SEIZED OR FROZEN Resources The total value of the assets seized or issued with a prohibition on disposal orders was finally updated by her. The overall price, according to the police, was over S$ 2.4 billion as of September 20. According to Mrs. Teo, they have since carried out” moreContinue Reading
The latest assessment of China’s decline from the World Bank is reassuring for the rest of Asia. However, the likelihood is not really awake enough.
The biggest market in Asia’s property sector is still receiving negative news, which is having an impact on global markets. The consensus among economists is that the multilateral lender is still far too optimistic as the World Bank lowers its 2024 China growth projection from 4.8 % to 4.5 %.
Consider the most recent assessment of the region’s consequences by the Asian Development Bank of China. The ADB issues a warning that” dangers to the prospect have intensified” as weaknesses in China’s house sector” hold back local growth.”
Investors have fled as a result of the struggles of China Evergrande Group & nbsp, which resumed trading on Tuesday. A significant debt restructuring plan has failed, the creator, which filed for default in 2021, just acknowledged. Authorities have prohibited the organization from issuing new loan because its president, Hui Ka Yan, is the subject of a criminal investigation.
According to researcher Thomas Gatley at Gavekal Dragonomics, that” threats to bring even more harm to China’s real estate sector and the broader business.”
Additionally, Gatley notes that” the likelihood of a government policy failure that disrupts markets and the economy has increased.” He therefore issues a warning that” as engineers delay or fail to make payments to their manufacturers, the financial strain of house developers is spilling over onto other businesses.”
For Asian neighbors who are relying on President Xi Jinping’s team to stabilize growth, the fact that the property sector in China accounts for up to 30 % of the gross domestic product ( GDP ) is terrible news. As a result, there is talk in Asia about andnbsp, disease risks, and the state’s 2024.
According to researcher Rick Waters at the Eurasia Group firm,” Industry and homebuyer attitude will likely continue to diminish and contribute to financial uncertainty as defaults snowball through the industry and Beijing withholds relief.”
In order to maintain the real estate industry, Beijing is in fact implementing a number of steps. The government is making an effort to ease monetary pressures without re-inflating real estate bubble, in contrast to earlier instances of slowing progress.
Regulators pushed commercial banks to reduce payment ratios for first-home purchases to 20 % and to 30 % in late September. Lenders reduced current first-time loan rates for borrowers with 40 million or more.
Guangzhou was China’s second top-tier city to end restrictions on purchasing more than two properties for people or one for nonresidents last quarter. Different cities can be seen doing the same.
Homebuyer trust will be lower despite easing measures, according to Waters, as more developers face definition and liquidation. Rates and sales will likely continue to decline in lower-tier cities.
We believe that more top-tier places with district-specific restrictions will follow suit to encourage non-core areas and possibly key areas as well, according to Karl Shen, an scientist at Fitch Ratings. Given that their house sales are typically more constrained by policy, for policies, if they are implemented, may further focus demand in larger cities. Given top-tier cities’ little share in full, this will add little to the federal new homes market.
Officials warn Beijing to do more to encourage developers to fix balance sheets and prevent more defaults, saying that it may take China’s real estate market as long as a time to recover.
Selling in China’s largest cities may start to increase again in the next four to six months, according to Li Daokui, a past member of the monetary policy committee at the PBS and nbsp. However,” it will take anything from six months to one time for a great treatment” in smaller cities.
The World Bank’s most recent forecast simply contains a small amount of encouraging information: South Asian growth is expected to significantly accelerate in 2024, excluding China, thanks to better prospects for manufactured goods and commodities.
However, as economists at the World Bank note,” what happens in China matters for the entire place.” A 1 % decrease in its progress is correlated with a 0.3 percent point decline in regional development.
or perhaps even more, as the loss of Asia’s primary development website has a negative impact on investor, household, and business confidence throughout the region. Negative threats include political unrest as well. They include the possibility of Saudi Arabia announcing new oil production reductions, raising the risk of international prices.
According to Aaditya Mattoo, chief economist for East Asia and the Pacific at the World Bank, experts in the region predicted that China’s post-pandemic treatment may be” more prolonged and more important than it turned out to be.”
Rather, governments from Bangkok to Jakarta to Seoul are dealing with the reality of stagnant wages, poor retail sales, sweet private business expense, and elevated home debt levels that may spread throughout the area.
According to Mattoo,” this entire region, which had bizarrely benefited from trade tensions between the US and China, is now suffering trade diversion apart from it.”
China’s” third quarter has started on a weak note ,” according to economist Stephen Innes at SPI Asset Management,” with weakening exports and imports in July ,”” a significant property developer reportedly missing bond payment ,” and” consumer price inflation joining producer price in the negative year-over-year territory, although primarily due to food prices.”
The two main drivers of China’s development, exports and real estate, are facing significant setbacks, according to Innes, which are having a negative effect on both the local and global ASEAN chance markets.
Following Covid-19, the Association of Southeast Asian Nations ( ASEAN ) economies are dealing with rising debt levels. The region’s ability to manage this overhang while also investing in domestic infrastructure, increased productivity, and human capital is clearly and currently in danger due to rising & nbsp, US debt yields, etc.
In the meantime, Jerome Powell, chairman of the US Federal Reserve, is making hints about a 12th tightening walk in the upcoming 18 times, adding to the pressures on Wall Street and the world’s largest economy.
The combined effects of the Fed’s most extreme tightening since the mid-1990s are having a negative impact on US growth. According to Goldman Sachs planner David Kostin, solid and long-term rate increases are starting to hurt corporate profits and returns on capital.
The main risk for S & amp and P 500 ROE will be higher interest expenses and lower leverage in the new” higher-for-longer” rates environment, according to Kostin. It would be a departure from the traditional trend for” a situation in which interest cost and leverage consistently weigh on ROE.”
The world keeps getting more expensive, according to Capital.com scientist Kyle Rodda. The increase in oil increased the upwards pressure on bond yields, and the combination of higher fuel, higher yield and a higher ruble does not typically portend properly for equities.
