FA Sustainable Finance Forum: Top Five Takeaways

In terms of sustainable development goals (SDG), business and investment have long and difficult journeys ahead.  Sobering figures from a draft report published by the United Nations (UN) last month reveal that at the end of 2022, just 12% of the SDGs were on track to meet their 2030 targets.

“It’s time to sound the alarm,” the report warned.

“At the mid-way point on our way to 2030, the SDGs are in deep trouble. A preliminary assessment of the roughly 140 targets with data show only about 12% are on track.”

“Close to half, though showing progress, are moderately or severely off track and some 30% have either seen no movement or have regressed below the 2015 baseline.”

The audience at FinanceAsia’s recent Sustainable Finance Asia Forum on April 18 heard that although there is plenty of road to make up on the journey to net zero, so too is there substantial opportunity. 

ESG imperatives are changing the way institutional investors approach decision-making, develop sustainable products and operate within new regulatory frameworks.

While the over-arching message of the forum underlined that sustainable goals and driving yield are not inimical, how exactly institutions approach sustainable finance will shape the future.

The following are FA’s top five takeaways from a forum focussed on these frameworks.

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1. Creativity is key

While sufficient capital may be out there to bootstrap transitional finance in Asia – a region that is bearing the physical brunt of climate change – getting it where it needs to go in emerging markets (EMs) is not working at the scale and speed necessary to effect change.

Emily Woodland, head of sustainable and transition solutions for APAC at BlackRock, told a forum panel exploring the state of play of Asia’s SDG commitments that, as well as climate and transition risks, investors also face the common-or-garden risks that come from operating in EMs.

“There are the general risks of operating in these markets as well – that’s everything from legal, to political, to regulatory to currency considerations,” she said. 

“Where finance can help develop new approaches, is around alleviating risks to attract more private capital into these innovation markets, and this is where elements like blended finance come into play.”

To make emerging market projects bankable, de-risking tools are urgently needed.

“That means guarantees, insurance, first loss arrangements, technical assistance which can help bring these projects from being marginally bankable into the bankable space, offering the opportunity to set up a whole ecosystem in a particular market.”

2. Regulation drives change

As investment in sustainable development goals moves from the fringe to the mainstream, institutions are bringing with them experience and learnings that are accompanied by policy, regulation and clear frameworks from regional governments.

Institutions are being asked to lead mainstream investment in the space as increasingly, investment in ESG becomes a viable funding choice.

“The next phase, which is the forever phase, will be when sustainability becomes mandatory rather than just a choice,” Andrew Pidden, Global head of sustainable investments at DWS Group told the forum.

“In the future, you will not be able to make an investment that has not been subject to due diligence with a view to doing no harm – or at least to doing a lot less harm than it is going to supply.”

“People may think this is never going to happen, but people thought this phase (of ESG investment becoming mainstream) was never going to happen 10 or 15 years ago.”

3. China is an ESG bond behemoth

Make no mistake, China is an ESG debt giant. Assets in China’s ESG funds have doubled since 2021, lifted by Beijing’s growing emphasis on poverty alleviation, renewable power and energy security.

According to Zixiao (Alex) Cui, managing director CCX Green Finance International, in 2022, green bond issuance volume alone totalled about RMB 800 billion ($115.72 billion), marking a 44% increase year-on-year (YoY). In the first quarter of 2023, there were 113 green bond issuances worth almost RMB 20 billion.

“Actually, this number decreased compared to last year because right now in the mainland, the interest rate for lending loans from banks is very low so there’s really not much incentive to issue bonds,” he told the audience during a panel on the latest developments in Chinese ESG bonds and cross-border opportunities.

“But over the long term, I think we are on target to achieve a number no less than last year.”

At the heart of this momentum is China’s increasingly ESG positive regulation.

“Policy making is very critical because in the mainland, we have a top-down governance model mechanism which has proven effective in terms of scaling up the market – especially on the supply side.”

4. Greenwashing depends on your definition

When is greenwashing – the overstating of a company’s or product’s green credentials – technically measurable, and when is it a matter of opinion?

