Protecting children in a digital world is a moral imperative of our era

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When you meet a child who has gone through the trauma of sexual exploitation and abuse, you never forget it.

In Southeast Asia, millions of child sexual exploitation images are downloaded, copied, forwarded, and shared in the blink of an eye, perpetuating trauma and stigma. In the borderless world of the Internet, national law-enforcement agencies find themselves limited.

Behind every abusive video and image is the life of a child, forever altered.  

Asia already registers the highest rate of child Internet users globally. Alarmingly, up to one in five Internet-using children in ASEAN has experienced child sexual exploitation and abuse online. With Internet use continuing to grow rapidly, all signs suggest this frightening number will only increase over time.  

This means accelerating action for child online protection is a matter of extreme urgency. Every child has the right to be safe from harm, both online and offline. And this is the collective responsibility of governments, of industry and the private sector, of parents and caregivers, of family members and young people themselves. 

There is increasing awareness of the pivotal role industry can, and should, play. Technology companies can help design innovative solutions to tackle online abuse, identify and rapidly take down abuse materials, cooperate with law enforcement to report illegal and suspicious activities, and adopt corporate policies on child protection.  

This week, with the support of UNICEF, Southeast Asian governments and industry representatives are convening in Bangkok at the second ASEAN-ICT Forum on Child Online Protection to discuss just that.  

The call to the technology industry to step up and improve child online protection is not just being made by us: It is being made by children and young people themselves. They have been asking for easily accessible online reporting mechanisms, for the rapid takedown of harmful content and for perpetrators of abuse to be swiftly removed from online platforms, and for child-friendly information about staying safe online and protecting their privacy.     

Yet among the children and young people surveyed ahead of this week’s forum, 51% told us they still see worrying or offensive content on a daily basis. 

Southeast Asia has shown strong commitment to addressing child sexual exploitation and abuse. Robust frameworks for child online protection are already in place, notably the 2019 ASEAN Declaration to Protect Children from All Forms of Online Exploitation and Abuse.

What needs to be done now is accelerate the implementation of the framework and its action plan, particularly through urgent action and accountability on the part of the private sector, in addition to appropriate regulation by states. 

As we work to keep children safe online, one of the fine balances we must continue to strike is ensuring they can still unlock all the precious new opportunities afforded by the Internet.

The Internet has helped children and young people learn, connect with and support one another, play, and make their voices heard. For more marginalized boys and girls living in remote areas and disadvantaged households, being connected to the Internet can change lives and open entirely new horizons. 

In a debate that has often been prolonged and polarizing, our actions must systematically be guided by children’s rights. At the heart of all dialogue, policies and measures should be children’s right to protection from harm, their right to privacy, to information, to education, to association and to speech. We can, and must, do better to uphold this range of rights online.

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Ukraine war a stalemate on land but not at sea

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As the attention of the world centers on the war in Gaza, many commentators believe that the war in Ukraine is becoming a stalemate. To date, Ukraine’s highly anticipated summer counteroffensive has not resulted in any substantial territorial gain, and Russia has not made any progress either.

In military terms, a stalemate is not necessarily negative, depending on your perspective. It’s a chance to replenish ammunition stocks (for instance, Russia’s limited supply of missiles) or procure new key weapons systems for the next phase of the war (Ukraine’s acquisition of F-16 fighter jets.)

In political and diplomatic terms, a stalemate enables both sides to rally their allies and partners – see Moscow’s public relations offensive in the Middle East to capitalize on the effects of the Israel-Hamas war. But it can also contribute to war fatigue – and we are seeing a degree of this among Kiev’s allies in the West.

However, this notion of a stalemate neglects the war’s maritime dimension, which has evolved fairly dramatically in Ukraine’s favor in recent months. With winter coming, recent successes in the Black Sea appear to offer Ukraine substantial tactical, strategic and political advantages.

Kiev claims that since the beginning of the war, Ukrainian forces have damaged or destroyed 27 warships and vessels belonging to Russia’s Black Sea fleet, including the fleet’s flagship, the 11,000-ton cruiser Moskva, as well as one of Russia’s Kilo-class submarines that carries cruise missiles.

With Russia’s naval base at Sevastopol considered no longer safe after a series of successful Ukrainian attacks, much of Russia’s Black Sea fleet has had to relocate to the port of Novorossiysk on the Russian mainland.

Moving its remaining Kilo-class submarines to safer locations is important for Russia because it cannot afford to lose any more of these expensive and scarce vessels.

Map of Black Sea including Novorossiysk.
Russia has shifted naval assets away from its Black Sea fleet base to Novorossiysk. Photo: Shutterstock via The Conversation / Michele Ursi

Tactical and strategic implications

This winter, we can again expect Russia to try to degrade Ukraine’s energy infrastructure, as it attempted to do last year. Russia used Kalibr cruise missiles launched from the Black Sea as part of this strategy, creating additional vectors of penetration to saturate Ukraine’s air defense capabilities.

But the repositioning of the Black Sea Fleet further away from Ukraine will have a negative effect on Moscow’s logistics and tactical options this time around. And in a long war – such as this conflict is predicted to be – denying the enemy even one tactical option can have synergistic effects on the overall conduct of operations.

The impacts of Ukraine’s successful harassment and strikes against Russia’s Black Sea assets – its warships, shipyards, command centers and air defense sites – are apparent well beyond the Black Sea.

Here’s why: the situation on the ground in Ukraine has become a slog, as both Russia and Ukraine are trying to exhaust each other and their allies. So Ukraine’s campaign in the Black Sea, which has increased the vulnerability of Crimea, has a great deal of significance.

While it is unlikely to provide a direct opportunity for Kiev to retake the peninsula any time soon, the perceived threat obliges Moscow to devote attention and limited resources to the defense of Crimea, which will affect its overall strategy of attrition.

