Global Developments and Analysis: Weekly Monitor (27 May-02 June 2024)

Economic

U.S. state laws take aim at pension investment in China

U.S. states are forcing public pension funds to divest from Chinese-owned companies, citing national security risks amid rising tensions between the world's two largest economies. Florida Gov. Ron DeSantis signed a law this month that requires the state investment board to cease investing any of its $250 billion of assets in any entities with more than 50% ownership by the Chinese government, Chinese Communist Party, or Chinese military. It also requires the divestment of any current direct holdings in China "to ensure foreign adversaries like China have no foothold in our state," DeSantis said on X, after signing the bill into law. Roughly $277 million of Florida's primary pension fund is exposed to Chinese state-owned entities, or 0.16% of the entire fund, according to a March legislative analysis of the bill. Its biggest investment is $54 million in the China Construction Bank, followed by two holdings worth a combined $46 million in Kweichow Moutai Co., a liquor company. The Florida law is similar to one Indiana passed in May last year prohibiting the public employee pension fund from investing in entities on, or connected to, federal exclusion lists or those controlled by the Chinese government or Chinese Communist Party. Illinois, Kansas, Missouri and New Jersey all have legislation currently moving through state legislatures relating to mandatory divestment of state pension funds from China. Click here to read… [2]

IMF upgrades China’s 2024, 2025 GDP growth forecasts but warns of risks ahead

China’s economy is set to grow 5% this year, after a “strong” first quarter, the International Monetary Fund said on May 29, upgrading its earlier forecast of 4.6% expansion though it expects slower growth in the years ahead. The global lender’s new projections come as Beijing steps up efforts to shore up an uneven recovery in the world’s second-biggest economy, which has stumbled in the face of a protracted property crisis and its ripple effects across investors, consumers and businesses. The IMF said it had revised up both its 2024 and 2025 GDP targets by 0.4 percentage points but warned that growth in China would slow to 3.3% by 2029 due to an aging population and slower expansion in productivity. It now expects China’s economy to grow 5% in 2024 and to slow to 4.5% in 2025. “The upgrade that we have for this year mainly reflects the fact that first quarter GDP growth came in stronger than expected, and there were some additional policy measures that were recently announced,” IMF’s First Deputy Managing Director Gita Gopinath said in Beijing. Gopinath was speaking at a press conference to mark the conclusion of the fund’s annual review of China’s economic policies. Click here to read… [3]

China launches $47bn chip fund to counter U.S. restrictions

China's government has launched a new state-backed semiconductor fund worth 344 billion yuan ($47 billion), in a strategic move to counter U.S. efforts to limit its access to advanced technology. The latest in a funding series designed to bolster the Chinese chip sector, the China Integrated Circuit Industry Investment Fund Phase III was formally registered May 24, according to the Chinese corporate information service Qichacha. This phase is by far the biggest: The first started in 2014 with an investment of about 140 billion yuan, while the second opened in 2019 at about 200 billion yuan. The Ministry of Finance is the leading shareholder with a 17% stake, followed by a subsidiary of the state-owned National Development Bank, with 10%. An investment company under the Shanghai municipal government holds 9%, alongside other state-owned enterprises. Although specific investment targets have not been disclosed, the focus is expected to be on artificial intelligence-related semiconductors and manufacturing equipment. The U.S. has imposed stringent export controls on advanced chips and fabrication equipment to limit China's ability to produce and acquire cutting-edge devices, including those designed for AI. The fund is also expected to finance research and development projects that enhance AI capabilities using existing chipmaking technology. Click here to read… [4]

Taiwan protests as China strips preferential tariffs on 134 products

China will remove long-standing preferential tariffs on 134 imports from Taiwan, its government said on May 31, in a move that appears designed to pressure the new Taiwanese president. The announcement by China's Ministry of Finance covers items such as base oils for lubricants, racing bicycles and textile products produced in Taiwan. It came less than two weeks after Lai Ching-te was inaugurated as Taiwan's president. Those items face higher Chinese tariffs starting June 15. Chiu Chui-Cheng, Taiwan's minister in charge of relations with China, called Beijing's announcement "unilateral" and not in line with World Trade Organization's rules. He said Taiwan "strongly protested" the decision and that it was a "political manoeuvre" to put pressure on Taiwan. Beijing has repeatedly condemned Lai and his Democratic Progressive Party for defending Taiwan's sovereignty. In his inaugural address, Lai pledged to boost Taiwan's economy, saying "Taiwan is eminently capable of being a thriving global economic powerhouse." Communist China has never ruled Taiwan, a democracy and home to 23.5 million people, but claims it and has not ruled out invading. In recent years, Beijing has doubled down on military incursions and economic coercion. Ian Tsung-yen Chen, an assistant professor at National Sun Yat-sen University in Kaohsiung, said the announcement would impact "industries and manufacturers that are highly dependent on the Chinese market and cannot find other alternative export markets in the short term." Click here to read… [5]

