Global Developments and Analysis: Weekly Monitor, 20 July - 26 July 2020

Economic

China floods and Japan downpour blamed on Indian Ocean hot spot

The 2020 monsoon season in East Asia that is wreaking havoc in China and Japan can be traced back to a warming hot spot in the Indian Ocean, experts say. Heavy rains in China have caused historic flooding along the Yangtze and other rivers, killing dozens, and straining the Three Gorges Dam, the world's largest hydroelectric dam. In Japan, a total of 208.3 meters of rain fell nationwide, according to the Japan Meteorological Agency, the most in 38 years. Both are believed to have resulted from the same phenomenon: the stalling of the front associated with the region's annual spring and summer monsoons. A growing number of experts attribute this to warmer-than-usual sea surface temperatures around the Indian Ocean. While analyzing moisture levels in the atmosphere, Nagoya University professor Kazuhisa Tsuboki identified a so-called atmospheric river. The roughly 500-km-wide "river" carrying 500,000 to 600,000 tons of water vaporis "more than three times as high as during the western Japan floods" of 2018, Tsuboki said. Click here to read.... [2]

Siberian heat wave is driving massive wildfires, sea ice melt in Arctic

The World Meteorological Organization warned on July 24 that temperatures in Siberia were about 18 degrees [10 degrees Celsius] above average in June as devastating fires rage in the Arctic and ice melts off the Arctic coast. “The Arctic is heating more than twice as fast as the global average, impacting local populations and ecosystems and with global repercussions,” WMO Secretary-General Petteri Taalas said in a statement. The Siberian heat wave and record heat in the Arctic would be virtually impossible without human-caused climate change, according to a recent study by the World Weather Attribution project. The WMO also said the heat wave is due in part to a blocking pressure system and a northward swing of the jet stream that is sending hot air into the region. Click here to read.... [3]

World poverty rate to mark 1st rise in 22 yrs due to virus: UN

The number of people in extreme poverty across the world is expected to rise this year for the first time in 22 years due to the new coronavirus pandemic, the United Nations said in a recent report. The proportion of the world's population living below $1.90 a day is projected to rise to 8.8 percent in 2020 from 8.2 percent in 2019, according to the Sustainable Development Goals Report 2020 released earlier this month by the U.N. Department of Economic and Social Affairs. The extreme poverty rate is projected to log its first increase since 1998, when it rose 0.4 percentage point to 29.7 percent, following the previous year's Asian financial crisis that started in Thailand and hit economies hard in the region, according to a U.N. official.The latest estimate is higher than the initial forecast of 7.7 percent made before the pandemic. Click here to read.... [4]

The role of central bank should be redefined after pandemic: ex-IMF official

The world should redefine the role and function of central banks after the COVID-19 pandemic, suggested a former International Monetary Fund (IMF) official, as many central banks are deemed to have crossed "red lines" in dealing with the impacts of the coronavirus. "In coming years, the world must carefully study solutions and redefine the role of the central bank," said Zhu Min, a former deputy managing director of the IMF, at an online discussion with Siddharth Tiwari, Chief Representative for Asia and the Pacific of the Bank for International Settlements (BIS), under the theme of "the pandemic and the response of central banks," on July 25. Tiwari noted that the responses from some central banks to deal with the pandemic had crossed "red lines" and needed cautious interpretation to be dealt with. Click here to read.... [5]

China leads the way on global standards for 5G and beyond

China is reportedly drafting a medium-term strategy dubbed "China Standards 2035," complementing the "Made in China 2025" industrial modernization plan under which it has cultivated such fields as 5G and artificial intelligence. But as distrust toward Beijing mounts, its growing dominance of the standards discussion risks becoming another source of friction. China submitted 830 technical documents related to wired communications specifications to the International Telecommunication Union last year, the most of any country and more than the next three -- South Korea, the U.S. and Japan -- combined, according to an industry group. Such documents serve as a basis for deliberation on new standards, and more papers mean more of a voice. Click here to read.... [6]

China May Retaliate Against Nokia and Ericsson If EU Countries Move to Ban Huawei