Insurance deal

The relocation of Russia’s naval resources away from Ukraine’s main trading routes in the northwestern Black Sea has weakened Russia’s attempted blockade of Ukraine. In the words of the Ukrainian president, Volodymyr Zelensky: “Russia is unable to use the Black Sea as a springboard to destabilize other regions of the world.”

Moving its naval assets further away from its base at Sevastopol has not completely prevented Russia from targeting civilian shipping, though. On November 9, a Russian missile hit and damaged a civilian vessel sailing under a Liberian flag as it entered a Black Sea port in the Odesa region, killing one and injuring four people. This led to a spike in insurance premiums.

The Black Sea port in Odesa, Ukraine. Photo: Twitter Screengrab / Alamy

Blockades only work if they make the operational and financial risks for ship operators and insurers too high, so it’s crucial that Kiev can act to increase confidence in Ukraine among the global shipping sector. The first step has been to reduce the threat posed by the Russian navy; the next is to reduce risk perception and normalize maritime trade to and from Ukraine.

Importantly, despite the incident with the Liberian-flagged ship, Kiev has managed to finalize a deal with a group of 14 British insurers that enables discounted insurance premiums (compared to high war premiums) thanks to a mechanism of state financial backing. Announcing the deal, the Ukrainian prime minister, Denys Shmyhal, explained:

It will make it possible to make a discount on the cost of insurance against military risks for exporters of all products from Ukraine. This will make the Black Sea corridor more accessible to a wider range of exporters.

The more ships that are able to move goods in and out of Ukraine, the more this will demonstrate that, despite Russia’s attempts to block Ukraine’s ability to trade, there is a lower risk involved – thus creating a new cycle of confidence within the maritime sector, and reinforcing the idea that the Russian blockade is obsolete.

Kiev’s key allies, including the UK, appear to understand the advantage that Ukraine now holds in the Black Sea. Despite the apparent stalemate on land, Ukraine’s successes at sea will ensure its resilience in the longer term.

Basil Germond is Professor of International Security, Department of Politics, Philosophy and Religion, Lancaster University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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What happens the day after the Gaza war?

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Last week’s Manama Dialogue in Bahrain was the first chance for a wider discussion between Americans, the primary international backers of the war still raging in Gaza, and the wider Middle East, which will have to deal with the consequences of that conflict. It didn’t go well.

If US President Joe Biden’s administration, which sent its top Middle East adviser Brett McGurk, had hoped Arab allies could be persuaded by the hardline approach it is pursuing, it was disappointed. McGurk stuck to the line that Biden later reiterated, that “a ceasefire is not peace.”

That represented a stark difference from most Middle Eastern leaders, who are seeking an immediate ceasefire to halt the vast civilian casualties in Gaza.

The US and its Arab allies are not merely not on the same page when it comes to the current war, they are also at odds over what happens after it ends.

There are two reasons for this. The first is that the Arab world is concerned that the US will allow Israel to destroy Gaza, and expect the Arab world to provide the money, expertise and personnel to rebuild it. Jordanian Foreign Minister Ayman Safadi was categorical: “We are telling the Israeli government … once you are done [will we] clean up your mess? No, we will not.”

The second aspect is what form of governance would follow the removal of Hamas in Gaza. And therein lies a conundrum, because every option available has already been rejected by one party or another.

There are, broadly speaking, three options for a Gaza post-Hamas. (That is, if it is even possible to uproot Hamas, something many analysts have pointed out is likely to be difficult or impossible.)

The first is a complete reoccupation of Gaza by Israel; the second is the return of the Palestinian Authority to the coastal enclave; and the third is some external political or security administration – perhaps a government with a coalition of Arab states or a UN-run administration.

The option of a complete reoccupation has been touted by more than one Israeli official, including Prime Minister Benjamin Netanyahu. The White House shot it down the very next day. “A reoccupation … of Gaza is not the right thing to do,” said an official.

That doesn’t, however, mean that it is off the table. The war could yet drag on in some form for more than a year, and next year’s US election could bring a new, more amenable occupant to the White House.

If the option is to have an Arab or international force next door that won’t do its bidding, Israel may well conclude it is better simply to wait out the next year, through endless “security operations,” and see what the US election brings.

The second option is the return of the Palestinian Authority, which appears to be Washington’s preference.

But if the Americans are keen on it, the Palestinian Authority is not, at least not on the current terms proposed. The PA governs parts of the Israeli-occupied West Bank, and previously Gaza until Hamas seized control in 2007. The PA wants to see political progress before it returns to Gaza.

Simply taking over governing Gaza without any changes to the stifling economic conditions would put the PA in the position of being Israel’s and America’s police officer – simply enforcing rules that have been decided elsewhere.

For the PA, which wants to win future elections – if they ever materialize – being seen as complicit in a continuing occupation is deeply problematic. Opposition to the return of the PA would also come from the Israeli government, with Netanyahu already voicing his opposition to the PA taking charge of the territory.

That leaves the option of an outside force, either an Arab coalition or something under the auspices of the United Nations. The first can probably be dismissed. Speaking in Manama, Safadi was direct: “There will be no Arab troops going to Gaza. None. We are not going to be seen as the enemy.” It can be presumed Safadi was articulating not merely the position of Jordan, but that of Arab heavyweights like Saudi Arabia.

That leaves the possibility of a UN force. While that may be palatable to both sides – the Arabs would get their wish not to have to clean up Israel’s mess, while Israel would feel at least Palestinians were not in charge – a UN force might prove trickiest of all, because it would require some form of publicly declared mandate.

Which means that, somehow, a vision of what exactly the force is doing there, and why, would need to be explained. And that pushes up against the more vital and most intractable question – what exactly is the political settlement in Gaza?

The reason the Israelis are so focused on the military strategy, and the Americans have resorted to dredging up the almost forgotten two-state solution, is that beyond that, there is no imagined political settlement. There is no vision of what Gaza can become.

