NO RUBBER SWANS FOR YOU
Afghanistan: Taliban ban women from visiting popular national park

Antoinette Radford - BBC News
Sun, August 27, 2023 

Band-e-Amir, seen here in May this year, was Afghanistan's first national park

The Taliban have banned women from visiting the Band-e-Amir national park in the central Bamiyan province.

Afghanistan's acting minister of virtue and vice, Mohammad Khaled Hanafi, said women had not been observing hijab inside the park.

He called on religious clerics and security agencies to forbid women from entering until a solution was found.

Band-e-Amir is a significant tourist attraction, becoming Afghanistan's first national park in 2009.

It is a popular destination for families and the ban on women attending will prevent many from being able to enjoy the park.

Unesco describes the park as a "naturally created group of lakes with special geological formations and structure, as well as natural and unique beauty".

However, Mr Hanafi said going to the park to sightsee "was not obligatory", Afghan agency Tolo News reported.

Religious clerics in Bamiyan said the women who were visiting the park and not following the rules were visitors to the area.

"There are complaints about lack of hijab or bad hijab, these are not Bamiyan residents. They come here from other places," Sayed Nasrullah Waezi, head of the Bamiyan Shia Ulema Council told Tolo news..

Afghan MP Mariam Solaimankhil shared a poem she had written on X, formerly known as Twitter, about the ban and wrote "we'll return, I'm sure of it".

Fereshta Abbasi, of Human Rights Watch, noted women had been banned from visiting the park on Women's Equality Day and wrote it was a "total disrespect to the women of Afghanistan".

Band-e-Amir, seen here last year, was popular with female visitors, who have been banned from most education and work

Meanwhile Richard Bennett, the UN Special Rapporteur on human rights in Afghanistan, asked why stopping women from visiting Band-e-Amir "is necessary to comply with Sharia and Afghan culture?".

The Taliban have a history of implementing bans on women doing certain activities on what it insists is a temporary basis, including preventing them from attending schools in December 2022.

The ban on visiting the Band-E-Amir national park is the latest in a long list of activities that women have been prevented from doing since the Taliban returned to power in August 2021.

Most recently, the Taliban ordered hair and beauty salons in Afghanistan to shut and in mid-July stopped women from sitting the national university entrance exams.

CHICKEN LITTLES COME HOME TO ROOST

Fears of a stock market crash among investors are the highest since the start of the pandemic, Yale gauge shows

Jennifer Sor
Fri, August 25, 2023 

Some Wall Street investors have remained worried over the odds of a recession and a sharp sell-off in stocks.

REUTERS/Lucas Jackson

Fears of a 1987-style stock market crash are the highest since the pandemic, a survey from Yale shows.


44% of institutional investors believe a similar crash is at least 10% likely over the next six months.


That's just under levels reported in March 2020, when 51% of institutional investors feared that outcome.

Investors' fears of a stock market crash are the highest they've been since the pandemic, according to a sentiment gauge maintained by researchers at Yale University.

The US Confidence Index, an index that gauges investors' belief that the stock market has more than a 10% chance of experiencing a 1987-style stock crash, is the highest it's been since the early months of the pandemic, when the S&P 500 crashed around 30% over the course of a few weeks.

Fears of a 1987-style stock market crash are the highest since 2020, Yale's US Crash Confidence Index shows.Yale School of Management

Around 34% of individual investors believe a Black Monday-style crash has more than a 10% probability of occurring in the next six months. Meanwhile, 44% of institutional investors believe in an imminent crash of that magnitude, according to the Yale School of Management's latest survey reading. That compares to in March 2020, when 26% of individual investors and 51% of institutional investors believed in such an outcome.

A persistent number of bearish investors on Wall Street have remained worried over the odds of a recession and a sharp sell-off in stocks, despite inflation cooling and the US economy remaining resilient. That's because the Fed could keep interest rates higher for longer than markets are expecting, which raises the risk that central bankers will push the economy into a downturn.

The federal funds rate was lifted to a target range of 5.25%-5.5% in July, the highest interest rates have been since 2001. Markets are pricing in a 53% chance rates will stay at that range in December, a 39% chance rates will increase another 25 basis-points by year-end, according to the CME FedWatch tool.

Higher rates could cut into the economy's strength, especially when considering the lagged impact of the Fed's rate hikes, which kicked off in March 2022. The labor market has already begun to slow its robust growth over the past year, and Americans are now beginning to exhaust their excess savings, which has been a major buffer for the economy since the pandemic.

The New York Fed has forecasted a 66% chance the economy will tip into recession by July 2024. Stocks could tumble by at least 15%, even in event of a mild recession, according to JPMorgan strategists.

China Eyes Partnership With Gulf Countries  For Space Exploration


Editor OilPrice.com
Sun, August 27, 2023

In the push to embrace emerging technologies and harness their potential commercial opportunities, Gulf countries are launching new initiatives to bolster their domestic space industries.

In June Saudi Arabia’s Council of Ministers approved the transformation of the Saudi Space Commission, which was launched in 2018, into a full government agency known as the Saudi Space Agency (SSA), underscoring the Kingdom’s commitment to the space sector and exploration activities.

The move followed the successful launch of Saudi Arabia’s first space mission in May to the International Space Station (ISS). The trip was sponsored by the Saudi government and included two Saudi astronauts, one of whom – a stem cell researcher – was the Arab world’s first female Arab astronaut. The trip was overseen by Houston-based Axiom Space, which is seeking to build the first commercial space station after detaching from the ISS.

The UAE has also forged major inroads in space. Since releasing its National Space Strategy 2030 in 2019, it has opened four space research and development centres, established national space laws and regulations, and launched its own Hope Probe, which orbited Mars in 2021, making the UAE the sixth country globally and the first in the Arab world to reach the planet.

Cross-sector diversification

Developing the space sector and engaging in ambitious exploration plans requires massive upfront capital expenditure for projects that may not pay off for several years. These are investment time horizons with which Gulf countries not only have significant experience from oil and gas, but also match their long-term strategies to diversify their economies.

