Global Developments and Analysis: Weekly Monitor, 31 August - 06 September 2020

Economic

Central bankers need to overhaul outdated thinking on labour markets

Federal Reserve Chair Jerome Powell has been more forthright than his predecessors about the relevance of monetary policy for employment. Powell, therefore, has become an advocate for actively pursuing an employment goal as part of the central bank's operational objectives. While the law governing the Fed has listed full employment as one of its goals for more than four decades, from the inflation spike of 1979 until just recently, the Fed leadership has tended to focus on the inflationary risks of overheating labour markets. This view emphasized considering employment through the lens of managing it as a means to price stability, rather than as an end unto itself. Eighty-plus percent of central banks around the world do not even have an employment goal included as part of their mandates, according to the Bank for International Settlements, further distancing themselves from labour market outcomes. Click here to read.... [2]

Meaningful servicification key element in modern industrialization: UNCTAD chief

Trade in services must underpin most national and regional development strategies, as meaningful servicification needs to be a key element in countries' strategies for modern industrialization, Mukhisa Kituyi, Secretary-General of UN Conference on Trade and Development (UNCTAD) said on 04 Sept. In his online speech at the opening of the 2020 China International Fair for Trade in Services in Beijing on 04 Sept, the UNCTAD chief noted that services represent two thirds of the global economy, more than half of the total employment and a quarter of world trade. He estimated that services are also responsible for two thirds of the total productivity growth in developing countries."A services-led structural transformation is today a viable development strategy for many developing countries, and efforts at addressing challenges posed by the COVID-19 pandemic can be a catalyst at setting this transformation in motion," he said. Click here to read.... [3]

China Focus: Understanding "dual circulation" and what it means for world

Ever since China's top leadership floated the new economic development pattern of "dual circulation" in May, the market is abuzz with interpretations of how the model will work and its knock-on effects on the pandemic-rattled global economy. Defined as a policy that "takes the domestic market as the mainstay while letting internal and external markets boost each other," the model has been viewed by analysts as a viable solution for China to build up resilience against external shocks and share its opportunities for development with the rest of the world. Hua Changchun, an economist with Guotai Junan Securities, said China's ever-expanding internal market is "a strategic asset" and has been "the source of the country's confidence and strength in pursuing higher-level opening up." Click here to read.... [4]

Facebook threatens to block Australians from SHARING NEWS, as Big Tech & media battle for ad revenue

Australian Facebook users may soon find themselves unable to share news, the social media giant has warned, citing a new law which has pitted Big Tech firms against major media outlets demanding a cut of their revenue. The draft regulation, proposed by the Australian Competition and Consumer Commission (ACCC), would mandate that platforms such as Facebook and Google give news organizations a piece of their digital marketing earnings. While supporters of the law argue the platforms unduly benefit from hosting news content, Facebook insists the ACCC “misunderstands the dynamics of the internet,” and that the regulation would force the company to bar Australian users from sharing news stories. The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true. Click here to read.... [5]

EU presents new strategy on 'critical raw materials'

The European Commission on Sept 03 announced plans to diversify its access to rare earth materials used in producing "strategic technologies" and consumer goods like smart phones, electric cars and televisions. Around 98% of rare earth minerals used in the EU come from China. Chile supplies 78% of Lithium, and South Africa 71% of platinum. The EU said it is concerned over dependence on a few countries for raw materials that present a high supply risk. By 2050, the EU will need around 60 times more lithium, essential for e-mobility, and 15 times more cobalt, which is used in electric car batteries. Also, the EU could need 10 times more rare earth minerals which are used for permanent magnets in electric vehicles, digital devices or wind generators. Click here to read.... [6]

Japan, India and Australia aim to steer supply chains around China

Japan, India and Australia agreed on Sept 01 to launch an initiative to achieve supply chain resilience in the Indo-Pacific region, in an apparent bid to reduce trade dependence on China -- a major trading partner for all three nations. In an online meeting, India's commerce and industry minister Piyush Goyal and Japanese and Australian counterparts Hiroshi Kajiyama and Simon Birmingham raised the need for a free, fair and predictable trade environment and called on like-minded nations in the region to take part. The ministers said in a joint statement they instructed officials to work out the details for a launch later this year. The development comes amid escalating Sino-American tensions, a standoff on the China-India border, and the COVID-19 pandemic. Many nations dependent on China for trade have suffered from supply disruptions, highlighting the need for diversification. Click here to read.... [7]

