Global Developments and Analysis: Weekly Monitor, 04 January - 10 January 2021

Economic

China’s New Rules Amp up Pressure on U.S. Businesses

Beijing hit back against recent U.S. restrictions targeting Chinese companies, saying it plans to ban Chinese firms and citizens from complying with foreign laws and sanctions it deems “unjustified.” Beijing’s new rules, released Jan 09, also allow Chinese companies to sue in Chinese courts those who comply with the foreign laws. The rules come after the U.S. imposed various restrictions against Chinese companies. Those include blocking some Chinese companies like Huawei Technologies Co. from obtaining certain components made by U.S. or foreign suppliers or accessing U.S. technology. While the rules didn’t name any specific foreign laws or sanctions, they amp up pressure against U.S. and other foreign companies with a footprint in China, possibly forcing them to choose between American or Chinese regulations, according to people in the foreign business community. They also come as President-elect Joe Biden prepares to take office this month, presenting him with the question of whether to overturn Trump administration actions targeted at China. Click here to read... [2]

Will Bitcoin become 'millennial gold'?

“Bitcoin's competition with gold has already started in our mind," the JPMorgan strategists wrote."Considering how big the financial investment into gold is, a crowding out of gold as an 'alternative' currency implies big upside for Bitcoin over the long term," they said. So, is Bitcoin the new gold? The answer is complicated, especially after a gold rally earlier this week. Value of the precious metal climbed to over $1,900 an ounce on Jan 04, the highest price in almost two months. At the same time, the cryptocurrency has continued to fluctuate. For fans of gold as an investment, its allure is obvious. The precious metal's real-world application is visible all around us in the form of coins, jewellery and other decorative items, and it has a long history to back it up. Bitcoin sceptics have repeatedly pointed to the cryptocurrency's lack of inherent value as one of its biggest weaknesses. Gold is a versatile and unchanging asset that many investors view as less risky than stocks, for instance. The price of Bitcoin would need to increase fivefold — to $146,000 a coin — to match the $575 billion global valuation of private gold wealth held in gold bars, coins or exchange-traded funds, JPMorgan said. Click here to read... [3]

Massive power grid failure plunges Pakistan into darkness

Pakistan’s national power grid has failed, leaving almost the entire country in the dark. With officials blaming a mysterious “plunge in the frequency,” conspiracy theories quickly proliferated." A countrywide blackout has been caused by a sudden plunge in the frequency in the power transmission system," Pakistani power minister Omar Ayub Khan wrote on Twitter, shortly after the country was plunged into darkness before midnight on Jan 09. Pakistanis soon shared pictures of their blacked-out cities and towns, with the starry night sky clearly visible above without the usual light pollution. Government spokesman Imran Ghazali said shortly afterwards that power would be restored to Islamabad within three hours and to the rest of the country by Jan 09 morning. Abid Qaiyum Suleri, an economic adviser to Khan, said on Twitter that a 500KV transmission had broken down, though Suleri did not know exactly how. He suggested that fog or an “uptake issue” from the Tarbela Dam hydroelectric plant could have been responsible. Click here to read... [4]

Gazprom loses gas monopoly as Southeast European market advances

The gas market in southeast Europe was marked by three events at the beginning of the New Year, all of them with far-reaching consequences. On January 1, Serbian President Aleksander Vucic celebrated his nation's gas supplies from Russia through a different route, notably via Bulgaria and the Balkan Stream pipeline, part of the Turkish Stream pipeline.Only hours prior to the announcement, Bulgaria started getting Azeri gas via the Trans Adriatic Pipeline (TAP), prompting Bulgarian Prime Minister Bojko Borissow to say during a visit to a compressor station near the Greek border: "As of now, complete diversification rules." He basically announced the end of Russia's Gazprom monopoly on the Bulgarian market. The third event was the inauguration of a new, floating liquefied gas (LNG) terminal near the Croatian island of Krk. A tanker supplied US LNG, which was modified and pumped into the EU-linked Croatian distribution network. For Croatia, which had so far been supplied by Gazprom almost exclusively, it also meant a big leap toward diversification. Click here to read... [5]