Solve China’s ‘overcapacity problem’ by helping developing nations go green, central bank adviser urges

To help developing countries expedite their green transition while simultaneously digesting China’s industrial overcapacity and enhancing the internationalisation of its financial sector, Beijing should take a page from the US’ old foreign-aid initiative known as the Marshall Plan, according to a central bank adviser. Huang Yiping, a member of the Monetary Policy Committee of the People’s Bank of China, said on May 27 that China could lend to emerging economies that are in need of a transition to clean energy but lack money and technology. “Since every country needs to make the green transition, and developing countries find it particularly difficult, if we share the burden, we cannot only help them achieve the goal, but also elevate China’s global leadership and influence in green development,” Huang said at the Global Finance Forum organised by Tsinghua University in the city of Hangzhou. While China’s overcapacity issue – caused by systematic excessive investment coupled with insufficient demand – is unlikely to abate in the short term, exporting the abundant fruits of its green energy sector is the only way out, said Huang, who is also dean of the National School of Development at Peking University. “There has been obvious resistance in the European and US markets, but at the same time we actually have huge potential in developing countries,” Huang said. Click here to read… [6]

‘Neutral’ Malaysia is best bet for chipmakers seeking haven from US-China tech war, Anwar says

Prime Minister Anwar Ibrahim on May 28 said Malaysia was the global semiconductor industry’s best bet for a “neutral and non-aligned location” to do business, as he pitched his country to top chipmakers seeking a haven from the US-China tech war over Washington’s sanctions. Across Southeast Asia, competition is fierce for semiconductor investments, as tech firms scan the world for sites to make their crucial chips. Concerns are escalating over a US-China tech war, which has disrupted supply chains of everything from smartphones and computers to electric vehicles. Anwar said Malaysia aimed to secure at least 500 billion ringgit (US$106 billion) in fresh semiconductor investments under a new National Semiconductor Strategy (NSS). “I offer our nation as the most neutral and non-aligned location for semiconductor production, to help build a more secure and resilient global semiconductor supply chain,” Anwar said in his keynote speech at Semicon Southeast Asia 2024 in Kuala Lumpur, which drew dozens of firms from Asia, Europe and the Americas. “Geopolitical dynamics aside, a robust multinational semiconductor production remains vital for humankind’s survival, particularly as we are running out of time in our climate action and risk mitigation.” Malaysia is a key player in the global semiconductor industry, supplying 13 per cent of total demand in the assembly, packaging and testing sector, according to government data. Click here to read… [7]

China’s top executives suffer first average pay cut in 2 decades as sluggish economy weighs on listed firms

The average annual salary of top executives at Chinese listed companies fell for the first time in two decades last year, according to a study of over 5,000 annual reports, as companies’ profitability was dented by the sluggish economy. The average last year stood at 1.66 million yuan (US$229,000), representing a 3.27 per cent decrease from 2022, according to the study by Shanghai Rongzheng Enterprise Consulting Service Group released on May 28. The study also showed the average annual pay for chairmen fell by 3.32 per cent from 2022 to 1.32 million yuan last year, while salaries for general managers, board secretaries and chief financial officers declined by 3.46 per cent, 1.12 per cent and 3.82 per cent, respectively. The consulting firm has been tracking executive pay at Chinese listed companies since 1999. Its findings were drawn from the annual reports of 5,326 listed companies published as of April 30. The highest-paid executive last year was Li Ge, chairman of biotech firm WuXi AppTec, who earned around 42 million yuan before tax, which was about the same amount he received in 2022. His salary easily eclipsed the 26.63 million yuan earned by Li Xiting, the chairman of medical equipment manufacturer Mindray Bio-Medical, and the 26.28 million yuan for Li Bin, the vice-president of agricultural and technology firm Tongwei. Click here to read… [8]

Japan eyes 1% growth under 6-year economic, fiscal program

The government slashed its target for the economy roughly in half and is now aiming for a real economic growth rate of around 1 percent for six years from April 2025, sources said. Prime Minister Fumio Kishida on June 4 instructed government officials to compile a plan on economic and fiscal management policies covering fiscal 2025-2030 at a meeting of the Council on Economic and Fiscal Policy. Kishida said the six-year “economic and fiscal new birth plan” is designed to achieve real economic growth of more than 1 percent on a stable basis along with regaining fiscal health. The plan will be included in the Basic Policy on Economic and Fiscal Management and Reform to be compiled by the end of the month.The economic growth target of around 1 percent will form the basis of the six-year plan. The previous target was 2-percent growth in real terms and 3-percent growth in nominal terms. In fiscal 2023, the Japanese economy grew 1.2 percent in real terms. The six-year plan will succeed the current fiscal consolidation goal of securing a surplus in the primary balance of the central and local governments in fiscal 2025. The primary balance is the fiscal balance excluding net interest payments on public debt. A surplus in the primary balance means that revenue excluding debt exceeds policy expenditures. Click here to read… [9]

