Global Developments and Analysis: Weekly Monitor, 26 December - 01 January, 2023
Prerna Gandhi, Associate Fellow, VIF
Economic
China to reopen border Jan. 8, requiring only negative COVID test

China will reopen its border to international travellers on Jan. 8, after the country made an abrupt U-turn on its COVID-19 containment policies earlier this month. The National Health Commission announced the decision late on Dec 26. Inbound passengers will only be required to present a negative test result obtained within 48 hours of boarding. As long as their health declarations are normal and they show no signs of illness in a "routine check-up" while clearing customs, they will not be subject to any special restrictions while in the country. The NHC said mass PCR testing upon arrival and centralized quarantine will be scrapped. So too will restrictions on international flights, such as the "Five-One" policy -- a rule under which a single country can only send one flight from one airline via one route once per week. In-flight masks will still be required. China will gradually reopen its water and land ports, too, the NHC said. And restrictions on outbound travel will be eased: The NHC said citizens will be allowed to go abroad "in an orderly manner." In the past three years, China has imposed a de facto ban on citizens traveling abroad for "nonessential" reasons, while refusing to replace expired passports. The shift could have a major impact on an international travel market that has been missing Chinese tourists and their cash. Click here to read...

Alibaba, Tencent lay-offs burst property bubbles in headquarters cities of Hangzhou, Shenzhen, sending prices plunging

A wave of job cuts among China’s giant technology companies has sent the home market reeling in neighbourhoods where waves of tech professionals – flush with high salaries and housing perks – drove prices upwards in recent years. Areas in Hangzhou and Shenzhen, home to China’s biggest enterprises such as Alibaba Group Holding, Tencent Holdings, and Huawei Technologies Co, once seemed impervious to the troubles that have plagued the broader housing market in China over the last couple of years. For example, proximity to Alibaba’s headquarters made Future Science Town in Hangzhou’s Yuhang district a property hotspot in the city in recent years, despite its location 45 minutes by subway from the city centre.But home prices have plunged in the area since June, linked to massive lay-offs at Alibaba, which let about 10,000 employees go in the second quarter, according to financial reports. Second-hand home prices in Yuhang district dropped by about 15,000 yuan (US$2,150) in the last several months, two local agents told the Post, citing the job cuts as one factor. Home prices in one prime neighbourhood once hit 83,000 yuan per square metre, but the figure fell nearly 28 per cent to 60,000 yuan in 2022, according to a local agent website. Meanwhile, the volume of second-hand homes listed for sale on one property-agent website increased for the ninth consecutive month in September. Click here to read...

Former PBOC official says China's digital yuan is little used - Caixin

China's central-bank digital currency is little used, a former official of the People's Bank of China (PBOC) said on Dec 28, financial news outlet Caixin reported. Expressing disappointment with the result of a trial in select provinces and cities, the former official, Xie Ping, told a conference that application of the so-called digital yuan needed to be widened. "The cumulative circulation of the digital yuan in the two years of the trial has been only 100 billion yuan ($14 billion)," he said. The figure showed that "usage has been low, highly inactive." "The results are not ideal," Xie, a former PBOC director-general of research, said at the conference on digital finance held by Tsinghua University, according to Caixin. Central bank digital currencies are digital tokens, similar to cryptocurrencies, issued by central banks. China has been a leader among several countries that are developing the new means of exchange. "What needs to change is the digital yuan acting only as a substitute for cash and only for consumption," Xie said. "Cash, bank cards and China's third-party payment mechanisms have formed a payment market structure that has met needs for daily consumption," he said. "The common people are used to it, and changing it is difficult."Digital-yuan business had no synergistic effect and no commercial benefits in banks' business, he said. Click here to read...

2022 to be remembered as the year that China's population peaked and its demographic crisis began

The year 2022 has been notable for many things, one of them being the "official" peak of China's population size. From this year onwards, the total number of people in China will gradually become smaller annually. During the over three decades that Beijing's ruthless one-child policy was enforced, the target was simply to bring down the size of the population and slow its growth. China has now reached the goal, but there is little reason to celebrate. By the government's own estimates, its infamous family planning policy had reduced the number of births by 400 million. In other words, had China not imposed forced sterilization, hefty fines on "additional births", and years of propaganda about the merits of having one child only, the nation would now have hundreds of millions more citizens aged between 10 and early 40s ― the sons and daughters, brothers and sisters, nephews and nieces of countless families. To be sure, with or without an extreme birth control policy, the demographic structure in China will still change, with fewer babies and more pensioners, as a result of longer life expectancy, increased income levels, improved female education, and shifting lifestyle among the younger generation - just like how it is in developed countries. But China's family planning policy has quickened the process and brought forward the challenges, forcing the country to deal with a population that is "getting old before getting rich".Click here to read...