Taiwan manufacturers quit China over trade tensions and rising costs

Hundreds of thousands of Taiwanese enterprises are bidding farewell to China because of rising costs and trade tensions between Washington and Beijing, marking a dramatic shift for Taiwan’s corporate landscape with significant implications for global manufacturing. “I see a structural collapse among the ranks of Taiwanese-owned businesses in China,” said Liu Jen, editor in chief at CRIF China Credit Information Service in Taipei. According to its survey, revenues grew at less than half of the 1,000 largest Taiwanese-owned enterprises in China last year and their total net profits before taxes dropped by more than one-fifth to the lowest in nine years. “The era of cross-strait industrial co-prosperity is over,” Mr Liu said. Click here to read... [6]

Twitter Shares Fall 7% Following Permanent Trump Ban

Twitter Inc. shares fell 7% in pre-market trading after the social media platform permanently banned outgoing President Donald Trump. The company confirmed its decision in a blog post on Jan 08, saying Trump’s tweets breached policies by risking incitement to violence. It cited his posts on the riots in the U.S. capital last week. It’s a watershed moment for technology platforms that have faced conflicting pressures on one hand to restrict misinformation and hate speech and defend free speech on the other. Twitter was Trump’s preferred channel for amplifying attacks on his rivals, spreading conspiracies and provoking other nations during his four years in power. Mirabaud analyst Neil Campling said the ban shows the company is making editorial decisions and opens the door to more regulation of social media under the next administration. “In the U.S., it’s about how are these companies being regulated, are they regulated, should they be regulated?” Campling said by phone. What is more, Trump is “the most popular character” on the platform, he added. Click here to read... [7]

Bank lending to plastics industry faces scrutiny as pollution concerns mount

Banks have provided $1.7 trillion of finance to 40 companies in the plastics supply chain without imposing any requirements to tackle plastic pollution pouring into the world's rivers and oceans, according to a report published on Jan 08. With European and US banks increasingly spurning the most polluting fossil fuel projects to help slow climate change, campaigners want lenders to take a similar approach to plastics by making loans conditional on measures to boost recycling. Compiled by Portfolio.earth a research network, the report ranked Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co as the three biggest financiers of plastics between January 2015 and September 2019. Barclays and HSBC were ranked as the largest plastics financiers among European peers, extending $118 billion and $96 billion respectively. Public concerns over plastic have risen in recent years, as scientists have discovered contamination in once pristine environments from ocean depths to the Arctic. Click here to read... [8]

China's Commerce Ministry says it will focus on early implementation of RCEP, China-Japan-S. Korea FTA talks in 2021

China will promote the early implementation of the Regional Comprehensive Economic Partnership (RCEP), accelerate talks for a China-Japan-South Korea Free Trade Agreement (FTA), promote the free trade negotiations with the Gulf Cooperation Council, Israel, and Norway, and actively consider joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in 2021, Wang Wentao, Minister of China's Commerce Ministry said on Jan 08 when introducing the ministry's 2021 work focus.China will sign free trade agreements with more trading partners and continue to expand its "friend circle" of free trade in 2021, said Wang, according to a report from the Xinhua News Agency. China has signed 19 free trade agreements with 26 countries and regions, and the trade volume with free trade partners has reached 35 percent of its total trade number, according to Wang.Wang said that China will further increase the ratio of zero-tariff goods, relax market access for service trade and investment, actively participate in negotiations on new agendas such as the digital economy and environmental protection, and promote the construction of a new higher-level open economic system. Click here to read... [9]

Strategic

Pro-Trump mob storms Capitol, disrupting electoral count

Rioters loyal to U.S. President Donald Trump breached the Capitol building Jan 06, delaying a joint session of Congress to certify the Electoral College vote count for Joe Biden and sending legislators scrambling for cover. The meeting went into lockdown, and U.S. lawmakers were quickly evacuated from the congressional chamber. Vice President Mike Pence, who was presiding over the certification process, was rushed to safety. Footage from C-SPAN showed congressional staff and reporters holed up inside the Capitol building with doors barricaded.Guns were drawn and fired inside the chamber. A woman who was shot in the neck by Capitol police later died at a hospital, according to the Metropolitan Police Department, which said another three people died in separate "medical emergencies." Flash grenades and tear gas were used to disperse the mob gathered on the steps of the legislative body. The joint session of the Senate and House of Representatives to confirm the election result is required under federal law. The violent disruption of this meeting represents a major challenge to the democratic process. Click here to read... [10]