The expansion of space activities is accelerating across the region thanks to advances in the technologies that constitute the Fourth Industrial Revolution (4IR) – blockchain, artificial intelligence, 3D printing, materials science, nanotechnology and biotechnology – that have decreased satellite launch costs and increased the capabilities of smaller satellites.

The 4IR represents what could be a SR1trn ($266.6bn) opportunity for Saudi Arabia that dovetails with the Kingdom’s Vision 2030.

More concretely, investing in space helps Gulf countries develop technical capabilities and expertise in aerospace engineering, satellite manufacturing, and advanced research and development to bolster their defence, tourism and technology sectors and diversify their economies.

Alongside the SSA, in March the Public Investment Fund, Saudi Arabia’s largest sovereign wealth fund, launched Riyadh Air, a low-cost start-up airline that aims to compete with other regional carriers, and placed an order for 72 Boeing 787 aircraft. The carrier will have a sustainability advantage due to its fleet of newer, more efficient planes and the use of sustainable aviation fuel. It targets launching operations in 2025.

In June the SSA held meetings with French aircraft manufacturer Airbus about enhancing cooperation in the space sector and other potential investment projects.

On the defence end, Saudi Arabian Military Industries (SAMI), which was launched in 2017, has accumulated more than $10bn in contracts with foreign companies in a bid to localise over 50% of defence spending by 2030. Last year SAMI announced a joint venture with Boeing to provide maintenance, repair, and overhaul and sustainment services for military rotary platforms operating in the Kingdom.

Also in June, in a deal that signals the possible synergies between aerospace and defence, SAMI subsidiary SAMI-AEC announced a partnership to make Saudi Arabia the home to US defence manufacturer Lockheed Martin’s Sniper Advanced Targeting Pod Repair Centre for line-replaceable units for helicopters in the Middle East.

Satellite imaging

In their foray into the space sector, Gulf countries have prioritised the development of domestic capacities to build satellites in an aim to bolster communications and monitoring systems.

Bahrain, Kuwait and Oman have all launched satellites in recent years, with Oman constructing a satellite of its own, while Qatar’s Es’hailSat satellite company signed a strategic partnership with Axess Networks in January to provide teleport and very small aperture terminal (VSAT) services to bolster satellite communications networks.

The UAE has been at the forefront in this regard through its National Space Strategy 2030. Last year the UAE created a $817m fund to support international and Emirati companies co-operating in space sector engineering, sciences and research applications, with a near-term goal of developing and launching a constellation of advanced imaging satellites.

Last year the Dubai Electricity and Water Authority (DEWA) launched the world’s first nanosatellite in collaboration with spacecraft engineering company NanoAvionics to monitor and maintain water and power infrastructure. DEWA is the first utility to use satellites in this regard, and seeks to leverage its expertise and offer satellite-as-a-service to other utilities around the world as they continue to digitise and improve their infrastructure.

In May Finland-based Iceye announced an agreement to develop a five-satellite constellation for Bayanat, a UAE geospatial analysis firm, and Abu Dhabi-based satellite communications company Yahsat that will launch in 2024, further bolstering the UAE’s satellite imaging capabilities.

The UAE also continues to pursue space exploration with the aim of scientific advancement. In May it announced plans to send a spacecraft to the solar system’s main asteroid belt by 2028 for a seven-year study of seven main asteroids. The mission will start with a fly-by of Venus, following the UAE successful 2021 mission to Mars.

Global partnerships

Investing in space is an opportunity to capitalise on what many see as a prime opportunity to commercialise space travel and communications. With the ISS nearing retirement, companies like Axiom Space as well as Blue Origin and Nanoracks have announced plans to build stations in low Earth orbit.

China is keen to develop its Tiangong space station, which become operational in 2022, and is looking to partner with Saudi Arabia and the UAE. China announced its intentions at the first China-GCC Summit held in Riyadh in December, specifying areas pertaining to remote sensing and communications satellites, space utilisation, aerospace infrastructure, and the selection and training of astronauts, according to the summit’s keynote speech by China’s President Xi Jinping.

After the establishment of the SSA in June, the agency immediately held meetings with Chinese government agencies and businesses to discuss enhanced cooperation and collaborations in the fields of technology, industry and space exploration.

Abdullah Al Swaha, chairman of the board of directors of the SSA, met his counterpart from China Aerospace Science and Technology Corporation and other leading figures from the space sector in Beijing. A Saudi delegation, meanwhile, held talks with China’s Galaxy Space, which develops and sells communication satellites, and iSpace, which specialises in the development and manufacture of spacecraft.

International public services company Serco launched its Saudi Space Division in March, through which it will establish local capabilities for its global advisory, consultancy and operational space services. These span the full lifecycle of a mission, from spacecraft and mission design through to data management, operations and decommissioning, including spacecraft control, ground segment operations and engineering.

In May Nanjing-based start-up Origin Space, UAE University’s National Space Science and Technology Centre, and the University of Hong Kong’s Laboratory for Space Research signed a letter of intent in Abu Dhabi to build a joint research and development centre in the city. The centre will build remote-sensing satellites and space telescopes, and pursue joint deep space exploration missions.

By Oxford Business Group

US-Sino tensions help spawn China card game craze

Yew Lun Tian
Sun, August 27, 2023 





Training sessior guandan, a poker-like card game, in Beijing

By Yew Lun Tian

BEIJING (Reuters) - China's bankers and business executives have become increasingly reliant on domestic capital in recent years as foreign funding has dried up, but a popular way to unlock that cash may very well involve "throwing eggs".

The term refers to Guandan, a poker-like card game that has been around for decades, but has gained fresh life among venture capitalists a few years ago as they awoke to its popularity among wealthy local government officials in eastern regions.

"Officials like this game, so we play along," said Yang Yiming, an investment banker whose job involves canvassing government funding for projects linked to semiconductors and defence.

The growing interest in business circles has spawned a craze for the game nationwide, driven partly by financial constraints stemming from souring ties with China's biggest trade partner, the United States.

This month U.S. President Joe Biden barred some investment in semiconductors and set controls on other sensitive sectors, aiming to curb trade and funding that could give rival Beijing an edge in technology.