Chinese companies find Swiss listing haven amid U.S. pressure

Chinese companies have found a new foreign listing venue in Switzerland as mounting regulatory pressure from the U.S. forces many to reassess their ties to Wall Street. Since the new Swiss listing mechanism kicked off five months ago, nine mainland Chinese enterprises have gone public in Zurich raising a total of $3.15 billion, far exceeding the amount raised in the American equity market in 2022. The latest to list on the Swiss Exchange, or SIX, was Jiangsu Eastern Shenghong, a private chemical product manufacturer, on Wednesday. The company raised $718 million in the Swiss market's largest initial public offering of 2022. "This is a crucial step in the company's move toward international development," Jiangsu Eastern said in a statement issued following its Swiss listing. The company said it intended to enhance its production capacity and "entice global investors and accumulate capital for global expansion." Under a "China-Switzerland Stock Connect" that took effect around the end of July, companies traded on the exchanges in either country could choose to seek secondary listings on the other side by issuing global depositary receipts, or GDRs. So far, Chinese companies including lithium battery producers Gotion High-Tech and Sunwoda Electronic, medical device maker Lepu Medical Technology Beijing, and hand tool manufacturer Hangzhou Great Star Industrial have listed in SIX. No European-listed companies have used the system to list either in Shanghai or Shenzhen to date. Click here to read...

1 year on, EU alternative to China’s belt and road fails to deliver

In December 2021, European Commission President Ursula von der Leyen stood on a Brussels podium and confidently announced that the European Union’s new infrastructure drive would be a “true alternative” to China’s Belt and Road Initiative. “We are able to do that. Countries made their experience with the Chinese investments. They need better and different offers,” she said of Global Gateway, a spending drive that promised to mobilise up to €300 billion (US$318 billion) by 2027 for modern infrastructure projects outside the EU. With some blowback forming towards China’s trillion-dollar plan to connect China with the rest of the world after high-profile allegations of “debt-trap diplomacy”, both Europe and the United States were positioning to offer a different model, grounded in democratic norms, transparency of funding, and with sustainable objectives. But one year on, observers are growing increasingly sceptical about von der Leyen’s claims. So far, Global Gateway has delivered plenty of hype, but little in terms of concrete projects, while confusion reigns in Brussels and beyond about what the initiative actually is. At a hearing in the European Parliament last month, lawmakers pressed officials for details, only to learn that none of the €300 billion would be “new”. “Global Gateway does not bring new financial means – there is no additional money when it comes to the EU level,” said Vincent Grimaud, an acting director in the commission’s department for international partnerships. Click here to read...

Cryptocurrency markets are primed for contagion

Financial contagions can be triggered easily, if conditions are right. First one financial institution falls and then others follow, like a chain of falling dominoes. The cinder that sparked the global financial crisis in 2007 is considered by many to have been a March 14 briefing by executives of the Lehman Brothers’ investment bank. Under intense questioning from financial analysts, the executives admitted the bank had overstated the value of billions of dollars in subprime mortgages. This news saw the Lehman Brothers stock price crash, and led to investors losing faith in the entire edifice of complex financial deals that had been so profitable for banks and brokers. As share prices fell, more investors scrambled to sell their stock, driving prices even lower. The contagion spread through global share, property and derivative markets. Of course, it was a crisis waiting to happen. It took years to create the rickety system that collapsed under pressure. It was going to happen sooner or later. But it still needed a trigger. We’re at a similar point in cryptocurrency markets. 2022 has seen several major crypto-related collapses. In May the Terra/Luna cryptocurrency, considered a reputable stablecoin with a total market cap of US$31 billion in April, was wiped out. In July the US-based crypto-currency lender Celsius, with assets valued at US$12 billion in May, went bankrupt. Click here to read...

Japan insurers to continue maritime war insurance in Russia

Japanese insurers will continue covering ships sailing through Russian waters against war damage in January and beyond, reversing an earlier decision to halt coverage, Nikkei learned Dec 29. Tokyo Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance had started informing clients on Dec. 23 that they would stop offering war risk coverage in Russian waters starting Jan. 1, after Western reinsurers withdrew coverage in Russia and Ukraine. Ships need this additional layer of coverage in order to sail through areas where they could suffer damage from acts of war. Japan's Agency for Natural Resources and Energy as well as the Financial Services Agency had urged insurers to reverse their decision, given its potential impact on liquefied natural gas imports from the Sakhalin-2 project in the Russian Far East. After renegotiations, Japanese insurers are set to continue providing up to around 8 billion yen worth ($59.7 million) of coverage, and overseas reinsurances worth up to another 22 billion yen. The combined figure of 30 billion yen represents less than half the current underwriting capacity of around 67 billion yen. The number of vessels that can be insured at once is also expected to halve, which could force shipping companies to reduce shipments. Click here to read...