Chinese Communist Party to mark 100th anniversary in isolation

The Communist Party of China will commemorate its 100th anniversary in July, as the country largely succeeds in containing the coronavirus and experiences a robust economic recovery. But congratulatory remarks are hardly being heard from the rest of the world -- the CPC under the leadership of General Secretary Xi Jinping is reinforcing its one-party rule even at the risk of friction with foreign governments. The atmosphere in the Huairen Hall in Zhongnanhai, a former imperial garden in Beijing where top CPC leaders have their offices, was filled with tension on Dec. 24 and 25 when Xi, who also serves as president of China, gathered the CPC's 25 Politburo members there for a "Democratic Life Meeting" session. Such a meeting is not an occasion for party cadres to discuss problems in daily life in a democratic manner. It is a rather a gathering where participants criticize themselves as well as their superiors and colleagues and reportedly started by Mao Zedong to expose his political foes. Since taking the reins of China in 2012, Xi has placed emphasis on the meeting. The theme of the latest session was to "earnestly learn the thought of unique socialism in China in the new age of Xi Jinping." Click here to read... [11]

UK's Johnson delays India visit in setback for Indo-Pacific push

The U.K.'s coronavirus health crisis has compelled British Prime Minister Boris Johnson to call off a visit to India that was meant to advance the two countries' economic ties ahead of the Group of Seven summit. Johnson "spoke to Prime Minister [Narendra] Modi this morning, to express his regret that he will be unable to visit India later this month as planned," a Downing Street spokesperson said, adding that Johnson said "it was important for him to remain in the U.K. so he can focus on the domestic response to the virus." The British prime minister was to have been a guest of honour at India's Republic Day celebrations on Jan. 26. The trip was set to take place as Britain's attention turns to the Indo-Pacific region.Johnson's government has invited India, South Korea and Australia as "guest nations" to the G-7 summit that the U.K will chair this summer. This invitation is seen as confirming the U.K.'s Asian push and helping create a democratic coalition to check China's growing maritime presence. Johnson promised to make the trip to India in the first half of 2021. Click here to read... [12]

Iran says it started enriching uranium to 20%, drifting further away from US-violated nuclear deal

Iranian media reports that the country has started enriching uranium to 20 percent, implementing the latest deviation from the terms of the 2015 nuclear deal. Tehran began the drift a year after the US broke the agreement. The enrichment process began “hours ago,” government spokesman Ali Rabiei told the Mehr news agency on Jan 04, adding that the first portion of higher purity uranium hexafluoride will be coming from the centrifuges later in the day. The chemical is used in its gaseous forms to separate different isotopes of the metal before the fissile uranium-235 can be reprocessed into nuclear fuel. The decision to ratchet up uranium enrichment was approved by the Iranian parliament in December in an apparent response to the assassination of nuclear scientist Mohsen Fakhrizadeh. Iran intends to produce 120 kg of uranium enriched to 20 percent each year and store it domestically. Under the law, it may curtail international inspections in two months, further increasing pressure on European signatories of the 2015 nuclear deal. Washington claims the move brings Tehran closer to producing a nuclear weapon, an ambition that the Iranian government denies ever having. Click here to read... [13]

Gulf leaders sign agreement to end Qatar blockade

Saudi Arabia's Crown Prince Mohammed bin Salman said on Jan 05 that the Gulf states had signed an agreement on regional "solidarity and stability" at a summit aimed at resolving a three-year embargo against Qatar. "These efforts helped us reach the agreement of the Al-Ula statement ... where we affirm our Gulf, Arab and Islamic solidarity and stability," he said, thanking the United States and Kuwait for mediating. The US has been pressuring Doha and Riyadh to reconcile, fearing that Iran might take advantage of the feud. The de-facto leader of Saudi Arabia also pointed to Iran in his Jan 05 speech. "There is a desperate need today to unite our efforts to promote our region and to confront challenges that surround us, especially the threats posed by the Iranian regime's nuclear and ballistic missile program and its plans for sabotage and destruction," said Prince Mohammed bin Salman. Qatar's ruler, Emir Sheikh Tamim bin Hamad al-Thani, also attended the Gulf leaders' summit in the Saudi desert city of Al-Ula on Jan 05. The remaining members of the Gulf Cooperation Council — Kuwait, Bahrein, Oman, and the United Arab Emirates — also signed the document. The details of the deal were not immediately released to the public. Click here to read... [14]

