Global Developments and Analysis: Weekly Monitor, 17 August - 23 August 2020

Economic

‘Famine of biblical proportions’ looms over humanity due to Covid-19, UN food chief warns

“All the data we have, including WFP forecast that the number of people experiencing malnutrition will grow by 80 percent by the end of the year … points to a real disaster,” David Beasley, Executive Director of the UN World Food Program (WFP), said. This year some 138 million people in 83 countries rely on WFP for their food supply, the official said. For many of them the UN humanitarian body is the “last hope for survival”. In South Sudan 1.6 million people were added this year to the 5 million already requiring assistance. In Yemen, the WFP feeds 13 million. The situation in Lebanon became particularly grim after a devastating blast two weeks ago in Beirut. The explosion not only destroyed stockpiles of grain, but also cut supply chains because the damaged port was used to deliver some 85 percent of the food that Lebanon needs. Click here to read.... [2]

China cautious on hitting back at US companies after Huawei sanctions

The latest Huawei sanctions are a clear provocation, analysts say. Mei Xinyu, a researcher affiliated with China’s commerce ministry, said the telecoms group — which is central to Beijing’s ambitions in 5G mobile technology — is far more important strategically than ByteDance and Tencent. The US commerce department’s latest curbs on Huawei have been described as a “death sentence” by some. Mr Mei said Beijing’s entity list was “a show of readiness to fight” but believes that officials may instead try to take the high ground rather than engage in tit-for-tat measures. “Given the current practices of the US, the most beneficial approach for China is not to simply retaliate, but rather to create the image that China is the most reliable supplier and customer, and will not arbitrarily break off supply or contracts,” he said. Click here to read.... [3]

Thousands of tons of cargo to be transported via Russian Arctic sea route in 2020

About 12,000 tons of cargo is planned to be transported this year via Russia’s Northern Sea Route (NSR), according to Petr Savchuk, Deputy Head of the Russian Federal Fishery Agency. He was talking to journalists this week at the official ceremony to mark the world’s largest sailing ship, ‘Sedov’, arriving at the Russian Far Eastern port of Vladivostok. The sailboat, which is taking part in the round-the-world voyage, will sail further to Kaliningrad along the Northern Sea Route. According to President Vladimir Putin, the route is “the key to the development of the Russian Arctic regions of the Far East,” and the goal is to make it a “truly global, competitive transport artery.” Putin plans on having NSR cargo traffic significantly increased up to 80 million tons a year. Ships will mainly transport liquefied natural gas, oil, and coal. Click here to read.... [4]

Huawei and ZTE slow down China 5G rollout as US curbs start to bite

Both Huawei and ZTE told some suppliers to slow down shipments of certain 5G base station-related products in June, so the Chinese companies could redesign products and change some equipment to remove as much US content as possible. It is part of a “de-Americanisation” effort by China after the Trump administration tightened export controls on Huawei, multiple sources said. The move by the two homegrown telecoms equipment suppliers coincides with Chinese carriers’ cautious stance over investing in 5G infrastructure, amid uncertainty over the likely returns despite the hype created by authorities and industries that are keen to profit from 5G deployment. “We were told by our client to slow down our shipments to them in June, and the shipments almost came to a complete stop in July,” a ZTE components and parts supplier executive told Nikkei. Click here to read.... [5]

Lack of trading data hits ETF growth in Europe

Exchange traded fund distribution in Europe is being hindered because market data providers have shown little interest in creating a shared database of equity prices and trading volumes, market participants say. The comments come as a new report by PwC finds that the EU’s Mifid II regime introduced in 2018 has had only a limited effect on improving transparency in market data in the region. The authors conclude that flaws in the availability, quality and consistency of trading data are impeding the distribution of ETFs in Europe. Improving trading data aggregation has been a major priority for EU policymakers, who have called for the creation of a consolidated tape — a type of electronic system in which data feeds from different exchanges are banded together to create a summary across all markets. Click here to read.... [6]