Big Banks Predict Recession, Fed Pivot in 2023

Big banks are predicting that an economic downturn is fast approaching. More than two-thirds of the economists at 23 large financial institutions that do business directly with the Federal Reserve are betting the U.S. will have a recession in 2023. Two others are predicting a recession in 2024. The firms, known as primary dealers, are a collection of trading firms and investment banks that include companies such as Barclays PLC, Bank of America Corp., TD Securities and UBS Group AG. They cite a number of red flags: Americans are spending down their pandemic savings. The housing market is in decline, and banks are tightening their lending standards. “We expect a downturn in global GDP growth in 2023, led by recessions in both the U.S. and the eurozone,” economists at BNP Paribas SA wrote in the bank’s 2023 outlook, titled “Steering Into Recession.” The main culprit is the Federal Reserve, economists said, which has been raising rates for months to try to slow the economy and curb inflation. Though inflation has eased recently, it is still much higher than the Fed’s desired target. The Fed raised rates seven times in 2022, pushing its benchmark from a range of 0% to 0.25% to the current 4.25% to 4.50%, a 15-year high. Officials signalled in December that they plan to keep raising rates to between 5% and 5.5% in 2023. Click here to read...

Tourism and Manufacturing Fight for the Future of Power in Europe

Europe’s plans to install wind and solar power are accelerating in the wake of the invasion of Ukraine, which drove up natural-gas prices sharply. They’re running into opposition from residents and officials who say a wave of new projects will harm the region’s landscapes, cultural sites and valuable tourism industry. European Union governments have been replacing coal-generated electricity with natural gas and renewables such as wind and solar in recent years to cut emissions. Still, bureaucratic hurdles and local opposition meant projects take years to complete. In 2021, the bloc’s executive arm proposed a major expansion of renewable energy over the next decade, from around 20% to 40% of the EU’s total energy consumption by 2030. Russia’s invasion of Ukraine, which more than tripled natural-gas prices last summer compared to before the war, led the EU to raise that target to 45%. France, Germany, Spain and other governments in Europe are passing legislation that would declare renewable energy an overriding public interest, sweeping aside obstacles that have slowed wind and solar investment and reducing the power of interest groups to delay or block projects. High energy prices have already forced the closure of scores of factories that form the region’s industrial backbone and employ tens of thousands. Many more are at risk, threatening the supply chains of auto makers, aerospace firms and other industrial giants. Click here to read...

How Ghana, Africa’s rising star, ended up in economic turmoil

Ghana, a country once described as Africa’s shining star by the World Bank, had the world’s fastest-growing economy in 2019 after it doubled its economic growth. But today, it is no longer the economic poster boy of West Africa. Despite being a major cocoa and gold exporter, it is currently battling its worst financial crisis in decades with inflation hovering at a record 50.3 percent, the highest in 21 years. Ghana’s economic successes were in the limelight when the new government of President Nana Akufo-Addo took power in January 2017 and brought down inflation significantly. Under the previous government in 2016, it was 15.4 percent, and it fell to 7.9 percent by the end of 2019 and remained in single digits until the pandemic hit in March 2020. Ghana’s budget deficit, which was about 6.5 percent of the nation’s gross domestic product before Akufo-Addo’s government came to power, was brought down to under 5 percent of GDP by the end of 2019. “The growth that we experienced around 2017 to 2019 was actually coming from the oil sector,” Daniel Anim Amarteye, an economist with the Accra-based Policy Initiative for Economic Development, told Al Jazeera. “We were so excited that the economy was growing, but we couldn’t devise strategies to ensure that the growth reflects in the other sectors of the economy,” he said. “For instance, we neglected the agriculture sector, and we couldn’t do any meaningful value-added investment in that sector. The government became complacent.” Click here to read...

The U.S. And China Are Rushing To Secure Resources in DR Congo

As the US intensifies its efforts to cut China off from advanced semiconductors, it is also making a run at the world’s most important source of minerals used in tech: the Democratic Republic of Congo (DRC). The DRC is sometimes called the “the Saudi Arabia of the electric vehicle age” because it produces roughly 70 percent of the world’s cobalt, which is a key component in the production of lithium-ion batteries that power phones, computers, and electric vehicles. Electric vehicle sales are predicted to grow from 6.5 million in 2021 to 66 million in 2040. The DRC is also Africa’s largest copper producer with some of the mines estimated to contain grades above 3 percent, significantly higher than the global average of 0.6 – 0.8 percent. It also has 70 percent of the world’s coltan, which is also critical to cell phone and computer manufacturing. All in all, it is estimated that the DRC has $24 trillion worth of untapped mineral resources. On Dec.13, the US signed deals with the DRC and Zambia (the world’s sixth-largest copper producer and second-largest cobalt producer in Africa) that will see the US support the two countries in developing an electric vehicle value chain. US Secretary of State Antony Blinken said the US Export-Import Bank and the International Development Finance Corporation will explore financing and support mechanisms, and the US Agency for International Development, commerce department and Trade and Development Agency will provide technical assistance. Click here to read...