There is some hope that the Fed’s tightening cycle is truly coming to an end, to be sure. According to scholar Rubeela Farooqi at High Frequency Economics,” Nevertheless, spending remains optimistic and inflation is slowing, which will be pleasant news to politicians.”
The Federal Reserve Bank of Chicago’s president, Austan Goolsbee, expressed optimism that the US is moving toward taming inflation without a formal recession next year.
According to Goolsbee,” The Fed has the opportunity to accomplish something very uncommon in the background of northern banks: to thwart inflation without tanking the economy.” The gold route may be studied for years if we are successful. If we don’t succeed, it will also be researched for a long time. But this strive to be successful.
Additionally, there is hope that China’s economy will start to recover more quickly than naysayers anticipate.
According to Morgan Stanley scholar Robin Xing,” a northern government-led, detailed plan to reduce local bill danger may be unveiled before / at the Third Plenum this drop.” ” From the third quarter 2023 onward, the business may be able to recover modestly thanks to the combination of these steps.”
The housing market will likely maintain in half a year, according to Yao Yang, dean of Peking University’s National School of Development. He claims that officials used to” overshoot” in their real estate onslaught. The central authorities will now” slowly release up on the supply side, very.”
After four consecutive months of collapse, China’s fresh home prices increased substantially in September. Developers accelerated launches to take advantage of Beijing’s new support measures as a result of the respite.
According to China Index Academy, a real estate consulting, the regular price increase starting in August was the largest month-over-month gain since October 2021. Just 30 of the 100 island places polled reported drops in new home prices.
The commencement of investing in China Evergrande stocks on Tuesday, along with a strong rallying price of up to 42 % on the Hong Kong Stock Exchange, may psychologically benefit the company.
Stocks of the business and subsidiaries like Evergrande Property Services Group were suspended on September 28. Hui, the leader of China Evergrande, was reportedly detained by police a moment earlier.
However, according to scientist Liu Jieqi of UOB Kay Hian Holdings, reform is still desperately needed. The” only option for debt restructuring ,” a move that” faces great uncertainties ,” continues to be the conversion of all debt to shares of Evergrande or of its arms.
Others, however, contend that China’s 2024 is a negative sign given the recent failure of designer Country Garden.
According to analysts at Barclays,” Country Garden was associated with China’s mass-market cover and urbanization story.” What little trust remained in the market was” shaken” by its difficulties making loan repayments.
Kenneth Rogoff, an analyst at Harvard University, adds that” the entire business is in trouble” as a result of China’s$ 18 trillion economy experiencing years of severe home shortages. Since the majority of China’s riches might collapse, how can you avoid the Chinese people from going into a stress mode? Rogoff queries. ” It’s not simple.”
The fact that” Chinese households no longer view cover as a healthy investment” presents an additional challenge, according to Société Générale analyst Michelle Lam.
In order to persuade homes to invest in stocks, Xi and Premier Li Qiang have intensified efforts to strengthen China’s money industry. and to create stronger social safety nets to persuade customers to spend more money and protect less. The switch from funding and property-led development is, at best, still in the early stages. That’s accurate both in China and elsewhere.
According to Mattoo, reforming the services sectors to take advantage of the digital revolution will be the next major driver of progress in a location that has truly prospered through trade and manufacturing investment.
In the interim, Asia is in danger. not just from China, either. The World Bank notes that the protectionist policies andnbsp of US President Joe Biden directed at China are having a negative impact on technology and electronics exports. Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are among the countries under consideration.
According to Mattoo,” The care under these rules is discriminatory against nations that are not exempt from the local information requirements.”
2024 appears to be the year to lock those seatbelts, with China’s downturn and Washington struggling with recession rumors.
At @ WilliamPesek, you can follow William Peserk on X, formerly known as Twitter.
Many of the world’s poorest countries are the least responsible for climate issues, but are bearing the brunt of the crisis. They are struggling to cope with natural disasters devastating infrastructure and livelihoods, and extreme temperatures affecting livestock and crops.
“Most of our developing member countries contribute virtually nothing to the climate problem. They are low emitters, per capita and national. However, they’re feeling the impacts,” he said.
“Helping them to move towards net zero is not about their commitment to low carbon but rather, energy security and better air quality in their cities.”
Where governments may have failed to act, Mr Evans is, however, optimistic about increasing interest from the private sector on investing in sustainable developments, green initiatives and climate-friendly adaptations.
“My optimism is not based on what governments are doing, but rather, based on what the private sector is doing,” he said.
“The interest of the private sector in working with us and with other multilateral development banks, to use the sovereign funding and the public sector money that we have, to help enable them to invest in climate actions, is making tremendous progress right now.”
The ADB has said the battle against climate change will be won or lost in Asia Pacific.
The region is home to 60 per cent of the global population – some 4.3 billion people, and includes the world’s top two most populous countries India and China.
It has five of the 10 largest emitters in the world – China, India, Indonesia, Japan, and South Korea – and accounts for about 45 per cent of global greenhouse gas emissions.
Asia Pacific is also where 40 per cent of the world’s climate-related disasters have happened since the start of the century, with increasing frequency and intensity.
Hence, the region plays a central role in global climate efforts.
The ADB said the battle against climate change will be costly, with an estimated US$1.7 trillion needed every year to invest in infrastructure in the region.
The bank recently launched a new funding programme to support lending efforts that help the region reduce greenhouse gas emissions and build infrastructure resilient to the impact of climate change.
Known as the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), wealthier nations such as the United States, United Kingdom, Denmark, Sweden, Japan and South Korea will guarantee some loans and shoulder losses in cases of default.
The initial target is US$3 billion in guarantees. The bank believes this will help to generate five times as much – some US$15 billion – in new climate loans.
“The IF-Cap works by taking guarantees from donor countries and using that to essentially carve out part of our existing sovereign portfolio. These are existing loans that developing countries take with ADB that have sovereign guarantees. We have a very, very low risk of default for these kinds of loans,” said Mr Evans.