US WeChat users sue Trump over order banning messaging app

Some U.S.-based users of WeChat are suing President Donald Trump in a bid to block an executive order that they say would effectively bar access in the U.S. to the hugely popular Chinese messaging app. The complaint, filed Aug 21 in San Francisco, is being brought by the non-profit U.S. WeChat Users Alliance and several people who say they rely on the app for work, worship and staying in touch with relatives in China. The plaintiffs said they are not affiliated with WeChat, nor its parent company, Tencent Holdings.In the lawsuit, they asked a federal court judge to stop Trump's executive order from being enforced, claiming it would violate its U.S. users' freedom of speech, free exercise of religion and other constitutional rights. Click here to read.... [7]

China criticizes Trump's decision to delay next trade talks

China on Aug 19 criticized the administration of U.S. President Donald Trump for postponing their next ministerial trade talks on the grounds of China's failure to curb the outbreak of the new coronavirus in an early stage. "China has performed its duties and obligations" in an "open, transparent and responsible manner," Foreign Ministry spokesman Zhao Lijian told reporters. "China's tremendous sacrifices and major contributions to the global fight against the epidemic are obvious." On Aug 18, Trump was quoted as saying by the White House, "I postponed talks with China. You know why?...I don't want to deal with them now. With what they did to this country and to the world, I don't want to talk to China right now." Click here to read.... [8]

Hong Kong security law sparks race for Asia's next financial capital

Hong Kong has long been a gateway to China's market, and its status will continue to be bolstered by its unmatched access and the size of its equity and bond markets. But the question of whether it will continue to also be Asia's central business hub has been cast into doubt. "If the new law leads to further unrest and exodus of talent, then the question over its future as a financial hub becomes more serious," said Stephen Roach, the former Asia chairman of Morgan Stanley and now a senior fellow at Yale University's Jackson Institute for Global Affairs. Ironically, another category of businesses already fleeing the encroachment of the Chinese state: Chinese financial interests and family offices that invest on behalf of wealthy mainland individuals who fear scrutiny by Beijing.

Click here to read.... [9]

US moves to shut China out of shaping APEC data protections

The U.S. has proposed separating a key international framework for data protection from the Asia-Pacific Economic Cooperation forum in its growing rift with China on technology. APEC's Cross-Border Privacy Rules system is a certification that companies can join to prove they meet internationally recognized data protections, allowing them to transfer such personal information as names and payment histories across borders without the onerous requirements that normally apply. At a working-level meeting in June, the U.S. proposed separating the CBPR from APEC and allowing countries outside of the forum, like Brazil, to participate, multiple sources said. By moving the framework out from under APEC, of which China is part, the U.S. is seen trying to keep valuable data from making its way to Beijing. Nine countries and regions, including the U.S., Japan, Australia and Singapore, currently participate in the CBPR. But the framework is still in its early stages. Click here to read.... [10]

Japan pushes defense equipment exports with corporate expertise

The Japanese government will work with the private sector to promote sales of defense equipment to India, Indonesia, Vietnam and Malaysia, helping to provide market research and other expertise in a sector long barred from exports. Japan has struck only four deals involving components since the 2014 revision of a rule that had prohibited the export of weapons. With no deliveries of finished equipment over the past six years, the government attributes the slow activity to inexperience finding sales channels due to the long-standing export ban. It will work with trading houses and other companies with operations abroad. The Acquisition, Technology & Logistics Agency under the Defense Ministry will choose a company to conduct market research as early as next month. A proposal will be crafted based on the budgets and needs of each country, with the goal of identifying promising items for export. Based on the proposal, the government will conduct negotiations with the four nations starting next spring. Click here to read.... [11]