Analysts Predict 1 Million Bpd Drop in Russian Crude Output

The European Union’s ban on Russian oil products set to come into force on February 5 could lead to a 1 million barrel per day drop in Russian crude oil output for the New Year, commodity analysts for UBS told Insider on Jan 02. "We expect the European ban on seaborne Russian crude and refined products (to come into force on February 5) to result in a drop of Russian production of at least 1 million barrels per day in 2023, with Russia having difficulties in finding alternative markets," UBS’ Giovanni Staunovo, told Insider. While Russia has been rerouting crude volumes to Asia, traders are finding it increasingly challenging to secure the necessary insured vessels to carry sanctioned Russian crude. As of the first week of December, Moscow was sending nearly 90% of its crude to Asia. Moscow has also warned it could cut production by up to 700,000 bpd as it responds to the $60/barrel price cap on its oil implemented by the G7 in December. Another analyst, Saxo Bank’s Ole Hansen, told Insider that global supplies will experience more tightness, leading oil prices to top $100 bpd this year, once Chinese demand improves. Russia boasts the world’s third-largest refining industry, and the EU ban that goes into effect on February 5 is expected to have a fairly significant impact. According to Energy Intelligence, Russian refineries are already struggling with a labour shortage due to conscription for Putin’s war on Ukraine. Click here to read...

Russian oil products refined abroad exempt from price cap – US Treasury

Seaborne deliveries of Russian petroleum products that are ‘substantially transformed’ outside Russia will not be subject to a price cap, the US Treasury Department said in preliminary guidance on the measure on Dec 30. The cap on Russian oil products is set to come into force on February 5. In order to be exempt from the price limit, Russian oil products must undergo one of a number of processes abroad, according to the document. These include distillation, thermal or fluid coking, catalytic cracking, hydro-treating, de-waxing, as well as other refinery processes involving chemical transformation, separation, conversion, or treatment. Previously published guidance confirmed that the same exemption applies to Russian oil if it undergoes deep refining outside of the country. “Once Russian petroleum products or Russian oil are substantially transformed… in a jurisdiction other than the Russian Federation, they are no longer considered to be of Russian Federation origin, and thus the price cap no longer applies,” the document states. It noted, however, that blending operations, including gasoline, distillate and crude blending, would not be considered “substantial transformation” and therefore oil products resulting from them would still be subject to the price cap. The US Treasury Department has not yet provided specific figures for the price cap on Russian oil products. The price ceiling on Russian oil was set at $60 a barrel, but may be revised depending on market conditions. Click here to read...

Russian space agency outlines goal for ISS

Russia’s Roscosmos is interested in remaining involved in the International Space Station (ISS) project after 2024, a top official has said. The space agency is now working on government approval of the decision. The International Space Station was launched in 1998, with plans to remain in orbit until 2024. NASA had previously announced that it intended to prolong the run of the aging station until 2030. But the new head of Roscosmos, Yury Borisov, previously indicated that Russia would consider withdrawing from the project after its initial expiration date in 2024 and begin its own national space station. The Russian space agency later clarified that it wasn’t going to make any “abrupt” moves, instead thoroughly considering the decision on a possible pullout. Sergey Krikalev, the head of the agency’s human spaceflight programs, said on Dec 27 that Roscosmos had been considering prolonging its participation in the ISS project for at least another four years. “For such a decision to be made [by Russia], we’ve sent the relevant papers to the government, offering to continue the mission of the station,” he pointed out. The authorities in Moscow have now asked the agency to provide additional materials proving the technical possibility of prolonging the ISS project and agreeing the move with other involved ministries, the head of the human spaceflight programs added. Click here to read...

Strategic
Chinese military short of troops trained in hi-tech operations, PLA Daily reveals in rare show of candour

The vice-captain of a warship has yet to complete a key training test, China’s military has revealed, in an indirect but rare acknowledgement of its shortage of highly skilled troops. The admission, in a recent media report, highlights a core problem as China speeds up the modernisation of the People’s Liberation Army – a lack of hi-tech expertise limiting state-of-the-art equipment from use to its full extent, especially in the navy. The vice-captain of the Zhangye – a Type 056 corvette – had not completed an important training assessment, military mouthpiece PLA Daily said in a report last week. While the report did not specify when the assessment had been due, it said the delay was caused by either ship maintenance or scheduling conflicts. The vice-captain, named in the report as Wang Yubing, is but one of several naval soldiers whose training has been held up.This has left the PLA Navy short of adequately skilled personnel to operate newly enlisted ships and hi-tech hardware, a situation framed by the report as “equipment awaiting talent”. “In recent years, as new warships have been commissioned and old ships retired, the problem of ‘equipment awaiting talent’ has become increasingly severe,” said the report, published on December 26. “In particular, due to a training resources imbalance, it is difficult to organise the training of some commanders and key soldiers systematically; and it is difficult to organise the final training assessments as scheduled.” Click here to read...

Chinese military drone flies near Japanese islands, prompting Tokyo to scramble fighter jets

The Japanese defence ministry said it spotted a Chinese military drone flying over waters between the islands of Okinawa and Miyakojima in southwestern Japan on New Year’s Day. The unmanned reconnaissance aircraft, which Tokyo identified as a WZ-7 drone, flew from the East China Sea, passing between the Japanese islands on its way towards the Pacific Ocean, then circled back via the same route as it headed west, the ministry said on Jan 01. While the drone did not enter Japanese airspace, Japan’s Air Self-Defence Force scrambled its fighter jets in response. “It was the first sighting of that type of drone around Japan … [and] it is the fourth type of Chinese military drone ever spotted,” Japanese defence ministry officials were quoted as saying by NHK. The ministry added that it would continue patrolling and surveillance as it was believed the Chinese military could be using drones in an effort to increase its operational capabilities. Tokyo’s ties with Beijing faltered last year amid differences over Taiwan and disputes in the East China Sea, which is home to the disputed Diaoyu Islands, known as the Senkakus in Japan. The uninhabited islands are administered by Tokyo and claimed by Beijing. Last month, the Chinese navy’s Liaoning aircraft carrier, along with two destroyers and a frigate, conducted a series of military drills near Okinawa. Click here to read...