Gabriel Wilson-Otto, head of sustainable investing strategy at Fidelity International, told a panel addressing greenwashing and ESG hypocrisy issues, that these transparency and greenwashing concerns are often problems of definition.

“There is a bit of a disconnect between how these terms are used by different stakeholders in different scenarios,” he says.

On one side, is the argument around whether an organisation is doing what it says it is, which involves questions of transparency and taxonomy.

“In the other camp there’s the question of whether the organisation is doing what’s expected of it. And this is where it can get incredibly vague,” he explained.

Problems arise when interests and values begin to overlap.

“Should you, for instance, be investing in a tobacco company that’s aligned to a good decarbonisation objective? Should you pursue high ESG scores across the entire portfolio?” he queried.

“Depending on where you are in the world, you can get very different expectations from different stakeholders around what the answer to these sub-questions should be.”

5. Climate is overtaking compliance as a risk

While increased ESG regulation means that companies must take compliance more seriously, this is not the only driver. According to Penelope Shen, partner at  Stephenson Harwood, there is a growing understanding that climate risks are real.

“The rural economic forum global risk survey shows that the top three risks are all related to financial failure directly attributable to climate risk and bio-diversity loss,” she highlighted during a panel called ‘ESG as a component of investment DNA and beyond?’

“In fact, if you look at the top 10 risks, eight of them are climate related.”

The prominence of climate as a risk factor has consistently ranked top of the survey over the past 10 years, she explained.

“Other more socially related factors such as cost of living and erosion of social cohesion and societal polarisation are also risks that have consistently ranked highly,” she noted.

What’s your view on the outlook for green, social and sustainable debt in 2023? We invite investors and issuers across APAC to have your say in the 6th annual Sustainable Finance Poll by FinanceAsia and ANZ.

¬ Haymarket Media Limited. All rights reserved.

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The super-heavy gun China aims to point at Taiwan

Taiwan’s frontline islands could come under siege from China’s new super-heavy artillery guns designed to smash the toughest of field fortifications and underground tunnels, adding a new firepower dimension to any invasion scenario.

Defense One reported last month that the People’s Liberation Army – Strategic Support Force (PLA-SSF) has awarded a contract for the production of 203-millimeter artillery guns, larger than any such weapon in known US or Chinese arsenals.

The report notes that the contract was awarded to the Nanjing University of Science and Technology (NUST), China’s leading institution for developing advanced artillery.

The PLA-SSF Northwest Institute of Nuclear Technology (NINT) in Xian has been charged with developing the project, which the Defense One report suggests may be capable of firing tactical nuclear rounds.

The same report notes that China may use 203-millimeter artillery to hit strategic targets far behind enemy lines, blast through enemy defenses, break up enemy advances, demolish urban enemy strongholds, and even as a terror weapon against civilian populations.

The report also says it may fulfill an intermediate role between 155-millimeter artillery and longer-ranged rocket artillery.

At the same time, China’s new 203-millimeter guns will face the same limitations as all heavy artillery pieces, including low rate of fire, limited mobility and difficult logistics.

China has previously developed 203-millimeter artillery, but those efforts stalled until recently. Global Security notes that Cold War border tensions between the Soviet Union and China made it imperative for the latter to develop artillery that could outrange and outgun the most powerful Soviet 203-millimeter artillery pieces.

The source notes that cooperation between China and Western companies working with noted supergun designer Gerald Bull produced the VSP-203/W90 203 self-propelled gun ranging from 37.5 to 50 kilometers depending on the round type, with the gun first tested back in 1995.

Although, Global Security notes that the end of the Cold War reduced border tensions between China and Russia, making improvements in China’s 155-millimeter guns, rocket artillery and super-heavy artillery such as the VSP-203/W90 203 seemingly superfluous. It also suggests that Bull’s assassination in March 1990 may have ended China’s supergun development program.

A Ukrainian 203-mm self-propelled gun 2S7 Pion captured by Russian forces. Image: Twitter

However, Global Security notes that China’s fast-growing economy means it could easily restart the development of super-heavy artillery, such as the VSP-203/W90 203, should the need arise.