The plan will support projects that address mitigation with a focus on reducing greenhouse gas emissions, and adaptation with an aim to build resilience against the impacts of climate change.
The bank said these investments could cover a wide range of sectors, such as transportation, energy, urban, and agriculture.
While the lender has made progress in multiple areas including increasing resilience to flooding, cooling efforts in cities with high temperatures, rehabilitating wetlands, promoting renewable energy including wind and solar, more needs to be done, said Mr Evans.
“We have in both the urban sector and rural sector, a number of initiatives that are paying back dividends now, in terms of building resilience. We have many success stories, but we’re not at the scale we need to be. We need to bring this all together and scale it up,” he said.
“The risks from climate impacts are severe. Every greenhouse gas emission reduced is important. Every household can play a role in that. Not so much in the poorer countries, but in the middle income countries, and in the richer countries, every household needs to play a role in reducing their carbon footprint.”
On Friday, the bank unveiled new capital reforms to boost lending by US$100 billion over the next decade as part of its continued mission to tackle climate change.
Getty ImagesA crisis at the world’s most indebted company has worsened after its chairman was placed under police surveillance.
It follows earlier reports that other current and former executives at Chinese property giant Evergrande had also been detained.
Evergrande suspended the trading of its shares in Hong Kong on Thursday until further notice.
It marks another low for the firm which was declared to be in default in 2021 after missing a crucial repayment deadline, triggering China’s current real estate market crisis.
Businessman Hui Ka Yan founded Evergrande, formerly known as the Hengda Group, in 1996 in Guangzhou, southern China.
According to the company’s website, Evergrande Real Estate currently owns more than 1,300 projects in more than 280 cities across China.
The broader Evergrande Group encompasses far more than just real estate development.
Its businesses range from wealth management to making electric cars and food and drink manufacturing. It even owns a controlling stake in what was one of the country’s biggest football teams, Guangzhou FC.
Mr Hui was once China’s richest person with his fortune estimated at $42.5bn (£34.8bn) by Forbes, but his wealth has plummeted since then, largely as Evergrande’s problems have grown.
Evergrande expanded aggressively to become one of China’s biggest companies by borrowing more than $300bn.
In 2020, Beijing brought in new rules to control the amount owed by big real estate developers.
The new measures led Evergrande to offer its properties at major discounts to ensure money was coming in to keep the business afloat.
Now it is struggling to meet the interest payments on its debts.
This uncertainty has seen Evergrande’s shares lose 99% of their value in the past three years.
In August, the firm filed for bankruptcy in New York, in a bid to protect its US assets as it worked on a multi-billion dollar deal with creditors.
There are several reasons why Evergrande’s problems are serious.
Firstly, many people bought property from Evergrande even before building work began. They have paid deposits and could potentially lose that money if it goes bust.
There are also the companies that do business with Evergrande. Firms including construction and design firms and materials suppliers are at risk of incurring major losses, which could force them into bankruptcy.
The third is the potential impact on China’s financial system: If Evergrande collapses, banks and other lenders may be forced to lend less.
This could lead to what is known as a credit crunch, when companies struggle to borrow money at affordable rates.
A credit crunch would be very bad news for the world’s second largest economy, because companies that can’t borrow find it difficult to grow, and in some cases are unable to continue operating.
This may also unnerve foreign investors, who could see China as a less attractive place to put their money.
The very serious potential fallout of such a heavily indebted company collapsing has led some analysts to suggest that Beijing may step in to rescue the company.
However, Jackson Chan from financial markets research platform Bondsupermart does not think that will now happen.
“To be honest, Evergrande has already collapsed,” says Mr Chan, adding that he believes “it is on the brink of a forced liquidation”.
This could have a major effect on China’s economy as the property sector contributes roughly a quarter of its growth.
Mr Chan also suggests that the country could be following a similar path to Japan in the 1980s, when it slipped into decades of economic stagnation.
However, others think it is unlikely that Evergrande will be allowed to completely collapse.
“That could spiral, affecting other indebted companies and further hurt the overall property sector which is very important to the growth of the economy,” Dexter Roberts, director of China affairs at the Mansfield Center at the University of Montana, told the BBC.
“At the same time, many people whose household wealth is mainly in their apartments will also be badly hurt,” he added.
Mr Roberts, who spent more than two decades in China as a journalist, said “the old Evergrande no longer exists” and while the authorities may keep it afloat, “it will be as a radically diminished company.”
Reporting by Peter Hoskins and Mariko Oi
Western nations and multinational corporations, severely impacted by Covid-19 restrictions and supply chain disruptions, are reevaluating their approaches toward China. While many Western businesses view China as a vital market, there is considerable uncertainty about the Chinese economy’s potential recovery.
Amid the backdrop of uncertain economic trends in China and globally, the interactions between the world’s two largest economies, China and the United States, hold significance. Relations are continuing to deteriorate. Chinese President Xi Jinping even accused the United States of trying to hinder China’s technological advances in March 2023.
Geopolitical tensions also exist, particularly over the Taiwan issue. While a military resolution to the matter remains largely hypothetical, the dynamics within the business community demonstrate that political tensions tend to take a backseat to economic considerations.
Since China lifted its restrictive Covid-19 measures in late 2022, it has reopened to foreign visitors and businesspeople. But despite political criticism of Beijing’s assertive stance in the South China Sea and Taiwan, Western businesses recognize the Chinese market’s importance to their companies or personal wealth accumulation.
If they ever need to take definitive actions, they would prefer to “de-risk” rather than completely sever ties with China.
The CEOs of prominent US companies such as Apple, Pfizer and BHP attended the China Development Forum in Beijing in April 2023. Elon Musk, Tesla founder and currently the wealthiest individual on Earth, visited China two months later.
China is Tesla’s second-largest sales market after the United States, accounting for around one-quarter of total revenue. In June, Microsoft CEO Bill Gates held a meeting with Xi in Beijing, during which the Chinese leader referred to Gates as the first “American friend” he has encountered in recent times.