Cooperation in public health to spearhead China's international efforts, rekindling US interest welcomed

Cooperation in public health will spearhead China's international cooperation in the coming years, Chinese analysts said, as a key white paper put helping countries to fight the COVID-19 virus as a top focus on Jan 10. The white paper recapped China's international development cooperation since 2013, which featured international cooperation under the China-proposed Belt and Road Initiative (BRI), China's contribution to the UN 2030 Agenda for Sustainable Development and the country's support for the endogenous growth of developing countries. By reaffirming that promoting a global human community of a shared future is the mission of China's international development cooperation, the white paper also stresses that South-South cooperation is the focus, and BRI cooperation is a major platform. The white paper emphasized safeguarding global health on top of its prospects for the future, noting that in 2020 China engaged in its most intensive and largest-scale emergency humanitarian assistance mission since 1949. The white paper said China will give $2 billion of international aid over two years to countries hard hit by COVID-19, especially developing countries, to support their fight against the virus and their efforts to resume economic and social development. Click here to read... [15]

US, Australia, UK, and Canada slam Hong Kong mass arrests

The foreign ministers of Australia, the United States, Britain and Canada expressed "serious concern" about the arrest of 55 pro-democracy activists in Hong Kong over the past weekin a joint statement released on Jan 10. The arrests were made on charges of "subversion" under Hong Kong's new national security law, which was passed in June. The people arrested were linked to an unofficial primary organized by pro-democracy parties ahead of legislative elections. The countries also criticized the national security law as: "a clear breach of the Sino-British Joint Declaration and undermines the 'One Country, Two Systems' framework." The Sino-British Joint Declaration, registered in 1985 with the UN, is a legally binding treaty. The new law "has curtailed the rights and freedoms of the people of Hong Kong," according to the joint statement. It is "being used to eliminate dissent and opposing political views," the statement continued. The governments also recommended that Legislative Council elections — scheduled for December — should be postponed until candidates with varying political opinions are included. Click here to read... [16]

Taiwan says relations with US elevated to 'global partnership'

The US lifting of restrictions on interactions with Taiwanese officials is a "big thing", Taiwan Foreign Minister Joseph Wu said on Jan 11, adding that the island's relations with the US have been elevated to a "global partnership". US Secretary of State Mike Pompeo announced the lifting of restrictions on Jan 09, in the waning days of the Trump administration ahead of Joe Biden assuming the US presidency on Jan 20. China, which claims democratic Taiwan as its own territory, has yet to formally respond, but the move is likely to increase Sino-US tensions as Biden prepares to take over. "This is a big thing for the elevation of Taiwan-US relations," Wu told reporters, expressing his "sincere gratitude" to the US government. "Taiwan-US relations have been elevated to a global partnership”. The foreign ministry will not let our guard down and hope to continue to boost the development of Taiwan-US ties." Although the United States, like most countries, has no official ties with Taiwan, it is bound by law to provide it with the means to defend itself and under President Donald Trump has ramped up arms sales and sent senior officials to Taipei. Click here to read... [17]

Taiwan's new passport hopes to banish confusion with China

Taiwan rolled out a newly redesigned passport on Jan 11 that gives greater prominence to the island's day-to-day name, aiming to avoid confusion with China amid the COVID-19 pandemic and Beijing's stepped-up efforts to assert sovereignty. Existing Taiwanese passports have "Republic of China", its formal name, written in large English font at the top, with "Taiwan" printed at the bottom, creating confusion internationally according to the government. During the early days of the pandemic Taiwan says some of its citizens were confused with Chinese nationals and on occasion unfairly subject to the same COVID-19-related entry bans when the disease was well under control in Taiwan though not in China. The new passport enlarges the word "Taiwan" in English and removes "Republic of China", though that name in Chinese and in small English font around the national emblem remains. China, referring to the new passports, has said it does not matter what "petty moves" Taiwan made, it would not change the fact that Taiwan was an inseparable part of China. Click here to read... [18]