The ongoing Ukraine war has revalidated the relevance of heavy artillery, with The Los Angeles Times noting in a June 2022 article that artillery has caused 80-90% of casualties in the Ukraine war, with the remaining ones caused by bullets.

Conventional artillery has so far played a more decisive role than high-tech weapons in the ongoing Ukraine war. In a December 2022 article for Business Insider, Michael Peck notes that mass artillery fire drove back Russia’s tanks’ advance on Kiev last year, not the anti-tank guided missiles (ATGM) touted in international media.

In terms of bang-for-buck, Harry Lye notes in an article for Global Defense Technology that artillery is cheaper to field than precision-guided weapons, making it more economical for breaking up enemy concentrations.

Apart from cost, Lye mentions payload limitations and weather conditions can handicap the ability of aircraft to deliver firepower on a large scale in the same way concentrated artillery barrage can.

Emerging technologies can improve the responsiveness, precision and reliability of artillery. For example, in an article this March in the peer-reviewed Bulletin of the Atomic Scientists, Dominika Kunertova notes that small drones have profoundly changed artillery capability in the ongoing Ukraine war, with their tactical reconnaissance shortening time-critical targeting and firing cycles from half an hour to three to five minutes while also reducing blind shelling incidents.

Asia Times reported last month that China has been testing AI-powered laser-guided artillery rounds that offer the potential for faster-targeting data processing speeds compared to traditional mathematical models. The AI-guided weapons reportedly bypass demanding calculations by using data from firing tests or real-life scenarios and improve accuracy through AI applications that handle sophisticated trajectory adjustments during flight.

Space-based assets have also substantially improved the reliability of artillery on the modern battlefield. For example, in an article this March, Defense One noted that Starlink had become the linchpin of a Ukrainian artillery kill chain consisting of drones and video chat software that links Ukrainian artillerymen to Russian targets.

It noted that without Starlink, successful artillery strikes would become impossible as cell networks in combat zones are often out of operation or are unreliable.  

China could seek to use its super-heavy artillery to crack open Taiwan’s frontline island’s defenses in a conflict scenario, replaying the vicious artillery duels between China and Taiwan over Kinmen and Matsu during the 1950s and 1960s.

‘Peacefully uniting China: One country, two systems’ – propaganda sign in Mawei facing the Taiwan-controlled Matsu. Photo: Wikipedia

Asia Times noted in July 2022 the strategic value of these islands, which can play an essential role in Taiwan’s strategy of deterrence through protraction by mounting a layered defense aimed at inflicting high casualties against a Chinese invasion force, theoretically forcing them to withdraw.

Kinmen, just three kilometers away from the Chinese mainland, hosts several World War II-era 240-millimeter M1 guns in fortified bunkers and Taiwan’s Kinmen Defense Command (KDC), which is the self-governing island’s frontline force against a Chinese invasion.

Similarly, Matsu has several field fortifications and underground tunnels. These defenses provide overlapping arcs of fire against mainland China and neighboring islands, featuring anti-tank and anti-aircraft guns for coastal defense, with the 1,100-strong Dongyin Area Command there using Hsiung Feng II anti-ship missiles and Sky Bow II surface-to-air missiles.

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Survey: 64% of regional consumers will opt for environmentally friendly products and services

85 % of people think that personal decisions can have an impact on economic progress.However, just 1 in 10 people invest in clean industries.According to study findings, customers in Southeast Asia are confident in their capacity to significantly impact the environment through their eating habits. Even though they couldn’t see how…Continue Reading

Not easy to get English-speaking foreign workers for customer-facing roles, recruiters say

HELP FROM CO-WORKERS, CUSTOMERS 

A Chinese national who only wanted to be known as Mr Qu recalled asking his co-workers for translation help while working in a Peranakan restaurant in the early 2000s.

“Everything was ordered in English. My boss didn’t speak Mandarin and I couldn’t even apply for leave,” said Mr Qu, who was a kitchen assistant then.

“I had to find translations for everything,” said the 50-year-old. Now a masseur, he can communicate with customers using some basic English words. 