Beijing is considering retaliating against the Chinese operations of two major European telecommunication-equipment manufacturers, Nokia Corp. and Ericsson, should European Union members follow the lead of the U.S. and U.K. in barring China’s Huawei Technologies Co. from 5G networks, according to people familiar with the matter. China’s Ministry of Commerce is mulling export controls that would prevent Nokia and Ericsson from sending products it makes in China to other countries, the people said. One person added that this was a worst-case scenario that Beijing would use only if European countries came down hard on Chinese suppliers and banned them from their 5G networks. The EU hasn’t banned Huawei, but took a softer stance in January by releasing 5G cybersecurity recommendations that member states could voluntarily adopt to restrict Huawei’s presence in each country. It is expected to soon publish a report detailing how its 27 member states have adopted them. Click here to read.... [7]

Australia challenges China's graphite crown in EV batteries

A mineral vital to electric vehicle batteries is no longer under China's near-exclusive control, as Australian mines challenge their Chinese counterparts in the extraction and processing of graphite. Australia's Syrah Resources fired up a graphite processing facility this month in the U.S. state of Louisiana to turn the mineral mined in Mozambique into the precursor for EV battery anodes. The long production chain -- from Africa to North America then on to automakers worldwide -- aims to provide "an option for geographic diversification," says Syrah. China commands a 60% share in natural graphite mining, and the country holds a virtual monopoly in supplying graphite for EV battery anode material. The world's top three anode producers are Chinese as well. Australian companies want to carve out a spot in this domain. Click here to read.... [8]

In Push for Better Cybersecurity, U.S. Energy Department Outlines a National Quantum Internet

A group led by the U.S. Department of Energy and the University of Chicago plans to develop a nationwide quantum internet that could be functional in about a decade and with the potential to securely transmit sensitive information related to national security and financial services. “What we’re moving forward on is building out quantum networks [to] someday…turn into a full second internet, a parallel internet to the digital internet,” said Paul Dabbar, the Energy Department’s Under Secretary for Science. The project will be funded by a portion of the $1.275 billion budget allocated as part of President Trump’s National Quantum Initiative, an effort to accelerate research and development in quantum information science, an area of study that includes quantum-based communication and quantum computing. The users of a quantum internet could include organizations that handle significant amounts of highly sensitive data and are traditionally vulnerable to cyberattacks, such as the financial services industry and government agencies in charge of national security. Click here to read.... [9]

Banks May Provide Safekeeping of Cryptocurrency, OCC Says

The Office of the Comptroller of the Currency said in an interpretive letter this week that national banks and federal savings associations are authorized to provide the services, including holding unique encoded keys associated with digital currencies, for clients. The letter, made public on July 22, came in response to a request from an unidentified party that asked the Treasury Department unit that supervises and regulates banks and savings associations to address the authority of a national bank to provide cryptocurrency custody services. Banks wanting to provide such services faced ambiguity around compliance in this area of crypto currency, experts said. The OCC also restated its position that banks may provide permitted banking services to cryptocurrency businesses as long as the banks effectively manage risks and comply with regulations such as anti-money-laundering requirements. Click here to read.... [10]

Strategic

At Nixon library, Pompeo declares China engagement a failure

The Trump administration took a hammer to one of the most significant Republican foreign policy achievements in the past five decades on July 23, with Secretary of State Mike Pompeo declaring U.S. engagement with China a dismal failure. At the Richard Nixon Presidential Library in Yorba Linda, California, Pompeo pointedly lamented that the former president's good and noble intentions in opening China to the world had come to naught and must be abandoned. Nearly 50 years after Nixon's historic 1972 trip to China, Pompeo used the symbolism of the venue to accuse the Chinese of taking advantage of that opportunity to lie, cheat and steal their way to power and prosperity. Pompeo called for the free world to "induce" change in China, making an overt appeal for a new coalition of democratic nations to force the Chinese Communist Party change direction or face isolation. Click here to read.... [11]

Indonesian navy makes show of force in South China Sea

Indonesia's navy has conducted a four-day exercise in the South China Sea, it said on July 24, in what appears to be a major show of force against Chinese claims to the waters. Twenty-four warships participated in the exercise that began July 21, including two missile destroyers and four escort vessels. Land-based training was also incorporated. A portion of the exercise was staged near Indonesia's Natuna Islands. The borders of the exclusive economic zone around Natuna overlap with the "nine-dash line" map claimed by China. In a May letter to United Nations Secretary-General Antonio Guterres, Indonesia said it is "not bound" by the Chinese nine-dash-line claim, which "lacks international legal basis." Follow-up letters in June saw Jakarta flatly reject an offer to negotiate what Beijing called "overlapping claims." Click here to read.... [12]