It is much easier to focus on a strategy of how to defeat Hamas in Gaza rather than to try to imagine what politics will look like the day after.

This article was provided by Syndication Bureau, which holds copyright.

Faisal Al Yafai is currently writing a book on the Middle East and is a frequent commentator on international TV news networks. He has worked for news outlets such as The Guardian and the BBC, and reported on the Middle East, Eastern Europe, Asia and Africa. Follow him on X @FaisalAlYafai.

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Time for Japan to warmly welcome more immigrants

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During a recent speech, Japanese Prime Minister Fumio Kishida outlined his primary policy priority in simple terms — “economy, economy, economy.”

Notably absent was any mention of foreign workers and their role in sustaining Japan’s future economic development. This is surprising, given the well-documented need to further increase the foreign workforce, which has already reached record highs in 2023.

In 2022, the Japan International Cooperation Agency outlined that Japan would need over 6.7 million foreign workers by 2040 to maintain an economic output aligned with the government’s GDP growth targets. This represents a roughly four-fold increase from current levels.

Kishida re-started the large-scale admission of foreign workers in spring 2022, following a relaxation of pandemic-related border restrictions. Yet, he has been hesitant to outline a broader vision for the long-term admittance and potential integration of migrant workers.

The reluctance to implement a formal immigration policy has long precedence among Japanese policymakers. For example, when presenting the 2018 amendment to the Immigration Control Act, the late former prime minister Shinzo Abe stated that “Japan would not adopt a so-called immigration policy.”

Instead, the amendments established the Specified Skilled Worker (SSW) system, which aims to boost foreign worker admittance within 12 economic sectors suffering from acute labor shortages.

Japan has long relied on immigration “side doors” — pathways to admit primarily lower-skilled foreign workers while legally denying their presence. These channels have historically included the generous admittance of people of Japanese descent, with the Abe years seeing a rapid increase in the numbers of working international students and participants in the Technical Intern Training Program (TITP). But these “side doors” have also been subject to criticism for placing foreign workers in vulnerable labor environments.

While the SSW system requires that workers pass an industry aptitude test and imposes some language requirements, the industries that the system serves and the institutions that govern it strongly overlap with the TITP.

Unsurprisingly, the SSW system essentially functions as a way for employers to retain technical interns, with roughly 70% of specified skilled workers coming from the TITP.

As it pertains to foreign workers, Kishida has so far opted to maintain the status quo set by Abe, preferring to adjust Japan’s primary admittance policies instead of implementing major reform.

In June 2023, his cabinet passed an expansion of the SSW Residence Status Two, which allows for unlimited renewals and family reunification. While this provides an effective path to long-term settlement for lower-skilled workers, the expansion has been essentially non-functional, with only 12 SSW Two status holders as of June 2023.

While the Kishida government expanded the acceptable industries that foreign students graduating from vocational schools can find employment, one of the most significant changes may lie in the future of the TITP, which is being reviewed by a Ministry of Justice-appointed panel.

Currently, the TITP works under the pretext of facilitating ‘skills transfer’ to developing countries, though analysts argue that it more closely resembles a rotational migrant worker system.

The TITP has also been criticized on human rights grounds, with many “interns” incurring debt to access the program and facing heavy restrictions in changing employers. The panel has suggested that the TITP be renamed and formalized as an entry point to the SSW system, abandoning the pretext of “skills transfer” and making it easier for workers to change employers. This proposal is yet to be adopted into policy.

The Kishida administration has opted for incrementalism on immigration. While Kishida has mentioned the need to “consider a society featuring co-existence with foreigners”, he has generally avoided the topic in major policy speeches, as there is simply no political necessity for him to do otherwise.

If current systems are sufficient for Japan to address its labor shortages, it is unnecessary to open the potential can of worms that a national conversation on immigration would represent. Still, the absence of a formal immigration policy means that foreign workers will continue to suffer from subpar policy outcomes.

Japan has a structural demand for foreign workers, but one major question going forward is whether there is sufficient supply. The countries from which foreign workers migrate, such as Vietnam, have experienced strong post-pandemic economic growth while the Japanese yen has weakened and wages have stagnated. As such, Japan’s attractiveness as a destination country for foreign workers has diminished.

Broader regional trends suggest that foreign labor migration to Japan will not continue to increase indefinitely and the potential effects of this will be felt by a future administration.

One way to address a potential bottleneck in foreign labor supply is to boost Japan’s attractiveness by improving labor conditions, expanding pathways to permanent residence and family reunification and integrating foreigners into Japanese society — considerations that a formal immigration policy could address.

But despite recent calls to pass a national “Immigration Act”, it is unlikely that the Kishida administration will do so. Until such a time, Kishida’s incrementalism looks set to continue.

Maximilien Xavier Rehm is a PhD Candidate at the Graduate School of Global Studies, Doshisha University. His research focuses on the politics of immigration in Japan.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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China’s property loan scheme may or may not work

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The Chinese government is reportedly drafting a white list of around 50 major property developers that will be allowed to borrow from banks more easily to maintain their construction work, a move that has at least temporarily lifted beleaguered property company shares.

The People’s Bank of China (PBoC), the National Administration of Financial Regulation and the Chinese Securities Regulatory Commission met on November 17 and jointly planned to offer new loans to certain property developers in the first quarter of 2024, according to some Chinese media. 

Hong Kong-listed property developers’ shares have surged by 20-30% over the past few days on the news. Longfor Group’s shares have gained 22% this week while Country Garden’s shares have skyrocketed 36%. Sunac China is up 29%. 

Meanwhile, Bloomberg reported on Thursday that China may allow banks to offer unsecured short-term loans, or so-called working capital loans, for the first time ever to some qualified developers.