Dunlopillo said it was open to employing staff in customer-facing roles who cannot speak English, but would pair them with staff who can. The mattress retailer has six to seven work permit employees in such roles, but all can speak English. 

“It is not a big obstacle to employ them, to be honest,” said national sales manager William Chua. “Singaporeans can use a lot of body language.

“So long as communication does not break down. If there’s any problem, (we can) just tell the customer that we don’t understand.”

Mr Chua said the customer can also be referred to another of its more than 15 outlets or shop spaces islandwide, or asked to return another day when an English-speaking employee is around.

To Mr Chua, the NTUC FairPrice incident was an “isolated” case. 

Singaporeans who find themselves in such situations would usually switch to a language that the other party understands, he said.

“Unless I don’t know how to speak Mandarin and you cannot speak English, the only way out is you get your supervisor or someone who can speak the language so you can communicate.” 

KNOWING ENGLISH WILL GET WORKERS FURTHER

Mr Koh of Future Employment recalled a case where a candidate who spoke basic English still had difficulty adapting to his workplace. 

The Chinese national was hired as a waiter and had to work with multiple nationalities, including Sri Lankans, Indians and Koreans. 

Due to the fast-paced nature of the job, the man was not given enough time to settle into his job and was scolded when he failed to pick up instructions. After a month, he gave up and returned to China without even considering a change in job, said Mr Koh. 

On the other hand, a bubble tea stall assistant from China whom Mr Koh recruited managed to work her way up with a basic command of English. Within three to four years, the woman was promoted to team leader then to cluster manager, Mr Koh said. 

Two Singaporeans of minority races that CNA spoke to had different views on whether companies should employ workers in front-facing roles if they cannot speak English.

A 26-year-old Singaporean Indian, who did not want to be named, said people should be more understanding as migrant workers were simply trying to make a living.

The researcher said he picked up simple Mandarin terms to communicate with workers who did not speak English at the coffee shop he frequented. He described it as a “let me help you so you can help me kind of thing”.

But Mr Kirill Petropavlov, 33, who moved from Switzerland to Singapore and is now a citizen, said speaking English is important to cater to visitors and the country’s diverse population. 

“On one occasion, I visited a shop that sells doors, and the sales lady there only spoke Mandarin. She tried her best to use the few English words she knew, but it was not sufficient for effective communication. Luckily, my wife, who can speak Mandarin, was with me and helped me communicate with the salesperson,” said Mr Petropavlov, who works in a bank.

“While it would be beneficial to know some basic Mandarin terms to help in certain situations, the main barrier is the complexity of the language and its limited usability across the globe,” he said. 

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Commentary: A gruesome severed fingertip tells a painful story about corporate Japan

WHERE DOES THE BUCK STOP

In the corporate context, this fear finds expression in various forms: Cash hoarding, risk-aversion, cross-held shares in other listed companies, the tendency to set forecasts low and hope for outperformance and chief executives whose grandest strategic ambition is to survive their time at the top without incident.

The striking thing about this framework of fear is how suddenly vulnerable it all looks, and on multiple fronts. The first of these, in a shift that has not yet been recognised for its truly tectonic nature, is a new edict from the Tokyo Stock Exchange that will in effect force companies to explain why their share-price-to-book-value ratio is consistently low.

The embarrassment factor should, in theory, shake a lot of companies hard. And while the price-to-book metric may not be the best or most consistent gauge of a company’s commitment to better governance and better capital efficiency, it works well as a catch-all identifier of the larger problem.

Japanese chief executives have lived until now without an explicit, sustained pressure (or stock-ownership-related incentive) to raise their share price, or even a clear doctrine that it lies within their powers to do so. Suddenly, the TSE has granted investors permission to hard-boil CEOs on their literacy levels when it comes to cost of capital, and to make inaction the greater fear than a sudden course correction.