Poor economic data indicates that even Chinese consumers harbor doubts about the future trajectory of China’s economic development. Statistics reveal challenges in the real estate sector, traditionally a key driver of China’s GDP.
Despite recent efforts by Chinese banks, such as slashing interest rates to stimulate consumption and investment, the outlook for the Chinese economy remains lackluster.
As the Washington–Beijing relationship deteriorates, European Union member states are adopting divergent strategies in their interactions with China. These strategies are influenced by multiple drivers, including each nation’s economic interests, historical experiences with authoritarian regimes during the Cold War, and values such as freedom and democracy.
For example, Lithuania adopts a distinct and principled policy towards China. Lithuania actively champions the fundamental values and democratic principles of the European Union.
It openly cultivates political relations with Taiwan and does not shy away from critiquing human rights violations in authoritarian regimes. After Lithuania agreed to exchange diplomatic offices with Taiwan, China effectively imposed an unofficial blockade against Lithuanian imports.
France – the second-largest economy in the European Union – adopts a more prudent approach when it comes to engaging with China. During French President Emmanuel Macron’s visit to China in April, he led a delegation of business leaders to forge new agreements. While this does not imply indifference to human rights issues, France recognizes the crucial significance of its business ties with China.
There is also a divergence in political approaches towards China within individual countries. In Germany, there is a faction characterized by a “business first” approach, exemplified by individuals as well as German manufacturers with business operations in China.
On the other side, there is a cohort of EU advocates who closely align themselves with the US stance on China, including the German Foreign Minister Annalena Baerbock.
This group advocates for reduced reliance on Chinese exports, intensified scrutiny of Chinese investments within the European Union and more stringent regulations on outbound investments into China. The Netherlands’ ban on exports of ASML chipmaking machines to China in June 2023 is in line with this policy.
Many European officials are increasingly aligning with US views on China while safeguarding their economic interests. For example, the Italian government has indicated its intention to pull out of China’s Belt and Road Initiative.
European Commission President Ursula von der Leyen is pushing for export controls on sensitive technologies. Hungary and Poland are both stepping up their economic cooperation with China. For the seventh consecutive year, China is Germany’s largest trading partner, with bilateral trade reaching US$322 billion in 2022.
As its overall trade deficit with China rises to unprecedented levels, the European Union is becoming more pragmatic about future economic cooperation with China. This leads to the de-emphasizing of China for many multinational companies and calls for “decoupling.”
Germany’s latest China strategy affirms the pressing need to establish effective frameworks for future engagements with Beijing.
Despite undeniable evidence of worsening relations between the United States and China, Western businesses continue to maintain ties with China. But even within the European Union, member states have varying approaches when it comes to dealing with China.
While at the EU level, China is perceived as a competitor, at the national level, each country possesses a unique set of business interests related to China, which shape their official policies.
Striking a balance between accommodating these interests and upholding EU approaches is an arduous task for every country.
Marian Seliga is head of China Desk and advisor to the board at J&T Banka, Czech Republic.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
Getty ImagesThere is a saying that when the United States sneezes, the rest of the world catches a cold. But what happens when China is unwell?
The world’s second-largest economy, home to more than 1.4 billion people, is facing a host of problems – including slow growth, high youth unemployment and a property market in disarray.
While these issues add up to a major headache for Beijing, how much does it matter to the rest of the world?
Analysts believe worries of an impending global catastrophe are overstated. But multinational corporations, their workers and even people with no direct links to China are likely to feel at least some of the effects. Ultimately, it depends on who you are.
“If Chinese people start cutting back on eating out for lunch, for example, does that affect the global economy?” asked Deborah Elms, executive director of the Asian Trade Centre in Singapore.
“The answer is not as much as you might imagine, but it certainly does hit firms who directly rely on domestic Chinese consumption.”
Hundreds of big global companies such as Apple, Volkswagen and Burberry get a lot of their revenue from China’s vast consumer market and will be hit by households spending less. The knock-on effects will then be felt by the thousands of suppliers and workers around the world who rely on these companies.
When you consider that China is responsible for more than a third of the growth seen in the world, any kind of deceleration will be felt beyond its borders.
The US credit rating agency Fitch said last month that China’s slowdown was “casting a shadow over global growth prospects” and downgraded its forecast for the entire world in 2024.
However, according to some economists, the idea that China is the engine of global prosperity has been exaggerated.
“Mathematically, yes, China accounts for around 40% of global growth,” says George Magnus, an economist at the University of Oxford’s China Centre.
“But who is that growth benefitting? China runs a huge trade surplus. It exports so much more than it imports, so how much China grows or doesn’t grow is really more about China than it is about the rest of the world.”
Nevertheless, China spending less on goods and services – or on housebuilding – means less demand for raw materials and commodities. In August, the country imported nearly 9% less compared to the same time last year – when it was still under zero-Covid restrictions.
“Big exporters such as Australia, Brazil and several countries in Africa will be hit hardest by this,” says Roland Rajah, director of the Indo-Pacific Development Centre at the Lowy Institute in Sydney.
Weak demand in China also means that prices there will stay low. From a Western consumer perspective, it would be a welcome way of curbing rising prices that does not involve further raising interest rates.
“This is good news for people and businesses struggling to deal with high inflation,” Mr Rajah says. So in the short-term, ordinary consumers may benefit from China’s slowdown. But there are longer term questions for people in the developing world.
Over the last 10 years, China has invested more than a trillion dollars in huge infrastructure projects known as the Belt and Road Initiative.
More than 150 countries have received Chinese money and technology to build roads, airports, seaports and bridges. According to Mr Rajah, Chinese commitment to these projects may start to suffer if economic problems persist at home.
“Now Chinese firms and banks won’t have the same financial largesse to splash around overseas,” he says.
While reduced Chinese investment abroad is a possibility, it is unclear how else China’s domestic economic situation will affect its foreign policy.
A more vulnerable China, some argue, may seek to repair damaged relations with the US. American trade restrictions have partly contributed to a 25% drop in Chinese exports to the US in the first half of this year, while US Trade Secretary Gina Raimondo recently called the country “uninvestable” for some American firms.