Citing unnamed sources, the report said the new financing facility would be available for day-to-day operational purposes, helping property developers to free up capital for debt repayment.

Some property analysts said the new bank loan facility will help large property developers improve their cash flow while leaving smaller developers in the cold. They said the Chinese are still reluctant to purchase homes when prices keep falling. 

On November 8, an article with the title “Property prices in Shenzhen are collapsing” was widely circulated online. 

It said the average property price at Huajun Garden in Baoan district has dropped 57% to 1.85 million yuan (US$259,843) per unit from a peak of 4.2 million yuan a few years ago. Property prices have fallen 41% to 2.4 million yuan at Youlin Apartment in Nanshan district and decreased 46% to 3.9 million yuan at Longyueju in Longhua district.

Citing more than 15 cases, the article said property prices in Shenzhen have lost 30-50% in recent years, causing property investors and homebuyers to delay purchases. 

The article was republished by some media platforms in the following days after its publication but then it was inexplicably removed from the Chinese internet. A few netizens continue to circulate the article. 

Online commentators said it is not a surprise that Shenzhen saw a bigger fall in home prices than other Chinese cities as the technology hub’s property markets had grown faster than those in Beijing, Shanghai and Guangdong over the past decade. 

‘Financing black hole’

In July 2020, China’s financial regulators launched what they called “three red lines” that barred highly-geared property developers from receiving loans for expansion.

The negative impact of the policy started showing effects in the second half of 2021 as property giant Evergrande Group failed to pay its contractors, deliver homes and repay its wealth management product buyers.

Earlier this year, China’s property prices rebounded slightly after the country lifted all of its Covid-19 rules and regulations. But they fell again in the second quarter as people saw their income decline amid a slower-than-expected, post-Covid economic recovery. 

Following in the beleaguered footsteps of Evergrande, Country Garden and Sunac Group also failed to repay their offshore bond investors and were forced to file for bankruptcy protection in the United States. 

An Evergrande development in a file photo. Image: Twitter

Some Chinese media outlets speculated that highly indebted property developers, namely Country Garden, Shimao, Sunac and Cifi Group, will be included on the white list but others were skeptical.

“In the end, those with credit risks may not be added to the white list as they have poor reputations, which make it hard for them to sell their properties,” Zhang Zhifeng, a columnist at Guancha.cn, wrote in an article published on Wednesday.

“These companies also have different and complicated outstanding loans. Once they have access to new money, they may use it to repay their old debt, instead of spending it on business operations,” Zhang says. “While their net assets continue to shrink, the new loan policy may create a ‘financing black hole’ for them.”

“Risks in the property markets are growing and have affected some financially healthy private and state-owned property developers,” said Li Yujia, chief researcher at the Guangdong Planning Institute’s residential policy research center. 

“Banks are in general risk averse and avoid offering new loans to indebted property developers, or even call loans from them,” he said. “It’s possible that this trend will lead to systemic risks in the banking sector.”

Huang Wentao, chief economist of CITIC Construction Investment, said it’s likely that the financial regulators will treat healthy and problematic property developers with the same new lending policy, as long as the developers’ financing needs are reasonable. 

He said he expects the government to announce more supportive measures to boost property market sentiment.

Some commentators said although 50 major property developers will be able to take out new loans, 20,000 smaller developers will still suffer amid the property downcycle.

Declining home sales

In October, property sales declined 14.4% year-on-year to 809 billion yuan while property sales volume plummeted 20.3% to 77.73 million square meters, according to the National Bureau of Statistics.

In the first ten months of this year, property sales dropped 4.9% to 9.72 trillion yuan from the same period last year while property sales volume fell 7.8% to 925 million square meters.

For the same period, property investment in China decreased 9.3% to 9.59 trillion yuan. The figure fell only 9.1% year-on-year in the first nine months of this year.

Yan Yuejin, research director of the think tank center of E-house China, said the weakening property investment showed that many property developers are still suffering from cash shortages and high inventories.

Read: China’s economic recovery faces deflationary risks

Follow Jeff Pao on Twitter at @jeffpao3

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S Korea and Boeing to counter N Korea’s drone threat

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South Korea and Boeing are joining forces to develop high-altitude, long-endurance (HALE) unmanned aerial vehicles (UAV) in response to North Korea’s recent drone infiltrations into South Korean air space.

Yonhap reported this month that South Korea’s arms procurement agency, known as DAPA, plans to collaborate with the US defense contractor on the new drone research project.

The Yonhap report noted that both sides signed a memorandum of understanding in April and met at the company’s headquarters in the state of Washington to collaborate on the project.

The report also mentions that DAPA’s goal is to have Korean companies take over the production of advanced aircraft while Boeing contributes its design and unmanned technology.

Yonhap also says that the South Korean military and Boeing have agreed to collaborate on the upkeep, repair, enhancement and modernization of Boeing aircraft utilized by the military. They have yet to finalize which models will be involved in the project, the report said.

South Korea is bolstering its drone capabilities in response to North Korea’s recent drone advancements, pushing an asymmetric edge over the former’s superior military capabilities.

In September, The Korea Times reported that the South Korean military created a new command center for drone operations at Pocheon in response to UAV threats after the infiltration of a North Korean drone last year.

According to the South Korean Joint Chiefs of Staff (JCS), the drone operations command is a military unit that will be under the direct supervision of the JCS chairman. It is the first combined combat unit of its kind, consisting of the Army, Navy, Air Force, and Marine Corps.

“Should the enemy launch another provocation against our country, we will show a prompt and overwhelming response to make it clear that their actions will lead to a devastating result,” said General Lee Bo-hyung of the Army Aviation Command, the appointed commander of the newly created unit.

The same month, The Warzone reported that the South Korean military had showcased a stealthy-shaped flying wing drone at a military parade in Seoul. The Warzone says a small UAV can provide covert, robust surveillance and monitoring capabilities. It could also perform electronic warfare assaults, kinetic strikes or act as a kamikaze drone/loitering munition to strike targets directly, the report said.