Closely linked to that is the need for companies to be more scared than they currently seem to be by the pace of irresistible, and in some cases existential, change. The transformations that will be forced on corporate Japan by artificial intelligence, deteriorating US-China relations and the fact that the country’s most important company, Toyota, appears to have misjudged global demand for electric vehicles are all examples of concerns that should far outweigh the more conventional fear of sudden strategic change. They have yet to do so – at least outwardly – in the C-suites of many companies.

A missing fingertip, however gruesome, may be survivable. The question the incident raises is how bad the injury would have to have been to give up on that day’s deliveries.

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Enter Australia in the laser weapon race

For those who aren’t gamers,” God mode” is a method of operation( or cheat ) included in some shoot-related games. You always run out of ammunition and are impervious to harm in God manner.

Of course, there is no God way in real life, but the military organizations around the world are very interested in weapons that resemble it, such as laser and additional” directed energy arms.” For instance, directed energy projects cost the US government close to$ 1 billion annually.

The argument is not unique to Australia. A directed power weapon system was required by the 2020 Force Structure Plan to be” capable of defeating armoured vehicles up to and including key battle tanks.”

The latest directed energy screening range for American business AIM Defence was introduced in March of this year on the fringes of Melbourne by Deputy Prime Minister Richard Marles. The Defense Science and Technology team announced a$ 13 million( US$ 8.6 million ) contract with European defence technology firm QinetiQ to create an initial protective light in April.

The new A$ 3.4 billion Advanced Strategic Capabilities Accelerator ( ASCA ) program places a high priority on directed energy technology.

Large quantities of electromagnetic energy are concentrated on a far-off goal by an energy tool that is directed. Light( a laser ) may be used to generate this energy, but microwaves or radio waves may also be employed.

We’ll focus on laser-based directed power weapons for the sake of conciseness, but the same can be said for other types of arms.

These arms may harm the sensitive digital systems that control devices and the people who use them, melt or burn stronger equipment, or both, depending on how much power is focused on the destination.

A black and white photo of a metal missile shell on a stand, appearing to explode.
In the 1980s, the US tested empirical light weapon systems. AP via The Conversation, a portrait

Magnetic waves are significantly faster than even the fastest conventional arms because they move at the speed of light.

Consider a hypersonic missile that is moving 10 kilometers off at ten years the speed of sound. By the time the directed light power from a high-power light reached the goal, it would have only moved in 10 meters.

Additionally, these arms never run out of ammunition because they project easy rather than weapons. Additionally, this implies that the weapon’s weapons does not need to be produced in a shop.

Directed power moves in a straight line because it is not affected by inertia like rockets and bullets. This makes target and aiming simpler and more trustworthy.

Additionally, directed energy arms have less chance of hitting near objects or sending debris flying because they cause problems by heating up a destination area.

Although directed energy arms have all these benefits over conventional weapons, it has proven challenging to construct good ones.

The enormous power needed to eradicate practical targets like missiles is one issue that laser weapons face. This dimension of object needs beams with hundreds of kilowatt or even megawatts of energy to be destroyed. We would need five years as much power to run these systems because they are only about 20 % appropriate.

Here, we are also into watt country, which is the amount of power a small city uses. Sometimes portable directed energy systems are enormous because of this.

Although devices with capacities up to 300kW have been developed, the US has just recently been able to produce a fairly low-power 50kW light small that is suitable for use on an armored vehicle.

A photo of an armoured vehicle
A 50kW light product mounted on an armoured vehicle is known as the US’s directed energy maneuver-short range air defense, or DE M-SHORAD. Jim Sheppard from the US Army via The Conversation

Additionally, the exquisite photonic equipment that produces the light very quickly needs to be freed of all that fire, or it will harm the light itself. Although laser technologies with more effective heat transfer have steadily increased the amount of light energy that can be effectively produced, this has proven to be challenging.

Dealing with for large amounts of energy also has the unintended consequence that any flaws in the visual techniques used to center and direct the light could easily harm the laser procedure catastrophically.

Additionally, it is difficult to direct a laser through atmospheric volatility, sand, or rain to an area the size of 10 cent pieces tens of kilometers away. The simple challenges become clear when you consider how challenging it is to maintain the energy in the same area on a fast-moving destination for tens of seconds.

