Global Developments and Analysis: Weekly Monitor, 05 September - 11 September 2022

Economic

Heat waves, wildfires to worsen air pollution: UN

Even beyond wildfires, a hotter climate can drive up pollution and worsen air quality. UN World Meteorological Organization (WMO) chief Petteri Taalas pointed out that severe heat waves coupled with stable high atmospheric conditions, sunlight and low wind speeds had been "conducive to high pollution levels," warning that "this is a foretaste of the future." "We expect a further increase in the frequency, intensity and duration of heat waves, which could lead to even worse air quality," he said. This phenomenon is known as the "climate penalty," which refers to how climate change amplifies ground-level ozone production, which negatively impacts air quality. In the stratosphere, ozone provides important protection from cancer-causing ultraviolet rays, but closer to the ground it is very hazardous for human health. If emission levels remain high, this climate penalty is expected to account for "a fifth of all surface ozone concentration increase," WMO scientific officer Lorenzo Labrador told reporters. The WMO called for action, stressing that "a worldwide carbon neutrality emissions scenario would limit the future occurrence of extreme ozone air pollution episodes." The report points out that air quality and climate are interconnected, since chemicals that worsen air quality are normally co-emitted with greenhouse gases. Click here to read... [2]

Countries growing 70% of world's food face 'extreme' heat risk by 2045

Blistering crop-withering temperatures that also risk the health of agricultural workers could threaten swathes of global food production by 2045 as the world warms, an industry analysis warned Sept 08. It is based on a worst-case emissions scenario leading to around 2 degrees Celsius of warming above pre-industrial levels as soon as 2045. Rice is particularly at risk, the assessment said, with other crops like cocoa and even tomatoes also singled out as of concern. However, the authors stress that in projections to mid-century, even scenarios that assume higher levels of carbon-cutting action could still result in temperatures nearing 2 degrees Celsius. India - responsible for 12 per cent of global food production in 2020 and heavily reliant on outdoor labour productivity - is already rated as at extreme risk, the only major agricultural nation in that category at current temperatures. That could impact productivity and in turn exports, and have potentially "cascading" knock-on effects on issues such as the country's credit rating and even political stability, he said. By 2045, the list grows much longer. Nine of the top ten countries affected in 2045 are in Africa, with the world's second-largest cocoa producer Ghana, as well as Togo and the Central African Republic receiving the worst possible risk score. Click here to read... [3]

Fed Officials Back Another Large Rate Increase

A Federal Reserve official suggested he would support raising interest rates by another 0.75-percentage point later this month to combat inflation, the latest policy maker to do so. Officials have been debating whether to raise rates by 0.5 point and 0.75 point at their coming Sept. 20-21 policy meeting, but they haven’t pushed back against market expectations of the bigger move. In a speech Sept 09, Fed governor Christopher Waller didn’t specifically say whether he would back a 0.5-point or 0.75-point rate increase, but his remarks strongly suggested he favored the larger one. “Looking ahead to our next meeting, I support another significant increase in the policy rate,” Mr. Waller said during remarks at a conference in Austria. Such an increase is necessary “to get the policy rate to a setting that is clearly restricting demand.” Christopher Waller said a significant interest-rate increase is necessary ‘to get the policy rate to a setting that is clearly restricting demand.’ He added, “Based on all of the data that we have received since the [Fed’s] last meeting, I believe the policy decision at our next meeting will be straightforward.” In recent weeks, officials have turned their focus toward the end point for their rate increases, with several anticipating the fed-funds rate could rise to around 4%. The September meeting is likely to focus on how fast officials think they should try to reach such a level. Click here to read... [4]

'Certainly a risk' of US recession, says Treasury Secretary Janet Yellen

The United States faces "a risk" of recession as its battle against inflation could slow the nation's economy, but a serious downturn can still be avoided, Treasury Secretary Janet Yellen said on Sep 11. An American recession "is a risk when the Fed is tightening monetary policy to address inflation", President Joe Biden's leader on financial, economic and tax policy told CNN, referring to the US Federal Reserve. "So it's certainly a risk that we're monitoring," Yellen said, adding that the US has got a strong labour market that can be maintained. Faced with soaring inflation - it reached its highest level in 40 years in June at 9.1 per cent, before dipping slightly in July - the central bank is gradually raising its key rates in order to ease the pressure on consumer prices, while hoping the move does not derail the world's largest economy. Commercial banks use the Fed's key rates to set the terms of the interest rates that they in turn offer their individual and corporate clients. Higher rates reduce consumption and investment. The challenge for policymakers is to quell inflation before it becomes dangerously entrenched, but without sending the US economy into a recession that would reverberate around the globe. While American GDP contracted in the first two quarters of 2022 - fitting the classic definition of a recession - Yellen again stressed that this was not the case. Click here to read... [5]