But there is no evidence to suggest China’s approach is softening. Beijing continues to retaliate with restrictions of its own, frequently blasts the “Cold War mentality” of western countries and appears to maintain good relations with authoritarian leaders of sanctioned regimes, such as Russia’s Vladimir Putin and Syria’s Bashar Al-Assad.
At the same time, a stream of US and EU officials continue to travel to China every month to keep up talks on bilateral trade. The truth is that few people really know what lies between Chinese rhetoric and Chinese policy.
One of the more extreme readings of this uncertainty comes from hawkish observers in Washington, who say a downturn in the Chinese economy could impact how it deals with Taiwan, the self-governing island that Beijing claims as its own territory.
Speaking earlier this month, Republican Congressman Mike Gallagher – chair of the US House Select Committee on China – said problems at home were making China’s leader Xi Jinping “less predictable” and could lead him to “do something very stupid” with regards to Taiwan.
The idea is that if, as Mr Rajah argues, it becomes apparent that China’s “economic miracle is over”, then the Communist Party’s reaction “could prove very consequential indeed”.
There are, however, plenty of people who dismiss this notion, including US President Joe Biden. When asked about this possibility, he said Mr Xi currently had his “hands full” dealing with the country’s economic problems.
“I don’t think it’s going to cause China to invade Taiwan – matter of fact the opposite. China probably doesn’t have the same capacity as it had before,” Mr Biden said.
However, if there is one lesson to learn from history, it is to expect the unexpected. As Ms Elms points out, few people before 2008 anticipated that subprime mortgages in Las Vegas would send shockwaves through the global economy.
The echoes of 2008 have got some analysts worried about what is known as “financial contagion”. This includes the nightmare scenario of China’s property crisis leading to a full-blown collapse in the Chinese economy, triggering financial meltdown around the world.
Parallels with the subprime mortgage crisis – which saw the collapse of Wall Street investment giant Lehman Brothers and a global recession – are certainly tempting to make. But, according to Mr Magnus, they are not completely accurate.
“This is not going to be a Lehman-type shock,” he says. “China is unlikely to let their big banks go bust – and they have stronger balance sheets than the thousands of regional and community banks that went under in the US.”
Ms Elms agrees: “China’s property market is not linked to their financial infrastructure in the same way that American subprime mortgages were. Besides, China’s financial system is not dominant enough for there to be a direct global impact like we saw from the United States in 2008.”
“We are globally interconnected,” she says. “When you have one of the large engines of growth not functioning it affects the rest of us, and it often affects the rest of us in ways that weren’t anticipated.”
“It doesn’t mean I think we’re headed for a repeat of 2008, but the point is that what sometimes appear to be local, domestic concerns can have an effect on us all. Even in ways that we wouldn’t have imagined.”
“You cannot expect any rational thought from a religious man. He is like a rocking log in water.” – E V Ramasamy
Erode Venkatappa Ramasamy, revered by his followers as Periyar, was an Indian social activist and politician who started the Self-Respect Movement. He is known as the “Father of the Dravidian movement.”
Dravidianism or Dravidian nationalism is based on the idea that people living in the southern part of India are racially and culturally different from the North Indian (Indo-Aryan). Periyar claimed that Brahmins of the south were originally Aryan migrants from Northern India, who spoke Sanskrit and brought caste system to South India.
Periyar promoted Dravidian nationalism, which was based on the principle of rationalism, dismantling Brahmin hegemony by abolition of the caste system and revitalization of Dravidian languages.
He rebelled against Brahminical dominance by preaching to people that the Brahmins had monopolized and cheated other communities for decades and deprived them of self-respect. Periyar also led a strong rebellion against the imposition of Hindi as a compulsory subject in Tamil Nadu schools, viewing it as an attempt to establish “North Indian imperialism.”
Periyar’s legacy of self-respect, women’s rights, and caste eradication continues to influence South Indian politics, particularly in the state of Tamil Nadu.
On September 2, Udhayanidhi Stalin, minister of youth welfare and sports development and son of Tamil Nadu Chief Minister M K Stalin, while speaking at a writers’ conference in Chennai, sparked a massive controversy with his remarks on Sanatana Dharma (Hindu religion).
He said Sanatana Dharma is against the idea of social justice and must be “eradicated.” He argued that the idea is inherently regressive, dividing people based on caste and gender, and is fundamentally opposed to equality and social justice. The controversial remarks drew widespread condemnation from the Bharatiya Janata Party, with the BJP terming it a “genocidal call.”
In defense, Udhayanidhi Stalin wrote on Twitter that he never called for genocide, but opposed the principle of Santan Dharma, which divides the people in the name of caste.
He has accused BJP leaders of twisting his statements and vowed legal action.
After the remarks, Paramhans Acharya, the chief priest of the Tapaswi Chawni temple of Ayodhya, Uttar Pradesh, the largest North Indian state, offered the equivalent of US$1.2 million to the one who beheads Udhayanidhi Stalin over his remarks against Sanatana Dharma.
But the bigger question is why North India is becoming so sensitive or radicalized with respect to its religion. A society must be able to understand that every religion has certain flaws, which must be corrected over time.
Certainly, Periyar’s views of making a rational society rather than a religious one based on superstitions and prejudice have played a crucial role in the development of South Indian states.
Telangana, Andhra Pradesh, Kerala, Karnataka and Tamil Nadu are commonly considered South Indian states. Bangalore, the capital city of Karnataka, is known as the “Silicon Valley of India” and accounts for one-third of India’s software exports. Tamil Nadu is known for manufacturing as it alone accounts for two-thirds of exports of personal vehicles from India.
Andhra and Telangana are known for being a pharmaceutical hub, accounting for 22.5% of all pharma manufacturing facilities in India.
Kerala is famous for its tourism industry. According to 2018 official data, tourism constitutes 10% percent of Kerala’s GDP and provides about 23.5% of employment in the state.