China’s aircraft carrier Liaoning spotted edging close to Guam for first time amid US strategic threats

The Liaoning aircraft carrier group of the Chinese People's Liberation Army (PLA) Navy was recently spotted for the first time sailing close to Guam, a key US military node in the second island chain, during its ongoing exercises in the West Pacific, a move analysts said on Dec 29 showed that the Chinese carrier is ready to defend the country against potential US attacks launched from there, including military interference attempts over the Taiwan question. Japan's Ministry of Defense Joint Staff updated the Liaoning aircraft carrier group's movements in a press release on Dec 28, saying that Japan's Maritime Self-Defense Force spotted the PLA Navy's aircraft carrier Liaoning, the Type 055 large destroyer Wuxi, the Type 052D destroyer Chengdu, the Type 054A frigate Zaozhuang and the Type 901 comprehensive replenishment ship Hulunhu continuing their voyage in the West Pacific since entering the region on December 16. The Liaoning has hosted about 260 fighter jet and helicopter landing and takeoff operations from December 17 to Dec 27, according to the Japanese press release. This seems to be the first time the Liaoning has approached Guam, observers said. The Chinese activity is likely a large-scale movement with an eye on the US military, Kyodo News quoted the Japanese Defense Ministry as saying. Click here to read...

Japan to deploy missile defence unit near Taiwan island, 'removing pacifist mask' as it ramps up military presence

Japan is removing its pacifist mask as it continues attempts to strengthen its military presence in the Asia-Pacific region, Chinese experts said on Dec 28, following reports that Tokyo is likely to deploy a surface-to-air missile defence unit at Japan's closest self-defence force base to China's Taiwan region. Citing ministry spokesperson Takeshi Aoki, Japan's Jiji Press reported on Dec 28 that the ministry of defence plans to deploy a surface-to-air guided missile unit on Yonaguni, a remote island in southwestern Japan that is about 110 kilometers from China's Taiwan region and 150 kilometers from China's Diaoyu Islands. Established in 2016 on the island, Ground Self-Defense Force Camp Yonaguni is based on the island with about 200 members of self-defence forces stationed there. According to sources reached by Jiji Press, the planned deployment, which also means the expansion of the Camp Yonaguni, is intended to "strengthen the defence of the Ryukyu Islands," including Yonaguni, in the face of China's "military pressure" they hyped. Liu Jiangyong, vice dean of the Institute of Modern International Relations at Tsinghua University, told the Global Times on Dec 28 that deploying a missile defence unit at the Ground Self-Defense Force camp closest to Taiwan island is a specific step from Tokyo to implement their new national security guidelines. Click here to read...

New Chinese FM Qin Gang talks to Blinken, expects new progress in China-US ties

Chinese Foreign Minister Qin Gang spoke with US Secretary of State Antony Blinken over the phone on Jan 01, saying goodbye to Blinken and recalling his multiple candid, in-depth and constructive meetings with the US official. The Chinese diplomat said he is looking forward to keeping in working contact with Blinken and helping the China-US relationship improve, the Chinese Foreign Ministry said on Jan 02. Qin, incumbent Chinese Ambassador to the US, was appointed as the new Chinese Foreign Minister, according to a decision made by the 13th National People's Congress Standing Committee on Dec 30. Wang Yi, China's former foreign minister, was appointed as director of the Office of the Foreign Affairs Commission of the Communist Party of China Central Committee. "Called Blinken to say goodbye. I appreciated several candid, in-depth and constructive meetings with him during my tenure. I look forward to continuing close working relations with him for a better China-US relationship," Qin tweeted. Spoke by phone this morning with incoming People's Republic of China Foreign Minister Qin Gang as he departs Washington for his new role. We discussed US-PRC relationship and maintaining open lines of communication, Blinken tweeted. Click here to read...

China to hold annual legislative meeting in early March

China will hold its annual legislative session in early March, a gathering that will see top leaders appointed including the new premier. The 14th National People’s Congress (NPC) will begin on March 5 in Beijing, the top legislature announced on Dec 30. The session will follow up on the Communist Party’s five-yearly national congress held in October and approve key appointments. Around 3,000 national representatives of the NPC will vote on the presidential candidate to lead the country for the next five years. Xi Jinping, 69, secured a groundbreaking third term as the party’s leader at the October congress and is expected to be confirmed as president for a third time. That was made possible after the constitution was amended in 2018 to remove presidential term limits. Other positions to be appointed at the NPC session include the premier, vice-premiers and other cabinet members as well as president of the Supreme People’s Court and procurator-general of the Supreme People’s Procuratorate. Li Qiang, 63, was anointed as the second-ranked Politburo Standing Committee member at the party congress and is widely expected to be named as the new premier. The NPC is China’s top legislative body and its representatives from across the country are re-elected every five years. During the term the representatives take part in a session every year to review the government work report, approve the budget and pass or amend legislation. Click here to read...