US may need 7.5% unemployment to curb inflation: Research

The United States unemployment rate may need to reach as high as 7.5 per cent, double its current level, to end the country's outbreak of high inflation, according to new estimates from a team of researchers including two staff economists from the International Monetary Fund (IMF). That would entail job losses of perhaps 6 million people, but the research found that only under "quite optimistic assumptions" about the behavior of the US job market and inflation would the US Federal Reserve be able to tame current price pressures with a smaller blow to employment. As of June, Fed officials at the median projected unemployment would need rise to only 4.1 per cent by the end of 2024 for inflation to drift back towards the central bank's 2 per cent target. The jobless rate in August was 3.7 per cent. "If either the labour market doesn’t behave, or (inflation) expectations don’t behave, the small increase in unemployment the Fed projects won’t be enough. Either inflation will stay substantially higher, or we will have higher unemployment and a substantial economic slowdown," Johns Hopkins University economics professor Laurence Ball said in a summary of the research distributed as part of a Brookings Institution economic conference. Click here to read... [6]

China's rare earth export price hits record high in August as global supplies tighten

China's rare earth export price hit a record high in August, jumping to $26 per kilogram, up 93.8 percent year-on-year, and industry observers said this upward trend may continue for the rest of the year thanks to factors including tighter policies for environmental protection. In August, China's rare earth export volume came to 3,673.6 tons, down by 6.7 percent year-on-year, following a decrease of 8 percent in July, data from the General Administration of Customs shows. The decline in export volume led to tightened supply and higher prices. Wu Chenhui, an independent industry analyst, told the Global Times on Sept 07 that the drop in export volume is the result of various factors such as tighter measures for the protection of the environment and resources. Rare earth export prices will also be pushed up by a supply reduction in Myanmar and surging demand for resources from downstream businesses, the expert predicted. Other factors such as geopolitical conflicts and inflation may also boost prices. On August 23, China Minmetals Rare Earth Co disclosed its 2022 semi-annual report, showing that in the first half of the year, the company achieved operating income of 2.201 billion yuan, a year-on-year increase of 39.82 percent. Click here to read... [7]

China central bank lists 19 systemically important banks

China's central bank and banking regulator on Sep 09 jointly unveiled a list of 19 banks for 2022 that are regarded as systemically important, as part of efforts to protect the financial system. The list of banks includes six state-owned commercial banks, nine joint-stock commercial banks and four city commercial banks, a statement released from the People's Bank of China and the China Banking and Insurance Regulatory Commission (CBIRC) said. Systemically important banks face additional capital requirements of between 0.25 per cent and 1.5 per cent, as well as additional leverage requirements. The regulators will also enhance supervision of systemically important banks to promote their stable and healthy operation and development, the statement said. Joint-stock commercial bank China Minsheng Banking will be subject to a higher additional capital requirement of 0.5 per cent from 0.25 per cent, the statement showed, the only bank on the list to face a different capital requirement versus last year. Other banks on the list include four of the country's biggest banks: Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China. It also includes mid-sized banks such as China Everbright Bank and Ping An Bank. Click here to read... [8]

China has named nearly 9,000 ‘little giants’ in push to preference home-grown technologies from smaller companies

The Chinese government has selected 8,997 industrial enterprises as “little giants”, which are eligible for preferential treatment to help the country become a stronger technological powerhouse in its competition with the US. The data was disclosed during a national summit of little giants that kicked off on Sept 08 in Nanjing, capital of eastern Jiangsu province. President Xi Jinping said in a letter that he hopes such enterprises will “play a more important role in stabilising supply chains and promoting economic and social development”. The summit also revealed that such companies made an average profit of 40 million yuan in 2021, more than three times the figure of small and medium-sized enterprises with annual revenue of at least 20 million yuan. Little giants are smaller and often little-known businesses that have special products and know-how in strategic sectors like semiconductors, advanced manufacturing, energy and critical minerals. They have so far established more than 10,000 research institutes at state and provincial levels. These companies have an average of 28.7 per cent of their employees working in research and development, in line with the 30 per cent rate for companies listed on the Shanghai Stock Exchange’s Science and Technology Innovation Board, known as the STAR market, according to state-owned Economic Daily. Click here to read... [9]

China to scale up support for employment, entrepreneurship to expand space of employment

China will step up policy support for employment and business start-ups to broaden the space of employment, help market entities emerge and grow, and foster new drivers of growth, according to a State Council executive meeting chaired by Premier Li Keqiang on Sept 07. The meeting also decided to extend phased government interest discounts on loans for upgrading equipment in some fields, increase credit support for the service sector and introduce phased tax reduction policies to support enterprises to galvanize more investment in enhancing innovation capability. The meeting underscored the fundamental importance of employment to people's well-being. Starting businesses can increase market entities and boost employment. Stable growth is mainly about stable job creation. Local governments must earnestly fulfill their due responsibilities and step up support for employment and business start-ups. "The current employment situation is generally stable, but there are concerns as well. Local governments must earnestly fulfill their due responsibilities and take some special measures," Li said. Companies will be entitled to job creation subsidies for hiring college graduates unable to find jobs two years after graduation and the young registered as unemployed. Unemployment insurance benefits will be issued to the jobless in a timely manner. Skills training for migrant workers will be enhanced to help them stay employed. Click here to read... [10]