A Chinese spacecraft lands on moon's far side to collect rocks in growing space rivalry with US

A Chinese spacecraft landed on the far side of the moon June 02 to collect soil and rock samples that could provide insights into differences between the less-explored region and the better-known near side. The landing module touched down at 6:23 a.m. Beijing time in a huge crater known as the South Pole-Aitken Basin, the China National Space Administration said. The mission is the sixth in the Chang’e moon exploration program, which is named after a Chinese moon goddess. It is the second designed to bring back samples, following the Chang’e 5, which did so from the near side in 2020. The moon program is part of a growing rivalry with the U.S. — still the leader in space exploration — and others, including Japan and India. China has put its own space station in orbit and regularly sends crews there. The emerging global power aims to put a person on the moon before 2030, which would make it the second nation after the United States to do so. America is planning to land astronauts on the moon again — for the first time in more than 50 years — though NASA pushed the target date back to 2026 earlier this year. U.S. efforts to use private sector rockets to launch spacecraft have been repeatedly delayed. Last-minute computer trouble nixed the planned launch of Boeing's first astronaut flight June 01. Click here to read… [10]

China signals retaliation against EU’s tariff-hike plans – Politico

China’s Commerce Ministry has warned that it will retaliate if Brussels goes ahead with plans to slap tariffs on Chinese-made electric vehicles (EVs), according to Politico, citing a letter sent to the EU trade chief. Chinese EVs are sold in the EU at considerably lower prices than their European counterparts, a gap that Brussels attributes to the financial assistance the Chinese government provides to domestic firms. The value of EU imports of Chinese EVs surged to $11.5 billion in 2023, from just $1.6 billion in 2020, accounting for 37% of all EV imports to the bloc, according to the research firm Rhodium Group. Last September, the European Commission launched an anti-subsidy investigation that could result in additional tariffs to offset the suspected use of state aid. The EU currently applies a 10% levy on all imported EVs. According to the outlet, the Chinese Commerce Ministry has sent a five-page letter to EU trade chief Valdis Dombrovskis expressing “annoyance” with the probes and urging for a reset to avoid a further escalation. The EU is expected to announce provisional tariffs on Chinese electric vehicles in the coming days. In the letter China warned the EU of retaliation, saying it would “start” with aviation and agriculture, the outlet said, citing a source familiar with the document. Hitting agriculture could deal a blow to the EU, as China is the third-largest consumer of the bloc’s agriculture output. Click here to read… [11]

US to send migrants to Europe – CBS

Some migrants applying for asylum at US outposts in Latin America may be sent to Italy or Greece instead, CBS News reported on May 30, citing anonymous sources and documents from the US Department of Homeland Security. Washington set up ‘Safe Mobility Offices’ (SMO) in Colombia, Costa Rica, Ecuador, and Guatemala last year, with the idea to reduce illegal border crossings by letting people apply to immigrate legally. Arrangements have already been made with Spain and Canada to take some of these migrants. Greece and Italy would likely accept “roughly 500 or fewer” migrants each under the new arrangements, which have not yet been officially announced, one source told CBS. A State Department spokesperson told the outlet that “we are in diplomatic discussions with other countries about joining this initiative to expand lawful pathways for resettlement but have no additional information to share at this time.” The Greek and Italian governments did not respond to requests for comment by CBS. Both countries, as well as Spain, have been dealing with thousands of migrants crossing the Mediterranean from Africa and the Middle East, seeking asylum and social services offered by the EU. According to the State Department, the SMOs have “enabled a six-fold increase in the number of refugees resettled from the Western Hemisphere.” Click here to read… [12]

Billions in African Gold Smuggled to UAE Yearly, SwissAid Says

Billions of dollars of gold is smuggled out of Africa every year, with the vast majority exported to the United Arab Emirates for processing, according to a report by SwissAid. Using data on declared and undeclared gold imports over a 10-year period ending in 2022, the Bern-based non-governmental organization estimates that the illicit trade amounts to between $23.7 billion and $35 billion annually based on current market prices. More than 435 tons of bullion was smuggled out of Africa in 2022 alone, it said. The revenue fuels conflict, finances criminal and terrorist networks, undermines democracy and facilitates money laundering, according to the group. Smuggled gold originates from 12 African countries, with most of the informal trade coming from Mali, Ghana and Zimbabwe. An estimated $115.3 billion worth of bullion entered the UAE in the decade following 2012, the group said. The UAE has taken “significant steps to address concerns around gold smuggling, recognizing the risks posed by such activities,” the Ministry of Foreign Affairs said in an emailed response to a request for comment. For example, the UAE authorities have seen suspicious activity reports relating to the gold sector increase to 6,432 last year from 223 in 2021, it said. The UAE has also increased inspections looking for smuggled bullion and so far, handed out more than 78 million dirhams ($21.2 million) in fines. Click here to read… [13]