Investigation, division, gridlock: what to expect in 2023 US Congress

After two years of one-party control, a fresh intake of US lawmakers will be seated on Jan 03 in a Congress divided between a Democrat-led Senate and a House of Representatives with Republicans behind the wheel. Despite its razor thin majorities, the 2021-23 Democratic-controlled Congress was one of the most productive in modern history, writing all manner of legislation – much of it bipartisan – on manufacturing, infrastructure, gun control, the climate crisis and more. But Washington watchers fear the age of cross-party cooperation may be coming to an end, with the legislative process about to enter gridlock and Republicans promising an aggressive agenda of investigations into most aspects of President Joe Biden’s administration. The party of former president Donald Trump has watched powerlessly from the sidelines over the last two years as Trump fended off multiple criminal, civil and congressional probes. But the Republicans are plotting revenge with an intense programme of their own investigations. One major target is likely to be Biden himself, and some Republicans have already confirmed that colleagues are mulling impeachment. The House Oversight Committee’s top stated priority, though, will be intensifying scrutiny of the Democratic leader’s son, Hunter Biden, who is already being investigated by the FBI over his business practices. Click here to read...

South Korea scrambles jets as North sends drones over border

Five North Korean drones crossed into South Korea on Dec 26 and South Korea responded by scrambling jets and attack helicopters and opening fire to try to shoot down the North Korean aircraft, the South Korean military said. As part of its response, the South Korea military also sent surveillance aircraft into the North to photograph its military installations, a South Korean military official said. "This is a clear act of provocation by the North violating our airspace," a South Korean official with the Joint Chiefs of Staff, Lee Seung-o, told a briefing. One of the five North Korean drones flew near the South Korean capital, Seoul, and the others flew near the west coast. Lee said the South Korea military "operated assets to shoot down" the drones. He did not say if any drones had been shot down but the Yonhap news agency later said South Korea's military fired about 100 shots but failed to shoot any down. Lee said South Korea initially fired "warning shots" when it first detected the drones. One of the drones was known to have returned to North Korea while South Korea lost track of the other four, Yonhap reported, citing the Joint Chiefs of Staff. North Korea has no channel for media queries from South Korea and its state media made no mention of any drones. Click here to read...

Korea’s Kim orders ‘exponential’ expansion of nuke arsenal

North Korean leader Kim Jong Un ordered the “exponential” expansion of his country’s nuclear arsenal and the development of a more powerful intercontinental ballistic missile, state media reported Jan 01, after he entered 2023 with another weapons launch following a record number of testing activities last year. Kim’s moves are in line with the broad direction of his nuclear program. He has repeatedly vowed to boost both the quality and quantity of his arsenal to cope with what he calls U.S. hostility. Some experts say Kim’s push to produce more nuclear and other weapons signals his intention to continue a run of weapons tests and ultimately solidify his future negotiating power and win greater outside concessions. “They are now keen on isolating and stifling (North Korea), unprecedented in human history,” Kim said at a recently ended key ruling party meeting, according to the official Korean Central News Agency. “The prevailing situation calls for making redoubled efforts to overwhelmingly beef up the military muscle." During the six-day meeting meant to determine new state objectives, Kim called for “an exponential increase of the country’s nuclear arsenal” to mass produce battlefield tactical nuclear weapons targeting South Korea. He also presented a task to develop a new ICBM missioned with a “quick nuclear counterstrike” capability — a weapon he needs to strike the mainland U.S. He said the North’s first military reconnaissance satellite will be launched “at the earliest date possible," KCNA said. Click here to read...

Japan, U.S. to discuss sharing bases and ports at security talks

Japan and the U.S. are expected to discuss sharing bases, ports and other facilities for defence purposes during peacetime at next month's "two-plus-two" meeting of top diplomatic and defence officials. Japanese Foreign Minister Yoshimasa Hayashi and Defense Minister Yasukazu Hamada will meet with U.S. Secretary of State Antony Blinken and Defense Secretary Lloyd Austin in Washington on Jan. 11, two days before a bilateral summit. A joint statement will follow their talks, the first such gathering in about a year. The meeting comes soon after both countries revised their respective national security and defence strategies, changes to be used as a foundation for planning and rehearsing joint operations under Washington's concept of "integrated deterrence." The issue of shared use of facilities in Japan, seen as essential for U.S. deterrence against China, likely will be high on the agenda. Tokyo's revised defence strategy cites this directly, stating that "Japan will on a regular basis increase joint/shared use of Japanese and U.S. facilities" to strengthen deterrence and response capabilities "in a unified manner." The allies' Status of Forces Agreement lets American forces use some facilities in Japan, under terms set by a joint committee, and Japanese law allows for this to be broadened in emergencies. Click here to read...