China property developers’ struggles make waves that threaten to swamp upstream and downstream suppliers

More than 20 major developers have defaulted on their unmanageable debts in the last year, while a public mortgage boycott that started in mid-July has not helped the bruised sector. “The worst part of this housing crisis is that it is still evolving, as there are so many businesses in the supply chain,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute. “Until we see things restored to order, including land sales, new project launches and home sales, more companies will struggle.” Beijing Oriental Yuhong Waterproof Technology, once a sweetheart of some international investors including Fidelity and Allianz, also red-flagged possible challenges due to property market woes in a recent interim report. “In the future, the company’s operation could be impacted by the downward pressure of China’s economic development [and] the macro control of the real estate industry,” the construction material company said after reporting a net profit decline of 38 per cent in the first six months of 2022. In comparison, it posted a 40 per cent increase in the first half of 2021, before the housing sector collapse. Real estate and related activities, such as construction, account for about 29 per cent of China’s gross domestic product (GDP), comparable to the entire economy of Spain or Ireland before the global financial crisis, according to Kenneth Rogoff, an American economist and Harvard University professor. Click here to read... [11]

Japan to review ODA policy to strengthen Indo-Pacific ties

The Japanese government intends to make strategic use of official development assistance to achieve a free and open Indo-Pacific region. The government decided it will review the development cooperation charter, which stipulates guidelines for Japan’s ODA to developing countries, in the first half of next year. The government has stressed the importance of an Indo-Pacific strategy in light of China’s growing military and economic influence in the region, along with Russia’s invasion of Ukraine. The revision of the charter would be the first since 2015. The government will announce the review as early as Sept. 9, and a panel of experts will be set up to discuss the plan. The new charter will state that attempts to unilaterally change the status quo by force will not be tolerated. It will call for the realization of the concept of a free and open Indo-Pacific based on the rules Japan has advocated. The charter will state it is essential to strengthen cooperation with countries in the Indo-Pacific region for this purpose, and the government intends to utilize ODA further. The charter will set out to achieve fair and transparent development finances, saying it will focus on the quality of growth leading to the improvement of people’s lives in the region. The government will prioritize economic security as a key issue and will work to secure supply chains. Click here to read... [12]

Taiwan’s multinationals are expanding from Malaysia to Mexico as they tread water in mainland China

Taiwanese multinationals are in a tough spot – it’s simply too risky to expand their operations in mainland China, but it would be impractical to abandon the market entirely. Instead, those with corporate expansion plans are increasingly picking other countries, from elsewhere in Asia to as far-flung as North America. Yet, despite being beleaguered by business-crippling coronavirus restrictions on the mainland, coupled with considerable uncertainties in terms of cross-strait tensions and supply-chain disruptions, many Taiwanese multinationals that already have a mainland presence are still unwilling to suffer the potential costs of throwing in the towel. In fact, this rollback of Taiwanese firms’ investments on the mainland is not a new trend. In the five years before Covid-19 took hold, Taiwanese investments in mainland China saw steady annual declines, from nearly US$11 billion in 2015 to about US$4.2 billion in 2019, official figures show. There was a bump in both 2020 and 2021 as China’s coronavirus-control measures made it a more attractive destination for investments, with about US$5.9 billion in each of those years. In total, from 1991 to mid-2021, approved investment reached US$193.51 billion. But more and more, Taiwanese entrepreneurs are looking to grow their businesses in places such as Indonesia, Japan, Malaysia, Vietnam, the United States and Mexico. Click here to read... [13]

European giants buck US decoupling from China

Blaring headlines such as “US bans ‘advanced tech’ firms from building facilities in China for a decade” and “China’s zero-Covid policies are crippling its economic outlook” distract from more mundane but arguably more important corporate news coming out of China. Those new developments include the start of production at BASF’s new industrial complex in Zhanjiang and the final commissioning of ABB’s state-of-the-art robotics factory in Shanghai, big new European investments that buck the trend of US “decoupling” with China. On September 6, BASF announced the inauguration of the first manufacturing plant at its Zhanjiang Verbund industrial complex in China’s southern Guangdong province. The plant is designed to produce 60,000 metric tons of engineering plastics per year, primarily for supply to the Chinese automotive and electronics industries. It will raise BASF’s annual engineering plastics capacity in the Asia-Pacific region to 420,000 metric tons. Headquartered in Germany, BASF is the world’s largest producer of chemicals. The Zhanjiang Verbund site is about nine square kilometers in size and the total investment is expected to reach about 10 billion euros (US$10.1 billion) by 2030. It will be BASF’s largest foreign investment to date and the first heavy chemical industry project in China to be wholly owned and operated by a foreign company. Click here to read... [14]