US seeks ambitious relationship with 'global power' India

The U.S. desires a "new age of ambition" in its relationship with India and sees the country as a rising defense and security partner in the Indo-Pacific and globally, Secretary of State Mike Pompeo said on July 22. "We see each other for what we are, great democracies, global powers and really good friend," he said, signalling the Trump administration's intent of building up the relationship as a counterbalance to China. In a video message to the U.S.-India Business Council's India Ideas summit, Pompeo said India is a "key pillar" of U.S. President Donald Trump's foreign policy -- "multilateralism that actually works." The mention of India as a security partner comes as the two countries hold joint naval drills in the Indian Ocean. Those exercises are being held parallel to a trilateral exercise between the U.S., Japan, and Australia in the Philippine Sea. Click here to read.... [13]

Xi starts another fight in China to control law enforcement

A new political struggle is emerging in China, with President Xi Jinping moving to consolidate control over the country's security apparatus. Chen Yixin, secretary-general of the Central Political and Legal Affairs Commission, told a conference on July 8 that the commission would start a nationwide disciplinary campaign to "rectify education" for politicians and law enforcement officials, saying the campaign aimed to "scrape the poison off the bones." "The party's Central Political and Legal Affairs Commission is highly crucial to governing the country, especially for China's highest person in power. The importance of controlling the commission is next to that of controlling the People's Liberation Army," said a person from the Communist Party who preferred not to be named. The commission supervises all public security and judicial agencies -- police, national security, judicial, prosecution agencies and courts. A Chinese political scientist said that the party commission's "education rectification" campaign "closely resembles the 'Rectification Movement' directed by Mao Zedong." Click here to read.... [14]

‘It’s high time we created club of countries hit by US sanctions’ – Iranian envoy to Russia

The states that have been targeted by Washington’s sanctions could unite to jointly counter the US policy, Iranian Ambassador to Russia Kazem Jalali has said. “I believe it’s high time we created a club of countries hit by sanctions,” the envoy said in an interview with Kommersant newspaper, published on July 21. “Among its members will be many strong powers with developed economies: Russia, China and Iran.” Such states should help each other in order to offset the negative influence of US moves, Jalali said, adding that Washington does not want to see any rivals, whose positions in any region would be stronger than those of the US. “They want Russia to be weak, China to be economically subordinated to them, and Iran to become their colony,” the diplomat claimed. Jalali said on May 21 that partnership between Russia and Iran impedes the influence of external factors on their relations, TASS reported. Click here to read.... [15]

Gulf dispute has gone on too long, U.S. envoy says on visit

U.S. Special Envoy for Iran Brian Hook said on July 26 a rift between Qatar and some of its other Gulf Arab allies had lasted too long and urged them to rebuild trust and unity. Gulf States Saudi Arabia, the United Arab Emirates, Bahrain and non-Gulf state Egypt cut ties with Qatar in June 2017 over accusations it supports terrorism. Doha denies the charges and says the bloc aims to infringe its sovereignty. The United States, along with Gulf state Kuwait, has so far unsuccessfully tried to mediate the dispute, which Washington sees as a threat to efforts to contain Iran. "The dispute has continued for too long and it ultimately harms our shared regional interests in stability, prosperity and security," Hook told reporters from Qatar after meeting with the Gulf state's foreign minister. "Bringing an end to this dispute really will advance the collective interests of all the parties to this conflict." Click here to read.... [16]

U.S., Russia to hold first space security talks since 2013

The United States and Russia next week will conduct their first formal, bilateral talks on space security since 2013, following a U.S. allegation that Russia tested a space-based anti-satellite weapon this month, a U.S. official said on July 24.Washington hopes to promote norms of responsible behaviour in outer space, the U.S. assistant secretary of State for international security and non-proliferation, Christopher Ford, said, calling for greater stability, predictability and crisis management tools. A U.S. State Department spokesman said the talks would take place on July 27 in Vienna.Ford told reporters the United States believed Russia and China have already turned space into "a war-fighting domain," noting the U.S. Space Command has said it has evidence that Russia tested a space-based anti-satellite weapon on July 15. Click here to read.... [17]

‘Considerable gaps’: UK negotiator says deal with EU can still be reached in September