US-Australia bid for 'China free' rare earth faces challenges

The U.S. and Australia have launched an ambitious project to create a supply chain for rare-earth metals that does not involve China, an effort that has drawn strong market interest but could face cost obstacles. Australian rare-earth mining company Lynas announced that it has signed a first-phase contract with the U.S. Department of Defense to build a Texas processing facility. "We are very pleased to have signed a contract with the DoD for this Phase One work," Lynas CEO Amanda Lacaze said in a July 27 statement, promising to deliver the facility "in a timely and low-risk manner." Lynas and American partner Blue Line will build a facility for such heavy rare earths as dysprosium, used in magnets. The funding from the Defense Department will go toward "a detailed market and strategy study plus detailed planning and design work" for the facility, Lynas said. Click here to read.... [12]

Pandemic Has Online Sellers Leaning on Cloud

Retailers more than ever are leaning on cloud computing to capitalize on a surge in online shopping without overloading their information-technology systems. Sparked by the coronavirus pandemic, the upswing in e-commerce is a boon to most cloud vendors, but especially Google’s cloud-services unit.Google Cloud, a division of Alphabet Inc., trails far behind front-runners Amazon.com Inc.’s Amazon Web Services and Microsoft Corp.’s Azure, with a 6% share of the global cloud market, according to research firm Canalys. AWS and Azure together account for more than half the market, the firm estimates. But a strategic focus on retail-sector services, which predates the crisis by roughly a year, has attracted deep-pocketed customers like Wayfair Inc. and Etsy Inc. Click here to read.... [13]

Strategic

'Cold War mentality': China will respond with 'necessary countermeasures' to deployment of US missiles in Asia Pacific

Beijing has warned the US against deploying its ground-based missiles in the Asia Pacific region, promising to take "countermeasures" and threatening any states that host such weaponry with consequences. "The US attempt to deploy land-based, medium-range missiles is consistent with its increasing military presence in the Asia Pacific and so-called 'Indo-Pacific strategy' over the past years, a typical demonstration of its Cold War mentality," China's Foreign Ministry spokesman Zhao Lijian said on Aug 21.The statement came in response to remarks that were recently made by US Special Presidential Envoy for Arms Control Marshall Billingslea in an interview with Japanese media. The high-ranking official said the US intends to discuss the deployment of missiles with some Asian countries. Click here to read.... [14]

US and Japan plan fleet of low-orbit satellites to track missiles

Japan and the U.S. plan to deploy a network of small satellites in low-Earth orbit to detect and track next-generation missiles being developed to evade current defense systems, Nikkei has learned.The project is expected to cost over $9 billion under a U.S. plan and be operational by the mid-2020s. The two sides will hammer out the details of the arrangement. The move is in response to the mounting breadth and sophistication of the missile arsenals being developed by China, Russia and North Korea. It also comes as nations begin to look at space as a final frontier for warfare. Click here to read.... [15]

‘No colonialist power or threat’ can deter Turkey’s operations in E. Mediterranean – Erdogan

President Recep Tayyip Erdogan has said Turkey will continue seeking natural resources in the eastern Mediterranean despite any threats. Ankara also expects actors in the region to take steps to de-escalate tensions. Turkey is locked in a dispute with Greece and Cyprus over overlapping claims to areas potentially rich in resources. Ankara has sent two survey vessels to areas claimed by the three countries. Cyprus said on Aug 18 it was willing to engage with all its neighbours on defining maritime boundaries. “Turkey is determined to seek its rights in the eastern Mediterranean until the end,” Erdogan said in a speech in Ankara. “No colonialist power or threat can deter our country from the oil and natural gas resources believed to be in the region.” Click here to read.... [16]

‘Nothing has moved’: No breakthrough in latest round of EU-UK post-Brexit talks, says Brussels

The latest round of negotiations between Britain and the European Union on their future relationship resulted in no breakthrough on key sticking points this week, an EU official has said. “Nothing has moved,” an official involved in the talks told Reuters on Aug 21. They cited some technical exchanges that “were not entirely pointless but nothing noteworthy on the topics that matter.”As the UK and the EU continued talks on their relationship after a post-Brexit transition period runs out at the end of 2020, sources in Brussels expressed hope that a final agreement could be ready for an October 15-16 EU leaders’ summit. On Aug 20, diplomats were quoted as saying that the EU had so far rebuffed British calls for talks on a deal to allow London to send unwanted migrants back to Europe from 2021. Click here to read.... [17]