Having said that, systems to get around all of these challenges are still being developed.

But let’s say that all of the specialized issues with directed power weapons are resolved. Even now, there will be vital infrastructure and supply chain challenges in order to manufacture them in large quantities.

There are businesses in Australia that have the knowledge to produce for gadgets. However, an industrial strength for the processing of the required laser diodes and high-quality optics, which does not occur in Australia, is required to develop and mass-produce directed energy weapons.

We will need to create such industries if we want to have” royal capability”— the ability to produce these weapons without relying on outside sources.

This is a costly and time-consuming invest in national network. In times of peace, it is relatively simple to obtain the basic materials for a directed energy weapon from abroad; however, in time of major conflict, nations that can produce these devices are likely to do so for their special needs.

Australia and many other nations will continue to be interested in developing directed energy arms due to their significant military benefits and the effects of an enemy possessing them.

However, as recent nuclear submarine policy decisions have demonstrated, it is not simple to quickly create an technological capability in technologies that our commercial base has up until now completely disregarded.

Sean O’Byrne is Associate Professor, Deputy Head of School (Research), School of Engineering and Information Technology, UNSW Canberra, UNSW Sydney

Under a Creative Commons license, this article is republished from The Conversation. read the article in its entirety.

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US Fed weighs mixed signals in next crucial rate call

Is the Federal Reserve finished raising interest rates now that inflation has decreased and the US market has cooled? After all, the central bank’s goal when it started jacking up prices more than a year later was to gradually lower the direction of prices without crashing the economy.

According to data released on April 27, 2023, the gross domestic product— the most comprehensive indicator of an economy’s output — expanded at a rate of just 1.1 % annually in the first quarter, down from 2.6 % during the last three months of 2022. Additionally, the most recent customer premium data from March indicates that inflation is slowing to 5 % annually, which is the lowest level in about a year.

However, the Fed hasn’t most finished raising rates just yet, which is bad news for consumers and businesses who are tired of skyrocketing borrowing costs. When the Fed meets for a two-day meet that ends May 3, 2023, commercial businesses are forecasting another quarter-point increase. Additionally, there might be additional changes in the future.

But this does bring up another crucial question: Is the Fed getting close to creating the” soft landing” it’s been hoping for with all the recent, frequently contradictory data and narratives about inflation, bank failures, and layoffs in the tech sector?

The market oscillates between zigzags.

The GDP facts offers some hints to the solution despite being a mixed bag.

Ultimately, the most recent GDP figures point to a good economic slowdown in the future, which is largely attributable to an increase in inventories, meaning that rather than ordering new goods, businesses are relying more on items that are already in storage.

Companies appear to be more likely to sell what is already available than to purchase different goods, probably in anticipation of a decline in consumption. Additionally, business investment fell 12.5 % during the quarter.

Consumer spending, which makes up about two-thirds of GDP, increased at a healthy 3.7 % rate at the same time that investment in machinery like computers and robotics increased by 11.2 %. However, this category is quite volatile and could easily change in the coming quarters.

A decline, such as a decrease in new purchases for manufactured goods, is also indicated by some data. This, along with the decrease in stock in the GDP report, may imply that companies are bracing themselves for a decline in consumer demand for goods and services.

Job openings have been declining when we consider the labor market, despite the fact that job growth has been strong( 334, 000 over the past six months ). According to the Bureau of Labor Statistics, holes decreased to about 9.9 million as of February 2022 from a peak of around 12 million.

Is the price of prices high or low?

We can also see opposing figures in terms of prices.

Since its peak in June 2022 at 9.1 %, the headline consumer price index has in fact been steadily declining. The Fed’s preferred solution of inflation, the primary preferred eating index, has nevertheless remained obstinately elevated.

The index, which excludes volatile food and energy prices, was up 4.6 % in March from a year earlier and has barely budged in months, according to the most recent data, released on April 28, 2023.

a grocery store in Washington, DC, selling fruits and vegetables. AFP portrait by Brendan Smialowski

However, wages increased at an annual 5.1 % in the first quarter, also in line with data released on April 28. Income, when rising, can have a significant upward thrust on price. Even though it’s down from its 5.7 % peak in the second quarter of 2022, wage growth is still moving at the fastest rate in at least 20 years.

