Global Developments and Analysis: Weekly Monitor, 7 September - 13 September 2020

Economic

China to revive international yuan drive along belt and road countries

China aims to use the yuan “as much as possible” in its Belt and Road Initiative to try to expand its use as a reserve currency, a senior Chinese government adviser said on the weekend. Former Chongqing mayor Huang Qifan told a financial forum in Xian in north-western China on Sept 12 that the yuan’s share of global payments was limited and the country must redouble efforts to increase the currency’s use in countries that signed up for the massive infrastructure plan. The Yuan accounted for about 2 per cent of global reserves and 1.76 per cent of cross-border payments by the end of June, Huang said, adding: “It’s not commensurate with our country’s status as the world’s largest foreign trade country.” He said the Yuan should be used as much as possible in pricing, settlement, receipts and payments and reserves. Click here to read... [2]

China to prioritize currency deal with ASEAN that could sidestep US dollar

China could give priority to expanding the scale of currency swaps with the Association of Southeast Asian Nations (ASEAN), Chinese State Councillor and Foreign Minister Wang Yi told his counterparts from the bloc on Sept 09, a move that could sidestep the US dollar and other foreign currencies in bilateral trade. “China is willing to give priority to expanding the scale of domestic currency swaps with ASEAN countries," Wang said in his remarks to the conference, calling for a "full force" push in the recovery of the regional economy from the COVID-19 pandemic. Amid worries over a potential financial crisis, China, ASEAN, Japan and South Korea were already considering adding the Chinese yuan and the Japanese yen to a multilateral currency swap deal, in a move to alleviate reliance on the dollar, the Nikkei Asian Review reported in May 2019. Click here to read... [3]

Taiwan looks to host economic talks with US, eyeing trade deal

Taiwan is set to open an economic dialogue with the U.S. as early as next week, it was learned on Sept 11, laying the groundwork for talks on a free trade agreement while the island unwinds cross-strait economic integration with Beijing. Taiwan's Ministry of Foreign Affairs said that discussions are underway for a visit by Keith Krach, U.S. undersecretary of state for economic growth, energy and the environment. The trip is slated for Sept. 17 to Sept. 19, according to Taiwanese media. Taipei hopes for cooperation on semiconductors and fifth-generation wireless networks, bolstering ties with the U.S. with an eye toward long-stalled negotiations on a bilateral free trade agreement.A U.S. trade deal is high on Taiwanese President Tsai Ing-wen's agenda. Click here to read... [4]

Oracle Wins Bid for TikTok in U.S.; Microsoft Proposal Is Rejected

Oracle Corp. won the bidding for the U.S. operations of the video-sharing app TikTok, people familiar with the matter said, beating out Microsoft Corp. in a high-profile deal to salvage a social-media sensation that has been caught in the middle of a geopolitical standoff. Oracle is set to be announced as TikTok’s “trusted tech partner” in the U.S., and the deal is likely not to be structured as an outright sale, the people said. The next step is for the White House and the Committee on Foreign Investment in the U.S. to approve the deal, said one of the people, adding that the participants believe it satisfies the concerns around data security that have been previously raised by the U.S. government. The move by TikTok’s parent company, Beijing-based ByteDance Ltd., comes days after the Chinese government threw negotiations into doubt when it issued new export restrictions late last month. Click here to read... [5]

Highflying Nvidia’s Deal for Arm Signals Loftier Chip Ambition

The impending sale of Arm Holdings to Nvidia Corp. for $40 billion could have wide-ranging implications for the global semiconductor industry, further elevating one of its highest fliers and unwinding another big bet by SoftBank Group Corp. The deal would add around $1.9 billion in annual sales to the $11 billion Nvidia, based in Santa Clara, Calif., posted for last year. But buying Arm also carries risk for Nvidia. Arm founded in 1990 as a spinoff of a joint venture that included Apple, designs blueprints for clients, including other chip companies, to make smartphone processors. Its designs are used in processors that power around 90% of the world’s smartphones and in many other types of mobile chips. Following a sale to Nvidia, customers like Samsung Electronics Co., Apple and Qualcomm Inc. would face the prospect of one of their chip-making competitors owning Arm, potentially undermining its attractiveness as a neutral supplier. Click here to read... [6]