S. Korea, US allay jitters over possible rift in extended deterrence against NK

Seoul and Washington tried to dispel what is seen as a rift between the two allies in their stances on extended deterrence to thwart North Korea's nuclear threats. It all began with President Yoon Suk-yeol's remarks during an interview with the Chosun Ilbo daily published on Jan 02 where he was quoted as saying, "South Korea and the U.S. are discussing information sharing, joint planning and joint execution plans regarding U.S. nuclear assets' operation, in order to counter North Korea's nuclear threats." After Yoon's interview was published, a White House correspondent asked U.S. President Joe Biden whether Washington is discussing "joint nuclear exercises" with South Korea. Biden said, "No," without elaborating. The U.S. president's denial sparked speculation among South Korean media outlets that there might be discord between Seoul and Washington regarding their responses to North Korea's nuclear threat. It turned out that the use of the term, "joint nuclear exercises," which was not what the South Korean president said, seems to have triggered the misunderstanding. Senior Presidential Secretary for Public Relations Kim Eun-hye said, "As the reporter asks, 'are you discussing joint nuclear exercises,' without presenting related context, President Biden had no choice but to say 'No.'" Kim added, "The term 'joint nuclear exercises' is only possible between countries that possess nuclear weapons." Click here to read...

Pakistan's Belt and Road hub Gwadar hit by protest clampdown

A de facto curfew has been imposed in Pakistan's port town of Gwadar after a crackdown on a local rights movement, casting a shadow over a key destination for China's Belt and Road infrastructure investment. Tensions had been rising for weeks as the Haq Do Tehreek (Gwadar Rights Movement) staged sit-ins that obstructed the port. The leader of the movement, Maulana Hidayatur Rehman, even issued an ultimatum for Chinese nationals working in the area to leave. In the early morning of Dec. 26, police raided the protest camp. Since then, internet services have been suspended in the town -- center stage of the $50 billion China-Pakistan Economic Corridor (CPEC), the Pakistani component of the Belt and Road. The government of the southwestern province of Balochistan, where Gwadar is located, has imposed Section 144 of the Criminal Procedure Code -- a draconian colonial-era law that enables a ban on all kinds of rallies and protests -- for one month. Police have reportedly arrested over 100 supporters of the movement, including the deputy chief of the rights group. Based on multiple background interviews, Nikkei Asia has learned that supporters of the movement clashed with authorities for at least four days after the crackdown began. One police officer and one protester were purportedly killed. Due to media blackouts coupled with the suspension of internet services, it was not possible to confirm casualty figures. Click here to read...

Putin expects China's Xi to visit soon; Xi holds his line on Ukraine

Russian President Vladimir Putin said on Dec 30 he was expecting Chinese President Xi Jinping to make a state visit early next year in what would be a public show of solidarity from Beijing as Russia's invasion of Ukraine falters. But an official Chinese readout of a video summit between the two leaders highlighted differences in approach to their developing alliance, making no mention of a visit and stressing that Beijing, which has declined to back or condemn the invasion, would maintain its "objective and fair" stance on the issue. Since sending its troops into Ukraine in February, Russia has turned its back on the Western powers that have ostracised it economically and politically and armed Ukraine, courting the rising global power of long-time rival China instead. "We are expecting you, dear Mr Chairman, dear friend, we are expecting you next spring on a state visit to Moscow," Putin told Xi in an effusive eight-minute introductory statement broadcast on state television. "This will demonstrate to the whole world the strength of Russian-Chinese ties on key issues." He also said he aimed to boost military cooperation with China - although there was no mention of this in the Chinese state broadcaster CCTV's report of the call. Although Xi called Putin his "dear friend", his introductory statement, at around a quarter the length of Putin's, was far more pragmatic in tone. Click here to read...

Turkey, Syria Defense Ministers Meet in Moscow

Turkey’s defence minister and intelligence chief held talks with their Syrian counterparts in Moscow on Dec 28, the first formal, high-level meeting between the two Middle East governments since the eruption of a civil war in Syria in 2011. The meeting, attended by senior Russian officials, came as Ankara is beginning to open a dialogue with Damascus after more than a decade of hostility. Turkish President Recep Tayyip Erdogan was the chief foreign supporter of an armed rebellion that sought to topple Syrian President Bashar al-Assad amid the uprisings of the Arab Spring. The Turkish Defense Ministry said the officials discussed “the Syrian crisis, refugee issue and efforts for a joint struggle against all terrorist organizations on Syrian soil,” during the meeting in Moscow. The officials agreed on “the need for the continuation of joint dialogue” to achieve stability in Syria, according to Syria’s state-run news agency SANA. Mr. Erdogan’s opening to the Syrian regime represents the reversal of one of the defining foreign-policy choices of his nearly 20 years in power. Under Mr. Erdogan’s leadership, Turkey accepted millions of Syrian refugees and offered support to rebel groups whose leaders have for years moved freely between Turkey and areas of northern Syria under their control. The decision embroiled Turkey in years of war, bringing it to the brink of direct conflict with Russia after Turkey shot down a Russian jet fighter in 2015. Click here to read...