Millions of migrant workers from the North reach the South in search of better jobs, putting an extra burden on the states. Data show that southern Indian states continue to outperform the rest of the country in health, education, and economic opportunities.
Kerala has the highest literacy rate in India. A state’s prosperity is measured on two indicators, gross state domestic product (GSDP) and per capita income. According to Wikipedia, four of the five South Indian states rank among the top 10 Indian states in terms of GSDP. Telangana, Karnataka, and Kerala make it into the top 10 states by per capita income.
Besides a strong industrial and IT base, the southern states have also been blessed with robust banking and finance infrastructure. Apart from public and private sector banks, NBFCs (non-banking financial companies) play a crucial role in lending infrastructure, a vital factor in supporting entrepreneurial spirit.
Today’s South Indian states are far better than all the other regions of India on every Human Development Index. But the bigger question is what led the South Indian states to march ahead of their North Indian counterparts.
In South India, social revolution always preceded the political revolution. But in the North, it’s just the opposite.
North Indian electorates remain swayed by emotive, irrational appeals by following a herd mentality to vote based on caste and religion, leading to long-term dominance by one party more than a decade.
The Indian National Congress ruled across North Indian states for five decades. Such a monopoly disconnects citizens from government activity and the government takes the people for granted, which results in less development in those states compare to South.
However, South India experiences stable political competition, with alternating parties in power such as the DMK and AIADMK in Tamil Nadu, LDF and UDF in Kerala, BJP, Congress and JDS in Karnataka, Congress, YSR Congress and TDP in Andhra. This healthy competition encourages governments to perform better and promotes citizen participation and activism, unlike the North, where politics tends to overshadow governance.
This has resulted in quality of governance and better leadership, which pushed the states on the path of development and prosperity. Effective population control consistently over the decades is a testimony of their leadership.
However, statistics show that South India is not getting enough reward for such good performance from the central government. Even South Indian politicians have expressed concerns about the state of federalism in India.
The central government collects taxes from all states and distributes them among states based on Finance Commission recommendations, considering three criteria: needs, equity, and state performance.
Recently the 15th Finance Commission increased weightage for the population criterion to 15% from the previous 10%, which some critics in South India believe is rewarding states with high populations that haven’t controlled population growth or provided better governance.
As a result, states like Uttar Pradesh, which have a large populations but low Human Development Index scores, receive more funding (17.9% ) than states with higher development indices like Karnataka (3.65%), Tamil Nadu (4.08%), and Kerala (1.09%). This appears to reward mis-governance, low productivity, and irrationality, raising questions about the fairness of Indian federalism.
More important, South Indian politicians are denied opportunities at the central leadership despite excellent performance in their respective states. The fact that only three cabinet ministers from South India are in the current Modi government is a testimony.
South India seems to be the biggest loser from this financial arrangement, where South Indians work hard to contribute more to national growth, while the North gets all the rewards for mis-governance and low productivity.
More important, the question arises, how long will South India fund the mismanagement and political shambles in North India, allowing non-performing states to set the country’s agenda? Udhayanidhi Stalin’s statement reflects the frustration with the kind of politics done in North India or Delhi for which South Indians have to pay a price.
Rather than tackling the issue of governance, productivity, HDI, economic opportunity, jobs, and better infrastructure, religion has become the center of the debate for the last nine years. In the real world, one who pays the bills is likely to get most of a deal. Unless we support the principle of prosperous regions always assisting poorer ones.
Getty ImagesDon’t run. Travel in groups. Carry an umbrella and wear sunglasses on the back of your head.
These are some of the ominous warnings issued in Australia each spring, as magpies and humans begin their annual turf war.
Streets and parks become a battleground, as the birds – descending from above and attacking from behind – swoop down on anything they fear poses a threat to their offspring.
High up in their nests, they rule over their kingdom with an iron claw, while on the ground, humans dust off their protective hats – traditionally a plastic ice cream container – and duck for cover.
At times drawing blood, their ambushes can cause serious injuries, and in a handful of cases, death.
But experts claim magpies are misunderstood and humans are the aggressors.
And they want you to know peace is possible.
Magpies are arguably the country’s most polarising bird.
Named after their resemblance to the Eurasian magpie, to which they are not actually closely related, Australian magpies are a protected native species, and to some, a beloved national icon.
Their beautiful warble is a quintessential Australian sound and, as predators of many pests, they are vital to the country’s ecosystems.
They are also incredibly intelligent – so smart they have even been caught helping each other unscrew scientific tracking devices – and they have also been known to strike up long-term, meaningful friendships with humans.
One Sydney family even credits a rescued chick named Penguin with helping them recover from a catastrophic accident, a heart-warming tale which grabbed global headlines and has since been turned into a best-selling book and a film.
Found in droves all over the country, such is their fanbase that in one 2017 poll magpies were voted Australia’s favourite bird and massive shrines have been erected in their honour in two Australian cities.
But there are also plenty of people who struggle to get past their divebombing antics.
The whir of flapping wings; the glint of a sharp beak in the sun; a flash of their reddish-brown eyes – all enough to strike fear in the hearts of many children and adults alike.
“I am genuinely terrified,” Tione Zylstra tells the BBC.
The 21-year-old’s local train station is vigilantly guarded by a magpie, and during breeding season it plays target practice with her head weekly.
“They’re silent killers… I’ll just see this shadow over my head getting bigger and bigger and bigger.”
“I have asthma and I would be sprinting, having an asthma attack on the train, just to get away from this magpie.
“I don’t know why it hated me, but it did… I never did anything wrong, I swear!”
Australians are well accustomed to swooping birds – there’s plovers, noisy miners and even the kookaburra.
But magpies are considered the ultimate “swoopy boy” and few people are without a story.
Only a very small portion of male magpies engage in the practice though, and when they do, it’s to protect their nests during breeding season, from August to November.
Experts say they do not swoop unprovoked.
But they also say magpies can interpret simple gestures like running through their territory as a slight, and not only can they recognise individual faces – they tend to hold a grudge.