World food price index rises for the third month running

World food prices rose for a third month running in August, led by coarse grains, vegetable oils and sugar, the UN food agency said on Sept 04. The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 96.1 points last month versus 94.3 in July. The Rome-based FAO also said in a statement that worldwide cereal harvests remained on course to hit an annual record in 2020. The agency’s cereal price index rose 1.9 percent in August from the month before and 7 percent above its value a year earlier. Among the major cereals, sorghum, barley and rice prices rose the most, FAO said. Click here to read.... [8]

Pakistanis to protest arrival of Chinese fishing vessels

Fishermen in Pakistan will protest the arrival of 20 Chinese deep-sea trawlers that will fish in the exclusive economic zone off Sindh and Baluchistan provinces. The pressure group Pakistan Fisherfolk Forum has announced a campaign against the trawlers' arrival near Karachi. According to the PFF, fish stocks in coastal areas have already declined by more than 72% since last year due to uncontrolled fishing. Now they fear that the trawlers will further deplete Pakistan's marine resources. The trawlers arrived off the coast of Sindh and Baluchistan in the first week of August. They have not started fishing yet. It is not known which part of China they came from. Following the PFF's lead, fishermen in the southwestern city of Gwadar have also announced a protest campaign against the vessels. Click here to read.... [9]

Locusts now threatening parts of southern Africa, UN says

Locusts are threatening another part of Africa, with up to 7 million people in the southern region facing further food insecurity, the United Nations said on Sept 04. The outbreaks of African migratory locusts in Botswana, Namibia, Zambia and Zimbabwe are not related to the huge outbreak of billions of desert locusts that has affected East Africa for months, the U.N. Food and Agriculture Organization said. While far smaller, the southern outbreaks need quick attention to prevent a wider problem as farmers and others already struggle to recover from a serious drought last year and the economic effects of the COVID-19 pandemic, the U.N. agency said in a statement. Click here to read.... [10]

France Reveals $118 Billion Plan to Relaunch Economy

France said it plans to spend €100 billion ($118 billion) on jobs programs, green technologies and health care as it seeks to breathe new life into its economy, which has taken an outsize beating from the coronavirus pandemic. The recovery fund represents about 4% of France’s gross domestic product, more than any other big European country, and it aims to return France’s economy to pre-crisis levels by 2022, the government said. France’s economic struggles are a sign of how countries that imposed some of the world’s strictest lockdowns are finding it tough to get back on their feet. Click here to read.... [11]

Germany Expects V-Shaped Economic Rebound from Coronavirus

Germany’s economy is recovering faster than was anticipated a few months ago, helped by a mild and short coronavirus lockdown, a large-scale fiscal stimulus and Berlin’s close trade links with China, according to new government forecasts. The country’s gross domestic product should contract by 5.8% this year, a 0.5 percentage-point improvement on earlier forecasts and on par with the decline recorded in the wake of the 2008 financial crisis, the economy ministry said on Sept 01. Germany’s growth upgrade reflects the nation’s success in cushioning the coronavirus’s economic toll thanks to a light lockdown that left most factories and offices open, large-scale testing that helped to keep Covid-19 casualties low and heavy government spending that kept the pockets of furloughed workers topped up throughout the downturn. Exports to China, Germany’s largest trading partner, increased by 15.4% in June compared with the same month a year earlier, the federal statistics office said last month. Exports to the U.S. dropped by 20.7% over the same period. Click here to read.... [12]

