Global Developments and Analysis: Weekly Monitor, 29 June- 05 July 2020

Economic

Clock ticks on 100m jobs as global stimulus packages expire

The fate of 100 million jobs hangs in the balance as a potential second wave of unemployment caused by the coronavirus pandemic looms over Japan, the U.S. and Europe with a combined $1 trillion worth of stimulus measures set to expire in the coming months. The U.S. added 4.8 million jobs in June, the Labour Department announced on July 02, dropping the unemployment rate to 11.1% from a peak of 14.7% in April, as the country aggressively pushed to restart economic activities. Over 4.2 million Japanese workers had been furloughed as of May, largely in the hotel and restaurant industries. Japan has budgeted 1.6 trillion yen ($14.9 billion) across two supplementary budgets for fiscal 2020 for the subsidy.European countries have also taken aggressive measures to ease the economic pain from the coronavirus. Germany, the U.K., France, Italy and Spain have each spent tens of billions of euros to pay furloughed workers, saving roughly 45 million, or a third, of jobs across the five countries. Click here to read.... [2]

Asia has an unemployment crisis waiting to happen with exports collapse

Beneath the surface, the region's labour markets are hanging on by a thread. There is a growing cohort of marginally attached workers who could flood the ranks of the unemployed if a new wave of COVID-19 cases emerges here or when the coming slump in exports, thanks to the slowdown in Western economies, hits the region. Asian governments must prepare for action.From a risk management perspective, Asian policymakers should be providing more direct support to companies in the form of tax relief, subsidies or grants conditioned on keeping workers on the payrolls, as a few governments in the region including Singapore and Hong Kong have started to do. For countries with large informal sectors and hidden unemployment problems, especially China, India, Indonesia and the Philippines, the authorities should offer more direct support to households. Click here to read.... [3]

Soaring saving rates pose policy dilemma for world’s central bankers

Households across the world have been saving up since the coronavirus pandemic hit the global economy, but their cash stash poses a dilemma for policymakers as they try to gauge the amount of stimulus needed to fuel a return to growth.If consumers rush back to the shops, extra government stimulus threatens to generate too much spending and inflation; but if they continue to hoard their incomes, too little stimulus threatens a vicious circle of weak expenditure, slower recovery and higher unemployment. The two trends are not mutually exclusive — the likeliest outcome is a bit of both — but the dilemma about which will be more powerful is pitting some of the big beasts in central banking on either side of an intellectual divide. Christine Lagarde, president of the European Central Bank, recently cited a surge in household bank deposits as reason for caution on the speed of the economic recovery, which she forecast would be “sequential and restrained”. Click here to read.... [4]

International luxury brands flourish while local labels perish

The prolonged COVID-19 pandemic has shown the clear contrast between international luxury firms and domestic fashion companies. Despite price hikes of luxury brands, people formed queues in front of their boutiques while local labels are offering deep discounts but not many are interested. Both Louis Vuitton and Chanel raised prices for their products here in May. It was the second time for Louis Vuitton which had already changed prices for some items in March, while Chanel had increased its prices by up to 26 percent. But complaints were rarely heard. In fact, people rushed to the boutiques to buy luxury goods before the mark-ups. The same scene was portrayed in front of Dior's stores in Seoul on July 1, when the news reported the French fashion house will increase prices by 12 percent to 15 percent. Click here to read.... [5]

Global warming threatens 60 pct of fish species, media reports

Up to 60 percent of fish species around the globe would be susceptible to warming waters by 2100, a British weekly magazine has reported. In a worst-case scenario of global warming when the temperature increases by 5 degrees Celsius, oceans would be too hot for 60 percent of fish species to live in, New Scientist cited a study as reporting on July 02."Even if humanity meets the Paris deal's tough goal of holding warming to 1.5 degrees Celsius, it would be too for 10 percent of fish," the British media reported. The research analysed existing scientific literature on the heat tolerance of 694 species of freshwater and marine fish spices, finding that embryos and spawning adults are more vulnerable to warming oceans due to their greater oxygen needs, said the report. Click here to read.... [6]