Japan, Britain reach post-Brexit trade deal in 3 months

Japan and Britain agreed in principle on a post-Brexit free trade deal on Sept 11 after only three months of talks, ensuring the continuity of close business relations following the end of London's transition period for exiting the European Union in December. "This is a historical moment for both countries. This deal deepens the already strong partnership between our two democratic island nations," British International Trade Secretary Liz Truss said in a videoconference with Japanese Foreign Minister Toshimitsu Motegi. Truss said the deal, which will take effect in January, is also an "important step" as Britain seeks membership of a trans-Pacific free trade agreement covering 11 countries, including Japan, Australia and Mexico, accounting for about 13 percent of the global economy. Click here to read... [7]

Japan companies line up for 'China exit' subsidies to come home

The Japanese government has seen an overwhelming surge of interest in subsidies to bring manufacturing back as the coronavirus pandemic highlights the risk of having supply chains concentrated in a single region, particularly China. The program to promote domestic manufacturing had 220 billion yen ($2.07 billion) earmarked in the supplementary fiscal 2020 budget. In the first round, which ended in June, the government approved 57 projects totalling 57.4 billion yen, or over half the 90 applications. The second round of applications, which closed in July, got a much larger response: 1,670 applications worth about 1.76 trillion yen -- 11 times the remaining amount in the budget. Recipients will be chosen in October after a review by outside experts.Another 30 companies have been approved to receive support under a separate 23.5 billion yen program focused on relocations to Southeast Asia. Click here to read... [8]

West Africa is keen to feed the UK post-Brexit

In a small room at Ghana's University for Development Studies (UDS), a team of Ghanaian and British researchers trade farming ideas under blistering heat. The team from the University of York are on campus in Tamale for a 6-month collaboration with their West African counterparts. "The network is simply to look at how to bring the ECOWAS region together to produce and export to the UK market," says Dr. Mahamudu Akudugu, the lead local facilitator for the Ghana-ECOWAS Food Systems and Export Network. Researchers at the University of Ibadan in Nigeria are also involved. The researchers agree that the UK's exit from the European Union could hold opportunities for the 15-member West African bloc to negotiate fresh economic partnerships, Akudugu tells DW. The UK's existing partnerships with Africa's regional economic blocs were made as part of a larger settlement negotiated through the EU. In the event of a no-deal Brexit, renegotiation will be necessary in order to retain current trade flows. Click here to read... [9]

Washington revives plans for its rare earths industry

Beijing’s threat of sanctions on Lockheed Martin in July has added urgency to efforts to break China’s stranglehold over the industry. It controls four-fifths of the global mined-supply of rare earths, and an even larger share of the manufacture of powerful rare earth magnets — industries worth $13bn a year combined. The Trump administration earmarked $209 mn in public funds for the sector — thought to include the funding for MP Materials — this year. Washington is not alone in being concerned over Beijing’s control of rare earths. The European Commission is working on a raw materials strategy that aims to wean domestic industry off their dependence on China by boosting industry collaboration and providing sustainable finance for new producers. Australia, which holds one-sixth of the world’s rare earths deposits, has teamed up with the US government to source new deposits and support market entrants. And Russia has unveiled a $1.5bn rare earths plan to tempt investors with tax breaks and cheap loans. Click here to read... [10]

Strategic

Trump says US to reduce troops to 4,000 in Afghanistan and 2,000 in Iraq as peace talks progress

Saying that “a lot of progress is being made” in the Middle East, US President Donald Trump told reporters there will soon be only 4,000 US troops in Afghanistan and 2,000 in Iraq, with only a few in Syria to “guard the oil.” The reductions will happen “very soon,” Trump said. While the Pentagon confirmed the pending withdrawal of some troops earlier this week, this is the first time the US president had mentioned specific numbers. The numbers did not necessarily correspond with those provided by US Central Command chief General Kenneth McKenzie on Sept 09, however, as CNN was quick to point out. McKenzie said the number would be reduced to 3,000 by the end of September. Click here to read... [11]