Strategic

China eyes military footing in Thailand, Myanmar and Pakistan: US

China seeks to establish a logistics network that could cover much of the Indian Ocean, the U.S. Department of Defense said on Sept 01 in its mandatory annual report to Congress on Chinese military power. China has "likely considered" Myanmar, Thailand, Singapore, Indonesia, Pakistan, Sri Lanka and other countries in Africa and Central Asia as locations for military logistics facilities, according to the 200-page "Military and Security Developments Involving the People's Republic of China 2020." This marks the first time that such an observation has appeared in the report, said Zack Cooper, a research fellow at the Washington-based think tank American Enterprise Institute, in an AEI webinar. China has already made overtures to Namibia, Vanuatu and the Solomon Islands, the report noted. Click here to read.... [13]

China rejects Pentagon claims Beijing planning to double nuclear warhead stockpile

The report by the US Defense Department, which claims that Beijing plans to double the number of its nuclear warheads, is biased, the Chinese Foreign Ministry said. The statement by ministry spokeswoman, Hua Chunying, followed the release of the Pentagon's annual report to Congress on China's military operations on Sept 01. Among other things, the paper claimed that Beijing's nuclear warhead stockpile, which is currently estimated in the low 200s, "is projected to at least double in size" over the next decade. China's goal is to achieve a "nuclear triad," which includes developing a nuclear capable air-launched ballistic missile, while also modernizing ground and sea-based nuclear capabilities, it added. Click here to read.... [14]

Israel opens diplomatic relations with Muslim-majority Kosovo, while Serbia promises to move embassy to Jerusalem

Israel and Kosovo will establish diplomatic relations with each other, while Serbia will move its embassy in Israel to Jerusalem. Both moves came during US-backed talks in Washington. Prime Minister Benjamin Netanyahu’s press office announced his country’s recognition of Kosovo on Sept 04, making Israel the 98th UN member state to recognize the former Serbian province. Kosovo, in turn, will recognize Israel, becoming one of only a handful of Muslim-majority countries to do so. The move was announced as Serbian President Aleksandar Vucic and Kosovo’s Prime Minister Avdullah Hoti met with US President Donald Trump at the White House to discuss normalizing their economic relations, two decades after a devastating conflict between them ended with a NATO bombing campaign against Serbia. Click here to read.... [15]

Athens & Ankara agree to talks, Stoltenberg says, amid maritime tensions between NATO allies

Greece and Turkey will meet for talks to reduce the likelihood of clashes in the Eastern Mediterranean and to establish deconfliction mechanisms, NATO Chief Jens Stoltenberg has announced. The two states are NATO allies, but have been locked in a naval standoff for a month, after Ankara sent a research vessel into disputed waters near Cyprus. The vessel was launched after Greece signed a drilling agreement with Egypt, a move Ankara claims is designed to force it out of the energy-rich waters of the Eastern Mediterranean, even though Turkey signed a similar agreement with Libya last year. With the Turkish Navy currently holding live-fire drills near northern Cyprus, and France and Italy joining Greece for its own military exercises near Crete, tensions have steadily ratcheted upwards in recent weeks. Click here to read.... [16]

Brexit: UK plans to override parts of EU withdrawal deal

The UK government is planning legislation that will override key parts of the Brexit withdrawal agreement, British newspaper the Financial Times reported on Sept 06.The so-called internal market bill, due to be published on Sept 09, is expected to "eliminate the legal force of parts of the withdrawal agreement" in areas relating to state aid and Northern Ireland customs, according to the newspaper. Irish Foreign Minister Simon Coveney, who was key in negotiating the withdrawal agreement, tweeted that the reported plan "would be very unwise." The status of the UK's only land border with the EU, between Northern Ireland and the Republic of Ireland, has been one of the most difficult sticking points in negotiations. Johnson on Sept 06 also restated the deadline of October 15 for a free trade deal with the European Union, after which Britain would walk away from the post-Brexit negotiations if the two sides failed to reach a deal. Click here to read.... [17]