A Saudi Rave Sparks Debate Over Kingdom’s Cultural Transformation

Pulsating purple lights played across the traditional coral stone- and-wood facades of buildings in the center of this ancient Saudi port city on the Red Sea while electronic music boomed and young men and women in jeans and glittery tops danced with glow sticks. The recent music festival in Jeddah’s Al-Balad neighbourhood drew an audience of around 25,000 celebrating young people. It also stirred criticism of a rapid cultural shift in the kingdom being pushed by its day-to-day ruler, Crown Prince Mohammed bin Salman. The 37-year-old heir to the throne has moved to permit women to drive, disempowered the morality police and opened the country to public entertainments from pop concerts to movies and sporting events that were once banned in the name of strict adherence to the rules of Islam. Many of the changes have been popular. Few have provoked the kind of public criticism that has followed the recent Jeddah festival, called Balad Beast, which turned the streets of Al-Balad into an open-air concert. Yet people are debating whether things are changing too much, too fast. For some, the juxtaposition of traditional and modern symbolized the new Saudi Arabia. “You have to be open to new things,” said Lola Mohammad, a 23-year-old accountant. She said the festival was an event that “honours my heritage but also embraces the future.” Click here to read...

Dozens of Russian troops killed in Ukrainian strike

More than 60 Russian troops have been killed by a Ukrainian missile strike, Moscow confirmed on Jan 02. The bombardment hit a temporary housing area used by the Russian forces in Donbass. The facility in the city of Makeyevka in Russia’s Donetsk People’s Republic was targeted by six missiles from US-supplied HIMARS multiple rocket launchers, the Defense ministry said. Two projectiles were intercepted by air defenses, but four made it through, the statement added. "As a result of a strike by four missiles with high-explosive warheads on a temporary deployment point, 63 Russian servicemen were killed,” Defense Ministry spokesman Lieutenant General Igor Konashenkov said during a briefing. All necessary assistance and support will be provided to the families of the fallen troops, the ministry assured. The strike was earlier reported by the Donetsk People’s Republic’s Information Minister Daniil Bezsonov, who said the missiles targeted the building of a vocational school where the troops were stationed. It happened precisely at 0:01 am on New Year’s night, while the serviceman were celebrating, he added. Russia’s Foreign Ministry earlier condemned Washington for not only supplying sophisticated weapons to Kiev, but also providing the Ukrainian military with intelligence about the location of the Russian forces. Click here to read...

Health
Countries split on restrictions for travellers from China

As the coronavirus tears through China under eased zero-COVID rules, governments around the world are diverging on how to handle an expected rise in Chinese traveling abroad. Such countries as Japan and the U.S. have announced strict testing and quarantine requirements. But other jurisdictions, such as Singapore and the European Union, have said new measures are not necessary. Concern over cross-border spread seems likely to increase now that China's biggest holiday, the Lunar New Year, is coming up in late January. South Korea announced border measures Dec 30centered on testing people entering from China and quarantining those who test positive. Issuance of short-term visas, such as for travel, will also be restricted from Jan 02 to the end of January. The country will also not permit an increase in flights from China. The steps will in effect ban leisure travellers from China. Malaysia announced measures Dec 30 to check the temperature of all foreign arrivals, including from China. Those who have such symptoms as a fever and are suspected of having COVID-19 will be tested. Toilet wastewater from flights from China will also be tested, with genetic analyses run when the results are positive. The U.S. will require a negative test result within 48 hours before boarding flights from China, starting Jan. 5. Japan introduced Dec 30 mandatory testing for people entering from China, requiring a seven-day quarantine for those who test positive and show symptoms. Click here to read...

Soaring China COVID-19 cases increase risk of new variants: Experts

An explosion of COVID-19 cases in China as the country lifts its zero-COVID measures could create a "potential breeding ground" for new variants to emerge, health experts warn.China announced this week that incoming travellers would no longer have to quarantine from Jan 8, the latest major reversal of strict restrictions that have kept the country largely closed off to the world since the start of the pandemic. While the country's National Health Commission has stopped issuing daily case numbers, officials in several cities estimate that hundreds of thousands of people have been infected in recent weeks. Hospitals and crematoriums have been overwhelmed across the country. With the virus now able to circulate among nearly one-fifth of the world's population - almost all of whom lack immunity from previous infection and many of whom remain unvaccinated - other nations and experts fear China will become fertile ground for new variants. Antoine Flahault, director of the Institute of Global Health at the University of Geneva, told AFP that each new infection increased the chance the virus would mutate. "The fact that 1.4 billion people are suddenly exposed to SARS-CoV-2 obviously creates conditions prone to emerging variants," Flahault said, referring to the virus that causes the COVID-19 disease. Bruno Lina, a virology professor at France's Lyon University, told the La Croix newspaper this week that China could become a "potential breeding ground for the virus".Click here to read...

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