The Warzone notes that the five flying wing drones in the parade were each mounted on top of a 4×4 Kia Light Tactical Vehicle. The source says the setup was specifically for the event, as the drones have landing gear designed for traditional runways.

The Warzone says it is uncertain whether the images depict models or actual flying drones, but they appear to be the latter. It also notes that the drones have protective covers over their engine intakes on top of their fuselages and the pitot tubes extending from the center of their noses.

The drone’s design is comparable to a smaller model known as the Kaori-X that Korean Air’s Aerospace Division has worked on for several years and tested in 2015.

However, it says that this drone has a different wing shape, known as a “cranked kite” design, that resembles the US X-47B, which is better suited for longer flights at slower speeds than a more traditional delta wing design.

Aside from infiltrating drones into South Korea, North Korea has also substantially improved its surveillance capabilities, adding urgency to South Korea’s drive to enhance its capabilities in the area.

This month, The Korea Times reported that on Tuesday North Korea launched a satellite for military spying purposes on South Korea. The launch comes after two unsuccessful attempts earlier this year.

The Korea Times says South Korea’s JCS detected the launch from the Tongchang-ri area on North Korea’s northwest coast at approximately 10:43 pm, passing over the waters west of the border island of Baengyeong.

It notes that the JCS did not provide additional information, such as whether the satellite was successfully separated and placed into orbit for the three-stage rocket.

While South Korea has a solid manufacturing base and leads in semiconductor technology that enables it to be a potential leader in military drone development, it faces strategic challenges in getting its drone program up to speed.

In an article this August for The National Interest, Lami Kim notes that South Korea’s approach has focused mainly on technology and weapons, largely disregarding operational concepts and doctrines. Kim notes that South Korea’s lack of a clear drone strategy and operational concepts poses questions on how it will meet its strategic goals.

Kim says that while South Korean officials mentioned that deterring North Korea’s drone incursions is a goal, they have not mentioned whether South Korea’s deterrence approach will be one of denial or punishment.

She notes that a deterrence-by-denial approach against North Korea would be difficult, as it is unlikely for South Korea to intercept the majority of North Korean drones given South Korea’s limitations in radar technology.

She also says that a small number of kamikaze drones that elude South Korea’s defenses could cause substantial damage and inflict psychological costs on the South Korean population. She notes it is futile to try to convince North Korea to stop sending drones over the border.

Kim also says a deterrence-by-punishment approach would risk military escalation with North Korea. She says South Korea, without a clear deterrence mechanism, may engage in a tit-for-tat without strategic merit.

According to Yahoo Finance, as of November 22, Boeing’s shares trading at US$219.91, with a market capitalization of US$133.04 billion. Boeing’s stock has been volatile due to engineering issues and a pandemic-driven decline in sales.

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Can three standing ovations change history?

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SUBSCRIBE TO THE GLOBAL POLARITY MONITOR Quantitative and qualitative polarization trends David Woo and David Goldman take stock of polarization trends across economic, market, and political arenas, including the impacts of the Biden-Xi summit, currency and equity risk in Europe, and potential consequences for global polarization accruing from the Gaza conflict. Military conflict risks: Low and receding David […]

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Yuan rally thickens China’s capital flight plot

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In the homestretch of 2023, China is calming fears for the year ahead that it might engage in a race to the bottom on exchange rates.

In recent days, China’s biggest state-owned banks bought the yuan in unison to support the currency. By swapping yuan for dollars in onshore markets and selling those dollars in spot markets, major banks are reassuring traders worried Beijing might chase the falling Japanese yen lower.

There are a few possible explanations for why China is putting a floor under the yuan. One is to reduce default risks among property developers servicing offshore debt. Another is to avoid fresh trade tensions with Washington. Beijing also wants to stanch the capital outflows now making global headlines.

What’s interesting, though, is that Chinese leader Xi Jinping is tolerating a firmer yuan at a moment when Asia’s biggest economy could really use an export boost. Overseas shipments fell 6.4% in October year on year following a 6.2% drop in September.

Yet Xi’s long-term commitment to internationalizing the yuan is taking precedence over short-term economic growth priorities — and that’s likely a good thing.

Since 2016, when China won inclusion into the International Monetary Fund’s top-five currencies club, Xi has made increasing the yuan’s role in trade and finance a major policy priority.

This objective paints China’s capital outflows dynamic in a new light. In other words, not all outflows are “bad” given that a large share at the moment appears to reflect China Inc leveraging overseas growth.

In the first 10 months of the year, China’s non-financial outbound direct investment (ODI) increased 17.3% year on year to 736.2 billion yuan (US$104 billion).

“The allure of new global markets and evolving business models are driving Chinese enterprises to venture abroad and expand their presence on the global stage,” notes economist Yi Wu, an author of the China Briefing newsletter published by Dezan Shira & Associates.

There are valid reasons why China’s take of foreign direct investment flows is facing headwinds. One is default concerns confronting County Garden Holdings and other giant property developers.

A porter walks on a bridge in Chongqing, China with new residential buildings in the background.
Photo: CNBC Screengrab / Zhang Peng / LightRocket / Getty Images

Another is disappointing data on manufacturing and retail sales. Xi’s team also has been slower to ramp up stimulus than in the past, fanning complacency concerns.

Yet an argument can be made that Xi’s real goal is staying focused on longer-term retooling, not short-term economic sugar highs.

“China only takes meaningful actions when there is a real crisis. The government and the market may have different opinions on whether China has an economic crisis,” says As Qi Wang, CEO of MegaTrust Investment. “It turns out the market over-worried, and China may be right not to over-stimulate.”

China, he adds, “doesn’t seem to be in a crisis mode,” at least “until recently” when the government finally realized it faces a “confidence crisis” as the economy slides back into deflation.