“Let’s say you’ve shown some kind of response by waving your arms or trying to hit the bird away from you,” says animal behaviourist and Emiritus Professor Gisela Kaplan, who literally wrote the book on magpies.
“That act is a declaration of open war. A magpie interprets that as a sign of aggression and will then always swoop that person from then on, every year.
“[And] somebody of a similar build, a similar height and hair colour may get mistaken in their fury, or anxiety.”
They have also been known to pre-emptively target cyclists and children because they don’t trust them – cyclists because “magpies think as little of covered faces as people in banks do of [those] in balaclavas”, and children because they are “less reasonable and may be a greater risk”, Prof Kaplan says.
For most people who are hit by magpies, it is a cut or scratch.
But they have been known to blind some – in the last fortnight a cyclist made the news after revealing a serial dive-bomber had left him needing major surgery and a prosthetic eye lens.
“This bird turned around and went straight for the eye, did a backflip and hit me right in the eye again,” Christiaan Nyssen said.
And in 2021, a baby was killed when her mother fell during her efforts to dodge a magpie – a case that horrified the country.
Two years earlier an elderly man died of head injuries after crashing his bicycle while fleeing an attacking magpie, and in 2010 a 12-year-old boy was hit and killed by a car in similar circumstances.
Serious injuries and deaths are rare though. What is far more common is human aggression towards the birds.
In May a Victorian man was fined after killing four magpies and injuring another two so seriously they were euthanised. And almost every year, wildlife officers report finding birds pierced with arrows, shot with guns, set on fire, shackled with chains, poisoned, or mutilated.
‘Problem’ birds are also sometimes killed by authorities, and in 2021 one Sydney council conducted a general cull of the birds after a spate of incidents.
Animal behaviourists say the magpie is misunderstood, and there’s no need for them to be harmed. It is our fear and response to them that is dangerous.
Yes, there are a very small number of “rogue” birds which have become aggressive – radicalised by interactions with humans – says Prof Kaplan. They should be “dealt with firmly”.
But the vast majority of magpies are reasonable creatures, she insists.
The best thing to do is avoid them. Authorities often erect signs, warning of magpies in the area, and some states have even launched apps designed to track sightings of nests.
If you are swooped, don’t run, or fight back, experts advise. If you’re on a bike, get off it. Stay calm and walk quickly through the area. Shelter under an umbrella or hold your backpack over your head.
The use of protective gear is also encouraged, like sunglasses and magpie hats.
Traditionally, they have been a plastic ice-cream containers – with eyes drawn or stuck on – or a helmet laced with zip ties. In recent years though, they’ve become more elaborate. For example, contraptions rigged up with party poppers or adorned with a fake magpie.
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But if all else fails, beg for mercy. Although authorities usually warn against feeding wild birds, Prof Kaplan suggests leaving a peace offering like a slice of bread or meat to win the magpies’ favour.
“You can make friends with magpies… they tend to be very diplomatic,” she says.
Ms Zylstra finds that prospect laughable: “Literally how… especially while they’re swooping you?”
But she agrees the birds should not be harmed and humans should learn to live in a kind of wary peace with them.
“As much as I don’t like them, they don’t deserve to die… just because they’re defending their eggs.”
Besides, magpie attacks are a character-building rite of passage, she says.
“Are you really Australian if you haven’t been swooped by a magpie?”
The International Monetary Fund’s June 2023 assessment of Indonesia’s export ban policy has reignited debate on Indonesia’s downstream industrial policy.
Advocates emphasize its substantial impact on export revenues and value addition, while critics pinpoint the fiscal cost and the market distortions caused by the policy. A more nuanced assessment suggests the merits of both perspectives.
Indonesia’s experiment with downstream industrial policy began with the 2009 Mining Law signed by former president Susilo Bambang Yudhoyono, which mandated the domestic processing of all mineral commodities mined in the country.
But the policy was only implemented in 2014 for nickel and bauxite amid widespread opposition from the mining sector. It was in nickel that Indonesia found its success.
Before banning nickel ore export in 2014, Indonesia predominantly exported raw nickel ore, which is minimally processed into nickel matte. The country’s nickel-related exports were a modest US$6 billion in 2013.
By 2022, this figure had skyrocketed to nearly $30 billion, propelled by the exports of higher value-added products such as stainless steel and battery materials.
The most crucial factor to this success appears to be Indonesia’s exploitation of its “market power” in nickel production through an export ban.
Chinese firms that were large players in the downstream nickel-based production had no choice but to expand their operations within Indonesia to secure access to its abundant nickel resources.
The rapid growth of the nickel sector was facilitated by concessional financing under the Belt and Road Initiative. Chinese state-owned banks financed the construction of coal power plants and basic infrastructure, integral components of the industrial areas that fostered economies of scale and agglomeration.
But while the export revenue gains are evident, the extent to which this revenue is retained and equitably shared within the country remains uncertain.
This is mostly due to the capital-intensive nature of the nickel sector, the high share of foreign equity and the sector’s limited linkage with other parts of the economy beyond the primary sector.
Growth in gross domestic product may not directly translate into gross national product as export earnings by foreign investors may be entirely repatriated out of Indonesia. Yet the downstream industrial development strategy has contributed significantly to structural transformation.
Nickel-based manufactured products now stand as the third-largest export commodities behind coal and palm oil. The impact on regional economic development is also significant as the industrial areas are concentrated in eastern Indonesia, which generally lacks a large formal manufacturing sector.
A balanced evaluation necessitates weighing these benefits against the costs. Basic trade theory suggests that an export ban will depress domestic prices relative to global prices, resulting in winners and losers within the economy.
The nickel mining sector has borne the brunt of subsidizing the downstream industries, which may affect the incentive to explore new reserves.
The fiscal costs of tax holidays and forgone royalties may also be substantial. The environmental and social costs associated with nickel processing should also be considered. Nickel smelting tends to be emission-intensive due to a reliance on coal-fired power plants. Industrial expansion has also been associated with deforestation and water pollution.
In terms of social cost, labor rights violations have been amply documented. The building of industrial areas has also been associated with the displacement of local communities traditionally dependent on agriculture and fishing.