Taliban set powerful negotiating team for intra-Afghan talks

The Taliban's chief has finalized a negotiating team that is to have sweeping decision-making powers in upcoming intra-Afghan negotiations, the top Taliban negotiator told the Associated Press on Aug 23. Maulvi Hibatullah Akhunzada hand-picked the 20-member team, 13 of whom come from the Taliban's leadership council -- around half of the council's total members. The negotiating team will have the authority to set agendas, decide strategy and even sign agreements with the political leadership of the Afghan government in Kabul, lead Taliban negotiator Sher Mohammad Abbas Stanikzai told AP. "This is a powerful team ... All decision-making powers are with the negotiation team," Stanikzai said. Click here to read.... [18]

US suspends extradition, two other agreements with Hong Kong

The United States on Aug 19 stepped up pressure against Beijing's actions to erode the freedom of Hong Kong, announcing the suspension or termination of extradition and two other agreements that have treated the former British colony differently from mainland China. The three agreements cover the surrender of fugitive offenders, the transfer of sentenced persons, and reciprocal tax exemptions on income derived from the international operation of ships, State Department spokeswoman Morgan Ortagus said in a statement. The U.S. special treatment of Hong Kong is believed to have helped the territory become an attractive investment destination and international financial hub. Click here to read.... [19]

Global leaders condemn Mali coup amid worry about extremists

African and Western leaders condemned on Aug 19 the junta that forced Mali's president from power, warning the coup was a deep setback for the West African nation that could threaten the battle against Islamic extremism. Soldiers calling themselves the National Committee for the Salvation of the People promised that they would ultimately hand power to a transitional civilian government but gave no timeline. Junta members urged Malians to return to business as usual. The African Union suspended Mali from the bloc, and the West African bloc ECOWAS said it would stop all economic, trade and financial flows and transactions between member-states and Mali. Click here to read.... [20]

Trump reaffirms plan to withdraw all US troops from Iraq

President Donald Trump on Aug 20 reaffirmed his plan to withdraw all U.S. troops from Iraq as quickly as possible as he met with the prime minister of Iraq to discuss ways to rein in pro-Iran militias in the country and counter residual threats from Islamic State sleeper cells."We look forward to the day when we don't have to be there," Trump said during an Oval Office meeting with Iraqi Prime Minister Mustafa al-Kadhimi. "We were there and now we're getting out. We'll be leaving shortly and the relationship is very good. We're making very big oil deals. Our oil companies are making massive deals. We're going to be leaving and hopefully we're going to be leaving a country that can defend itself. "There are more than 5,000 American troops in Iraq now. Last month, the top U.S. general for the Middle East said he believed the U.S. will keep a smaller but enduring presence in the country. Click here to read.... [21]

With U.S. Backing, Iraq Pushes for Energy Rapprochement with Saudis

The Trump administration is urging Iraq to proceed with a project to connect its power grid with Saudi Arabia and other Gulf states, among steps to reduce Baghdad’s longstanding dependency on Iranian energy, U.S. and Arab officials said. The grid-connection venture has been the subject of intensive consultations in recent months and was discussed during Iraqi Prime Minister Mustafa al-Kadhimi’s visit to Washington last week. But now the parties are moving toward sealing and executing the component deals, which would mark a major rapprochement between Iraq and former Arab adversaries who clashed in the 1991 Persian Gulf War. Iraqi Finance Minister Ali Allawi said Aug 21 the project was “on the verge of being defined and designed and put out to tenders.” A Saudi energy minister spokesman confirmed that agreement “is advancing toward completion” and includes an option for a direct connection between Iraq and Saudi Arabia. Click here to read.... [22]