Study: World's pile of electronic waste grows ever higher

The world's mountain of discarded flat-screen TVs, cell phones and other electronic goods grew to a record high last year, according to an annual report released on July 02. The U.N.-backed study estimated the amount of e-waste that piled up globally in 2019 at 53.6 million metric tonnes (59.1 million tons) - almost 2 million metric tons more than the previous year. The authors of the study calculated the combined weight of all dumped devices with a battery or a plug last year was the equivalent of 350 cruise ships the size of the Queen Mary 2. Among all the discarded plastic and silicon were large amounts of copper, gold, and other precious metals -- used for example to conduct electricity on circuit boards. While about a sixth of it was recycled, the remainder of those valuable components -- worth about $57 billion -- weren't reclaimed, the study found. Click here to read.... [7]

Japan nixes S. Korea proposal for panel over export control rules

Japan rejected on June 29 a proposal from South Korea to set up a dispute-resolution panel at the World Trade Organization over Tokyo's tightening of export controls on semiconductor materials, officials involved in the process said. In a meeting of the WTO's Dispute Settlement Body, Japan argued that its export controls on South Korea-bound exports of three key materials used to manufacture semiconductors and display panels are allowed under WTO rules due to fears of diversion for military purposes.Washington maintains that the export controls have arisen from a national security concern and should not be subject to a ruling from the WTO. But Japan's latest move may not be the final word in the row between the two Asian neighbours, as the panel will be set up anyway if South Korea proposes it again in the next DSB meeting on July 29. Click here to read.... [8]

Tech Giants to Face EU Legal Push on Content, Competition, Taxes

Margrethe Vestager, the EU’s digital-policy and antitrust czar, detailed for the first time a comprehensive plan of how she aims to rein in U.S. tech giants, using a package of initiatives that the EU has begun to outline individually in recent weeks. She said the EU won’t demand that platforms be “liable for each and every post or fake bag that is put up for sale,” but rather that they create redress mechanisms that businesses and individuals can appeal to when their posts and ads are taken down. Another condition to be imposed would require platforms to establish themselves as business entities in Europe, Ms. Vestager said, “so that they are all governed by these sets of rules, and that goes for platforms wherever they come from on this planet.” Another piece of legislation would list prohibited practices. It is aimed at stopping platforms from leveraging their dominance to quash smaller rivals and is inspired by the three EU antitrust cases against Google that brought fines totalling more than $9 billion. Click here to read.... [9]

China’s tech titans fight for cloud control

Tencent began to display a new level of aggressiveness after positioning its cloud business as a major area of growth in September 2018, and that has only amped up amid the pandemic, employees say. “The competition with Alibaba is so fierce right now, the sales teams are fighting them for every deal,” said a source in Tencent’s cloud division who was not authorized to speak on the matter and declined to be identified. This year alone, Tencent has hired more than 3,000 employees for its cloud division. And as China went into lockdown and demand for corporate video bandwidth surged in February, it added 100,000 cloud servers in eight days to support a two-month old product, Tencent Conference — a feat the company says is unprecedented in Chinese cloud computing history. Click here to read.... [10]

Banks urge Britain and EU to sort out financial market access

Britain and the European Union need to make progress on EU financial market access given that the coronavirus crisis will make it even harder to cope with potential disruption if there is no agreement, banking lobby AFME said on July 06. Britain left the EU in January but has full access to the bloc under a transition period that runs until the end of December. London and Brussels blamed each other last week for missing a June 30 deadline for assessments on financial market access from January. Future direct EU access will depend on whether Brussels deems UK regulation to be "equivalent" to standards in the bloc. Although it is far more limited than current access, without equivalence EU investors would not be able to use financial services in London. Click here to read.... [11]

