Global Developments and Analysis: Weekly Monitor, 03 August - 09 August 2020
Prerna Gandhi, Associate Fellow, VIF
Economic
China and Russia ditch dollar in move toward 'financial alliance'

Russia and China are partnering to reduce their dependence on the dollar -- a development some experts say could lead to a "financial alliance" between them. In the first quarter of 2020, the dollar's share of trade between Russia and China fell below 50% for the first time on record, according to recent data from Russia's Central Bank and Federal Customs Service. The greenback was used for only 46% of settlements between the two countries. At the same time, the euro made up an all-time high of 30%, while their national currencies accounted for 24%, also a new high. Click here to read....

1bn students affected by virus closures, UN chief Guterres says

UN Secretary-General Antonio Guterres said on Aug 04 that the coronavirus pandemic has led to the largest disruption of education in history. Schools were closed in more than 160 countries in mid-July, affecting over a billion students, according to the UN chief.He added that at least 40 million children worldwide have missed out on education “in their critical preschool year,” AP reports. Guterres warned that the world faces “a generational catastrophe that could waste untold human potential, undermine decades of progress, and exacerbate entrenched inequalities.” “We are at a defining moment for the world’s children and young people,” Guterres said in a video message and a policy briefing. Click here to read....

China passes US as world’s top researcher, showing its R&D might

China has outstripped the U.S. in putting out research papers in the natural sciences, data released on Aug 07 shows, further illustrating its emerging dominance in scientific investigation. China now owns the top share of scientific papers at 19.9%, while the U.S. comes in second at 18.3%. Between 2016 and 2018, China published an average of 305,927 papers, topping the 281,487 papers released by the U.S. Germany ranks third at 67,041 papers, equating to a 4.4% share. Japan's National Institute of Science and Technology Policy compiled the numbers using data provided by U.S.-based Clarivate Analytics. Because the publication of papers fluctuates from year to year, the numbers are presented as averages over three years. Looking at the top 1% of cited research papers, the U.S. was responsible for 29.3%, with China issuing 21.9%.Click here to read....

Chinese analysts lambast Pompeo’s expanded ‘clean network’

The US State Department, headed by Secretary of State Mike Pompeo, unveiled on Aug 05 (US time) a five-pronged approach to extend its so-called "clean network," which basically means telecom networks will be stripped of anything Chinese. In the new five-point expansion, the US department hopes that efforts can be made to remove Chinese mobile apps from Apple and Android app stores; Huawei smartphones will be prohibited from pre-installing popular US apps; and cloud services offered by Chinese internet giants Alibaba, Baidu, and Tencent will be discouraged. Chinese telecom carriers doing businesses in the US and Chinese-invested undersea cables are also being targeted, though the two sectors have been subjected to US crackdowns previously. Tencent, China Mobile and China Telecom declined to comment when reached by the Global Times. Click here to read....

Microsoft’s Talks to Buy TikTok’s U.S. Operations Raise Ire in China

Washington’s ultimatum to the Chinese owner of TikTok—sell the app’s U.S. operations or leave the country—is hardening long-held suspicions in China that the U.S. aims to sabotage the country’s efforts to grow its technology, while raising concerns about the precedent it could set for Chinese companies with global ambitions as U.S.-China relations unravel. After months in which TikTok owner Bytedance Ltd. fought to appease the Trump administration, Washington’s push for Bytedance to sell TikTok’s U.S. operations to Microsoft Corp. means China will likely lose control over its first true global internet sensation—one with ambitions of becoming a top-tier global technology giant—in its most important market.Turning over the U.S. operations to Microsoft would also likely ripple across other Chinese internet companies that have harboured global aspirations, like Alibaba Group Holding Ltd. and Tencent Holdings Ltd., whose mobile app WeChat has been mentioned by top U.S. officials as a potential target. Click here to read....

Chinese artificial intelligence company files $1.4 billion lawsuit against Apple

Chinese artificial intelligence company Shanghai Zhizhen Intelligent Network Technology Co., also known as Xiao-i, has filed a lawsuit against Apple, calling for $1.43 billion in damages and demands. Xiao-i argued that Apple’s voice-recognition technology Siri infringes on a patent that it applied for in 2004 and was granted in 2009. Apple did not respond to a request for comment. Reuters was not immediately available to find a copy of the court filing. The lawsuit marks the continuation of a row that has been ongoing for nearly a decade. Shanghai Zhizhen first sued Apple for patent infringement in 2012 regarding its voice recognition technology. In July, China’s Supreme People’s court ruled that the patent was valid. Click here to read....