‘Suganomics’ from A to Z: policies of Japan’s PM frontrunner

The biggest difference between Mr Abe and Mr Suga lies in fiscal policy. Unlike Mr Abe, who leaned heavily on reflationist advisers like Etsuro Honda to pursue aggressive monetary easing, Mr Suga does not have anyone espousing that monetary theory in his brains trust. Mr Suga is more receptive to fiscal tightening. Thus, Mr Suga might take a more moderate approach that mixes an aggressive fiscal policy with spending reforms. He also overcame party resistance to implement a visa programme that opened the doors for unskilled foreign workers, a shift from the previous policy, which centred on internship programmes that often confine foreign workers to low-paying jobs. Mr Suga is prepared to maintain Mr Abe's direction on foreign policy, centred on the US-Japan alliance. Referring to the concentration of business production sites in China, Mr Suga said in a Nikkei interview in April that it was necessary to “diversify manufacturing bases over several countries.” Click here to read.... [18]

US under fire over sanctions on top ICC officials

Washington is facing international condemnation after imposing sanctions on top International Criminal Court officials over the tribunal’s probe into alleged war crimes by US troops and others in Afghanistan. The action constituted an attack on the rule of law and an interference with efforts to prosecute “grave crimes of concern to the international community”, the 123-country Hague-based tribunal said late on Sept 02 night. Washington announced earlier on Sept 02 that it had imposed a travel ban and asset freeze on ICC prosecutor Fatou Bensouda and a member of her office. The move escalates a US campaign against the court over its investigation into crimes allegedly committed in Afghanistan by American forces, as well as Taliban fighters and Afghan national troops. Click here to read.... [19]

'CANZUK' alliance idea makes waves with Indo-Pacific in flux

Once derided as a fringe movement, there is also evidence of growing support for CANZUK. While the four nations and the U.S. have long shared intelligence as part of the Five Eyes network, cooperation has expanded to include meetings between finance and welfare ministers. Senior politicians in the main center-right parties of Britain, Canada and New Zealand have voiced support for the alliance and Canada's Conservatives recently elected a CANZUK proponent as leader. Opinion polling in all four countries suggests broad support for increased cooperation between them, though what a CANZUK alliance would entail has not been strictly specified or scrutinized. Ambitions range from a superpower organization bound by NATO-like commitments, to more modest hopes of stepped-up trade and political exchanges. Click here to read.... [20]

APEC summit to be held online Dec. 4 due to virus pandemic

The annual summit of the Asia-Pacific Economic Cooperation forum will be held online Dec. 4 due to the coronavirus pandemic, an Asian diplomatic source said on Sept 04. The APEC summit was originally scheduled to be held Nov. 12. But, Malaysia, the current chair of the regional forum, has decided to postpone it by about three weeks and hold it virtually, according to the source.The source added that the leaders of the 21 member economies are expected to hold their meetings either during midday hours or in the evening Kuala Lumpur time.Malaysia is expected to formally announce the date soon.The host's original plan, drawn up before the pandemic, was for an in-person summit to be held in Kuala Lumpur and neighbouring Putrajaya on Nov. 12. Click here to read.... [21]

Taiwan unveils new passport to avoid confusion with mainland China

Taiwan on Sept 02 unveiled its redesigned passport that now emphasizes the word "Taiwan" to prevent confusion with mainland China, a move likely to anger Beijing. Executive Yuan spokesman Ting Yi-ming told a press conference the new passport will come into circulation in January. He pointed out that the new design was based on three principles -- minimal changes to the cover, highlighting the word "Taiwan" and presenting the official name differently in English. The current passport, issued in 2003, carries the official name of Taiwan, the Republic of China, at the top in Chinese and large English font, with the word "Taiwan" printed at the bottom. Click here to read.... [22]

China Cracks Down on Mongols Who Say Their Culture Is Being Snuffed Out

Chinese authorities are searching for protesters in Inner Mongolia after a new policy aimed at pushing Mandarin-language education across the region sparked widespread unrest among the country’s ethnic Mongols, with many angered by what they saw as a move to erase their culture. Thousands of students in Inner Mongolia have taken to the streets during the past week to rally against the government’s three-year plan to push Mandarin-language education across the northern region and phase out local history, literature and ethnic textbooks in favour of national course books, according to rights group Southern Mongolian Human Rights Information Center. Parents are also refusing to send their children to school in defiance of the new policy, said the New York-based human-rights center in a report earlier this week, while unverified videos of demonstrators protesting outside schools have circulated on Chinese social media. Click here to read.... [23]