UAE, South Korea Look to Buck Protectionist Wave With Trade Deal

The United Arab Emirates reached an agreement with South Korea to bolster bilateral commerce, adding Asia’s fourth-largest economy to a growing roster of nations to close trade deals with the wealthy Gulf state. Signed during UAE President Sheikh Mohammed bin Zayed’s visit to South Korea this week, the pact — known as a Comprehensive Economic Partnership Agreement — is part of the Arab country’s effort to grow its non-oil foreign trade to over $1 trillion by the end of the decade It’s already inked similar agreements with India, Indonesia, Turkey and Ukraine, among others. The latest deal will aim to alleviate or remove tariffs on such products as energy and health care, according to a statement published on May 29. The accord stands out amid a rising tide of protectionism and tensions among the world’s biggest economies. The Biden administration announced this month it’s reimposing tariffs on hundreds of goods imported from China and has moved to quadruple US duties on Chinese electric vehicles. The European Union launched a probe of China’s EV industry last year and is nearing a decision on raising levies. China, meanwhile, has signalled it’s ready to unleash tariffs as high as 25% on imported cars with large engines. The UAE has tried to position itself as a neutral power broker that’s doing business with developing nations while also pursuing ties with the West. Click here to read… [14]

Data Centres Set to Consume 9% of U.S. Electricity by 2030

Over the past few years, dozens of pundits and industry experts have laid out prognostications that the ongoing Fourth Industrial Revolution will drive unprecedented electricity demand growth in the United States and globally. Last year, the power sector consulting firm Grid Strategies published a report titled “The Era of Flat Power Demand is Over,” which pointed out that United States grid planners—utilities and regional transmission operators (RTOs)—had nearly doubled growth projections in their five-year demand forecasts. For the first time in decades, demand for electricity in the U.S. is projected to grow by as much as 15% over the next decade driven by the Artificial Intelligence (AI), clean energy, and cryptocurrencies boom. AI, in particular, is expected to drive a lot of that surge in power demand. According to the Electric Power Research Institute (EPRI), data centres will consume up to 9% of total electricity generated in the United States by the end of the decade, up from ~1.5% currently thanks to the rapid adoption of power-hungry technologies such as generative AI. For some perspective, last year, the U.S. industrial sector energy consumed 1.02 million GWh, good for 26% of U.S. electricity consumption. That prediction might sound bold but might be warranted. Click here to read… [15]

Sanctions and Missile Attacks Are Hindering Efforts to Cut Shipping Emissions

The shipping industry is one of the biggest targets for decarbonization planners. As such, it has also been the target for pointed efforts to reduce its fuel consumption—and the emissions that go with it. Lately, however, this has become harder because of other actions by those same planners who want cleaner maritime transport. Ships, which represent as much as 90% of global trade, consume massive amounts of fuel, and the overwhelming bulk of that fuel is derived from hydrocarbons. The International Maritime Organisation, under pressure from transition-oriented governments, recently approved rules that lower the sulphur content of bunkering, but this has not been seen as enough by those same governments and their NGO advisers. Meanwhile, some of those concerned governments are making decisions that are, inadvertently, leading to higher emission levels greater risk of fuel spills. For instance, the Red Sea crisis diverted most of the traffic from the Suez Canal to the Cape of Good Hope. The diversion around Africa adds 4,000 miles to the average ship’s journey between Europe and Asia. This means a lot more additional fuel consumption, too. Perhaps it would be possible to argue here that the consequences of the Houthis’ attacks on ships in the Red Sea were not a result of conscious action on the part of governments in Europe and the United States. Click here to read… [16]

Strategic

US Lawmakers Vow Arms Support for Taiwan After China’s Drills

US lawmakers expressed support for Taiwan’s defense in a trip to the self-ruled democracy just two days after China ended its biggest military exercise in a year around the island. “We have to provide that deterrence here,” said Representative Michael McCaul, chairman of the House Foreign Affairs Committee, in a joint press briefing with Taiwanese Foreign Minister Lin Chia-lung on May 27. Lin called the trip an “important gesture of solidarity that shows America stands firmly with democratic Taiwan.” The bipartisan delegation were the first US lawmakers to meet with Taiwanese President Lai Ching-te since his inauguration on May 20. It comes days after Beijing staged expansive military exercises around Taiwan in what the US called “military provocations.” Lai met the lawmakers in the morning and said Taiwan will continue to deepen cooperation with the US. He also cited former US President Ronald Reagan’s notion of “peace through strength” and pledged to bolster national defense. McCaul said he had “very direct conversations” with Lai about the threat Taiwan faces from China. “What they did in the last couple of days was essentially a preview of what a blockade would look like,” he told reporters. “The key is to make sure the island has the weapons necessary for deterrence.” Click here to read… [17]