Samsung to end Chinese PC production as costs soar

Samsung Electronics will end Chinese personal computer production as it looks to shift production to Vietnam to cut costs and remain competitive in the PC business. The plant in the city of Suzhou will close as soon as this month and convert part of the facility into a research and development center. Samsung informed employees of the factory stoppage and job cuts at the end of July. The South Korean tech group looks to shift production to an existing factory in Vietnam. A spokesman said the decision to shut the Chinese plant was based on the need to find a cost advantage. Samsung once operated three smartphone factories in China, but the group shut down all Chinese production at the end of 2019. Click here to read....

TPP members agree to bolster digital rules, supply chains amid virus

The 11 members of the trans-Pacific free trade pact agreed on Aug 06 to take the lead in global rule-making for the digital economy and bolster efforts to make resilient supply chains amid the novel coronavirus pandemic.The delegates agreed to work toward setting up a subsidiary body dedicated to addressing the use of digital technologies, which have been increasingly utilized in the wake of the pandemic. Multilateral regulation of the digital economy has been discussed at the World Trade Organization, but a consensus is yet to be reached. Countries remain divided due to differences over consumer privacy protection and restrictions on the transfer of data across borders. Click here to read....

Robots Running the Industrial World Are Open to Cyber Attacks

According to a new report entitled “Rogue Automation,” some robots have flaws that could make them vulnerable to advanced hackers, who could steal data or alter a robot’s movements remotely, like a scene out of science fiction. Robots are often connected to networks and run via software, according to the report, and previously unknown vulnerabilities could allow hackers to hide malicious code in them and other automated, programmable manufacturing machines. The researcher found flaws in software produced and distributed by the Swedish-Swiss multinational ABB Ltd, one among world’s largest industrial robot maker. They also found other vulnerabilities in one of industry’s most popular open-source software called “Robot Operating System Industrial”, or Ros-I, adapted for ABB and for Kuka AG, a German robot maker. Click here to read....

Lebanon's battered economy dealt fresh blow after port blast hits 'Achilles heel'

Lebanon’s economy, already sinking before the explosion that knocked out its main port, could now shrink by double the rate previously forecast for this year, making it even harder to secure the financing the country needs to get back on its feet. Economists say the Aug 04 blast, which also damaged large parts of commercial Beirut, could lead to a GDP contraction of around 20-25% this year - far beyond the IMF’s recent forecast for a 12% decline due to a deepening economic and political crisis. Lebanese officials have estimated losses due to the blast, which killed 150 people, left thousands injured and rendered tens of thousands homeless, could run into billions of dollars. A financial crisis had already led Lebanon to enter negotiations with the International Monetary Fund in May this year after it defaulted on its foreign currency debt, but those talks were put on hold in the absence of reforms. Click here to read....

US blasts Houthis over ‘ticking time bomb’ tanker in Red Sea

The US blasted Iran-backed Houthi militias in Yemen on Aug 09 for reneging on a deal to allow UN teams to board a rusting oil storage vessel that threatens an environmental disaster in the Red Sea. The FSO Safer has been moored 7 km off the coast of Yemen since 1988. It fell into Houthi hands in March 2015, when they took control of the coast around the port city of Hodeidah. The Houthis briefly bowed to pressure last month and agreed to allow a team of UN engineers to visit the ship, before changing their minds and restating their previous demands for the revenue from the oil. As the vessel’s condition deteriorates there are fears that the 1.4 million barrels of oil it contains will start to seep out. Click here to read....

U.S., Chinese Officials to Meet Aug. 15, Assess Trade Deal

The U.S. and China have agreed to high-level talks on Aug. 15 to assess Beijing’s compliance with the bilateral trade agreement signed early this year, according to people briefed on the matter. The trade pact has emerged as one of the few remaining avenues for the two countries to engage on matters of mutual concern. Relations have deteriorated in recent months, with the Trump administration hammering Beijing over the coronavirus outbreak, Hong Kong and the treatment of Uighurs in western China. U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, President Xi Jinping’s point man on economic policies, will participate in the talks, likely via videoconference, the people said. Click here to read....