Total U.S.-based venture-capital investment in China plummeted to $9.7 billion last year from $32.9 billion in 2021, PitchBook data shows.

Domestic private capital has also dwindled as President Xi Jinping signalled his preference for a bigger state presence in the economy by launching crackdowns over the last few years in areas from technology to real estate and private tutoring.

As investment prospects darken, financiers increasingly view the game as a way to build 'guanxi' or connections with officials who hold the purse strings on local projects, especially those overseas investors might consider too risky.

"In finance, information is currency," said Yang, for whom a game of guandan has become a standard gambit before wining and dining local officials.

"During a game which can stretch for hours, we are bound to chit-chat, and sometimes useful information gets passed around after people feel comfortable and trust you."

Yu Longze, a broker based in Beijing, said his boss this month ordered all staff to learn the game.

Like bridge, the classic staple, the game is played among four players paired up in teams. Using two decks, players must throw down poker and other special card combinations to clear their hands before opponents.

"From observing someone's playing style, you can tell if he is smart, aggressive or a team player. This can help you decide if you want him as a business partner," said a businessman surnamed Huang, who runs a private clubhouse where the game has become a favourite pastime of officials and company executives.

But not everyone treats guandan as a business tool.

Many players say they simply enjoy the mental stimulation from a game that is cheap, convenient to play and allows them to socialise - aspects that, taken together, explain its appeal to all walks of life.

Customers ranged from retired people to young professionals seeking to build new social ties, said Hua Min, who this year opened the first bar dedicated to hosting guandan games in Beijing, the capital.

Li Keshu, a lawyer, said playing with his friends in a park helped get through the social isolation and economic frustration of the COVID-19 years, when China threw up strict barriers against infection.

"It's cost-free. Unlike 'Texas Hold'em' or mahjong, this game doesn't need to be played with money to be fun. On the contrary, money spoils the friendship and the game."

While the players Reuters spoke to said they do not gamble, Chinese officials have been censured in the past for receiving bribes through the playing of card games or the traditional tile pastime of mahjong.

In April, the ruling Communist Party's anti-graft watchdog censured one of its officials in the eastern province of Anhui for playing guandan during a training course, among other misdeeds.

In a sign that Beijing is not perturbed by the growing interest in the game, however, China's national sports authority has organised the first nationwide guandan competition this year.

(Reporting by Yew Lun Tian; Editing by John Geddie and Clarence Fernandez)

East Asia's 'seismic shift': why China sees the Camp David summit as the start of a de facto military alliance


South China Morning Post
Sun, August 27, 2023 


As Washington inches closer to a de facto military alliance with Tokyo and Seoul, pundits have warned of the destabilising impact it could have on the regional power balance amid fears over escalating tensions between China and the US.

US President Joe Biden hailed the "new era" of a close security partnership between the three powers at a landmark trilateral summit held at Camp David over the weekend. While Biden also insisted the summit was not targeted at Beijing, a joint statement from the three powers voiced concerns about China's "dangerous and aggressive behaviour" in the South China Sea and its policy towards Taiwan.

On Monday, Chinese foreign ministry spokesman Wang Wenbin lashed out at the summit, which he said had "smeared and attacked China" and was "a deliberate attempt to sow discord between China and our neighbours". He compared the partnership to other US-led alliances such as Aukus with Britain and Australia and the Quad with India, Japan and Australia.

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"We see two trajectories in the Asia-Pacific [region] today," Wang said. "One features efforts to advance solidarity, cooperation and economic integration. The other features attempts to stoke division and confrontation and revive the Cold War mentality."

Seong-hyon Lee, a senior fellow at George H.W. Bush Foundation for US-China Relations, said by formalising the cooperation between the countries, the Camp David summit marked "a de facto military alliance without explicitly stating so".

"We are witnessing a seismic shift in the East Asian security landscape that we haven't seen for the last 100 years," he said, noting that Biden, South Korean President Yoon Suk-yeol and Japanese Prime Minister Fumio Kishida agreed to hold summits and joint military drills annually.

The trio also agreed to set up a new hotline to share military intelligence, pledged to share real-time data on North Korea's missile launches and discussed measures to de-risk global supply chains from exposure to China.

Shi Yinhong, a professor of international affairs at Renmin University in Beijing, said although the summit fell short of announcing a military alliance, it marked a new stage of intensifying strategic coordination between Washington and China's neighbours.


In recent years, he said, both the US and Japan had stepped up "extensive, in-depth and specific" preparations for a possible conflict with China over Taiwan, which Beijing sees as a runaway province that must be reunited, by force if necessary. He added both countries had also implemented supply chain restructuring to further squeeze China's strategic and economic operating space.

"Under these circumstances, the establishment of a permanent military and economic security framework against China by the United States, Japan and South Korea was formally put on their joint agenda through effective coordination, and thus there was a Camp David meeting," Shi said.

For Beijing, the most important takeaway from the summit was the high degree of coordination on China-related issues between the three powers, against the backdrop of the Biden administration's "comprehensive suppression of China", said Zhu Feng, a professor of international affairs at Nanjing University.

Of the three nations, Zhu said South Korea's rapprochement with Japan and its change of heart on sensitive issues such as the South China Sea and Taiwan on Yoon's watch were particularly unexpected for Beijing.

"While the US, Japan and South Korea have established a tighter trilateral alignment on regional security issues, the summit also meant that Seoul has basically ended its years-long policy of maintaining a balance between the US and China," Zhu said.

"The fact that South Korea has effectively picked a side in the US-China rivalry will have a very important impact on China's peripheral security and its strategic competition with the US in East Asia."

Unlike Japan, South Korea used to be reluctant to side with the US on maritime disputes and cross-strait tensions. But since Yoon took office over a year ago, Seoul has sought closer military ties with Washington, improved strained ties with Tokyo and increasingly aligned itself with the two countries on China issues.