Germany warns new US sanctions endanger Nord Stream 2 pipeline

Many German analysts say the sanctions seem driven by American efforts to promote its own liquefied natural gas in Europe. Washington “has pushed the purchase of US LNG”, said Kirsten Westphal, of the German Institute for International and Security Affairs. At a July 01 panel, Michael Harms, managing director of the German Eastern Business Association, estimated new sanctions could affect 120 companies from 12 European states, and that many companies could feel compelled to withdraw. German chancellor Angela Merkel said the “extraterritorial sanctions” Congress was planning “are not consistent with my understanding of the law”. If passed, it would be harder to complete Nord Stream 2, but she said “we still believe its right to get the project done”. The new proposed bipartisan sanctions, co-sponsored by Republican senator Ted Cruz and Democratic senator Jeanne Shaheen, are likely to be included in a defence bill winding its way through Congress. Click here to read.... [12]

$800bn plan to turn Riyadh into cultural hub for the Middle East

Saudi Arabia is launching a SR3 trillion ($800 billion) plan to double the size of Riyadh in the next decade and transform it into an economic, social and cultural hub for the region. The ambitious strategy for the capital city was unveiled by Fahd Al-Rasheed, president of the Royal Commission for the City of Riyadh, ahead of key meetings of the U20, the arm of the G20 leaders’ summit that deals with urban development and strategy. “Riyadh is already a very important economic engine for the Kingdom, and although it’s already very successful, the plan now, under Vision 2030, is to actually take that way further, to double the population to 15 million people,” he told Arab News. Click here to read.... [13]

Strategic

Putin orders amendments extending his rule into constitution

President Vladimir Putin on July 03 ordered amendments that would allow him to remain in power until 2036 to be put into the Russian Constitution after voters approved the changes during a week-long plebiscite. "The amendments come into force. They come into force, without overstating it, at the people's will," Putin said after he signed a decree to have the constitution revised."We made these important decisions together, as a country", the Russian president said during a videoconference with lawmakers who worked on drafting the amendments.According to a copy of the decree released by the Russian government on July 03, the amendments will come into force on July 04. The changes allow Putin to run for two more six-year terms after his current one expires in 2024, but also outlaw same-sex marriages, mention the "belief in God as a core value" and emphasize the primacy of Russian law over international norms. Click here to read.... [14]

China holds simultaneous drills in 3 Asia seas

China conducted military exercises in the South and East China seas as well as in the Yellow Sea last week, flexing its muscles amid growing tensions with the U.S. State-run media touted the unusual simultaneous exercises in what it called the "three major battle zones." Speculation suggests that the large-scale drills were intended not only to send a strong message to the outside world, but also to distract from concerns at home. A missile destroyer and two helicopters practiced capturing unrecognized vessels in the East China Sea, state broadcaster China Central Television reported. The drill is thought to have been tailored for the waters near Taiwan and the Japan-administered Senkaku Islands, which China claims and calls the Diaoyu. The People's Liberation Army also conducted live-fire exercises in the Yellow Sea and the South China Sea. Civilian ships were banned from sailing near the Paracel Islands in the latter waters from July 01 to July 05. Click here to read.... [15]

2 US aircraft carriers conduct drills in disputed S. China Sea

Two U.S. aircraft carriers conducted military exercises in the South China Sea on Saturday local time, according to a U.S. Navy officer, with China holding drills in the area that it claims almost entirely. The Ronald Reagan and the Nimitz are "conducting dual carrier operations and exercises in the South China Sea to support a free and open Indo-Pacific," a public affairs officer for the Ronald Reagan Carrier Strike Group said. The exercises would be among the U.S. Navy's largest in recent years in the hotly contested area, media said. "These efforts support enduring U.S. commitments to stand up for the right of all nations to fly, sail, and operate wherever international law allows," the officer said. The exercises would involve four other warships and include round-the-clock flights testing the strike capability of carrier-based aircraft, The Wall Street Journal reported. Click here to read.... [16]