Strategic
US health chief offers Taiwan 'strong' support in landmark visit

U.S. Health Secretary Alex Azar offered President Donald Trump's strong support for democratic Taiwan on Aug 10, telling President Tsai Ing-wen that her government's response to the coronavirus pandemic had been among the world's best. Azar arrived in Taiwan on Aug 09 as the highest-level U.S. official to visit in four decades, a trip condemned by China which claims the island as its own, further irritating Sino-U.S. relations. China has promised unspecified retaliation to Azar's trip. Azar's visit was facilitated by the 2018 passage of the Taiwan Travel Act, which encouraged Washington to send higher-level officials to Taiwan after decades during which such contacts were rare. Click here to read....

Japan to lead first cyber defense drill with ASEAN, US and Europe

Japan, the U.S., European countries and the Association of Southeast Asian Nations will join forces for a digital defense exercise, set to take place as early as this autumn, to prepare for possible cyber attacks on critical infrastructure. The joint international exercise would involve over 20 countries, including the U.S., UK, France, and the 10 ASEAN members. It will mark the first cyber defense drills of this scale organized by the Japanese government. The coordinated effort comes as the coronavirus pandemic and upcoming elections create opportunities for hacking and disinformation campaigns, with the U.S. and other countries accusing Chinese and Russian groups of supporting these activities. Click here to read....

China hopes U.S. will cooperate to create favourable conditions for trade deal, says top diplomat

China urges the United States to strengthen cooperation so as to create favourable conditions for the implementation of the phase one trade deal, said its top diplomat Yang Jiechi on Aug 07. Yang, in an essay published on China’s foreign ministry website, also urged the United States to stop “bullying” Chinese firms and to create a fair, open, non-discriminatory environment for them, in an apparent reference to an impending U.S. ban on transactions with the Chinese owners of messaging app WeChat and video-sharing app TikTok. “Military ties should become the stabilising factor for bilateral relations,” wrote Yang. Click here to read....

US sanctions pro-China leader of Hong Kong, other officials

The U.S. on Aug 07 imposed sanctions on Hong Kong officials, including the pro-China leader of the government, accusing them of undermining autonomy and restricting freedom of expression and assembly in the former British colony. The Treasury Department announced sanctions on Carrie Lam, the leader of the government in Hong Kong, and 10 other officials. The sanctions are the latest in a string of actions the Trump administration has taken targeting China as tensions between the two nations rise over trade disputes and the coronavirus. Click here to read....

US to cut troop presence in Afghanistan to ‘less than 5,000’ by November, Pentagon chief Esper says

The number of US forces stationed in Afghanistan will be reduced to less than 5,000 in the coming months, US Defense Secretary Mark Esper said in an interview with Fox News. The withdrawal, which would account for around half of the 8,600 personnel in the country, will be completed by November, he said. “Right now we think that we can do all the core missions – first and foremost ensuring the United States is not threatened by terrorists coming out of Afghanistan – we can do those at a lower level,” he told Fox News’ Judge Jeanine. US President Donald Trump said earlier this week that he wanted to cap US troop presence in Afghanistan at 4,000. Click here to read....

Afghan president to sign release of Taliban prisoners, peace talks expected in days

Long-awaited peace negotiations between the Afghan government and the Taliban were expected to start in Qatar within a week once the final batch of Taliban prisoners were released, the U.S. special envoy and Afghan government sources said on Aug 10.The government accepted the advice of a loya jirga, a grand assembly of elders, on Aug 09 to release 400 “hard-core” Taliban prisoners, paving the way for talks aimed at ending a war that has ground on since U.S.-backed Afghan forces ousted a Taliban government in late 2001.“We are ready to sit for talks within a week from when we see our prisoners released. We are ready,” Taliban spokesman, Suhail Shaheen, told Reuters on Aug 10. Click here to read....

GCC unites to seek U.N. extension of Iran arms embargo

The six-member Gulf Cooperation Council (GCC) has asked the United Nations to extend an international arms embargo on Iran, a move pushed strongly by the United States. The secretariat of the GCC, made up of Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates and Saudi Arabia, said in a statement on Aug 09 that Iran’s continued interference in neighbouring countries made an extension necessary. The arms embargo on Iran is currently set to end on Oct. 18 under Tehran’s 2015 nuclear deal with world powers, which Washington quit in 2018. Click here to read....