The three leaders, South Korean President Yoon Suk-yeol, US President Joe Biden and Japanese Prime Minister Kishida Fumio, formed what is being touted as a de facto military alliance at the Camp David summit. Photo: Getty Images via AFP alt=The three leaders, South Korean President Yoon Suk-yeol, US President Joe Biden and Japanese Prime Minister Kishida Fumio, formed what is being touted as a de facto military alliance at the Camp David summit. Photo: Getty Images via AFP>

Beijing recently stepped up pressure on Seoul, publicly criticising the Yoon administration's pro-US stance, particularly his pursuit of close security alignment with the US and Japan. In June, China's ambassador to South Korea Xing Haiming was caught in a diplomatic row when he warned that Seoul would "definitely regret it" if it bet against Beijing in the US-China rivalry.

Apart from Yoon's pivot towards the US, Zhu said China's Wolf Warrior-diplomacy in dealing with South Korea, especially following Seoul's deployment of a US missile defence system known as THAAD in 2016, had also had negative impacts on bilateral ties.

"Following Japan's lead, South Korea has accepted that its security and strategic concerns trump other issues, including business and economic interests," he said.

Benoit Hardy-Chartrand, an international affairs specialist at Temple University Japan in Tokyo, said Yoon's election in South Korea was the key factor in bringing the three countries together.

"Without [Yoon's] willingness to reach out to Japan despite the political risks it entailed, none of this would have been possible," he said.

"This highlights the potential fragility of the trilateral partnership. While we cannot ignore the geopolitical variables that brought them together, this partnership remains liable to the vagaries of domestic politics in South Korea and, to a lesser extent, Japan."

He noted that if a candidate from the progressive opposition, which is traditionally more anti-Japanese, won the 2027 presidential election in South Korea, it could "spell serious trouble for trilateral cooperation".

Hardy-Chartrand added that the other factors behind the summit included North Korea's repeated missile provocations, Russia's invasion of Ukraine and a shared perception among regional countries of a growing challenge posed by China.

"We cannot understate how significant the Camp David summit was. Leaders often tend to overhype such diplomatic events in order to score domestic points, but in this case, bringing the three leaders together for the first Japan-South Korea-US stand-alone summit was not only a diplomatic success for Biden, but also a sign of the widening fractures in regional geopolitics," he said.

Zhiqun Zhu, an international relations professor from Bucknell University in Pennsylvania, said the summit served to underline that the world was being divided into two Cold War-style camps, with the US and its allies on one side, and China, other authoritarian regimes and some developing countries on the other.

"As the Biden administration galvanises support from its allies in Europe and Asia in competing with China, tensions will not only grow between the US and China, but also between China and its Asian neighbours," he said.

"As a result, East Asia will become more unstable, and the dangers of conflict in the Taiwan Strait and the South China Sea will increase."

Zhu cautioned against what he called "a misguided belief" among the US and its allies that by strengthening security alliances, China would be deterred on issues such as Taiwan and the South China Sea.

"This miscalculation unfortunately underestimates China's will and preparedness to defend what it considers 'core' national interests," he said.

In response to the US, he said we could see China consolidate its relationships with Russia and other countries in its own circles, such as the Shanghai Cooperation Organisation and Brics, which held a summit in Johannesburg this week.

However, he said China should take a long view and wait for political changes in the US, South Korea and Japan before taking any action.

"After all, Biden may be out of office after the 2024 election, and approval ratings of both Yoon and Kishida are lacklustre at home. Nevertheless, it is unwise for China to confront the US head-on now, especially when Beijing is facing serious domestic challenges now," Zhu said.

Lee pointed to a possible weakness of the partnership: the three leaders' focus primarily on security "at a time when people are more concerned about the economy".

"If these moves do not yield economic benefits, they risk facing domestic political backlash," he said, adding that the leaders were trying to advance an economic partnership that complemented their security cooperation.

Kim Hyun-wook, a professor at Korea National Diplomatic Academy, also said domestic politics, especially leadership reshuffles, remained the biggest challenge for the trilateral partnership.

"If Trump wins the election [next year], the future of trilateral cooperation will be opaque, because Trump's keynote is America first and isolationism," he said. "The historical issue between South Korea and Japan will also rise back to the surface if Seoul has a regime change to progressive government."

Kim also said that despite China's frustration, it was unlikely to retaliate against Japan and South Korea due to economic difficulties and concerns about a public opinion backlash in both countries. He added that besides the North Korea factor, China's hardline diplomacy with South Korea and Japan had also played a big role in pushing them into the arms of America.

Hardy-Chartrand agreed that China's heavy-handed approach to South Korean relations was partly to blame for the situation.

"Beijing could until recently be comforted by the fact that South Korea was keen to maintain strong ties with China, in large part due to its economic dependence on its neighbour. But now that Seoul appears poised to move away from its traditional equidistance to Beijing and Washington, this is a blow to Chinese efforts to forge a favourable geopolitical environment and pry away American allies," he said.

Additional reporting by Seong Hyeon Choi

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

KEYNESIAN STATE CAPITALI$M

China's economic model isn't working, but that doesn't mean the country's headed for a 'Lehman moment

Phil Rosen
Sat, August 26, 2023 

Economists are wary on China, but many don't expect a Lehman moment to transpire.

Getty Images / Stringer, Getty

China's economy hasn't rebounded from the pandemic, and its troubles have fueled talks of a "Lehman moment."


China experts and economists told Insider that the troubles in the property sector are serious, but different from the 2008 US crisis.


"You're not going to have a comparable banking crisis because of the simple reason you have a state-owned financial system."

Recent chatter of China facing its own "Lehman moment" hasn't emerged out of thin air.

President Xi Jinping is overseeing a nightmare cocktail of economic hurdles that include a huge pile of debt, an ailing property sector, demographic hurdles, and deteriorating foreign investment and trade. And, similar to the crisis that ultimately toppled Lehman Brothers in 2008, much of China's troubles are rooted in its property sector.

But while economists and policy experts say that risks are high, they also say the situation is unlikely to catalyze an event like the Great Financial Crisis.
China's property crisis

Front and center for any comparison between today's China and the US in 2008 is the real estate market.