Japan's ruling party urges government to cancel Xi's visit

Japan's ruling Liberal Democratic Party is stepping up pressure on the government to cancel Chinese President Xi Jinping's upcoming state visit, which has been postponed due to the novel coronavirus outbreak. The LDP's foreign affairs division and other party members drew up a resolution on July 03 in response to Beijing's passage of a new national security law for Hong Kong. The law was enacted earlier this week. The foreign affairs division has been pushing for a harder line with China over the issue since May, when it submitted a proposal to the government to reconsider Xi's visit. "China has a very different way of thinking," Shigeru Ishiba, the LDP's secretary-general and a potential successor to Prime Minister Shinzo Abe, said at a forum in Tokyo on July 03. "Japan must have the power to say clearly that it will not accept China's move. It must work together with its allies," he stressed. Click here to read.... [17]

Taiwan to re-open de facto consulate on US island of Guam

Taiwan said on July 03 it will re-open its de facto consulate in Guam, a strategically located U.S. island with a large U.S. military base in the Pacific, a part of the world where China is stepping up its diplomatic reach. China is challenging U.S. influence in the Pacific, a region that the United States has considered its back yard since World War Two. Last year, China whittled away at Taiwan's allies in the Pacific by winning over Kiribati and the Solomon Islands. Taiwan's Foreign Ministry said the re-opening of its Taipei Economic and Cultural Office in Guam, after its closure in 2017 for budget reasons, was a response to closer Taiwan-U.S. relations and the strategic importance of the Pacific region. Click here to read.... [18]

Australia to boost defense spending in 'more dangerous' world

Australia will invest AU$270 billion ($186.5 billion) over the next decade to upgrade its defense forces in preparation for a world that is "poorer" and "more dangerous" in the wake of the coronavirus pandemic. Prime Minister Scott Morrison also said that the government will spend $800 million on long-range anti-ship missiles from the United States to maintain security and deter or respond to aggression in the Indo-Pacific region. Australia will also add 800 personnel to its forces, most of them joining the navy. The new defence policy announced by the premier prioritizes the regional security of the Indo-Pacific, which he described as the "epicentre of rising strategic competition," citing recent border tensions between India and China. Click here to read.... [19]

Calls for UN probe of China forced birth control on Uighurs

Politicians around the world have called for a United Nations probe into a Chinese government birth control campaign targeting largely Muslim minorities in the far western region of Xinjiang, even as Beijing said it treats all ethnicities equally under the law. They were referring to an Associated Press investigation published this week that found the Chinese government is taking draconian measures to slash birth rates among Uighurs and other minorities, while encouraging some of the country's Han majority to have more children. The Inter-Parliamentary Alliance on China, a group of European, Australian, North American, and Japanese politicians from across the political spectrum, demanded an independent U.N. investigation. "The world cannot remain silent in the face of unfolding atrocities," the group said in a statement. Click here to read.... [20]

Iran threatens retaliation after what it calls possible cyber-attack on nuclear site

Iran will retaliate against any country that carries out cyber-attacks on its nuclear sites, the head of civilian defence said, after a fire at its Natanz plant which some Iranian officials said may have been caused by cyber sabotage. The Natanz uranium-enrichment site, much of which is underground, is one of several Iranian facilities monitored by inspectors of the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog. Iran’s top security body said on July 03 the cause of the “incident” at the nuclear site had been determined, but “due to security considerations” it would be announced at a convenient time. Iran’s Atomic Energy Organisation initially reported an “incident” had occurred early on July 02 at Natanz, located in the desert in the central province of Isfahan. Click here to read.... [21]