In recent weeks, this manifested itself in Beijing’s “national team” buying shares in top banks and loading up on exchange-traded funds to boost investor confidence. Xi’s recent visit to San Francisco, where he made nice with US President Joe Biden, marked the start of a financial charm offensive.

But machinations in Beijing smack more of longer-term objectives than panic in Communist Party circles. This goes, too, for China deflation risks, which burst back into global headlines.

Last month, mainland consumer prices fell a greater-than-expected 0.2% year on year. While not precipitous, the trend adds to “evidence of renewed economic weakness,” Capital Economics wrote in a note to clients.

Still, economist Robert Carnell at ING Bank calls it a “pernicious” turn of events for Xi’s party. “What China has right now,” he explains, “is a low rate of underlying inflation, which reflects the fact that domestic demand is fairly weak.”

Data show that Chinese suppliers of goods face intensifying headwinds, too. China’s producer price index, which measures goods prices at the factory gate, dropped 2.6% in October year on year.

The trend “reflects uncertainty around the solidity of China’s recovery,” says HSBC economist Erin Xin. It “will likely keep policymakers on guard to keep support coming through.”

And yet many observers are surprised the People’s Bank of China isn’t acting more forcefully to attack deflationary forces, lest “Japanification” speculation might intensify. The yuan exchange rate may be the missing link.

At a moment of ebbing global confidence in China’s economy, Xi and the PBOC are working to display some at home. The rationale appears to be that a stable exchange rate communicates self-assuredness on the part of Chinese institutions.

The PBOC is encouraging lenders to cap the volume of new loans in early 2024. Governor Pan Gongsheng’s team also is prodding banks to shift some lending programs forward to stabilize China’s credit cycle. Again, few hints of panic.

Pan Gongsheng, pictured here as vice governor of the PBOC, is working to steady the yuan. Picture: Twitter / Screengrab

Here, the ODI-is-a-good-thing argument also comes into play. Increased outward direct investment is a natural sign of economic maturity whereby domestic firms expand operations to foreign countries.

As Japan and South Korea demonstrated, it’s natural to tap overseas growth in case domestic markets become saturated.

In the first 10 months of 2023, Chinese ODI increased 11% from a year earlier. This strategy both reduces concerns about China’s balance of payments and hints at a longer-term payoff to Beijing keeping its cool.

Looking at Japan’s example, deflationary currents require a major recalculation in economic planning. Part of it is the PBOC knowing what it can and can’t control.

The capital outflows China is experiencing are as much a product of rising US bond yields as concerns about Xi’s economic strategies.

It remains unclear whether the US Federal Reserve will tighten rates further in the weeks ahead. Fed Chairman Jerome Powell’s team remains noncommittal.

This uncertainty is keeping Sino-US rate differentials at levels that favor the dollar. As money seeks higher returns, Chinese FDI fell nearly $12 billion in July-September year on year, the first quarterly drop since the State Administration of Foreign Exchange began reporting the data in 1998.

All this makes the yuan’s recent rise to four-month highs all the more noteworthy. At a minimum, it buttresses the argument that Beijing is propping up the yuan in defiance of where traders might want to push exchange rates.

This helps explain why as exports fall for a sixth straight month, imports are rising in ways that could support neighboring economies. Imports rose 3% from a year earlier to $218.3 billion. With exports dropping to $274.8 billion, Beijing’s trade surplus is now $56.5 billion, a 17-month low.

The lessons from Japan suggest that deflation tends to portend a strong currency down the road. Yet in Tokyo’s case, the emphasis has been on defying the laws of economic gravity and engineering a weak exchange rate.

As 2024 approaches, Japan is being reminded of the limits of this strategy. Since the late 1990’s, government after government clung to a weak exchange rate strategy to support the export-geared giants towering over Japan’s economy.

Yet the last decade of Bank of Japan hyper-easing merely exacerbated Tokyo’s all-liquidity-no-reform problem. It produced record corporate profits but failed to incentivize companies to boost wages, invest big in innovation, increase productivity or take risks on promising new industries.

A weak yen is the cornerstone of 25 years of modern capitalism’s most generous corporate welfare, one that continues to hold Japan back. Why should CEOs bother restructuring, recalibrating or reimagining industries when the BOJ prints free money decade after decade?

The yuan isn’t tracking Japan’s huge devaluation. Image: Getty / Screengrab / Al Jazeera

Xi’s team seems determined to avoid this outcome. Of course, Xi’s work to increase the yuan’s global footprint is far from done.

“The internationalization of the RMB is an ongoing process, with a promising future for China ahead,” says economist Elvira Mami at the Overseas Development Institute think tank. “Nevertheless due to the tight capital controls in China which prevent capital outflow, despite its growing use, the RMB  is not likely to replace the US dollar in the nearest future.”

Of course, discussions of China’s troubles can tend toward hyperbole.

“We do see some indications that supply chain shifts are underway globally and that FDI decisions are changing as well,” says Jeremy Zook, director of Asia-Pacific at Fitch Ratings. “But our view is that China will likely remain the dominant player in global supply chains for a long time and such shifts will only be gradual.”

A key prerequisite is restoring trust in China as a destination for capital. Since late 2020, when Xi launched a crusade against tech founders — starting with Alibaba Group’s Jack Ma — China has too often been in global headlines for all the wrong reasons. This has had Wall Street analysts debating whether China was becoming “uninvestable.”

Since March, newish Premier Li Qiang has worked to flip the script. Li’s team stepped up outreach efforts to reassure overseas chieftains that China is once again open for business.

The efforts come as international business lobbies urge Beijing to level playing fields, reduce local protectionism, make the regulatory environment less erratic and tamp down on national-security-related crackdowns.