North Korean leader seeks to build party-centred regime

According to the North's Korean Central News Agency (KCNA), Jan 11, the sixth-day session of the party's eighth congress, held on Jan 10, unanimously adopted a decision on electing Kim as the party's general secretary, the same title used by his father Kim Jong-il and his grandfather, national founder Kim Il-sung. Experts also noted the exclusion of Kim Yo-jong, the dictator's younger sister and the de facto No. 2 in the regime, from the list of alternate members of the party's political bureau is a matter of no great importance, adding she can come to the forefront at any time. In the previous party congress in 2016, Kim, who took power in 2011, was endorsed as party chairman from the party's first secretary."Kim had sought to consolidate his control of the party by using the title of chairman, a rare yet superordinate position to party general secretary. In fact, most socialist states, including China, do not use the chairman position," said Hong Min, a senior researcher at the state-run Korea Institute for National Unification. "However, now Kim is set to use a party-centred control system, making the party's ruling practices more functional in his rule, which looks more normal."Click here to read... [19]

US designating Yemen’s Houthis a ‘terrorist’ group

The United States will designate Yemen’s Houthi rebels as a terrorist group, Secretary of State Mike Pompeo said, a late term move that aid groups fear will worsen the world’s worst humanitarian crisis. With just 10 days left before President-elect Joe Biden takes office, the announcement on Sunday could complicate the new US administration’s efforts to restart diplomacy with Iran, which has ties to the Houthis and to reassess the US relationship with Saudi Arabia, which has led a brutal offensive in Yemen. “The designations are intended to hold Ansar Allah accountable for its terrorist acts, including cross-border attacks threatening civilian populations, infrastructure and commercial shipping,” Pompeo said in a statement, using the official name of the Houthi movement. It has led a campaign that has “killed many people, continues to destabilise the region and denies Yemenis a peaceful solution to the conflict in their country”, he added. Pompeo pointed to a December 30 attack on an airport in Yemen’s second city Aden, which killed 26 people and was blamed by the Saudi-backed government on the Houthis. The rebel group controls much of Yemen and is already under US sanctions. Click here to read... [20]

South Korean diplomat in Iran over seized ship, frozen funds

A South Korean diplomatic delegation arrived in Iran on Jan 10 to negotiate the release of a vessel and its crew seized by Iranian forces amid an escalating financial dispute between the countries, Iranian state-run media reported. The South Korean-flagged tanker seizure by Iran’s Revolutionary Guard in the crucial Strait of Hormuz came as Iranian officials have been pressing South Korea to release some $7 billion in assets tied up in the country’s banks due to American sanctions. It appeared the Islamic Republic was seeking to increase its leverage over Seoul ahead of South Korea’s pre-scheduled regional trip, which included a stop in Qatar. Iran maintains the tanker and its 20-member crew were stopped in the mouth of the Arabian Gulf because of the vessel’s “environmental pollution,” a claim rejected by the vessel’s owner. The crew, including sailors from Indonesia, Myanmar, South Korea and Vietnam, remain in custody at the port city of Bandar Abbas near the Strait of Hormuz. Click here to read... [21]

Kyrgyzstan populist tipped for easy win in presidential vote

Kyrgyzstan went to presidential polls Jan 10 in its first elections since a political crisis embroiled the ex-Soviet country and saw a populist freed from jail who is now tipped to top the ballot. Sadyr Japarov’s journey from prison to presidential frontrunner is an example of the dramatic changes in political fortunes in the Central Asian country that is both more unpredictable and pluralistic than its authoritarian neighbours. But critics of combative Japarov, 52, who became acting leader during the October unrest, fear his victory could tip Kyrgyzstan toward the strongman rule dominant in the ex-Soviet region.In addition to picking a new president Kyrgyz are choosing between parliamentary and presidential forms of government, with Japarov backing greater powers for the post he is seeking. With a threadbare economy battered by the coronavirus pandemic, Kyrgyzstan’s next leader is likely to be even more dependent on goodwill from allies Russia — a destination for hundreds of thousands of Kyrgyz migrants — and neighbouring economic giant China. Russian President Vladimir Putin recently described the overthrow of the previous government as a “misfortune.” Click here to read... [22]