Bahrain to follow UAE in normalizing relations with Israel, Trump announces

The Kingdom of Bahrain will join the United Arab Emirates in signing a peace treaty with Israel next week, US President Donald Trump has announced, becoming the second Gulf Arab nation to do so after US mediation.“Another HISTORIC breakthrough today!” Trump tweeted on Sept 11, making the long-rumoured Bahrain deal official. He also posted the text of a joint statement with King Hamad bin Isa bin Salman al-Khalifa of Bahrain and Israeli Prime Minister Benjamin Netanyahu, confirming that a representative of the Gulf monarchy will attend the September 15 ceremony at the White House and sign a Declaration of Peace with Israel alongside the UAE. The UAE congratulated Bahrain and Israel on the decision to establish diplomatic relations, the spokeswoman for the foreign ministry in Abu Dhabi told reporters. Click here to read... [12]

China Launches Initiative to Set Global Data-Security Rules

Announcing the initiative on Sept 08 at a Beijing seminar on global digital governance, Chinese Foreign Minister Wang Yi cited growing risks to data security and what he characterized as efforts to politicize security issues and smear rival countries on technology matters—in an apparent swipe at Washington. Under its new “Global Initiative on Data Security,” China urged governments to respect other countries’ sovereignty in how they handle data—in line with Beijing’s vision of “cyber sovereignty,” whereby countries exercise full control over their own corners of the internet.“Bent on unilateral acts, a certain country keeps making groundless accusations against others in the name of ‘clean’ network and used security as a pretext to prey on enterprises of other countries who have a competitive edge,” Mr. Wang said, according to the transcript. “Such blatant acts of bullying must be opposed and rejected.” Click here to read... [13]

Afghan Government and Taliban Meet to Kick Off Historic Peace Talks

Representatives of the Afghan government and the Taliban sat down Sept 13 to kick off a historic round of direct talks this week aimed at ending the two-decades-long conflict, a day after delegations met for the first time in a hotel in Qatar. While the Afghan government insists on an early cease-fire and protection of the constitution and human rights, the Taliban have said only that they seek to establish an Islamic system in Afghanistan. So far, neither side has shown any sign of how they will bridge that divide. One rare area of agreement between the two sides: No foreigners are allowed in the negotiation room, Mr. Abdullah said. The Taliban accuse the Kabul government of being American puppets. The Afghan government says the insurgents are supported and sheltered by Pakistan. Click here to read... [14]

Boris Johnson defends Brexit change to avoid UK 'carve-up'

British Prime Minister Boris Johnson has strongly defended his government's plan to override sections of the Brexit deal he negotiated with the European Union, arguing that the EU has an "extreme" interpretation of the treaty that could jeopardize the U.K.'s future. In a column published Sept 12 in The Daily Telegraph, Johnson said the government's Internal Market Bill is needed to end EU threats to impose a "blockade" in the Irish Sea that the prime minister asserted could "carve up our country." The legislation, which the British government has conceded violates international law in places, has prompted a furious outcry within the EU and Johnson's Conservative Party. British lawmakers are expected to debate it next week. With the government showing no sign of changing course, there are real concerns that ongoing talks on a future trade deal between the U.K. and the EU could collapse within weeks. Click here to read... [15]

Climate change largely missing from US political campaign as fires rage

Historic fires and Hurricane Laura have left millions of Americans reeling. But it's barely had an impact on the campaign for the White House, in part because of the vulnerabilities it highlights for President Donald Trump and his Democratic challenger, Joe Biden. The president is already facing multiple challenges, including the pandemic, joblessness and social unrest, and can ill afford another one. When he talks about California, where fires have killed at least a dozen people and threatened thousands of homes, it's mostly to blast the state's Democratic leaders. And for Biden, the spreading fires are a reminder to the party's progressive base that he doesn't embrace some of the most liberal elements of the Green New Deal, the grand plan for tackling climate change. Click here to read... [16]

US, India agree to deepen quadrilateral ties with Japan, Australia

Senior government officials from the United States and India agreed on Sept 11 to further strengthen dialogue with Japan and Australia, the U.S. State Department said, amid increasing rivalry between Washington and Beijing. The virtual meeting took place as the United States and India are preparing a bilateral "two-plus-two" meeting involving their foreign and defense ministers later this year. During the talks, the United States underscored the importance of India's status as a "major defense partner." The two sides also discussed efforts to counteract "destabilizing" actions in South Asia and the broader Indo-Pacific region, according to the department. Click here to read... [17]