China, U.S. defense chiefs spar over Taiwan at Singapore meeting

U.S. Defense Secretary Lloyd Austin and Chinese counterpart Dong Jun exchanged sharp comments over rising tensions in the Taiwan Strait during a rare meeting on May 31, while pledging to maintain communication. The meeting on the sidelines of the Shangri-La Dialogue defense forum in Singapore was the first for Austin and Dong, who was appointed defense minister in December. It also marked the first for the rival superpowers' defense chiefs in about 18 months. According to a Pentagon readout, Austin expressed concern over "provocative" activity by the Chinese People's Liberation Army. The warning came about a week after China conducted large military drills encircling Taiwan and its outlying islands -- ostensibly as "punishment" for new Taiwan President Lai Chinge-te's pro-sovereignty inauguration speech. Austin added that Beijing "should not use Taiwan's political transition -- part of a normal, routine democratic process -- as a pretext for coercive measures." Dong, for his part, warned Austin that the U.S. should not interfere in China's affairs with Taiwan, which it regards as a renegade province even though the Communist Party has never ruled it. Following the meeting, China's Defense Ministry spokesperson said Washington's approach to Taiwan is sending a "wrong signal" to "separatist forces" in Taipei. Click here to read… [18]

Xi pledges more Gaza aid and talks trade at summit with Arab leaders

Chinese President Xi Jinping reiterated calls for the establishment of an independent Palestinian state and promised more humanitarian aid for people in Gaza as he opened a summit with leaders of Arab states May 30 in Beijing. “Since last October, the Palestinian-Israeli conflict has escalated drastically, throwing people into tremendous suffering,” Xi said in a speech opening the China-Arab States Cooperation Forum. “War should not continue indefinitely." He restated China’s backing of a two-state solution and pledged 500 million yuan ($69 million) in humanitarian aid for Gaza. He also promised to donate $3 million to a United Nations agency that provides assistance and relief to refugees of the Israel-Hamas war. Beijing and the Arab states back Palestinians in the conflict, where Israel is facing growing international condemnation after its strike in the southern Gaza city of Rafah in which at least 45 people were killed over the weekend. The overall Palestinian death toll in the war exceeds 36,000, according to the Gaza Health Ministry. Beijing has long backed Palestinians and denounced Israel over its settlements in the occupied territories. It has not criticized the initial Hamas attack on Oct. 7 — which killed about 1,200 people — while the United States and others have called it an act of terrorism. However, China has growing economic ties with Israel. Click here to read… [19]

China to snub Zelensky ‘peace conference’

Beijing will not attend the Ukraine peace conference hosted by Switzerland in mid-June, the Chinese Foreign Ministry has said. The event would be “difficult” to attend because some of the “important” conditions for China to take part were not met, including the participation of both Russia and Ukraine, Foreign Ministry spokesperson Mao Ning said at a press briefing on May 31. The conference is scheduled for June 15-16 at the Burgenstock Resort near Lucerne. More than 160 countries have been invited, including members of the G7, G20, BRICS, and the EU, with German Chancellor Olaf Scholz and Canadian Prime Minister Justin Trudeau among the leaders confirming their attendance. Moscow has not been invited, although it has said it would not attend even if it were, arguing that the summit will revolve around Ukrainian leader Vladimir Zelensky’s so-called ‘peace formula’. The ten-point initiative calls for Moscow to withdraw from all territory Kiev claims as its own and for a tribunal to be set up to prosecute Russian officials for alleged war crimes. Moscow has dismissed the initiative, calling it “detached from reality.” Mao said China has always insisted that peace talks to resolve the conflict should have “three important elements: Recognition by Russia and Ukraine, equal participation by all parties, and fair discussion of all peace plans, otherwise it will be difficult to play a substantive role in restoring peace.” Click here to read… [20]

Iran’s Near Bomb-Grade Uranium Stock Grows Ahead of Election

Iran increased its stockpile of near bomb-grade uranium, a move that could flame tensions across the wider Middle East as Tehran prepares to hold presidential elections next month. It’s the first nuclear-safeguards assessment since Iran’s president and foreign minister died in a helicopter crash just days after top officials from the United Nations’ atomic watchdog travelled to the country to secure greater cooperation in their monitoring efforts. International Atomic Energy Agency inspectors verified on May 27 that Iran’s stockpile of highly enriched uranium rose 17% over the last three months, according to a nine-page, restricted report circulated among diplomats and seen by Bloomberg. That’s enough uranium to fuel several warheads, should Iran make a political decision to pursue weapons. “Further public statements made in Iran during this reporting period regarding its technical capabilities to produce nuclear weapons and possible changes to Iran’s nuclear doctrine only increase concerns about the correctness and completeness of Iran’s safeguards declarations,” IAEA Director General Rafael Mariano Grossi said in the report. The war in Gaza and recent tit-for-tat missile strikes between Israel and Iran have added urgency to the IAEA’s years-long search to uncover the scope of Tehran’s nuclear ambitions. While the IAEA carries out daily inspections of declared atomic facilities, suspicions linger over whether Iranian engineers could be concealing work used for military purposes. Click here to read… [21]