More excursions are coming.

What does all of this mean for the Fed’s interest rate policy, then?

The market chances strongly favor another 0.25 amount stage increase, making it the 10th straight increase since March 2022, when the next meeting is scheduled to start on May 3.

The central bank is probably not finished raising rates because the inflation rate is still well above the Fed’s target of about 2 %, along with continued job growth and a low unemployment rate. I concur with the competition conflict pricing for a quarter-point increase for the meeting in May. Future content will direct any rate increases that come after that.

The good news is that, in my opinion, the higher price changes have historically occurred.

landing gently, or at least slowly

That brings us full circle to the crucial query: How near is the Fed to implementing a soft landing in which the US business is able to control inflation without erupting?

Unfortunately, it’s also soon to tell. Political and international functions, such as potential impasse on debt ceiling deals or further escalation of the Ukraine combat, you turn things upside down. Work businesses can be very unstable. Having said that, a development or mild recession is what we are anticipating.

What makes them different? A growth recession indicates a poor economy, but not enough to cause unemployment to rise drastically. This is preferable to an even mild recession that results in multiple quarterly GDP declines and significantly higher unemployment.

Simply put, we are unsure of which is more plausible. However, I believe that a severe downturn has been avoided, barring any fatal and unexpected events.

Christopher Decker, Professor of Economics, University of Nebraska Omaha

Under a Creative Commons license, this article is republished from The Conversation. Read the original publication.

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US tech war opens fire on China’s cloud computing

US Commerce Secretary Gina Raimondo stated that she and the Biden administration would not be portrayed as bad on China in response to Republican senators’ pressure to censure Chinese cloud computing business:

She told the Senate Appropriations Committee,” I’ve put more than 200 Chinese businesses on the institution list during my tenure, and we’re constantly looking into new threats. If and when we decide that companies should be added to the list, I won’t bother.”

Eight Republican senators, including Senator Bill Hagerty( R-TN ), a ranking member of the Senate Banking Subcommittee on National Security and International Trade and Finance, wrote to Raimondo, Treasury Secretary Janet Yellen, and Secretary of State Antony Blinken on April 25 requesting that they take decisive action against Chinese cloud service providers like Baidu and Tencent, as well as Alibaba Cloud and Huawei Cloud.

According to” Open-source information ,” Huawei Cloud and PRC-based cloud computing services are directly undermining the interests of the US and our allies and partners in terms of national security and economic security. They are also increasingly interacting with foreign entities, some of which are sanctioned. & nbsp, We implore you to take decisive action against these companies through sanctions, export restrictions, investment bans, and further research into PRC cloud computing service companies.

The following payment is listed on Senator Hagerty’s site:

” The example we give in the text demonstrate the viability of China’s military-civil integration strategy.” It does make sense to refuse US exports of these nations given China’s laws, which require every Chinese citizen and company to participate in regional security or intelligence work, according to Hagerty. & nbsp,” Yet businesses like Alibaba Cloud that are not on the Entity List now have access to US technology, imports, and even activities here in the United States.”

Do you recognize that the PRC cloud service providers operating in the United States pose a danger to our national and our financial security, given the scope of China’s military legal fusion strategy and regional security-related laws? Hagerty questioned.

According to Secretary Raimondo,” I’m in wide agreement with you.”

Gina Raimondo, secretary of commerce. Asia Times images

The email continues by citing specific but well-known instances of the companies’ play with China’s military, security, and intelligence services, such as satellite imagery and regional monitoring. They do, however, mainly serve financial markets, much like US military legal fusion company Boeing.

For instance,” military civil fusion” is not a sinister Chinese plot; rather, it is based on common practice. Boeing declared in February that it had been” selected by the US Air Force as the prime contractor for the country’s intercontinental ballistic missile ( ICBM ) guidance subsystems support.” Over the course of 16 years, the contract could be worth up to$ 1.6 billion.