Indo-Pacific countries launch trade talks that shun tariff cuts

Economic ministers from the United States and 13 Indo-Pacific countries kicked off negotiations Sept 08 on Washington’s first major pan-Asian trade engagement effort in nearly a decade, but this time any deal will not cut tariffs. U.S. Trade Representative Katherine Tai said the Indo-Pacific Economic Framework talks in Los Angeles were aimed at addressing future challenges and achieving “sustainable and equitable growth” in the Indo-Pacific region. The effort was first launched by President Joe Biden during a May trip to Tokyo. Tai, who is leading the talks with Commerce Secretary Gina Raimondo, said the ambitious initiative was making progress, although some critics have questioned its value to participating countries. The talks include ministers from Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Together with the United States the participants represent some 40 percent of global GDP. “This framework will be a durable model for the rest of the world to follow,” Tai told the gathering, adding it would bring economic value for small businesses, including the 200,000 in Los Angeles. She said the initiative would target issues such as the digital economy, labor, environment, agriculture and trade. Click here to read... [15]

Japan raises concern over U.S. eligibility rules on EV subsidies

Japan has expressed concern to the U.S. that Japanese electric vehicles may not be eligible for Washington's new subsidy program. Japanese Economy, Trade and Industry Minister Yasutoshi Nishimura, who is visiting the U.S., told Commerce Secretary Gina M. Raimondo on Sept 07 that sales of Japanese-brand EVs could be hurt by the eligibility conditions for tax incentives. The Inflation Reduction Act, which was signed into law by U.S. President Joe Biden last month, offers tax incentives for EVs assembled in North America as part of measures to tackle climate change. Tax incentives also target EV batteries sourced from North America or from nations that have free trade agreements with the U.S. Japanese brands are already struggling as late comers to the market, and Toyota Motor and its peers make almost no EVs or plug-in hybrid vehicles in North America. Nishimura also noted that the measure may run afoul of World Trade Organization rules. Raimondo showed a willingness to discuss the issue further, according to the Japanese side. Nishimura will attend a ministerial meeting scheduled for Sept 08-09 for the Indo-Pacific Economic Framework, a U.S.-led economic initiative that counts 14 countries as participants. On the agenda will be strengthening supply chains through such steps as improving information sharing among members. Click here to read... [16]

Russia reveals solution to oil shipping problem – media

Russia could create its own company to provide insurance services for vessels carrying the country’s crude abroad, according to Energy Minister Nikolay Shulginov, as quoted by TASS. “We are exploring various possibilities, including using a number of local insurance companies from friendly nations,” Shulginov told the news agency on the sidelines of the 7th annual Eastern Economic Forum in Vladivostok. He added that establishing a new insurance company in Russia is also an option, but it would have to involve mutual recognition from other nations. Last week, the Financial Times reported that the EU and Britain agreed to introduce a coordinated ban on providing insurance for Russian ships – but London, home to global insurance major Lloyd’s, decided to postpone the drastic step. The UK had already prohibited insurance for tankers that carry Russian oil to the country, but the measure will come into effect in 2023. The Group of Seven (G7) nations (the US, UK, Canada, Germany, France, Italy, and Japan) agreed to set a price ceiling for Russian crude to undercut the country’s revenue from oil exports, while maintaining energy flows to the West without spikes in prices. The measure will be enforced by banning services such as insurance and financing for ships transporting Russian crude above an agreed price level. Russia has said it will respond to any price caps on its oil by only shipping crude to countries that do not implement the measure. Click here to read... [17]

Strategic

Pentagon unveils new Ukraine weapons package

Artillery ammunition, armored vehicles, and remote-launched mines make up the bulk of the new package of US military aid to Ukraine, which Washington values at $675 million, according to a list published by the US Department of Defense on Sept 08. This is the 20th “drawdown” of equipment for Ukraine from US military stocks since August 2021 – months before the conflict escalated. According to the Pentagon, Kiev will receive ammunition for High Mobility Artillery Rocket Systems (HIMARS) and High-speed Anti-radiation missiles (HARM) – without specifying the quantities of either – as well as 36,000 105mm artillery rounds and four howitzers of the same caliber. In addition to 100 armored Humvee cars, Ukraine will get 1.5 million bullets, 5,000 anti-tank rockets, 50 armored ambulances, and 1,000 rounds of the 155mm Remote Anti-Armor Mine (RAAM) Systems, as well as some night vision devices, the Pentagon said. Speaking at the meeting of the “Ukraine Defense Contact Group” in Ramstein, Germany, US Defense Secretary Lloyd Austin boasted that Kiev has so far received 126 of the M777 howitzers since April, and a total of 26 multiple-launch rocket systems – including the US-made HIMARS – capable of firing long-range missiles. Austin claimed the weapons have “demonstrably” helped Ukraine in the conflict, but said it was time for NATO to “sustain Ukraine’s brave defenders for the long haul” by “moving urgently to innovate and to push all of our defense industrial bases” so they could supply Kiev on “the hard road ahead.” Click here to read... [18]