US, Mekong ministers meet amid latest rivalry with China

U.S. Deputy Secretary of State Stephen Biegun and foreign ministers from five Southeast Asian countries along the Mekong River held their first meeting on Sept 11, discussing ways to deepen their partnership amid their latest rivalry with China over the 4,350-kilometer river. During the group's inaugural meeting, Biegun claimed that the current drought suffered in the Mekong downstream area during the past two years has been caused by dams built by China in the upstream area. "We have to hold China accountable as the decision made in Beijing affects you all in the region," Biegun told the ministers of the downstream Mekong countries -- Cambodia, Laos, Myanmar, Thailand and Vietnam. China's 11 dams in the river have "adversely affected food security, environment and livelihood of people in the Mekong," the U.S. official said. Click here to read... [18]

Suga wins LDP election, in step to becoming Japan's prime minister

As widely expected, Prime Minister Shinzo Abe's chief cabinet secretary defeated former Defense Minister Shigeru Ishiba and former Foreign Minister Fumio Kishida. Abe's right-hand man for nearly eight years won the support of the LDP's two largest factions -- Abe's 98-member Hosoda faction and the group led by Finance Minister Taro Aso. The 47-strong group led by LDP Secretary-General Toshihiro Nikai was the first to declare for Suga. Suga is a rare party leader who does not belong to any faction. Suga has said he would create a central agency to handle Japan's digitalization, and improve competition in the telecommunications industry to lower mobile phone rates -- a crusade that began when he was minister of internal affairs and communications. Suga has also expressed support for keeping Bank of Japan Governor Haruhiko Kuroda's ultra-easy monetary policy. Click here to read... [19]

Germany ends China honeymoon with new Indo-Pacific strategy

After years of shaping its Asian strategy around China, Germany has made a sharp break and will focus instead on stronger partnerships with democracies in the region such as Japan and South Korea to promote the rule of law. The shift comes as part of a rising sense of alarm throughout Europe about economic dependence on China and the country's track record on human rights. "We want to help shape [the future global order] so that it is based on rules and international cooperation, not on the law of the strong," German Foreign Minister Heiko Maas said on Sept. 2. "That is why we have intensified cooperation with those countries that share our democratic and liberal values." Germany that day adopted new policy guidelines covering the Indo-Pacific, stressing the importance of the rule of law and promoting open markets in the region. China had been Berlin's diplomatic focus in Asia, with German Chancellor Angela Merkel visiting the country almost yearly. But economic growth has not opened the Chinese market as hoped. Click here to read... [20]

Reunified Pakistani Taliban threatens China's Belt and Road

As peace negotiations between the Afghan Taliban and the government in Kabul continue, Pakistan's leading Taliban group, which operates from Afghanistan, has announced the reunification of various breakaway factions. "In Khyber Pakhtunkhwa province's various remote areas, several Chinese development projects, mainly in the field of hydro-electricity generation and infrastructure, are going on," an Islamabad-based security official told the Nikkei Asian Review on condition of anonymity. "The Pakistan Taliban's recent reunification has increased concerns about the safety of Chinese nationals and projects. "The Jamaat-ul-Ahrar, the Hizb ul-Ahrar, and Hakeemullah Mehsud group were the three major factions in the Tehreek-e-Taliban Pakistan (TTP) until they splintered in 2014 over leadership issues. Last month, it was announced they were all getting back together and also being joined by a faction of Lashkar-e-Jhangvi, a banned sectarian group that operates in the western province of Balochistan. Click here to read... [21]

Australia defends intelligence raids as spat with China escalates

Australia's Home Affairs Minister Peter Dutton on Sept 13 defended the government's right to intelligence raids to prevent foreign interference, after China condemned searches on the homes of its journalists working in Australia. Dutton declined to directly confirm that the Chinese journalists were questioned by Australia's intelligence agency in June, saying an investigation was still underway, but said there was some "activity" by the country's intelligence agency. "Where (the Australian Security Intelligence Organisation) has sufficient grounds for the execution of a search warrant or for activities otherwise, then they'll undertake that activity," Dutton said on the Australian Broadcasting Corp (ABC) television. "If people are masquerading as journalists or business leaders or whoever they might be, and there's evidence that they are acting in a contrary nature to Australian law, then .... (the) agencies will act." Click here to read... [22]