Alibaba Cloud is the biggest cloud service provider in China and the fourth-largest in the world. It offers services to the banking, e-commerce, logistics, and many industries around the world in the areas of repository, storage, data analytics, networking, application, security, etc.

The employment website indeed.com currently lists 30 positions at Alibaba in Sunnyvale, California, including software engineer, photonics expert, research scientist, and business manager, with annual pay ranging from$ 110,000 to$ 240,000.

According to Crunchbase, US technology providers have eliminated more than 135, 000 projects so far this year. Senator Hagerty and his associates likely want to do away with internships at Alibaba as well as the modern know-how they stand for.

The level of knowledge is very deep. For instance, a Ph.D. is required for applicants for the placement of optics professional. have in the construction, development, and production of golden optics chips for visual interconnects, as well as a d. degree in electrical engineering, applied science, or another related field.

Although Huawei Cloud is basically roughly half as big as Alibaba Cloud, it has been developing quickly. Huawei Cloud, as reported on its website, has received a number of qualifications and awards since being added to the Entity List in August 2020, including:

The initial cloud service provider in Asia-Pacific to receive PCI 3DS accreditation for regional transactions account information security as of August 2020.

The second cloud service provider to achieve information security management Standard 27799 certification in September 2020.

The British Standards Institution has awarded both the CSA STAR 2021 Gold Certification and the ISO / IEC 27034 application security standard certification.

Forrester Research has named him a president in predictive analytics and machine learning as of November 2020.

For its GaussDB registry products, which assist businesses in migrating data to the sky, Gartner has included it in its Magic Quadrant for Cloud Database Management Systems for December 2020.

One of the best four and the fastest-growing cloud service provider in Latin America, Canalys named it in March 2021.

May 2021- No. Ranked 1 in the IDC market for commercial cloud infrastructure in China.

Ranked No. December 2021 IDC ranks machine learning at number one in China’s public cloud system market.

More than 1,000 public staff, clientele, and business experts attended the Huawei Cloud Summit Middle East and Africa in Dubai in March 2022.

The meeting looked at how cloud computing can help with public services, financing, carriers, media, e-commerce, and gaming.

The second Huawei Cloud Indonesia Summit was held in Jakarta in September 2022 to discuss the electronic economy with local business leaders and scholars, business partners, and the internet.

With more than 60 products to be launched in areas like e-commerce, shorter video platforms, online gambling security, and finance, Indonesia became a new area for Huawei Cloud in November.

In order to create good town ideas, Huawei Cloud and BCB Blockchain of Singapore joined forces in November 2020.

The Huawei Cloud Accelerator, a system intended to support the growth of start-ups with the aid of venture entrepreneurs, was unveiled in September 2022 at the summit held by the Huang Cloud Global Startup Founders Summit. This program aims to empower businesses in Shenzhen.

According to the company, Huawei Cloud is now used by more than 800 public clouds in China. The bank’s” One City, One Cloud” approach has been put into practice in over 150 settlements, and it also powers over 300 financial institutions, including six major institutions.

E-commerce, financing, power, manufacturing, medicine, and gaming are a few other user industries. Huawei Cloud is present outside of China in the Asia-Pacific, Middle East, Africa, Latin America, and Europe. Being on the Entity List does not appear to be a serious issue, aside from not being able to work in the US.

May US politicians be able to punish some Chinese cloud service providers for their actions? Maybe. Even as they forced Oracle to cut its ties with Huawei, they may compel US businesses like Salesforce, IBM, VMware, and Fortinet to do the same with Alibaba Cloud.

Huawei created its own ERP application as a result, which it unveiled in April. If Alibaba Cloud were added to the Entity List, which is overseen by the Bureau of Industry and Security ( BIS ) of the Commerce Department, something similar would likely occur.

Being placed on the list can be a significant issue, but it also motivates the targeted business to exert more effort. It may be referred to as the BIS Certificate of Quality in the Global South and some regions of the world where US sanctions are truly recognized.

@ ScottFo83517667 is the author’s Twitter account.

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