Western arms production to ramp up as Ukraine burns through stockpiles

Western governments are mobilising their arms manufacturers to ramp up production and replenish stockpiles heavily diminished by supplying Ukraine's six-month-old battle against Russia's invasion. United States Defense Secretary Lloyd Austin announced this week a meeting of senior national armaments directors from allied countries to make long-term plans for supplying Ukraine and rebuilding their own arms reserves. "They will discuss how our defence industrial bases can best equip Ukraine's future forces with the capabilities that they need," he said at a meeting at Ramstein Air Force Base in Germany of the Ukraine Contact Group, 50 countries currently supporting the war effort. On Sept 09, the Pentagon's arms acquisition chief Bill LaPlante said that the meeting would take place in Brussels on Sep 28. The goal is to determine "how we can continue to work together to ramp up production of key capabilities and resolve supply chain issues and increase interoperability and interchangeability of our systems", LaPlante told reporters at the Pentagon. North Atlantic Treaty Organization (NATO) countries do not all have the same weapons, but their arms are compatible. So ammunition manufactured in one country in the alliance can be used by another. Click here to read... [19]

Russia announces troop pullback from Ukraine's Kharkiv area

Russia’s Defense Ministry announced Sept 10 that it was pulling back troops from two areas in Ukraine’s eastern Kharkiv region where a Ukrainian counteroffensive has made significant advances in the past week. The news came after days of apparent advances by Ukraine south of Kharkiv, the country’s second-largest city, in what could become the biggest battlefield success for Ukrainian forces since they thwarted a Russian attempt to seize the capital, Kyiv, at the start of the nearly seven-month war. Russian Defense Ministry spokesman Igor Konashenkov said troops would be regrouped from the Balakliya and Izyum areas to the eastern Donetsk region. Izyum was a major base for Russian forces in the Kharkiv region, and earlier this week social media videos showed residents of Balakliya joyfully cheering as Ukrainian troops moved in. Konashenkov said the Russian move was being made “in order to achieve the stated goals of the special military operation to liberate Donbas,’” one of the eastern Ukraine regions that Russia has declared sovereign. The claim of a withdrawal to concentrate on Donetsk is similar to the justification Russia gave for pulling back its forces from the Kyiv region earlier this year when they failed to take the capital. Earlier Sept 10, Ukrainian officials claimed major gains in the Kharkiv region, saying their troops had cut off vital supplies to Izyum. Click here to read... [20]

Ukraine war driving US back into the Balkans

With the war in Ukraine about to enter its eighth month, members of the powerful US Senate Foreign Relations Committee (SFRC) have fixed their sights on what is emerging at the next front in the new Cold War between Russia and the West. Though it received scant media attention, the chair of the SFRC’s Subcommittee on Europe and Regional Security Cooperation, New Hampshire Democratic Senator Jeanne Shaheen recently introduced with bipartisan backing new legislation titled the Western Balkans Democracy and Prosperity Act, which seeks to deepen American involvement in a region long divided along ethnic, religious and geopolitical lines. In a statement, Shaheen said the act was partly a response to “Putin’s clear ambitions to spread malign influence across Eastern Europe.” The legislation, with seven co-sponsors including two Republicans and five Democrats, including Connecticut’s Chris Murphy, an influential voice on foreign affairs within the Democratic caucus, would “increase United States trade and investment with the Western Balkans, particularly in ways” that “support the expeditious accession of the countries in the Western Balkans to the European Union and to the North Atlantic Treaty Organization (NATO) for those that desire membership.” The act also singles out the George Soros-funded Open Balkans initiative for support. Click here to read... [21]

Europe sends air power to Indo-Pacific after flexing naval muscle

In a recent military exercise near New Caledonia, the fictitious island of "Badland" showed signs of invading its neighbor "Goodland." France, seeing that its territory was at risk, decided to deploy air assets to the region. The mission was to reach the theater in 72 hours. On Aug. 13, three Dassault Rafale fighters, two Airbus A330 multi-role tanker transports (MRTTs) and two A400M Atlas transport aircraft arrived in the South Pacific from France within the allotted time. The convoy made short fuel stops in Sulur, India, and Darwin, Australia. Once in the region, Paris observed the situation from a live feed sent from the MRTT aircraft and gave direct orders to the Rafale pilots to destroy the enemy's logistics base. The drill was part of the five-week Mission Pegase 2022 exercise that the French Air and Space Force is currently conducting. It overlaps with a similar drill conducted by the German Air Force named Rapid Pacific 2022, which saw Berlin send six Eurofighter jets and seven support planes from Germany to Singapore in 24 hours. France, Germany and the U.K. have been actively sending maritime assets to the Indo-Pacific. The additional projection of air power reflects a sense of urgency in Europe to show that they can be in the region at short notice -- in days, not weeks. Click here to read... [22]