Pompeo tours Middle East as part of Trump's Arab-Israeli push

US Secretary of State Mike Pompeo arrived in Israel on Aug 24 to start a five-day Middle East tour focused on Israel's normalising of ties with the United Arab Emirates and pushing other Arab states to follow suit. Pompeo, wearing a face mask in the colours of the US flag, was due to meet Prime Minister Benjamin Netanyahu and in coming days also visit Sudan, Bahrain and the UAE, the State Department said. Washington and its close ally Israel hope the Jewish state will soon be able to normalise ties with other regional countries, including several that share their deep animosity with Iran. Click here to read.... [23]

Flooding Again Pounds China’s Three Gorges Dam

The water level at the Three Gorges reservoir started to recede after reaching 167.65 meters at 8 a.m. on Aug 22, the highest since the reservoir was built in 2003, according to the Changjiang Water Resources Commission. The reservoir saw an inflow of 75,000 cubic meters per second at the peak of the flood and a maximum outflow at 49,400 cubic meters per second, with some of the floodwater contained in the reservoir. Yangtze River, China's longest, on Aug. 17 recorded the fifth flood of the year in its upper reaches after a spell of heavy rainfall, three days after the fourth flood was recorded on Aug. 14. The fifth flood of Yangtze, along with a flood of Jialing River, resulted in severe flooding of Chongqing in southwest China. This made the city activate a top-level response to the floods on Tuesday the highest rung in the country's four-tier emergency response system.The floods caused an emergency evacuation of 251,000 people. Click here to read.... [24]

Diplomatic row over GSOMIA dissipates

Korea and Japan appear to have calmed tensions over whether to keep their intelligence-sharing pact intact as the date for its cancellation passed without any action from either country. This is a complete about-face from last year when the neighbouring countries engaged in a harsh diplomatic spat over the issue, initiated by Tokyo's tightened controls on exports to Seoul. At that time Korea suspended its withdrawal following a U.S. request to maintain the pact, or the General Security of Military Information Agreement (GSOMIA). Opinions are rampant that this time it would not have been easy for the government to have again raised the issue of cancelling the GSOMIA as it is facing tough internal and external political and diplomatic situations. The government's reluctance to raise the issue may mainly be due to a possible backlash from the United States, which is in an ongoing diplomatic row with China. Click here to read.... [25]

Haftar rejects GNA's call for Libya ceasefire

Renegade military commander Khalifa Haftar's forces have dismissed a ceasefire announcement by Libya's internationally recognised government as a "marketing" stunt. Ahmed Mismari, spokesman for Haftar's self-styled Libyan National Army (LNA), said on Aug 23 rival forces from the war-torn country's west were mobilising around front lines in the centre of the country.In a media briefing, he said the eastern-based forces were ready to respond to any attempted attack on its positions around the coastal city of Sirte and Jufra, further inland. Mismari's comments were the first by the LNA after the announcement on Aug 21 of a ceasefire and a call for the resumption of oil production by the Tripoli-based Government of National Accord (GNA), headed by Prime Minister Fayez al-Sarraj. Click here to read.... [26]

Japan's 'medical diplomacy' in ASEAN aims to sap China clout

Japanese Foreign Minister Toshimitsu Motegi has embarked on an expansive tour of Southeast Asia, offering medical assistance to help countries contain the spread of the coronavirus.It is only his second overseas trip since the pandemic outbreak, following a visit to the U.K. earlier this month. As the first leg of the tour, Motegi visited Singapore and Malaysia from Wednesday. He will continue his tour of the region this week to spell out Japan's assistance plans, traveling to Papua New Guinea Thursday, followed by Cambodia, Laos and Myanmar. Agreements are already in place for Japan to provide hospital beds and ambulances to some members of the Association of Southeast Asian Nations. In July, Japan said it will provide the equivalent of 11.6 billion yen ($109 million) in medical equipment and other supplies to five countries along the Mekong River -- Cambodia, Laos, Myanmar, Thailand and Vietnam. Click here to read.... [27]