Medical

Vaccine group says 76 rich countries now committed to 'COVAX' access plan

Seventy-six wealthy nations are now committed to joining global COVID-19 vaccines fairly distribute the shots, the project's co-lead said on Sept 02. Seth Berkley, chief executive of the GAVI vaccines alliance, said the coordinated plan, known as COVAX, now has Japan, Germany, Norway and more than 70 other nations signed up, agreeing in principle to procure COVID-19 vaccines through the facility for their populations. "We have, as of right now, 76 upper middle income and high-income countries that have submitted confirmations of intent to participate - and we expect that number to go up," Berkley told Reuters in an interview. Click here to read.... [24]

Hepatitis C drugs show promise against the coronavirus

Antiviral drugs developed to the treat hepatitis C may also be effective against the coronavirus, a new report suggests. Researchers examined more than 6,000 drugs with a history of safe use in humans to see if any of them could block an important protein in the life cycle of the virus called the main protease. "The most potent of these were approved drugs for treating hepatitis C," study leader Brian Kraemer of the University Of Washington School Of Medicine told Reuters. He singled out boceprevir and narlaprevir, protease inhibitors developed by Merck & Co that have been superseded by more effective hepatitis C treatments. If the effects of these drugs against the novel coronavirus are confirmed in clinical trials, they would likely be given as part of a combination therapy to employ more than one line of attack against the virus, researchers said. Click here to read.... [25]

Steroids cut death rates among critically ill COVID-19 patients, major study finds

Treating critically ill COVID-19 patients with corticosteroid drugs reduces the risk of death by 20%, an analysis of seven international trials found on Wednesday, prompting the World Health Organisation to update its advice on treatment. The analysis - which pooled data from separate trials of low dose hydrocortisone, dexamethasone and methylprednisolone - found that steroids improve survival rates of COVID-19 patients sick enough to be in intensive care in hospital. "This is equivalent to around 68% of (the sickest COVID-19) patients surviving after treatment with corticosteroids, compared to around 60% surviving in the absence of corticosteroids," the researchers said in a statement. Click here to read.... [26]

Only 1 in 10 medical treatments is backed by high quality evidence according to shocking report

A disturbing new study has found that just one in 10 medical treatments are supported by high-quality evidence, greatly undermining academic medical research for years if not decades to come. Published in the Journal of Clinical Epidemiology on Sept 01, a new study led by Jeremy Howick, director of the Oxford Empathy Programme, examined 154 systematic treatment reviews published between 2015 and 2019. Alarmingly, Howick and his fellow researchers found that just 15 (9.9 percent) had high-quality evidence according to the gold-standard method GRADE (grading of recommendations, assessment, development and evaluation). Some 37 percent had moderate evidence, 31 percent had low, and 22 percent had very low-quality evidence backing their suggested course of action. These startling findings reinforce a now decades-old concern about medical academia, which is trending towards lower quality research. Click here to read.... [27]

China's CNBG, Sinovac find more countries to test coronavirus vaccines

China National Biotec Group (CNBG) and Sinovac Biotech Ltd said on Sept 05 four more countries have agreed to run late-stage clinical tests of their coronavirus vaccine candidates, as China steps up its efforts in the global race. Serbia and Pakistan are among the new countries agreeing to Phase 3 trials, as the two companies seek more data overseas amid dwindling new cases in China. Serbia will test two vaccines developed by CNBG's Wuhan and Beijing units, and Pakistan will test the Beijing unit's candidate, the company told Reuters. CNBG's Phase 3 trials are expected to involve 50,000 people in about 10 countries, said CNBG vice president Zhang Yuntao. Trials have already begun in United Arab Emirates, Bahrain, Peru, Morocco, Argentina and Jordan. Zhang said foreign countries have expressed interest in ordering a combined 500 million doses of its vaccines. Click here to read.... [28]