Japan, India to step up arms drills, technology cooperation

Japan and India agreed on Sept 08 to expand military cooperation by holding more joint exercises and pursuing combined development of defense equipment such as unmanned vehicles amid growing tensions with China and Russia in the region. Japanese Foreign Minister Yoshimasa Hayashi said there was “an increasing need” for India and Japan to step up security cooperation. He noted Russia’s war on Ukraine, China’s increasingly assertive actions, including escalating tensions around Taiwan, and North Korean missile and nuclear threats. Hayashi and Japanese Defense Minister Yasukazu Hamada held talks together with their Indian counterparts, Subrahmanyam Jaishankar and Rajnat Singh, in Tokyo on Thursday. Prime Minister Fumio Kishida has pledged to substantially increase Japan’s military capability, possibly including pre-emptive strikes, which critics say would violate the country’s war-renouncing constitution. His government is currently revising the country’s national security strategy and defense guidelines and is seeking to nearly double military spending to about 2 percent of GDP. Japan is also seeking to expand military equipment transfers to support its feeble defense industry. The four ministers said in a statement that Japan and India are pursuing joint development of unmanned ground vehicle technology and will discuss concrete areas for future cooperation in defense equipment and technology. Click here to read... [23]

Saudi Arabia And Iran Held Secret Meetings To Bolster Collaboration

Given the centuries-long hatred between regional rivals, Iran and Saudi Arabia, last week’s comments by Iran’s President, Ebrahim Raisi, that there have been five rounds of meetings between high-level personnel from Tehran and Riyadh in recent months has drawn surprisingly little attention. This is all the more surprising, given that Raisi then cited Iraq – which apparently played the role of mediator between the two sides – as praising: “The initiatives offered, and measures taken by Iraq to improve cooperation among regional countries free from foreign meddling [will] play an effective role in bolstering regional collaboration.” In sum then, a rogue state, and the former number one ally of the U.S. in the Middle East, have been chatting away for months, hosted by a country which, following the U.S.’s ‘end of combat mission’ last year, appears to be drifting into civil war; so, what is going on precisely and where does it lead? As OilPrice.com has uniquely been highlighting for several months, Saudi Arabia’s days of being counted on by the U.S. as an ally are over. A key signal of this shift – over and above all the other signs since the end of the 2014-2016 Oil Price War, as analysed in depth in my latest book on the global oil markets – were comments about Iran made by Saudi Crown Prince, Mohammed bin Salman (MbS) last year. Click here to read... [24]

Iran warns regional states against hosting U.S. forces: general

A top Iranian general said Sept 07 that Iran has issued written warnings to all regional states hosting the U.S. military forces that such U.S. presence increases the threat against Iran. Mohammad Baqeri, chairman of the Chiefs of Staff of the Iranian Armed Forces, made the remarks in a post on his page on a domestically-developed social media app Rubika, reported the official news agency IRNA. The written warnings were issued through the Iranian Foreign Ministry, he said. Iran has also sent out warnings to these states through expanding its presence in the region, increasing the number of aerial and maritime patrols as well as the level of intelligence dominance, and holding diverse military drills, Baqeri said. He noted that over the past months, the "U.S. terrorist regime" has sought to compensate for the retreat of its aircraft, cruisers and destroyers from the Gulf and Sea of Oman, which has created a power vaccum instilling fear in its regional allies, by connecting the area under Israel's occupation to the U.S. Central Command. The Iranian general added that Iran constantly advises the neighboring states to ensure security in the region through expanding brotherly relations and cooperation among themselves, and refraining from relying on foreigners. Click here to read... [25]

Israel sees no new Iran nuclear deal before US November mid-terms

Israel does not anticipate a renewal of Iran's nuclear deal with world powers before the US mid-term elections in November, an Israeli official said on Sep 11, after European parties to the negotiations voiced frustration with Tehran. Having supported then-US President Donald Trump's withdrawal from a 2015 Iranian nuclear deal which it deemed too limited, Israel has similarly been advocating against the re-entry sought by the current US administration. On Sept 10, Britain, France and Germany said they had "serious doubts" about Iran's intentions after it tried to link a revival of the deal with a closure of UN watchdog probes into uranium traces at three of its nuclear sites. Tehran called the European statement "unconstructive". "At this point in time, it appears that a nuclear agreement with Iran will not be signed at least until after the (US) mid-term elections," the Israeli official told reporters on condition of anonymity. Some Israeli commentators saw the remark as anticipating reluctance by US President Joe Biden to enter a deal close enough to the vote for Republican rivals to use it in their domestic campaigns against his Democratic Party. Briefing the Israeli cabinet on Sept 11, Prime Minister Yair Lapid thanked the European powers "for their forthright stand". "Israel is conducting a successful diplomatic drive to halt the nuclear deal and prevent the lifting of sanction on Iran," he said. "It's not over yet. The road is long. But there are encouraging signs." Click here to read... [26]