In San Francisco last week, Xi received something of a hero’s welcome from Western CEOs keen to re-engage with China Inc. Attendees included Apple’s Tim Cook, Tesla’s Elon Musk and Blackstone’s Steve Schwarzman, among others.

Equally important, Xi and Li are making their most assertive push to date to fix China’s property crisis. The vital sector faces a nearly $450 billion shortfall in cash needed to regain its footing and to complete millions of unfinished apartments weighing on local economies.

Li’s reform team is cobbling together a list of 50 builders that will receive financial support. Among the distressed developers Beijing is targeting are Country Garden and Sino-Ocean Group. If coupled with bold regulatory reforms, investors have reason to hope China will avoid Japan’s lost decades.

The structural reform piece is vital. Any steps to increase transparency, allow full yuan convertibility, create a robust credit rating matrix, increase the size and freedom of the private sector, curb the role of state-owned enterprises and build social safety nets to encourage greater consumption would cheer global funds and improve China’s FDI trends.

Chinese President Xi Jinping and Premier Li Qiang in a file photo. Image: NTV / Screengrab

Efforts by Xi and Li to communicate that China is addressing these cracks and others are clearly falling short, witnessed in the huge capital flight unsettling world markets.

Yet even here it’s best to remember that not all the capital leaving reflects investors giving up on China. A growing share of outflows reflects China Inc going global in ways to be expected from any fast-rising economic superpower.

The same goes with letting the yuan rise, a sign that China’s leaders and policymakers aren’t as worried about the trajectory of the economy as many would suspect.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

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EU erecting a green wall against Asia’s textiles

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The European Union has released new trade policies and requirements for exporting textiles to the EU market, policies that have been accused of trade protectionism. 

Among them, the June 2022 EU Strategy for Sustainable and Circular Textiles (EUSSCT) is likely to significantly impact East Asian textile makers, who supply over 70% of the European Union’s textiles.

Within the EUSSCT, a series of environmental regulations stipulate that by 2030, companies trading clothing and apparel with the European Union must adhere to standards regarding durability, the absence of hazardous substances and the predominant use of recyclable materials. 

This strategy is expected to serve as the foundational plan for the evolution towards more sustainable consumption of clothing and apparel by EU member states. In doing so, the European Union could be a pioneer in enforcing its commercial partners to adopt sustainable manufacturing.

Garment, textiles and footwear sectors remain a critical contributor to Asian economies, generating around 60 million jobs for the region and indirect employment for millions more. 

The textile industry is still growing in most East Asian countries, with the fastest growth rates recorded in China, Indonesia, Vietnam and Cambodia. 

The region is the production hub for heavyweights of the European fast fashion industry like Nike, Zara, C&A and H&M. Textiles are the fourth largest burden on the environment stemming from European consumption.

An H&M store in Shanghai. Photo: WeChat

The East Asian region is the main garment producer in the world – playing a key role in the textile and garment supply chain. In 2019, the region made up around 55% of global textiles exports. 

For example, Vietnam exported apparel, garment and textile products valued at US$37.6 billion to the global market in 2022. Out of these exports, 5.4 billion euros ($5.8 billion) went to the European Union.

The industry is seeing rapid growth, which is partly attributed to increased engagement in Southeast Asia driven by the EFTA–Singapore Free Trade Agreement and the EU–Vietnam Free Trade Agreement (EVFTA). The EVFTA has led to an increasing reliance on the EU market by Vietnamese goods.

Yet since the Covid-19 pandemic, the East Asian garment and textile industry has struggled due to lower demand in key markets, including the European Union and the United States. Textile exports from Indonesia, Malaysia, Thailand and Vietnam also fell in 2020. 

In light of this, the EUSSCT’s new regulations may impact East Asian garment and textile manufacturers more significantly than previously anticipated.

The EUSSCT is expected to pose challenges and potentially increase costs for the East Asian apparel sector. Enterprises operating within this sector should be proactive in adapting to these forthcoming regulations to ensure exports continue. 

The European Union has set 2030 as the target year for full circularity. This places pressure on textile and clothing businesses to comply with different aspects — including circularity, traceability and decarbonization.

Vietnam is angling to strike a delicate trade balance between the US and China. Photo: Reuters
A clothing boutique in downtown Hanoi. Photo: Asia Times Files / AFP / Hoang Dinh Nam

East Asian clothing and apparel producers who do not utilize recyclable materials may face heightened scrutiny. Also, this sector’s heavy water and chemical usage contributes to severe water pollution as it discharges substantial volumes of wastewater containing hazardous substances into rivers and waterways. Reducing carbon emissions will require changes to the sector’s business models and technological and process innovations.

But opportunities abound. The domestic transformation required to meet EU standards could make the region better prepared if other developed markets implement similar policies. 

Embracing green production practices can have a positive impact on the local environment and the quality of life of East Asian people. It can also open up new sustainable production and business opportunities. In turn, this could attract more foreign investment from developed countries.

Despite the challenges caused by these new regulations, companies in the region are proactively addressing them. Singapore-based Ramatex has already made strides in sustainability by researching how to create clothes that do not shed microfibers. 

In Vietnam, the Spectre garment factory relies on renewable energy to power its operations, while South Korea’s Hansae Group and the Hanoi Textile and Garment Joint Stock Corporation have collaborated to produce recycled textiles for exports to the European Union.

To some extent, opportunities for environmental progress depend on existing capabilities and other facilitating factors, including policy frameworks and infrastructure. Mitigating the environmental impact of textile manufacturing requires a systemic shift towards a circular economy. 

This transition should encompass green public procurement, eco-design, labeling and standards, and increasing producers’ responsibility. It is imperative to adopt a new development approach that is both net-zero carbon and environmentally restorative.

A substantial challenge in the sustainability transformation of the textile industry in East Asia is the limited knowledge and technical know-how regarding environmental sustainability. 