Japan, South Korea to Boost Defense Ties, End 5-Year Stand-Off

Japan and South Korea will resume high-level military talks after reaching an agreement on measures to prevent a recurrence of a maritime spat, defense ministers from the two countries said late on June 01. The deal is expected to help strengthen the defense ties between the two neighbours and ends a five-year stand-off following a dispute on an incident between a Japanese maritime patrol aircraft and a South Korean warship in December 2018. Japanese Defense Minister Minoru Kihara and his South Korean counterpart Shin Wonsik, in a joint statement, said they agreed that defense cooperation between the two countries is important in the face of regional security issues and threats from North Korea. Both countries will increase exchanges in various areas to advance the defense cooperation between the US and its two allies and will resume annual vice-ministerial defense talks as well as working-level defense dialog, according to the statement. Shin told reporters after the meeting that the two countries have restored trust, while Kihara said that exchanges between them will become active now that the long-standing issue surrounding the maritime incident is cleared, according to a Nikkei report. Click here to read… [22]

U.S., Japan to hold first weapons cooperation meeting in June

Defense officials from Japan and the United States will meet in Tokyo early next month to discuss weapon development, Nikkei Asia has learned, following the two countries' commitment to deepen defense industry cooperation. William LaPlante, the U.S. undersecretary of defense for acquisition and sustainment, will meet with Masaki Fukasawa, the commissioner of Japan's Acquisition, Technology and Logistics Agency (ATLA) for the inaugural meeting of the Forum on Defense Industrial Cooperation, Acquisition and Sustainment (DICAS), according to people with knowledge of the matter. The two-day meeting will begin on June 10 with discussion on ramping up co-production of Patriot surface-to-air missiles and the future co-development of common jet trainers, according to a U.S. government official who spoke on the condition of anonymity. The next day, both sides will convene to launch the Ship Repair Council Japan, a meeting to discuss conducting short-term maintenance on U.S. Navy ships in Japanese private shipyards. U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida agreed in April to deepen defense industry cooperation, paving the way for the DICAS. The forum will "identify priority areas for partnering U.S. and Japanese industry, including on co-development, co-production and co-sustainment," the leaders said. The integration of defense industrial bases comes as the U.S. faces supply shortages due to its financial aid and weapons commitment in the Ukraine war and the conflict between Israel and Hamas. Click here to read… [23]

Thailand aims to become first Southeast Asian BRICS member

Thailand will apply as soon as this month to join the BRICS bloc of emerging nations, the government said on May 28, aiming to team up with other Global South countries in boosting its presence on the global stage. The BRICS group is centred on Brazil, Russia, India, China and South Africa. At a cabinet meeting May 28, the Thai government finalized plans to submit the application. If approved, Thailand would become the group's first member from Southeast Asia. Joining BRICS will enhance Thailand's role as a leader among developing countries, a government spokesperson said at a press conference after the meeting. Some view BRICS as a competing framework in an international order led by developed economies such as the U.S. and Europe. China and Russia have been leading the bloc's expansion, with the United Arab Emirates, Iran, Ethiopia and Egypt joining in January. Click here to read… [24]

Rare spat shows China, North Korea still at odds on nuclear weapons

North Korea’s rare swipe at China this week underscored how Beijing and Pyongyang do not entirely see eye-to-eye on the latter’s illicit nuclear weapons arsenal, despite warming ties in other areas, analysts and officials in South Korea said. The North condemned China, Japan and South Korea on May 28 for discussing denuclearization of the peninsula, calling their joint declaration after a summit in Seoul a “grave political provocation” that violates its sovereignty. Even though Beijing helped tone down the statement by advocating mention of the peninsula rather than the North specifically, that was enough to raise its neighbour’s hackles, one analyst said. “It is notable that North Korea criticized a joint statement that China had signed onto, even after Beijing helped water down the statement,” added Patricia Kim, of the Brookings Institution in the United States. In their remarks, the three nations “reiterated positions on regional peace and stability, denuclearization of the Korean peninsula” but unlike the last such statements in 2019 and earlier, did not commit to pursue denuclearization. Since international talks with the United States and other countries stalled in 2019, North Korea has moved to reject the concept of ever giving up its nuclear weapons. “This is about North Korea emphasizing its stance that any diplomatic rhetoric suggesting Pyongyang should eventually denuclearize is unacceptable,” said Tong Zhao, a nuclear expert at the Carnegie Endowment for International Peace. Click here to read… [25]