Similar to the US, which both then and now counts property as the primary source of most people's wealth, real estate in recent years has come to account for roughly 20% of China's GDP. A survey by the People's Bank of China in 2020 found that property accounted for 59% of household wealth, and three-quarters of household liabilities. That means consumer confidence — how people feel — is closely tied to the property market.

Alfredo Montufar-Helu, the head of the China Center at the Conference Board, told Insider he does not anticipate a Lehman moment, but he maintained that China's old economic model may have run its course.

"The boom that characterized the property sector of the last decade is over," he said. "China is at a crucial moment where they cannot stop supporting the supply side, because economic growth would decelerate, but at the same time they need reforms on the demand side. Hopefully the intentions alone can generate more confidence in the market."

Indeed, Citi analysts wrote in an August note that default worries for firms like Zhongrong Trust—a troubled shadow bank with massive exposure to real estate—have escalated thanks to the downturn in the property sector, but they, too, don't see it as the start of a Lehman moment.

Still, given the scale of China's property market, policymakers may need to step in with fiscal stimulus to avoid catastrophe. That, however, can make asset price bubbles bigger and drive up debt, according to William Hurst, deputy director for the Centre for Geopolitics at the University of Cambridge, told Insider.

"If we think about the 2008 collapse in the US property market, driven by excessive wealth plowed into real estate, versus what's happening in China with much higher amounts of wealth in that sector, the scale and severity of the crisis is potentially much much worse than what happened 15 years ago in the US," Hurst said.

In any case, most of Chinese households' debt is tied to mortgages, and it's climbed so fast over the last decade that it's hovering near levels seen in the US pre-Great Financial Crisis. But unlike in 2008, homeowners in China are paying off their debts, and the share of people fulfilling their obligations outpaces the number of foreclosures, Montufar-Helu said.

"Stimulus on the supply side — facilitating financing, decreasing taxes, reducing business costs, fiscal investment — all that is rapid, and has a short-term impact," he said. "But China's demand-side imbalances are long-term, and it needs to transition from industrialization-led to consumption-led economic growth."
Different political economies

Drawing parallels between market-driven economies like the US or Japan is misleading, as it detracts from the reality of China's government-regulated, capital-controlled economy — though that hasn't necessarily prevented global investors from becoming spooked.

Over the last month, bleak economic figures have rolled out of China at a startling clip. Production data, retail sales, consumer prices, and exports are all trending lower, while major property developers like Country Garden Holdings have missed debt payments while Evergrande has filed for bankruptcy.

In early August, China tipped into deflation, and observers have turned increasingly bearish on the country's growth outlook. But the government is extremely involved in every corner of the economy, and Beijing consistently prioritizes stability, which suggests a cascading, Lehman-esque fallout would be limited in scope.

"Trying to compare what's going on with China now to the US in 2008 is like comparing apples and oranges," Nicholas Spiro, a partner at macroeconomic consultancy Lauressa Advisory, told Insider. "It's unhelpful but it's made its way into the narrative, which is worrying. It's not a Lehman moment. You're not going to have a comparable banking crisis because of the simple reason you have a state-owned financial system."

That said, Spiro said it's unlikely China can return to the boom-times of decades past.

"There isn't going to be a sudden sharp shock or dramatic loss of confidence or financial stability," he said. "Rather, it'll be a slow-moving, structural economic crisis that could last for years. We are seeing a deep-seated, economic malaise which will be very prolonged."

Centaline says mainland China unit has 'huge' unpaid developers' commissions

Reuters
Sat, August 26, 2023 

Sign of Centaline Property is pictured at the company's office in Tianjin


BEIJING (Reuters) - Centaline Property has said its mainland China unit is owed a huge amount of unpaid commissions and so it cannot pay employees their commissions, responding to reports of delayed payments to the unit by developers including the embattled Evergrande.

Centaline's statement comes as a deepening housing market crisis, rising risk of default and a faltering economy are dragging property developers and agents into commission arrears.

The Hong Kong property agency's mainland arm, Centaline Property Agency (Shenzhen), has not recovered some commission fees as property developers grapple with the debt crisis and liquidity crunch, Centaline said in a statement on Friday.

"The current amount of unpaid commissions from developers and agents is huge and Centaline Property is not in a position to advance them to its employees," the company said.

It did not give a figure for the unpaid commissions but the Securities Times state news outlet reported on Aug. 21 that commission owed to the Shenzhen subsidiary had reached more than 1 billion yuan ($137.19 million).

The Shenzhen unit has paid fixed salaries up to July, Centaline said, adding that all of units were operating normally and it would not withdraw from the mainland China market.

Centaline said it had set up a team to handle overdue payments and it would prioritise the settlement of corresponding commissions with employees once funds are recovered.

Liu Tianyang, who is leading the team, earlier told the Securities Times that some developers had used housing to offset commissions, but that often resulted in a loss of revenue for the Shenzhen property agency.

He said the company was operating under major pressure and the payment of commissions due to employees would lead to more difficulties for it.

($1 = 7.2890 Chinese yuan renminbi)

(Reporting by Ella Cao and Ryan Woo; editing by Robert Birsel)

China's economy faces a lopsided supply and demand problem that's been years in the making

Phil Rosen
Fri, August 25, 2023


China has fueled decades of economic growth with industrialization, huge exports, and foreign investments.


That model is starting to show its weaknesses, however, as it's created a lopsided economy with too much supply and soft demand.


"Stimulus functions on the supply side, and on the demand side you need structural reforms. You need to give people more confidence."

Over four decades, Beijing has spurred massive growth and brought hundreds of millions of its citizens out of poverty, but the economic model that drove that boom seems to be losing legs.

By more than one measure China now appears to be slowing down considerably, with slumping trade and an ailing property sector, historic youth unemployment and a lack of consumer confidence, and major firms missing bond payments.

Everything appears to be boiling over all at once, but China's problems have been years in the making.

"China had a very robust if imperfect delivery of high levels of economic growth based on export pricing and foreign direct investment during 1994 to 2008," William Hurst, deputy director for the Centre for Geopolitics at the University of Cambridge, told Insider. "After the 2008 crisis and the end of that model, there hasn't been a new equilibrium."