North Korea says no need to sit down with U.S. for talks

North Korea does not feel the need to have talks with the United States, which would be nothing more than “a political tool” for Washington, a senior North Korean diplomat said on July 04, ahead of a U.S. envoy’s visit to South Korea. Vice Foreign Minister Choe Son Hui said negotiations would not work out between Washington and Pyongyang and there will be no change in North Korea’s policy. “We do not feel any need to sit face to face with the U.S., as it does not consider the DPRK-U.S. dialogue as nothing more than a tool for grappling its political crisis,” Choe said in a statement carried by state-run KCNA news agency. U.S. Deputy Secretary of State Stephen Biegun is due to visit South Korea next week to discuss stalled talks with North Korea. Click here to read.... [22]

Russian Orthodox Church says 'unacceptable' to turn Hagia Sophia into a mosque: Ifax

Converting Istanbul’s Hagia Sophia monument from a museum to a mosque would be “unacceptable”, a senior official in the Russian Orthodox Church said on July 04. Turkish President Tayyip Erdogan has proposed restoring the mosque status of the UNESCO World Heritage Site, a sixth century building at the heart of both the Christian Byzantine and Muslim Ottoman empires and now one of Turkey’s most visited monuments. “We can’t go back to the Middle Ages now,” Metropolitan Hilarion, chairman of the Moscow Patriarchate’s department for external church relations, said on state television, the Interfax news agency reported. “We believe that in the current conditions this act is an unacceptable violation of religious freedom,” he was quoted as saying. Click here to read.... [23]

Iran says it has built underground missile cities along Gulf coastline

Tehran has built underground “missile cities” along the Gulf coastline, Iran’s Revolutionary Guards Navy chief said on July 05, warning of a “nightmare for Iran’s enemies”. “Iran has established underground onshore and offshore missile cities all along the coasts of the Persian Gulf and the Gulf of Oman that would be a nightmare for Iran’s enemies,” Rear Admiral Ali Reza Tangsiri told the Sobh-e Sadeq weekly. Click here to read.... [24]

Berlin says EU foreign ministers will discuss Hong Kong at next meeting

Foreign ministers from European Union member states will discuss Hong Kong issues at their next meeting, German Foreign Minister Heiko Maas said on July 03. The West says China’s national security law threatens freedoms in the city. Beijing says the law is necessary to tackle secession, subversion, terrorism, and collusion with foreign forces, following anti-government protests that escalated in June last year. German Chancellor Angela Merkel said earlier that Germany would raise with China issues such as human rights, during its presidency of the EU, which began this month. The EU must speak with one voice to China if it wants to achieve ambitious deals that secure the bloc’s interests; Reuters quoted Merkel as saying on July 03. Click here to read.... [25]

Russia to reopen embassy in Libya – Lavrov

Moscow has decided to reopen its embassy in Libya, Russian Foreign Minister Sergey Lavrov was quoted as saying on July 03. He made the statement at the start of a meeting with the speaker of Libya’s eastern parliament, Aguila Saleh. The parliament supports Commander Khalifa Haftar. At this stage, the embassy will be headed by the interim charge d’affaires, Jamshed Boltaev, the Russian minister was quoted by RIA Novosti as saying. Boltaev will represent Russia’s interests in the entire Libyan territory. However, the diplomat will temporarily remain in Tunisia. Lavrov said a ceasefire in the Libyan conflict, proposed by Egyptian President Abdel Fattah el-Sisi alongside Haftar in Cairo on June 6, fitted into decisions taken at an international conference in Berlin regarding the situation in the North African country. Click here to read.... [26]

Medical

What doctors have learned about fighting COVID-19

1. Patients are at increased risk of blood clots, and blood thinning agents can help.
2. “Proning” - putting patients on their stomachs to relieve pressure on the lungs - can stave off the need for mechanical ventilation.
3. Besides the respiratory system and lungs, the coronavirus can attack many other organs, including the heart, liver, kidneys, and brain.
4. The most promising treatments so far seem to be the anti-viral remdesivir; dexamethasone, a steroid to treat the body’s inflammatory response to COVID-19; and plasma donated by patients who have antibodies to the disease.
5. More widespread testing and quicker results helps relieve pressure on hospitals.
6. Information-sharing among health professionals worldwide is crucial.
7. Prevention is critical. Doctors are relying on the public to do their part with good hygiene, masks and social distancing.