Moscow outlines territorial gains in Ukraine conflict

Russia has pushed Ukrainian forces back from some 880 square kilometers of land so far this year, Defense Minister Andrey Belousov said on May 31. Some of the fastest advances were made recently in Ukraine’s Kharkov Region, where the front line has been moved nearly 10km away from Russian territory, the minister said. The offensive was launched earlier this month with the stated goal of creating a buffer zone along the border to stop Ukrainian attacks on Russia’s Belgorod Region. Kiev’s setbacks near Kharkov have prompted the administration of US President Joe Biden to authorize Ukraine to use US-supplied weapons on targets inside Russia that pose a direct threat on that axis, according to Western media reports and the Ukrainian government. Officials in Washington had previously claimed they did not consent to Ukrainian use of American arms outside of what Kiev claims to be its territory. The Russian minister said that Kiev has maintained its intention to inflict damage upon Russia despite losing the initiative on the battlefield. In order to demonstrate its military prowess to the US and its allies, it has been launching attacks on Russian civilian infrastructure, Belousov alleged. On May 30, Russian air defences stopped a barrage of ten US-donated ATACMS missiles that Kiev had fired at the Crimean Bridge, he said, noting that it was the largest attack of this kind since the hostilities started in February 2022. Click here to read… [26]

Mexico elects first woman president

Claudia Sheinbaum is set to become Mexico’s first ever female president after she was projected to have won elections at the weekend, officials have said, citing preliminary results. Rival candidates have already congratulated the 61-year-old, who is from the ruling Morena party and previously served as mayor of Mexico City. In addition to choosing a new head of state, who will serve a single six-year term, Mexicans also elected members of both the lower and upper chambers of the country’s parliament during polling on June 02. In a video message posted on X (formerly Twitter) on June 03, the head of the National Electoral Institute, Guadalupe Taddei, revealed that turnout was estimated at between 60% and 61.5%. Sheinbaum, who was the clear frontrunner in the presidential race, has garnered between 58.3% and 60.7% of the vote, according to preliminary results based on rapid sample counts. Xochitl Galvez of the opposition centre-right Strength and Heart for Mexico coalition – which comprises the National Action Party, Institutional Revolutionary Party, and the Party of the Democratic Revolution – is estimated to have finished second with 26.6%-28.6% of the vote. Jorge Alvarez Maynez of the left-wing Citizens’ Movement trailed in third with a 9.9%-10.8% share. Addressing her supporters as preliminary results began to emerge, Sheinbaum described herself as “grateful,” noting that “for the first time in the 200 years of the republic, I will become the first female president of Mexico.” Click here to read… [27]

The Taliban's Unrecognized Government Is Expanding Its Diplomatic Reach

No country in the world formally recognizes the Taliban-led government in Afghanistan, where the extremist group seized power in 2021. But some countries operate embassies in Kabul and have accepted diplomats appointed by the Taliban, which controls Afghan missions in some 14 nations in the region. Russia is the latest country that is set to expand diplomatic ties with the militants. Moscow appears poised to delist the Taliban from its list of terrorist groups. “This could be a step toward the Taliban gaining regional legitimacy," said Graeme Smith, a senior Afghanistan analyst at the Brussels-based International Crisis Group. Many countries have tied recognition to the Taliban establishing an inclusive government, ensuring women's rights, and breaking ties with extremist groups -- issues that the militants have refused to budge on. But Afghanistan's neighbours, concerned about security, trade, migration, and drug trafficking, have been more open to establishing ties with the Taliban, said Smith. The militants face major hurdles in gaining international legitimacy, and many Afghan missions around the world are still run by diplomats appointed by the former internationally recognized Afghan government. But the hard-line Islamist group appears to be making headway in its strategy to gain recognition from countries in Afghanistan's backyard. Click here to read… [28]

Israel says war on Gaza likely to last another seven months

Israel’s national security adviser says the continuing war on Gaza is likely to last through the end of the year. In an interview with Israel’s Kan public broadcaster on May 29, Tzachi Hanegbi said “we are expecting another seven months of fighting” to destroy the military and governing capabilities of Hamas and the smaller Palestinian Islamic Jihad (PIJ) group. His remarks came as Israel finds itself increasingly isolated on the world stage nearly eight months into the assault, with even the United States and other close allies expressing outrage over the civilian death toll. Hanegbi defended Israel’s ongoing operations in Rafah, on Gaza’s border with Egypt, saying the frontier had become a “smuggling kingdom” since 2007, when Hamas began governing Gaza. “Every rocket, every explosive device, every shot fired at Israel is because that border was breached,” he said. Later on, May 29, an Israeli military spokesman said the army had gained “operational control” over the narrow Philadelphi Corridor, a buffer zone between Egypt and Gaza that was created as part of the 1979 peace treaty between Israel and Egypt. “In recent days, our forces have taken operational control of the Philadelphi Corridor,” army spokesman Daniel Hagari said in a televised address. Click here to read… [29]