Azerbaijan strikes Armenian border

Explosions attributed to artillery and drones were reported by residents of Vardenis, Jermuk, Goris, and Tatev – cities within Armenia proper – shortly after midnight on Sept 12. Armenia has blamed neighboring Azerbaijan for the attack. Shots are being fired “along the entire line of the Armenian-Azerbaijani border,” and the government in Yerevan has called an urgent meeting, according to local media. The Armenian Defense Ministry said the army of Azerbaijan has used heavy artillery and drones are also being used. A Turkish-made Bayraktar drone was allegedly shot down over Vardenis, which is in northern Armenia and not adjacent to the disputed region of Nagorno Karabakh. Armenian troops are “giving an adequate response,” Yerevan said. The government of Azerbaijan said Armenia “began widespread provocations” against the Azeri armed forces, which responded with “intensive fire” on Armenian positions. The defense ministry in Baku accused Armenian “teams of saboteurs” of mining roads and firing mortars into Azerbaijani army positions near the towns of Basarkecher, Istisu, Garakilsa and Gorus, on the Azeri side of the border, causing “losses among personnel and damage to military infrastructure.” Azerbaijan also stated that there were losses among the personnel and military equipment of the Armenian armed forces. Sept 13 morning’s clashes are a major escalation of tensions between the two Caucasus countries. Click here to read... [27]

North Korea Passes Law Allowing Pre-Emptive Nuclear Strikes

North Korea passed a new law allowing pre-emptive nuclear strikes as leader Kim Jong Un declared he would never abandon nuclear weapons to counter the U.S. Mr. Kim delivered a speech Sept 08 to North Korea’s rubber-stamp parliament, where members passed legislation outlining the country’s nuclear status. The law included a provision requiring North Korea’s military to launch nuclear strikes if the leadership comes under attack. “The utmost significance of legislating nuclear-weapons policy is to draw an irretrievable line so that there can be no bargaining over our nuclear weapons,” Mr. Kim said, according to a Friday statement in state media. Officials in Seoul and Washington say North Korea has completed preparations to resume nuclear testing for the first time since 2017. In recent months, the Kim regime’s rhetoric has become more bellicose by threatening to annihilate South Korea’s military and ridiculing Seoul’s efforts to improve ties. The new law, passed by the Supreme People’s Assembly, allows for pre-emptive nuclear strikes if an imminent attack against the country’s strategic targets, including its leadership, is detected. It also says Pyongyang won’t threaten nonnuclear states unless they join a nuclear state in attacking the North, and bans sharing nuclear technology with other countries, according to state media. “There will never be any declaration of giving up our nukes or denuclearization, nor any kind of negotiations or bargaining to meet the other side’s conditions,” Mr. Kim said. Click here to read... [28]

China’s No 3 official Li Zhanshu calls for united front with Russia against Western sanctions

Cooperation between China and Russia should be strengthened in light of Western sanctions on the two countries, China’s No 3 official said before he wrapped up his trip to Russia last week. In a readout by Chinese state news agency Xinhua released on Sept 10 night, Li was quoted as saying the two sides should share more experience in “legislation regarding fighting against external interference, sanctions and long-arm jurisdiction”. During his meeting with Vyacheslav Volodin, chairman of the Russian State Duma, the country’s lower house, and Valentina Matviyenko, speaker of the Russian Federation Council, Li said the two sides should strengthen exchanges of experience on domestic governance. Li, the chairman of China’s National People’s Congress Standing Committee, thanked the pair for Moscow’s support of Beijing’s stance on Taiwan, both of whom had slammed a trip to the island by US House Speaker Nancy Pelosi in August. Russia was the first leg of Li’s 11-day trip that began on Sept 07. He is the most senior Chinese official to have travelled outside China since the early days of the Covid-19 pandemic more than two years ago. In a meeting with Russian lawmakers on Sept 09, he repeated Moscow’s narrative on the Ukraine war, saying the United States and its allies in Nato had threatened Russia’s security by expanding their presence near Russian borders. Click here to read... [29]

Chinese president may enshrine his views on ‘one country, two systems’ principle for Hong Kong in Communist Party’s charter