Britain can still reach an agreement with the European Union in September, the UK’s Chief Negotiator David Frost said on July 23. The statement comes even after the latest round of talks on a future relationship ended with “substantial areas of disagreement.” Since Britain left the bloc in January, talks on a trade agreement and other ties have all but stalled. Each side has accused the other of failing to compromise before the transition period runs out at the end of this year.Frost said the EU’s proposals failed to meet the UK government’s demand to be treated as an independent country. The chance of reaching an “early understanding on the principles underlying any agreement” will not be reached in July, with the two sides unable to breach the gap over fair competition and fisheries, Reuters quoted the negotiator as saying. Click here to read.... [18]

Macron urges EU action & sanctions over ‘provocations’ in E. Mediterranean

French President Emmanuel Macron on July 23 said it would be a serious error by the EU to not respond to what he described as provocations in the eastern Mediterranean. Macron also said he wants more sanctions on those who violate Greek and Cypriot maritime space. “In this part of the Mediterranean, which is vital for our two countries, energy and security issues are essential,” Macron told reporters alongside his Cypriot counterpart, Nicos Anastasiades. “What’s at stake is a power struggle in particular of Turkey and Russia which are asserting themselves more and more and in the face of which the EU is still doing too little,” Reuters quoted Macron as saying. “It would be a serious mistake to leave our security in the Mediterranean in the hands of other actors. This is not an option for Europe and it is not something that France will let happen,” the French president said. Click here to read.... [19]

Russian Oil Grab in Libya Fuels U.S.-Kremlin Tensions in Mideast

Military contractors linked to the Kremlin have seized control of two of Libya’s largest oil facilities in recent weeks, heightening tensions between Russia and the U.S. over Moscow’s growing footprint in the turbulent North African nation. Since June, armed fighters from the Wagner Group, a Russian firm with ties to the Russian government, have moved in to secure Libya’s largest oil field and its most important oil-exporting port, Es Sider. The advance has helped Libyan warlord Khalifa Haftar maintain a blockade of the country’s petroleum exports in defiance of U.S. pressure to restart them, according to Libyan and Western officials. The U.S. Africa Command has taken the unusual step of revealing Russian mercenary deployments in Libya through a series of public statements accompanied by satellite photos and other imagery. Click here to read.... [20]

Putin says Russian navy will be armed with hypersonic weapons

Russian President Vladimir Putin announced on July 26 the Russian navy's capabilities were growing and that it would be equipped with hypersonic nuclear strike weapons and underwater nuclear drones. According to Putin, Russia would be armed with 40 new vessels this year but he did not specify when it would receive new hypersonic weapons. The Russian defense ministry said the weapons were in their final phase of testing. "The widespread deployment of advanced digital technologies that have no equals in the world, including hypersonic strike systems and underwater drones, will give the fleet unique advantages and increased combat capabilities," Putin said in St Petersburg at an annual naval parade that displays the country's best nuclear submarines, ships and naval aviation. Earlier this week Putin attended a ceremony of keel-laying of new warships in Crimea and said Russia needs a strong navy to "help maintain a strategic balance and global stability." Click here to read.... [21]

China shuts Houston consulate as ordered by US, fuelling tensions

China has closed its consulate general in Houston as ordered by the United States, the U.S. State Department said on July 24 after labelling the mission "a hub of spying and intellectual property theft," signalling that tensions between the world's two major powers have risen to their highest level in decades. In retaliation, the Chinese government has compelled the United States to shut its equivalent liaison office in the southwestern city of Chengdu in a development that could hurt their future diplomatic relations. On July 25, Chinese media reported the gate of the U.S. consulate general in Chengdu has been closed, indicating that Washington has begun work on its closure. Click here to read.... [22]

Pentagon chief Esper hopes to visit China this year ‘to discuss issues of mutual interest’

US Defense Secretary Mark Esper said on July 21 he hopes to visit China by the end of the year to discuss areas of mutual interest. The statement came even as the Pentagon chief condemned Beijing’s maritime activity in the South China Sea, Reuters reports. “Before the year is out, I hope to visit the PRC for the first time as secretary,” Esper said, using an acronym for the People’s Republic of China. The trip would help “enhance cooperation in areas of common interest, establish the systems necessary for crisis communications and reinforce our intentions to openly compete in the international system,” Esper added. The defense secretary also said that he had not given any orders to withdraw US troops from South Korea. Click here to read.... [23]