Policymakers have made a habit of prioritizing strategies that bolster the supply-side of China's economy, much of which entails short-term actions like interest rate adjustments, decreasing taxes, and rapid fiscal stimulus that can boost business.

While this approach can indeed catalyze growth, ignoring the demand side of the equation comes with risks. Hurst said it's long been known that China had to figure out how to boost domestic consumption and motivate people to spend, but that's not yet materialized in policy.

Confidence crisis

These issues have manifested most clearly in the real estate market, which now faces a glut of inventory thanks to years of overbuilding.

When the risks of a property crisis grow, that weighs on consumer confidence — people save money rather than spend it, which then raises the odds of further declines in real estate values, which in turn eats away even more at household wealth.

China currently has enough empty apartments to meet seven years' worth of demand, the New York Times reported, while consumer-oriented sectors like travel or dining have notably lagged behind.

The country also doesn't have a robust consumer-driven economy to fall back on, and it hasn't built a system that includes social safety nets or other means of boosting confidence.

Oversupply leads to speculative buying, and that's created an economy where about 70% of Chinese households' wealth comes from housing assets, according to The Conference Board.

Connected to that is 30% of local government revenues come from land sales to developers — two of which, China Evergrande and Country Garden Holdings, made headlines this month for filing for bankruptcy and missing bond payments, respectively.

"Demand-side imbalances are long term," Alfredo Montufar-Helu, the head of the Conference Board's China Center, told Insider. "To transition from an industrialization-led economy to a consumption-led economy, you have to sustainably increase consumption, and a key driver of this is diminishing the need for precautionary savings."

The fundamental issue, the Cambridge scholar explained, is that China has relied on short-term remedies rather than making any lasting structural changes to its economy. Spending and lending packages make asset bubbles worse, crowd out consumption, and cap more productive investments, and ultimately make systemic changes harder to implement later.

"There's a strong pressure or temptation for the state to intervene with more stimulus to avert a short-term crisis, but that doesn't solve the long-term issues," Hurst said. "There could be a real rapid decline in real estate prices that would hurt a lot of people's livelihoods."

German Inflation Trauma of 1923 Strikes an Uneasy Chord Today

Sonja Wind and Jana Randow
Sat, August 26, 2023 



(Bloomberg) -- By late-1923, hyperinflation had rendered Germany’s currency so worthless that one woman used several billion marks of banknotes to fashion a dress for carnival.

The gown is part of an exhibition at the Frankfurt History Museum that’s striking an uncomfortable chord with Germans today who’ve been rocked by the steepest price rises since the country’s reunification, thanks to Russia’s attack on Ukraine.

“We couldn’t have imagined it would be so relevant,” said Nathalie Angersbach, a co-curator of ‘Inflation 1923. War, Money, Trauma.’ “We see this with one eye laughing and the other weeping — of course we don’t want inflation, but the attention we have now makes us happy.”

A hit with young and old, the exhibit has won praise from Philip Lane, chief economist at the European Central Bank, which is based in the city and has been battling to drag price gains across the 20-nation euro zone back down to 2%.

For Germany, despite the recent bout of inflation being nowhere near the 29,000% or more that quickly vaporized households’ savings a century ago, the challenges it’s unearthed shouldn’t be underestimated.

Soaring energy costs helped trigger a recession that’s exposed economic frailties. Heightened inequality, meanwhile, is fueling a resurgence of far-right political forces.

Having peaked at 11.6% last October, inflation in Europe’s largest economy may abate to 6.4% this month, according to a Bloomberg survey of analysts. But the ramp-up in the cost of everything from gasoline to butter, alongside the unprecedented barrage of interest-rate increases the ECB has unleashed in response, are stinging. And while nearing their end, the hikes may yet persist.

Germans’ traditional aversion to inflation, rooted in the ordeal of the 1920s, was revived in 2022 after moderating a little in the preceding period, polls have showed.

Like a century ago, the ensuing economic hardship is proving to be fertile ground for populism. Support for Germany’s AfD has surged to record highs in recent months, propelling the far-right party past Chancellor Olaf Scholz’s center-left Social Democrats.

AfD sympathizers are significantly more dissatisfied with their own lives and the economy than average voters, according to Marcel Fratzscher, who heads the DIW research institute. With German output stagnating, things may yet get worse.

For the poor, the spike in inflation has been particularly pronounced, with food costs — which make up a bigger chunk of their spending than they do the wealthier households — jumping at twice the pace of overall prices.

In Frankfurt, beyond the skyscrapers that are home to some of Europe’s biggest banks, the Frankfurter Tafel food bank has witnessed the fallout first-hand.

Requests for assistance have soared by such an extent that the charity was forced to impose a freeze on new intake. While it has plenty of storage space, donations haven’t kept up with demand.

“Once, there was only one onion and three carrots left, and there were still four families waiting, who then started fighting over it all,” spokeswoman Nilab Alokuzay-Kiesinger said, surveying empty warehouse shelves.

At one distribution point, located in a Latin American nightclub, people line up every Friday morning amid colorful party decorations, waiting for their bags filled with everything from vegetables to sausage and yogurt. One retiree said her pension doesn’t cover both food and rent, since prices shot up.

Inflation is poised to slow further, though prices aren’t likely to offer relief by falling.

“There is that understanding that the overall inflation is coming down,” Bundesbank President Joachim Nagel told Bloomberg TV last week. “It’s often like that, that it takes more time for the core inflation to come down. That could be a possible scenario. But we should wait for the September numbers.”

But the government is also paring back support measures that helped keep heating bills down after the war in Ukraine sent energy prices rocketing.

Scholz is optimistic that inflation can be overcome, calling Germany “perfectly capable of mastering the problems of our time.” Initiatives include rapidly installing liquefied natural gas terminals to lower energy costs, and investing in the green transition to keep electricity cheap for an industrial sector that had grown addicted to low-cost fuel from Russia.

The chancellor is also defiant on the rise of AfD. “We won’t be able to avoid taking a stand and saying that we’re defending democracy and the freedom we’ve achieved,” he said this month.