Chinese President Xi Jinping’s views on the “one country, two systems” principle governing ties between Hong Kong and the rest of the nation may be added to the Communist Party charter at next month’s congress, political pundits have said, interpreting a lengthy article on the city published by a top policy body. The 5,000-word article, released by the Central Leading Group on Hong Kong and Macau Affairs late on Sept 09, reviewed principles and legal changes Beijing has set out for the financial hub in recent years. These included the national security law and a requirement that only “patriots” be in charge, as well as Xi’s entreaties that the city bolster its competitiveness and the government improve people’s livelihood. It also mentioned the situation in Macau. The Beijing-based body is a policy coordination group within the party’s Central Committee, comprising top party leaders who oversee the State Council-level Hong Kong and Macau Affairs Office. But political analysts on Sept 10 suggested the timing of the article’s publication, rather than its content, was key to understanding Beijing’s intentions. “The 20th national congress of the Chinese Communist Party is around the corner, and it is expected that Xi’s thoughts will be written into the party’s charter,” said Lau Siu-kai, vice-chairman of the semi-official Chinese Association of Hong Kong and Macau Studies. Click here to read... [30]

Seoul has ‘no more plans’ to deploy China-opposed US THAAD missiles, hopes for Xi-Yoon summit

Seoul has no immediate plan to deploy more China opposed US-controlled missile defence batteries, a high-ranking South Korean official said on Sept 07. The comments come amid hopes that President Yoon Suk-yeol will meet Chinese President Xi Jinping as early as November. The official also confirmed China’s top legislator Li Zhanshu plans to visit Seoul next week amid speculation that Li could meet with Yoon to discuss the South Korean leader’s first summit with Xi. “Currently, we are not considering deploying more THAAD batteries,” he told journalists in reference to the sophisticated US missile defence system. Beijing is opposed to the system and claims THAAD is a direct threat to its own security. The official made the statement as South Korea is seeking to normalise access to the THAAD base in Soseong-ri farming village in the southeastern county of Seongju where protesters have set up roadblocks and staged sit-ins to block traffic to the site. Basic amenities and facilities to accommodate US soldiers working at the base are also not yet in place, forcing them to “live in tents and shipping containers,” Defence Minister Lee Jong-sup said last month. Construction projects at the base have been delayed for years as helicopter lifts for personnel and supplies are sometimes required due to the blockades and protests. Click here to read... [31]

Health

US foresees annual boosters

Barring the emergence of drastically different variants, COVID-19 boosters will likely be recommended annually in a similar manner to influenza vaccines, US health officials said on Sept 06. The announcement came after the Food and Drug Administration last week authorized updated bivalent shots against both the original strain of coronavirus and the BA.4 and BA.5 lineages of the Omicron variant, which are predominant. "We likely are moving toward a path with a vaccination cadence similar to that of the annual influenza vaccine, with annual updated COVID-19 shots matched to the currently circulating strains," President Joe Biden's chief medical advisor Anthony Fauci said. However, the elderly and immunocompromised may require more frequent shots - and the annual strategy would have to be reviewed in case of a "curveball" such as a dangerous new variant that differs dramatically from predictions. Ashish Jha, the White House COVID-19 coordinator, added the message was "simple" - if you are 12 or older, and have been previously vaccinated, now is the time to get boosted. If you were recently infected or vaccinated, "it's reasonable to wait a few months," he added. People can get their COVID-19 booster at the same time as the flu booster, he said. "I really believe this is why God gave us two arms, one for the flu shot and the other one for the COVID[-19] shot." Click here to read... [32]

China locks down 34 cities for a smidgen of Covid cases

In the latest flex of China’s economy-killing “zero Covid” policy, at least 34 cities are now partially or completely locked down after a total of 6,696 cases were identified across the country of 1.4 billion earlier this month. Tianjin municipal city and provincial cities including Sichuan’s Chengdu, Tibet’s Lhasa, Qinghai’s Xining, Xinjiang’s Urumqi, Henan’s Shijiazhuang, Guizhou’s Guiyang and Heilongjiang’s Harbin have locked down many of their city districts. Meanwhile, certain districts in Beijing, Shanghai and Shenzhen have also adopted so-called “silent management mode” policies to slow virus transmission. Caixin reported late September 4 that the measures have affected over 65 million people nationwide. While most Western countries ended their quarantine and social distancing rules earlier this year, China has been reluctant to abandon its “zero Covid” policy and adopt the West’s “living with the virus” strategy. After the Chinese Communist Party (CCP) announced last week its plan to hold its 20th National Congress on October 16, China Central TV said in an opinion piece that the West’s “living with the virus” strategy was like “dancing with the demons.” Citing World Health Organization data, it said over one million people Covid patients had died so far this year. Many Chinese cities have recently adopted a new “silent management mode” policy in which residents are required to take daily Covid tests, avoid leaving home except for essential reasons and refrain from gatherings. Click here to read... [33]