Medical

Another breakthrough? New Russian drug means fewer Covid-19 patients need ventilators, has significantly reduced mortality

A new Russian medicine being used on Covid-19 patients has reduced the mortality rate by up to five times, according to its developer, Oleg Rosenberg, of Surfactant-BL. The drug is most commonly used to treat severe lung lesions.Speaking to Moscow newspaper Izvestia, Rosenberg noted that his creation has not only improved the chances of coronavirus patients staying alive, but it has also kept them off ventilators. Surfactant-BL is formed from a natural substance, found in the lungs of cattle, which lines the inside of a cow's pulmonary alveoli. Developed initially to help premature babies with immature lungs, there are now around ten surfactant drugs globally. Sergey Avdeev, the country's chief pulmonologist, explained that a randomized trial of the drug has already begun, with a total of 90 patients due to be treated. If the test goes well, Surfactant-BL will be included in the Ministry of Health's official Covid-19 recommendations. Click here to read... [23]

To Keep Schools Open as Covid Surges, Europe Isolates Infected Students

European governments are working to keep schools open amid a rise in coronavirus infections, removing pupils suspected of being infected and so far, avoiding a repeat of the wide-scale spring closures. Governments in the U.K., France, Germany and elsewhere say they are determined to keep classrooms open in the fall both because it enables parents to return to work and because of the social and economic scarring caused by months without face-to-face teaching for millions of pupils earlier this year. Schools that have already reopened in Europe have relied on isolating individual students or bubbles of children, while also tracing their immediate contacts. So far, relatively few schools in Europe have closed, despite a surge in infections in a number of European countries. Since returning for the fall at the start of this month, 32 of France’s 60,000 schools have shut because of the virus, and 525 classes are in quarantine. Click here to read... [24]

Astra Zeneca resumes COVID vaccine trials halted by patient illness

Astra Zeneca has resumed British clinical trials of its COVID-19 vaccine, one of the most advanced in development, after getting the green light from safety watchdogs, the company said on Sept 12. The late-stage trials of the experimental vaccine, developed with researchers from the University of Oxford, were suspended this week after an illness in a study subject in Britain, casting doubts on an early rollout. "On 6 September, the standard review process triggered a voluntary pause to vaccination across all global trials to allow review of safety data by independent committees, and international regulators," Astra Zeneca said. It added that safety reviewers had recommended to Britain's Medicines Health Regulatory Authority (MHRA) that it was safe to resume the British trials. The patient involved in the study had been reportedly suffering from neurological symptoms associated with a rare spinal inflammatory disorder called transverse myelitis. Click here to read... [25]

Asia offers more flu shots to head off COVID-19 complications

Some Asian countries are rolling out early and more aggressive influenza vaccination programmes this year, seeking to reduce the potential of people contracting the flu and COVID-19 simultaneously, crippling healthcare systems. With a second or third wave of the coronavirus pandemic looming for many countries, tackling this year's flu season - typically December through February - has taken on increased urgency. The World Health Organization has urged global widespread flu vaccinations this year, amid concerns the same people who are most vulnerable to risks from COVID-19, such as the elderly and those with respiratory conditions, are also at greatest risk for the flu. Officials are also urging symptomatic patients to call medical hotlines before going for testing to avoid contagion at hospitals. Click here to read... [26]

Coronavirus: vaccine scandals haunt China’s winter flu shot drive

China is ramping up production of the shots in anticipation of much higher domestic demand but even if all the doses are used, only a small proportion of people will be vaccinated, with many deterred by cost, lack of access and fresh memories of pharmaceutical scandals. People in high-risk groups encouraged to get an influenza jab to help ease pressure on the country’s health system. In China, the flu was linked to an average of 88,100 excess respiratory deaths each year between 2010–11 and 2014–15, corresponding to 8.2 per cent of all respiratory deaths, according to a paper published in The Lancet last September and co-authored by Li Li, of the WHO Collaborating Centre for Infectious Disease Epidemiology and Control and other 25 researchers. Click here to read... [27]