Back in the Frankfurt museum, visitors learning about the perils of money-printing include Klaus Moor, a pensioner who keeps a box with millions of devalued marks from his grandfather at home.

“I hope it’s not going to get as bad as back then,” he said. “I have a good pension but I can imagine that many families, especially the ones with children, are having a hard time coping with today’s price increases.”







--With assistance from Alexander Weber and Michael McKee.

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German Budget Hawk Steers Faltering Coalition as Far Right Rises

Kamil Kowalcze
Fri, August 25, 2023 






Finance Minister Christian Lindner

(Bloomberg) -- When German Finance Minister Christian Lindner was asked this year where he sits on the “government boat” – in the middle, at the stern or on the lower deck — he didn’t hesitate: “At the helm.”

The leader of the business-friendly Free Democrats, or FDP, has been at the forefront of infighting within Berlin’s three-way governing coalition. His policy wins have enraged his Green party partners on issues including fossil-fuel heating, combustion-engine cars, and cutting funding in their ministries.

The 44-year-old sees himself as steering the fractious alliance and best placed to win over some conservative voters and stem the flow of support to the nationalist Alternative for Germany. And with Olaf Scholz’s Social Democrats, or SPD, fading behind the resurgent far right, the chancellor has given his hawkish budget chief free rein.

“Due to the weakness of the major parties, there is competition between the Greens and FDP for the role of kingmaker,” Ursula Muench, director of the Academy for Political Education in Tutzing, Bavaria, said in an interview. “The chancellor is aware that he needs both partners and, in my opinion, the FDP is closer to him because the dogmatism of the Greens bothers him and the SPD immensely.”

Critics say the government’s unpredictable behavior has become a disruptive influence, with the fallout being felt not just in Germany but throughout Europe.

The question of how far to indulge Lindner’s love of the spotlight and whether to change tack is becoming a potentially decisive issue for the chancellor. Yet as Scholz struggles to persuade Germans he can solve problems ranging from slumping industry, high energy costs and urgent defense needs to the AfD’s resurgence, his finance chief knows he has leverage until the general election due in the fall of 2025.

And he’ll put this to the test already on Oct. 8 when the wealthy states of Bavaria and Hesse hold five-yearly votes.

The son of a math teacher and a reserve major in the German military, Lindner argues that opposing the leftist climate-protection agenda of his coalition partner, the Greens, is the best way to prevent voters switching to the AfD, which questions humans’ role in global warming.

“Not everyone who votes for the AfD is a Nazi,” Lindner said during a meeting with citizens in Weimar, in the eastern state of Thuringia, a far-right stronghold.

That sort of talk has so far failed to stop voters drifting to the anti-migrant group, whose popularity has leapfrogged that of the SPD as public discontent simmers over inflation, record immigration and costly environmental measures.

The latest INSA poll of voting intentions put the AfD at 20.5%, ahead of the SPD at 18.5% and Economy Minister Robert Habeck’s Greens at 14%. The FDP trails with 8%.

The conservative bloc led by the Christian Democratic Union, or CDU, is in front with 26.5%. Lindner sees the party of former Chancellor Angela Merkel as his main competitor and considers he can win voters away from it while acting as a bulwark against the AfD.

Veronika Grimm, a member of Scholz’s panel of independent economic advisers, said political point scoring within government too often distracts from the issues at hand.

“I would have hoped that the coalition partners would pool their strengths,” she said. “The constant confrontation — from all sides, by the way — is not conducive to increasing the coalition’s popularity.”

During months of in-fighting, the FDP scored wins on the temporary extension of the lifespan of nuclear power plants and watering down a virtual ban on new fossil-fuel heating systems. Against the will of the Greens, Lindner pushed through a 2024 budget that slashes net new borrowing to its lowest since before the pandemic to protect what he calls Germany’s reputation as the “gold standard of public finance.”

As well as wresting harsh spending cuts from all ministries except defense, including those led by the Greens, he succeeded in shifting €20 billion ($21.6 billion) of subsidies for foreign chip manufacturers that Habeck lobbied for from the regular budget to the Climate and Transformation Fund.

At the Finance Ministry’s summer party in June, Lindner explained that his voters expect resistance against the leftist ideas of the SPD and Greens, and rejected claims that coalition bickering serves the far-right. He said the public backed his opposition to Habeck’s controversial heating law and that the AfD would be at 25% in the polls if it weren’t for his fight to keep the country in the political center.

Just days later, in the Sonneberg district of Thuringia, voters elected an AfD candidate as a district administrator for the first time.

While Lindner says he’s focused on the next general election, he’s determined to do better in state votes. Having taken over a defeated FDP a decade ago that had failed to secure any seats in Germany’s Bundestag for the first time in its history, a string of regional election losses since joining the coalition at the end of 2021 raised the specter of becoming irrelevant again. The party was in danger of missing the 5% threshold for entering parliament again in a regional election in Bremen in May but ultimately scraped in with 5.1%.

An FDP parliament member familiar with Lindner’s thinking said coalition battles will continue in the run up to the October votes, enabling him to play on his firm stance against the Greens.

Lindner also appeals to his base through tough talk on fiscal discipline, including his defense of Germany’s constitutional debt break that limits federal net borrowing.

Still, international organizations have raised questions over his budget pronouncements. The OECD warned some of his spending restrictions contain loopholes that have created massive taxpayer liabilities and harmed the credibility of the country’s public finances.

The International Monetary Fund echoed this view, suggesting the government should limit the use of special investment funds worth hundreds of billions of euros to enhance transparency, cohesion with the European Union’s fiscal rules and the effectiveness of the debt brake.

When contacted by Bloomberg for this article, a finance ministry spokesman declined to comment on any party-political issues or internal government consultations.

Regarding criticism of the government’s use of off-budget funds, the spokesman noted that Lindner had made it clear on several occasions that transparency should be increased and their overall number reduced. The government is continuously reviewing the funds, added the spokesman, who asked not to be identified by name.

Back in Berlin after summer breaks, the governing parties will lock horns again when Scholz holds a cabinet retreat in Meseberg starting on Tuesday.