Terrorism and economy expected to top agenda at China-Pakistan talks as security concerns cloud belt and road

Counterterrorism cooperation and the economy are expected to be high on the agenda when Pakistani Prime Minister Shehbaz Sharif makes a five-day trip to China next week. Chinese foreign ministry spokeswoman Mao Ning confirmed on Friday that Sharif’s trip, which starts on May 31, will include talks with President Xi Jinping and Premier Li Qiang. Sharif will also visit Guangdong province, China’s economic hub, and the northwestern province of Shaanxi. “Under the guidance of the leaders of the two countries, China and Pakistan have in recent years had close high-level exchanges, steadily advanced practical cooperation … on the China-Pakistan Economic Corridor and maintained sound communication and coordination in international and regional affairs,” Mao said. It is Sharif’s first trip to China since starting his second term as prime minister in March. His visit comes amid concerns about security in Pakistan’s southwestern Balochistan and northwestern Khyber Pakhtunkhwa provinces, the site of a number of major Chinese infrastructure projects under the multibillion-dollar China-Pakistan Economic Corridor. In the latest in a string of attacks targeting personnel working on Chinese projects, five Chinese nationals and their Pakistani driver were killed in a suicide bombing on their way to the Dasu hydropower dam project in Khyber Pakhtunkhwa in March. Click here to read… [30]

Zuma big election ‘winner’ as South Africa heads for coalition government

Former President Jacob Zuma is emerging as the biggest victor of South Africa’s general elections as his new breakaway Mkhonto we Sizwe Party (MK) appears poised for major gains at the expense of the country’s governing African National Congress. With more than 97 percent of votes counted, the MK appeared to be on the cusp of grabbing power in KwaZulu Natal, comfortably leading in a province where the ANC has never previously lost since the first post-apartheid elections in 1994. Nationally, as results trickled in, the MK stood third with approximately 15 percent of the vote, behind the ANC with about 40 percent of the vote and the principal opposition party, the Democratic Alliance (21 percent). The votes counted so far paint a clear picture of the MK winning over chunks of the ANC’s traditional support in its strongholds. In addition to KwaZulu Natal and the Western Cape – where the DA looked set to return to power with a clear majority – the ANC has also taken a lashing in the province of Gauteng, where it is also far short of a majority of its own. Over the past two days, these trends have only solidified, and if they persist, the ANC will – for the first time in 30 years – need to plead with some opposition parties to support it in a national coalition government if it is to remain in power under President Cyril Ramaphosa. It will also need to do the same to stay in power in provinces like Gauteng. Click here to read… [31]

Health

Global pandemic treaty to be concluded by 2025, WHO says

Talks aimed at reaching a global agreement on how to better fight pandemics will be concluded by 2025 or earlier, if possible, the World Health Organization said on June 01. The WHO's 194 member states have been negotiating for two years on an agreement that could increase collaboration before and during pandemics after the acknowledged failures during COVID-19. The UN-agency had initially aimed for an agreement this week, but talks have been extended amid deep divisions between rich and poorer countries on issues like vaccine-sharing and preparedness. Countries did, however, reach a parallel deal to update existing legally binding health rules, known as the International Health Regulations (IHR), which includes a new category of "pandemic emergency" for the most significant and globally threatening health crises. "The historic decisions taken today demonstrate a common desire by member states to protect their own people, and the world's, from the shared risk of public health emergencies and future pandemics," WHO Director-General Tedros Adhanom Ghebreyesus said in a statement. "With this agreement, we take steps to hold countries accountable and strengthen measures to stop outbreaks before they threaten Americans and our security," said U.S. Health and Human Services Secretary Xavier Becerra on June 01. Click here to read… [32]

Taiwan not invited to World Health Organization's annual assembly

Member states of the World Health Organization on May 27 decided not to invite Taiwan to the organization's annual assembly in Geneva after China appealed for it to remain sidelined. Taiwan is excluded from most international organizations because of objections by China, which considers the democratically governed island its territory. Taiwan attended the WHO's World Health Assembly (WHA) as an observer from 2009 to 2016 under the administration of then-President Ma Ying-jeou, who signed landmark trade and tourism agreements with China. But Beijing began blocking Taiwan's participation in 2017, after President Tsai Ing-wen won office, for her refusal to agree to China's position that both China and Taiwan are part of "one China." Chen Xu, China's permanent representative to the United Nations in Geneva, said there was no political basis for Taiwan to participate in the WHA, and accused Taiwanese officials of deliberately politicizing the issue of health. "The so-called gap in the global epidemic prevention system is pure nonsense," he said, referring to calls by Taiwan and its allies for it to be included to better prevent pandemics. Ahead of the decision, Taiwanese Health Minister Chiu Tai-yuan's said Taiwan's absence from the assembly was hindering pandemic prevention efforts. "Taiwan's participation in the WHA and WHO is a matter of health, not politics," he said. Click here to read… [33]