Suu Kyi revisits Panglong peace initiative ahead of election

Myanmar's State Counsellor Aung San Suu Kyi is making her fourth push for peace with insurgent ethnic minorities ahead of national elections in November when the three-day 21st century Panglong Conference opens today in Naypyitaw, the national capital. There have been three conferences since Suu Kyi's National League for Democracy (NLD) won a landslide election victory in 2015, and was able to form a civilian government after decades of military rule. The NLD's election prospects on Nov. 8 will be affected by criticism of ongoing wars with minorities that date back to 1948 and the end of British rule. With just months to go, Suu Kyi's decision to press ahead with another Panglong conference following a number of postponements is clearly intended to show that peace efforts are making progress. Click here to read.... [28]

China pushes Asia diplomacy to resist Western backlash

Facing a growing backlash from the U.S. and Europe over Hong Kong, China has stepped up a diplomatic offensive to bolster relations with Asian neighbours and avoid international isolation. Top Chinese foreign affairs official Yang Jiechi and South Korean national security adviser Suh Hoon agreed on Aug 22 that Chinese President Xi Jinping will visit South Korea once the COVID-19 situation is brought under control. As China clashes with the U.S., the U.K. and Australia over its tightening grip on Hong Kong, it is looking to South Korea, Japan and Singapore for diplomatic support. But with some neighbours wary of being dragged into the prolonged Beijing-Washington standoff whether the Chinese strategy will pay off remains to be seen. "President Xi will prioritize a visit to South Korea," South Korea's presidential Blue House quoted Yang as saying. Specifics of the timing are to be hashed out in the future. Xi last visited South Korea in July 2014. Click here to read.... [29]

Medical

Mutation making coronavirus more infectious ‘may be a good thing’, says disease expert

An increasingly common mutation of the coronavirus seen across the world – but mainly in former epicentres of the pandemic – that is more infectious but less deadly may prove to be our saving grace, a leading disease expert says. The rise in the prevalence of the D614G mutation in Europe, North America and parts of Asia coincides with a drop in Covid-19 death rates, and “maybe that’s a good thing,” argues Paul Tambyah, senior consultant at the National University of Singapore and president-elect of the International Society of Infectious Diseases. Tambyah highlights that it is the natural evolution for viruses to become less virulent as they mutate, in a bid for longer-term survival – if they kill their hosts too quickly, viruses tend not to last too long in the wild. Click here to read.... [30]

FDA Authorizes Convalescent Plasma for Covid-19 Use

The Food and Drug Administration authorized use of convalescent plasma, the antibody-rich blood component taken from recovered Covid-19 patients, for the treatment of serious coronavirus cases. The agency’s action on Aug 23, called an emergency-use authorization, permits use of the treatment on hospitalized Covid-19 patients. The Wall Street Journal reported last month the move was coming. For Covid-19 patients and the doctors who treat them, the designation opens up the possibility for faster and easier access to a promising treatment. But the FDA said more clinical studies are necessary for definitive proof of the therapy’s effectiveness. Click here to read.... [31]

Could Germany's COVID concert experiment help arenas hold large events again?

The ambitious event, organized by the University Medical Center of Halle, was held to collect data on crowd behaviour in and around the arena to better assess the risk associated with holding such large events in the future, as Michael Gekle, dean of the medical faculty at the Halle University, told DW. He hopes that the data will "contribute to national decisions as to whether an event should take place or not, thanks to reliable predictions as to the risk of additional infections related to such an event." Every participant had to test for COVID-19 48 hours ahead of the event and could only participate with a negative result; people with symptoms or recently returning from a high-risk country were not allowed to take part. On the morning of the study, the participants' temperature was taken before they were handed an FFP2 mask, which blocks respiratory droplets through which the disease could be transmitted, as well as a contact tracer to track their movements, and a bottle of disinfectant mixed with a fluorescent marking spray to determine the surfaces they'd touch throughout the day. Click here to read.... [32]