Medical

Tokyo declares state of emergency over coronavirus case surge but promises 'safe and secure' Olympics

Japan’s PM has cited a “strong sense of crisis” while placing the Tokyo metropolitan area in a state of emergency over a resurgence of Covid-19 cases, even as the Japanese capital gears up to host the Olympics this summer. Prime Minister Yoshihide Suga has pledged to improve the coronavirus situation in one month, authorizing more robust measures on Jan 07 to fight a surge in infections. The announcement comes days after the prime minister's coronavirus expert panel recommended that a state of emergency should be declared and governors from the affected prefectures urged the central government to act, due to a spike in coronavirus cases in the Tokyo metropolitan area. The state of emergency will come into force on Jan 08, lasting until February 7, and will require residents to stay home. Restaurants and bars will close at 8pm, with department stores, gyms, and entertainment facilities working shorter hours. Employees will be encouraged to work from home to reduce the number of people in the office by 70 percent. It's the second declaration of emergency since April last year. Click here to read... [23]

EU member states cannot negotiate their own Covid-19 vaccine deals – von der Leyen

The European Commission’s president has warned EU member countries against ordering Covid-19 vaccines in side deals, saying it undermines the bloc’s own efforts to tackle the virus. Speaking on Jan 08, European Commission President Ursula von der Leyen said that the EU had ordered more than enough doses for everyone in the EU, as Brussels announced its purchase of another 300 million doses of the Pfizer jab. Von der Leyen took the opportunity to warn member states against making their own side deals with vaccine producers. “The only framework we are negotiating in is as 27. We do this together, and no member state on this legal binding basis is allowed to negotiate in parallel or to have a contract in parallel,” von der Leyen told reporters in Brussels. The whole portfolio covers 2.3 billion doses of vaccines, so this is more than enough to vaccinate the whole European population. The president’s comments follow considerable criticism that the EU has not ordered enough doses and rollout has been too slow. The EU’s vaccination program started on December 27, after the Pfizer vaccine was approved by Europe’s regulator. Click here to read... [24]

WHO team tasked with probing origins of Covid-19 set to arrive in China as country sees largest daily rise of cases in 5 months

An international team of experts from the World Health Organization is expected to arrive in China this week to investigate the origins of the coronavirus pandemic, as the country registers a sharp uptick in new cases. China’s National Health Commission announced on Jan 11 that the WHO team would begin its work in the country on January 14. The health authority did not elaborate on locations that the experts might visit or the activities they might carry out during their stay in China. The team was initially hoping to come to China in early January, but their plans were delayed as they waited to receive formal authorization from Beijing. Their expected arrival has coincided with a spike in new Covid-19 cases in China. China does not count asymptomatic cases in its total infection tally. The new cases were primarily from Hebei province, which surrounds Beijing. The daily total also included 18 “imported” cases from people arriving in China. Shijiazhuang, the capital of Hebei province and home to 11 million people, launched a mass testing drive last week and imposed restrictions on gatherings and movement as the city registered an increase in new cases. Click here to read... [25]

Can the second dose of the COVID-19 vaccine be delayed?

The second COVID-19 vaccination is meant to be administered three weeks after the first dose. Given the shortage of vaccine, the UK is delaying the second dose so that more people can receive a first dose earlier. The UK authorities consider that a delay of up to 12 weeks does not impact the effectiveness of the vaccines. The British initiative has triggered a lively debate in Europe. Expert opinions differ widely — which does not necessarily increase confidence in the newly developed vaccines. The only thing that is clear is that a second vaccination is absolutely essential because it triggers the necessary immune response, like a kind of booster. The European Medicines Agency (EMA), no longer responsible for the United Kingdom since Brexit, is sceptical of the decision. A maximum limit for the time interval between doses of the BioNTech-Pfizer vaccine is not explicitly defined, but the proof of efficiency is based on a study in which the doses were administered 19 to 42 days apart, according to EMA. Administration of the second dose after a six-month interval, for instance, would not comply with the regulations and would require an amendment to the authorization and more clinical data, the agency said. Click here to read... [26]