As Indonesia contemplates extending the policy to other commodities, it is imperative to note that its nickel-based export success was highly contextual and whether comparable outcomes can be realistically expected for other commodities.
This underscores the necessity for the downstream industry development strategy to move beyond export bans and tariffs.
While harnessing market power through export restrictions has attracted investments, there is an inherent risk to this strategy due to its impact on global prices and supply. It potentially incentivizes the innovation of substitutes and provokes retaliatory trade measures from other countries.
Indonesia needs better policies to internalize the social and environmental externalities associated with nickel processing. Better enforcement of labor and environmental regulations will be key. Indonesia could also draw inspiration from certain aspects of the US Inflation Reduction Act.
While Pigouvian taxes remain the optimal way to internalize externalities, linking fiscal incentives to broader social and environmental objectives — such as reducing carbon intensity and creating quality middle-class jobs — can be another method to achieve similar goals.
Also, as natural resource advantage diminishes the more downstream a sector is, a more holistic approach that focuses on ecosystem development through the provision of key public inputs will be essential.
Developing human capital and subsidizing public research and development will amplify positive spillovers as well as support downstream industrial growth, promoting more inclusive and shared prosperity.
Finally, increasing the share of value-add that stays in Indonesia will require financial market deepening and removing foreign direct investment barriers. These will incentivize the reinvestment of export receipts in the country.
There is reason for cautious optimism and with the implementation of better evidence-based policies, Indonesia can expand on its initial success and achieve the intended goals of its downstream industrial policy.
Faris Abdurrachman is a Master’s student in Quantitative Economics at New York University Stern School of Business and Graduate School of Arts and Science and a former Research Analyst at the Australia-Indonesia Partnership for Economic Development.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
SINGAPORE: A jobless man who was unable to find employment during the COVID-19 pandemic agreed to act as the director for 186 companies in exchange for payment.
One of those firms was used to launder US$2.36 million (S$3.24 million) obtained from victims who had been cheated overseas.
Er Beng Hwa, a 49-year-old Singaporean, was fined S$4,000 by a court on Wednesday (Sep 27), after pleading guilty to one count of failing to exercise reasonable diligence as a director. A second similar charge was considered in sentencing.
He was also disqualified from being a company director for three years.
The court heard that Er, also known as Adrian, had a Bachelor’s degree in business and worked various jobs to earn a living in 2020 and 2021.
Between April and June in 2020, he could not find a job because of the pandemic and was unable to pay his rent and other debts.
His previous landlord introduced him to a Chinese national named Zheng Jia.
Zheng was a chartered accountant who provided accounting and corporate secretarial services via the companies Atoms Global, Zhuoxin Global (Singapore) and Panasia Secretarial Services.
He suggested an arrangement for Er to act as a local director for companies incorporated by Atoms Global for Zheng’s clients.
Zheng said Atoms Global would conduct the necessary checks on clients and handle paperwork and checking of accounts.
Other than signing documents for company registration and opening bank accounts, Er “need not do anything”, Zheng said.
Er understood that he would be a director of the companies in name only and would not have any responsibility over the actual running of the firms.
In exchange, he would receive S$50 per year for each company that he stood as nominee director for. He would also be paid S$50 if he needed to open a bank account for the company or make any trip to sign documents.
Er did not know what work Zheng or his companies did, but agreed to the arrangement.
Under this agreement, Er was registered as local director and secretary of a Singapore company called Rui Qi Trading, incorporated in August 2020.
One of Zheng’s clients, Chinese national Hou Xiaohui, was registered as the foreign director of Rui Qi, which supposedly dealt with the wholesale of industrial, construction and related equipment.
Rui Qi opened two bank accounts under Hou’s name, which were used to funnel the proceeds of cheating.
These include a sum of US$1.2 million, which Texas Capital Bank was cheated into transferring in November 2020 via a spoof email scam.
The sum went to one of Rui Qi’s bank accounts and was transferred to various accounts in China, Hong Kong, India and Indonesia.
Another scam victim was German company Gasfin Development Gmbh, which received purported emails from its supplier requesting payments.
Gasfin fell for this business impersonation scam and transferred a sum of about US$176,400 to a bank account.
Of this sum, about S$237,000 was transferred to Rui Qi’s account and dissipated to other bank accounts in China and Hong Kong.
A third victim was Abu Dhabi Ports, which received a fraudulent email presenting an invoice from Bengal Tiger Line.
The company was deceived into transferring nearly US$980,000 to Rui Qi’s account. The money was further transferred to bank accounts in Hong Kong.
Police reports were lodged in Singapore over the three cases of cheating. Investigations revealed that Hou had not entered Singapore, and that Rui Qi’s bank account was opened through exploiting local banks’ remote account opening processes.
Certain processes were allowed to be done through video-conferencing during the COVID-19 pandemic.
As of January 2021, Er was found to be a director of 186 companies in Singapore. He stopped acting as a director of Rui Qi in August 2021.
The prosecution sought a fine of S$3,000 to S$4,000 and for Er to be disqualified from standing as a nominee director for three years.
Deputy Public Prosecutor Vincent Ong said it is “almost impossible to exhibit greater negligence as a director” than Er was in this case, “having absolutely washed his hands clean of the affairs of the company”.
“It is only due to his ability to point to the fact that he was effectively told to do so by Zheng that prevents his conduct from crossing into the realm of gross negligence – the facts indicate that he had been assured to some degree that Zheng would handle everything other than signing documents for the company,” said Mr Ong.
Er was motivated by monetary returns for doing “essentially nothing” in exchange for payment of S$50 per company per year, and a later employment with a salary of S$1,400 per month, said Mr Ong.
“The fact that he was a director of 186 companies as at January 2021 would have generated a return of at least more than S$9,000,” he said.
For failing to exercise reasonable diligence in the discharge of his duties as director, Er could have been jailed for up to 12 months or fined up to S$5,000.
Zheng faces charges under the Companies Act and his case is pending before the courts.