Click here to read.... [27]

WHO sees first results from COVID drug trials within two weeks

The World Health Organization (WHO) should soon get results from clinical trials it is conducting of drugs that might be effective in treating COVID-19 patients, its Director General Tedros Adhanom Ghebreyesus said on July 03. “Nearly 5,500 patients in 39 countries have so far been recruited into the Solidarity trial,” he told a news briefing, referring to clinical studies the U.N. agency is conducting. “We expect interim results within the next two weeks.” Click here to read.... [28]

Japanese supercomputer finds 30 existing drugs potentially effective to treat COVID-19

Analysis by Japanese supercomputer Fugaku, which was recently named the world's fastest, has found some 30 existing medications that could be effective COVID-19 treatments, Kyoto University professor Yasushi Okuno announced on July 3. According to the supercomputer's assessment, the candidate drug with the most potential was not known to be effective for coronavirus treatment. Professor Okuno, a specialist in computational science for pharmaceutical development, says a Japanese firm holds the patent for this existing drug. He hopes to launch clinical research and a drug trial after negotiating with the manufacturer. Okuno and a team of researchers ran simulations using Fugaku to see how 2,128 existing drugs, including anticancer agents and common cold medicine, bind to proteins unique to SARS-CoV-2 -- the novel coronavirus' scientific name -- and looked into how the drugs worked in the body on the molecular level. Click here to read.... [29]

Deep UV-LED renders novel coronavirus 99.9% ineffective

Irradiation from deep ultraviolet LED light renders the novel coronavirus inactive, according to what could be trailblazing research.Nikkiso Co., a Tokyo-based medical equipment maker that developed the light, teamed up with the University of Miyazaki’s Faculty of Medicine to gauge the effect of LEDs installed in Nikkiso’s Aeropure air purifier. They said their findings, released May 27, were a world-first. The purifier, equipped with the deep UV-LED, is aimed primarily at preventing in-hospital infections. The light is said to be effective in sterilizing water and air since its wavelength is shorter than that of typical ultraviolet light. Nikkiso installed the deep UV-LED in the air purifier that it began manufacturing and selling to hospitals in January. In late April, the maker and the university’s Faculty of Medicine tried irradiating the coronavirus on a petri dish with the LED light. Click here to read.... [30]

Vitamin D promoted as potential defence against coronavirus

This week three influential organisations, including the government’s Scientific Advisory Commission on Nutrition, urged people in the UK to make sure they were consuming enough vitamin D. But even advocates of the “sunshine vitamin” — so called because the body makes it in the skin through exposure to sunlight — say more evidence is needed to prove definitively that it cuts the risk of coronavirus infection and severity of symptoms. Vitamin D, a steroid hormone, is essential for maintaining a healthy immune system. In mid-latitude countries such as the UK, people with pale skin can make enough of it during summer by exposing bare arms or legs to sunlight for a few minutes a day. The process takes longer in those with heavily pigmented skin that blocks more ultraviolet radiation from the sun. In winter all of a person’s vitamin D has to come from foods, such as oily fish, egg yolks and mushrooms, or pills. Click here to read.... [31]

Journal Papers

The Rise of Strategic Corruption: How States Weaponize Graft

Graft is nothing new; it may be the second-oldest profession. Powerful people and those with access to them have always used kickbacks, pay-to-play schemes, and other corrupt practices to feather their nests and gain unfair advantages. And such corruption has always posed a threat to the rule of law and stood in the way of protecting basic civil and economic rights. What is new, however, is the transformation of corruption into an instrument of national strategy. In recent years, a number of countries—China and Russia, in particular—have found ways to take the kind of corruption that was previously a mere feature of their own political systems and transform it into a weapon on the global stage. Countries have done this before, but never on the scale seen today. Click here to read.... [32]