“I also wish there could be less noise, with solutions presented more quickly,” Lindner told Bavarian radio this week when asked about public coalition spats. But he added: “It must make a difference to voters who they vote for.”

--With assistance from Zoe Schneeweiss and Iain Rogers.

Charting the Global Economy: Euro Area Activity Retrenches

Vince Golle and Molly Smith
Sat, August 26, 2023 

(Bloomberg) -- The contraction in euro area business activity deepened this month, most notably in Germany where the decline was the steepest since the pandemic brought the economy to a screeching halt in May 2020.

France reported a third monthly drop in output, while the rest of the region contracted more moderately, according to a survey of purchasing managers. Sweden’s economic prospects dimmed, while a decline in UK retail sales underscored greater consumer caution.

In Turkey, central bankers, including newly appointed officials led by Governor Hafize Gaye Erkan, surprised markets with the steepest interest-rate increase since 2018. The move sparked a rally in Turkish lira and banking shares.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

Europe

The contraction of private-sector activity in the euro area intensified, leading investors to bet that the European Central Bank will pause its campaign of interest-rate hikes next month. Services in August ceased being a bright spot and followed the industrial sector into a downturn in the region’s top two economies.

Sweden’s government shrugged off the potential for a contraction next year, while projecting meager growth for the economy as consumers remain under pressure from higher costs.

UK retail sales fell more than expected in July after a spell of cool and rainy weather kept people out of shops at a moment consumers are becoming more cautious with spending.

Record pay raises and the slide in property prices caused the biggest improvement in UK housing affordability in more than a decade, a glimmer of hope for young buyers who have been priced out by stretched valuations.

US

US mortgage applications for home purchases slid last week to an almost three-decade low, indicating residential real estate is reeling from the recent spike in borrowing costs. The contract rate on a 30-year fixed mortgage increased 15 basis points to 7.31% in the week ended Aug. 18 — the highest since late 2000.

US job growth was probably less robust in the year through March than previously reported. While the government’s preliminary estimate suggests that strength was somewhat overstated, it doesn’t fundamentally alter the picture of a resilient and robust labor market that’s gradually cooling.

American politicians are keener than ever to juice the economy with government cash, a shift that’s already helping to drive up borrowing costs and looks likely to keep them high long after the inflation emergency is over. The outlook for the federal budget right now is essentially unprecedented—crisis-size deficits as far as the eye can see. That prospect is making investors uneasy.

Asia

South Korea’s early exports kept declining in August in the latest sign of lackluster global trade weighing on economic growth. Daily shipments decreased 10.7% on average in the first 20 days of the month compared with a year earlier.

China will stop all seafood imports from Japan, escalating tensions between the two nations as Japan begins a contentious release of treated wastewater from the wrecked Fukushima nuclear power plant.

Emerging Markets

Turkey’s central bank’s jumbo interest-rate increase triggered a major rally in the country’s assets on hopes that it augurs the unwinding of policies that have sent foreign investors fleeing the $900 billion economy. The Turkish lira, long one of the world’s worst-performing currencies, surged the most in almost two years following the Thursday announcement.

World

One of the world’s most potent symbols of global trade — the Panama Canal — is falling victim to climate change as shrinking water levels force ships to part-load in order to navigate the vital waterway. If lower container loads continue, there is a chance that business will suffer delays in restocking inventories ahead of Christmas, according to Container xChange, a container logistics platform.

Iceland’s central bank raised western Europe’s highest interest rate by more than expected. Officials in Turkey boosted rates far more than expected, while Zambia also hiked. Korea, Sri Lanka and Indonesia held rates unchanged.

--With assistance from Beril Akman, Christopher Condon, Eamon Akil Farhat, Sam Kim, Alex Longley, James Mayger, Liz Capo McCormick, Colum Murphy, Reade Pickert, Tom Rees, Niclas Rolander, Augusta Saraiva, Zoe Schneeweiss, Alex Tanzi, Naomi Tajitsu, Erik Wasson, Alexander Weber and Lucy White.

 

India Tightens Rice Exports in Threat to Global Food Prices

Pratik Parija, Shruti Srivastava and Siddhartha Singh
Sat, August 26, 2023 



(Bloomberg) -- India imposed more curbs on shipments of rice to ensure its food security, a move by the top exporter that’s likely to further squeeze global supplies of the grain.

The government levied a 20% export tax on parboiled rice with immediate effect, according to a notification by the finance ministry late Friday, confirming an earlier report by Bloomberg News. India has now restricted overseas sales of all non-basmati varieties, which account for about 80% of its total rice shipments. Its share in the global rice trade is about 40%.

Asian rice prices soared to their highest in almost 15 years earlier this month, and could climb further, raising costs for importers such as the Philippines and some African nations. India’s recent protectionist measures are in line with its aggressive efforts to cool local food prices ahead of a general election early next year, when Prime Minister Narendra Modi will seek a third term.

“With this move, domestic prices will drop and that will help the government in controlling food inflation,” said B.V. Krishna Rao, president of the Rice Exporters Association. “But, global prices will rise and buyers will have to absorb the increase. There will also be re-negotiations between buyers and sellers on some contracts.”

Rice is a food staple for about half of the world’s population. India’s curbs come at a time when food costs are still elevated because of Russia’s war in Ukraine and as volatile weather across the world threaten supplies of grains and oilseeds. There are concerns India’s move to ensure domestic food security will hit several poorer nations still struggling to recover from the Covid-led economic downturns.

Parboiled rice accounts for about one-third of India’s total rice shipments. The nation has already banned exports of broken rice and non-basmati white rice, curbed shipments of wheat and sugar, and restricted stockpiling of some crops. India is also considering abolishing a 40% import levy on wheat, and selling tomatoes, onions and grains from state reserves to improve local supplies.

Parboiling is a process that involves partial boiling of the paddy before milling to boost its nutritional values and change the texture of cooked rice. Some restaurants use parboiled rice because it is already clean and easy to cook.

The government said that exporters having valid letters of credit before the new rule will still be allowed to ship the grain. The export tax on parboiled rice will remain in force until Oct. 15, it said.