Ukraine sceptical of American LNG gas pipe dreams

The US is supporting Poland's bid to create a political counterweight to Germany in the eastern parts of the EU. This time it's not promising troops on the ground, but long-term gas contracts…with Ukraine.US liquefied natural gas (LNG) is "molecules of US freedom exported to the world." That is according to Steven Winberg, US assistant secretary for fossil energy. And that freedom could soon be boldly going in Ukraine's direction, with talks over long-term LNG supplies that would be transported via Poland into the ex-Soviet republic. However, many in Ukraine and elsewhere believe there is no need for such plans. In May, the Ukrainian government preliminarily approved the text of a memorandum on the prospects for importing LNG from the US, with the supply of 5.5 billion cubic meters (bcm) of natural gas annually over 20 years. Click here to read.... [24]

Medical

German sniffer dogs show promise at detecting coronavirus

Scientists at the University of Veterinary Medicine Hanover have found that trained sniffer dogs could be used to detect COVID-19 in human samples with a relatively high rate of accuracy, a study published on July 23 revealed. Eight sniffer dogs from the German Bundeswehr were trained for only a weekto distinguish between the mucus and saliva of patients infected with coronavirus and non-infected individuals. The dogs were then presented with positive and negative samples on a random basis by a machine. The animals were able to positively detect SARS-CoV-2 infected secretions with an 83% success rate, and control secretions at a rate of 96%. The overall detection rate, combining both, was 94%.Click here to read.... [25]

With no new law to curb drug costs, Trump tries own changes

Unable to land the big deal with Congress to curb drug costs, President Donald Trump on July 24 moved on his own to allow imports of cheaper medicines, along with other limited steps that could have some election-year appeal. At a White House ceremony, Trump signed four executive orders. One was about importation. The others would direct drug maker rebates straight to patients, provide insulin and EpiPens at steep discounts to low-income people, and use lower international prices to pay for some Medicare drugs. Click here to read.... [26]

India begins 1st human trials of potential novel coronavirus vaccine

India began its first human trials of a novel coronavirus vaccine candidate as the world's second-most populous country recorded nearly 49,000 new cases. The All India Institute of Medical Sciences, a premier teaching hospital in the capital of New Delhi, says it has administered the first dose of a trial COVID-19 vaccine on July 24. The candidate vaccine, Covaxin, is among nearly two dozen that are in human trials around the world. AIIMS is among the 12 sites selected by the Indian Council for Medical Research for conducting the two-phase randomized, double-blind, placebo-controlled clinical trials of Covaxin. Click here to read.... [27]

Coronavirus Vaccine Contender CureVac Files to Go Public in U.S.

CureVac, a competitor in the race for a coronavirus vaccine, has filed for an initial public offering in the U.S. The company in its filing on July 24 listed the size of its offering as $100 million, a placeholder that will likely change. Terms of the share sale will be disclosed in a later filing. CureVac, based in Tubingen, Germany, could raise $150 million to $200 million, valuing the company at $1 billion, Bloomberg has reported. That valuation could change depending on whether regulators approve a vaccine. The filing follows an agreement in June by the German government to acquire 23% of the company for 300 million euros ($349 million) via development bank Kreditanstaltfuer Wiederaufbau, known as KfW. The offering, confirming the Bloomberg report, is being led by Bank of America Corp., Jefferies Financial Group Inc. and Credit Suisse Group AG. The company, to be renamed CureVac NV and incorporated in the Netherlands, is planning to list its shares on the Nasdaq Global Market under the symbol CVAC. Click here to read.... [28]

Blood test may identify COVID-19 patients who need steroids

A blood test may help identify coronavirus patients who would benefit from steroids early in their illness, researchers said, after a gold-standard trial published last week showed dexamethasone reduced deaths in COVID-19 patients who needed oxygen or mechanical ventilation. In a report in the Journal of Hospital Medicine on July 22, doctors said two other widely available steroid drugs are also helpful. They studied more than 1,800 hospitalized COVID-19 patients, including 140 who were treated in the first 48 hours with dexamethasone, prednisone, or methylprednisolone. Overall, the steroids did not appear to reduce rates of mechanical ventilation or death. However, early steroid treatments in patients with high levels of C-reactive protein (CRP) in their blood - indicating high levels of inflammation - reduced the chance of mechanical ventilation by 80% and the risk of death by 77%. Using CRP levels to identify COVID-19 patients who might benefit from steroids is a potentially good idea, the doctors say. But to prove that, and also to see whether different steroids might yield different results, a randomized controlled trial is needed. Click here to read.... [29]