Workers supervise embroidery machines working on fabrics for wedding dresses at a small factory on the outskirts†of Islamabad on September 2, 2020. Photo: Asia Times Files / AFP / Farooq Naeem

To make the East Asian textile and apparel industry greener, key projects must be set in motion. They include investing in research and development and providing comprehensive education and training programs to increase expertise in environmental sustainability.

Governments should also enact supportive policies and incentives for sustainable manufacturing in the textile sector, including tax incentives and subsidies. These incentives should encourage the adoption of eco-friendly technologies and promote green supply chain practices.

International and domestic collaborations to share best practices and strategies for sustainability are also vital. By addressing these issues, East Asian textile and apparel manufacturers can better position themselves to meet the evolving standards of the European market and improve their sustainability.

Associate Professor Dr Hoang Hai Ha is Senior Lecturer at the Faculty of History, Hanoi National University of Education.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Hamas hardly represents Gaza’s Palestinians

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After more than a month during which Israel has relentlessly bombarded then invaded Gaza with the stated aim of destroying Hamas, Gaza’s health authorities have estimated that more than 13,000 people – mainly civilians and a distressingly high proportion of those children – have been killed.

Yet it should be remembered that it was the initial attack on Israel by Hamas fighters on October 7, killing 1,200 people – again, mainly civilians, many in the most brutal manner – that led to Israel’s invasion of Gaza.

Initially, the Israel Defence Forces issued warnings to Gazan civilians to move south. But repeated airstrikes on towns in the south of Gaza have left the population fearing that there are no safe spaces left in the enclave.

Israel continues to insist, with the backing of its allies in the West, that this military operation is aimed at rooting out Hamas. They say it is the fact that Hamas embeds itself in civilian populations that is causing so many casualties.

But recently there have been signs that some Palestinian civilians are openly challenging Hamas’s authority. Associated Press reported on November 10 that angry crowds threw stones at Hamas police in one location while in another, people huddling in a UN shelter hurled insults at Hamas officials.

Political party or terror group?

Hamas was founded in Gaza in 1987 by Sheikh Ahmed Yassin, an imam, and his aide Abdel Aziz al-Rantisi. This was shortly after the beginning of the first intifada – an uprising against Israel’s occupation of the Palestinian territories.

Initially emerging as an offshoot of the Muslim Brotherhood in Egypt, Hamas later established a military wing known as the Izz al-Din al-Qassam Brigades. Its primary goal was to engage in armed resistance against Israel with the aim of liberating historic Palestine.

While there is international support for Palestinian self-determination, Hamas’s aim – spelled out in its founding charter – to destroy the state of Israel has cost it legitimacy with many who would otherwise support Palestine’s cause.

The group has effectively controlled Gaza since shortly after then-Israeli prime minister Ariel Sharon withdrew troops and settlers from Gaza in 2005. In elections in 2006, Hamas secured a majority of seats in the Palestinian Authority’s legislature and established a government.

This gave Hamas some legitimacy as far as the Palestinians in Gaza were concerned – at least temporarily.

Hamas’s early success has been ascribed to its provision of social services such as healthcare and welfare. Initially, it also seemed to be a valuable counterpoint to what was perceived as corruption within the incumbent Fatah party.

But Fatah and its Western backers found the election outcome to be unacceptable, leading to the removal of Hamas from power in the West Bank. This effectively denied Hamas the role in the PA that it believed it deserved.

Mahmoud Abbas, president ot the Palestinian Authority. Photo: Asia Times Files / AFP / Alex Brandon / Pool

A 2008 presidential election confirmed Fatah’s Mahmoud Abbas as the head of the PA. But by this stage the split between the two parties meant that while the Fatah-dominated PA governed the West Bank, Hamas was largely unchallenged in Gaza.

Vote of no confidence

But a survey undertaken by Arab Barometer, a nonpartisan research network, between September 28 and October 8, 2023 revealed dwindling confidence in Hamas (the surveys in Gaza were completed on October 6).

Asked to identify the amount of trust they had in the Hamas authorities, 44% said they had no trust at all, while 23% said they had little trust. Significantly this lack of trust was roughly uniform across age groups with those between the ages of 18-29 and those over 30 giving similar answers.

An earlier poll taken by the Washington Institute in July 2023, moreover, found that 62% of people in Gaza supported Hamas maintaining a ceasefire with Israel and 50% agreed that: “Hamas should stop calling for Israel’s destruction, and instead accept a permanent two-state solution based on the 1967 borders.”

So, given the gulf between Hamas’s aims and style of governance, how has it kept control of the enclave of 2.2 million people for so long? It’s important to remember that there have been no elections since 2006 and the average age of people in Gaza is about 18, meaning most people have not had the chance to vote for any other leadership.

Hamas has also reportedly ruled with an iron fist. Hamas has used strict and authoritarian methods of control, applying its own interpretations of strict sharia law, enforcing gender segregation in public, controlling the media, repressing any political opposition and eliminating all mechanisms of transparency and accountability.

Numerous reports have detailed human rights abuses conducted by Hamas against Palestinian civilians, including arbitrary detention, torture, punishment beatings and the death penalty.

Smoke billowed over residential Israeli areas as sirens sounded overhead amid Hamas rocket attacks launched from the Gaza Strip on October 7, 2023. Image: NDTV Screengrab

To be fair, a report in 2018 from Human Rights Watch found that similar human rights abuse was just as common in the West Bank under the Fatah-led PA. Hamas also stands accused of harassing journalists who criticize its government.

The catastrophic Hamas attack on October 7 which has led to the deaths of so many Palestinian civilians in Gaza has eliminated any pretence of legitimacy that Hamas may ever have had in the eyes of most of the world. Indeed, the days of Hamas may be over.

But this will only increase the urgency of finding a long-term solution for Palestine, something that seems further away than ever.

Christoph Bluth, Professor of International Relations and Security, University of Bradford

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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