Sri Lanka president, brother tighten grip with big election win

Sri Lanka’s parliamentary elections handed President Gotabaya Rajapaksa and his older brother an overwhelming majority, results showed on Aug 07, giving the family power to enact sweeping changes to the constitution of the island nation. Rajapaksa had sought, and achieved, a two-thirds majority for his Sri Lanka Podujana Peramuna party and its allies to be able to restore full executive powers to the presidency, a move analysts say could push the country toward authoritarianism. The ruling group won 150 seats in the 225-member parliament according to a tally published by the election commission from Aug 05 vote. Click here to read....

Oil spill threatens ecological disaster as Mauritius declares emergency

Fuel spilling from a Japanese bulk carrier that ran aground on a reef in Mauritius two weeks ago is creating an ecological disaster, endangering corals, fish and other marine life around the Indian Ocean Island, officials and environmentalists say. The MV Wakashio, owned by the Nagashiki Shipping Company, struck the reef on Mauritius’ southeast coast on July 25. On Aug 06, the government said fuel was leaking from a crack in the vessel’s hull and Prime Minister Pravind Kumar Jugnauth declared a state of environmental emergency, pleading for international help. Satellite images released on Aug 07 showed a slick spreading out into the turquoise waters surrounding the stricken vessel. Some fuel has washed ashore. Click here to read....

Pakistan approves most expensive China-aided project to date

Pakistan’s top economic body on Aug 05 approved its costliest project to date as part of the multibillion-dollar China-Pakistan Economic Corridor (CPEC) agreement, giving the go-ahead for a $6.8 billion project to upgrade its railway lines, the government said. On a cost-sharing basis between Islamabad and Beijing, Pakistan’s existing 2,655km railway tracks will be upgraded to allow trains to move up to 165km per hour - twice as fast as they currently do - while the line capacity will increase from 34 to over 150 trains each way per day. “The execution of the project shall be in 3 packages and in order to avoid commitment charges, the loan amount for each package will be separately contracted.” Click here to read....

Medical
City in China's Inner Mongolia issues warning after bubonic plague patient dies

Authorities in a city in the Chinese region of Inner Mongolia issued a warning after a patient who had bubonic plague died of multiple organ failure; state media reported on Aug 08.Cases of plague are not uncommon in China, although outbreaks have become increasingly rare. From 2009 to 2018, China reported 26 cases and 11 deaths. The patient was confirmed to have bubonic plague, the People's Daily reported, citing an announcement from the health committee of the Bayan Nur city. The bubonic plague, known as the "Black Death" in the Middle Ages, is a highly infectious and often fatal disease that is spread mostly by rodents. The committee issued a third-level alert, the second lowest in a four-level system, effective Aug 07 to the end of 2020 to prevent the spread of the disease, the People's Daily reported. Click here to read....

Germany and France quit WHO reform talks amid tension with Washington - sources

France and Germany have quit talks on reforming the World Health Organization in frustration at attempts by the United States to lead the negotiations, despite its decision to leave the WHO, three officials told Reuters. The move is a setback for President Donald Trump as Washington, which holds the rotating chair of the G7, had hoped to issue a common roadmap for a sweeping overhaul of the WHO in September, two months before the U.S. presidential election. The talks on WHO reform began about four months ago. There have been nearly 20 teleconferences between health ministers from the Group of Seven industrialised nations, and dozens of meetings of diplomats and other officials. Click here to read....

Pfizer to make Gilead's COVID-19 treatment remdesivir

Pfizer Inc said on Aug 07 it signed a multiyear agreement to make COVID-19 treatment remdesivir for developer Gilead Sciences Inc (GILD.O), which is under pressure to increase tight supplies of the antiviral drug. Gilead is aiming to make enough of the drug by the end of the year to treat more than 2 million COVID-19 patients and agreed to send nearly all of its remdesivir supply to the United States through September.But hospital staffers and politicians have complained about difficulties in gaining access to the drug, which is one of only two to have demonstrated an ability to help hospitalized COVID-19 patients in formal clinical trials. There are also fears of shortages outside the United States, and separately on Friday, Britain’s Hikma Pharmaceuticals Plc (HIK.L) said it has started manufacturing remdesivir at its Portugal plant. Click here to read....

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