China vows to ‘transform’ economy, targets stable growth of around 5%

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Premier Li Qiang announced on Tuesday ( Mar 5 ) that China will work to reduce wasteful spending by local governments by about 5 % this year as it works to change its development model, stop industrial overcapacity, defuse property sector risks, and reduce wasteful spending.

In the cramped Great Hall of the People in Tiananmen Square, Li presented his first work report at the annual meeting of the country’s legislature, the National People’s Congress ( NPC ).

China’s expansion goal was comparable to that of last year, but stronger federal stimulus may be necessary for it because the country’s economy is still dependent on state investments in infrastructure, which have resulted in a mountain of metropolitan debt.

A mumbling post-COVID treatment over the past year has exposed China’s extensive architectural imbalances, including fragile home use and decreasing investment returns, provoking calls for a new development model.

China’s leaders have been under more pressure to respond to calls for a house problems, worsening depreciation, a stock market rout, and mounting regional government debt issues.

” We should be properly prepared for all risks and challenges and not lose sight of worst-case cases,” Li said.

” In particular, we must move forward with transforming the growth design, making architectural changes, enhancing value, and enhancing achievement.”

On the alterations China intended to adopt, there were no immediate information.

The yuan was thin, suggesting that investors were unsatisfied with the trigger ideas and reform promises, and Chinese stocks recovered earlier losses to commerce largely intact on the day.

According to Ben Bennett, an Asia-Pacific purchase strategist at Legal And General Investment Management, “politicians seem content with the latest trajectory,” the economic priorities were” as expected.”

” That’s disappointing for those who hoped for a bigger drive.” Local government loan and the real estate market have some facetious aid, but the key is how this is applied in practice.

According to Li, politicians “have taken into account the need to improve jobs and incomes and prevent and alleviate risks,” while adding that China intended to have a “proactive” fiscal position and “prudent” monetary plan.

China intends to have a budget deficit of 3 % of its output, down from a revised 3.8 % last year. Importantly, it intends to issue 1 trillion yuan ( US$ 39 billion ) in particular ultra-long-term Treasury securities, which are not included in the funds.

Local governments ‘ specific bond issuance limit was set at 3.9 trillion renminbi, compared to 3.8 trillion yuan in 2023. China also wants to create more than 12 million urban jobs this year, keeping the unemployment rate at about 5.5 %, while maintaining the consumer inflation target of 3 %.

According to Xia Qingjie, professor of economics at Peking University,” the Taiwanese government does not want to stimulate the economy to much,… and also wants to keep utilize somewhat low.” Xia added that the budget deficit goal may be modified as needed in the future of the year.

Researchers anticipate that China will reduce its goals for annual growth in the future. The International Monetary Fund projects that China’s economy will grow at 4.6 % this year and will experience a 3.5 % decline in the medium term by 2028.

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Time for China to move past GDP growth targets – Asia Times

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Sometimes, good news on China’s economy is actually bad news for the broader global economy and financial system. The reference here is to the suspense surrounding Beijing’s highly anticipated annual gross domestic product (GDP) target.

This market ritual is playing out again this week as the “Two Sessions” meetings as part the National People’s Congress that convenes and offers details – or at least smoke signals – on economic priorities heading into 2025.

None matters more in investment circles than Beijing’s GDP target. And that’s too bad, for it’s high time for China to stop issuing one altogether, particularly as President Xi Jinping faces perhaps the most challenging economic moment of his decade-plus leading the Communist Party.

“The real estate issue is still unresolved and China’s dependence on external demand will also encounter uncertainties due to the ongoing geopolitical tensions,” says Alicia Garcia Herrero, Asia Pacific chief economist at Natixis.

On Tuesday (March 5), Premier Li Qiang is widely expected to announce the roughly 5% growth target. The trouble with this annual GDP game, however, is that it weds China to an arbitrary goal that warps all financial incentives.

It’s very much at the root of the credit and debt excesses that have plagued China in the years since the 2008 global financial crisis and the nation’s epic stock crash in 2015.

Spread across Asia’s biggest economy are 34 province-level administrative divisions. Each is led by ambitious Communist Party members with designs on national office.

The quickest way for any apparatchik to get on Beijing’s radar screen is to turn in above-target economic growth year after year. This incentive structure helps explain why over the last decade-plus Chinese provinces engaged in an infrastructure arms race of sorts.

Look no further than the one-upmanship among metropolises scrambling to build bigger and better skyscrapers, six-lane highways, international airports and hotels, white-elephant stadiums, sprawling shopping districts and even amusement parks.

China hasn’t intervened in the property market crisis as aggressively as many anticipated. Image: Twitter

This dynamic explains, too, much of the motivation behind the explosion of local government financing vehicle (LGFV) debt now estimated at around US$9 trillion.

Such growth incentives are also at the root of urgings from the World Bank, International Monetary Fund and US Treasury Department to improve the quality of economic growth. That means disincentivizing prefectural leaders from generating growth for growth’s sake.

The property crisis preoccupying Xi demonstrates the costs of putting the quantity of growth over its effectiveness. Even if the immediate default crisis raised by China Evergrande Group has simmered a bit, the nation remains highly exposed to the threat of a “rapid” housing market downturn, notes International Monetary Fund economist Henry Hoyle.

The IMF reckons that housing investment in China could soon be down as much as 60% from 2022 levels. That, Hoyle notes, could lower Chinese GDP to about 3.4% by 2028.

Thanks to years of “excessive” investment in housing and infrastructure, China’s economy remains highly exposed to property market shocks. And at a moment when Xi and Li confront deflationary pressures, high youth unemployment, subpar productivity and a rapidly aging population.

In February, the value of new home sales plunged 60% from a year earlier. That followed a more than 34% drop in January. The trouble with such declines is how many members of China’s 1.4 billion people the losses affect.

“Home prices became significantly stretched relative to household incomes in the decade before the pandemic, in part because consumers preferred to invest their considerable savings in real estate given the scarcity of attractive alternative savings options,” Hoyle notes.

This collapse, he adds, is unfolding at “a historically rapid pace only seen in the largest housing busts in cross-country experience in the last three decades.”

The reason why a wholesale change in Beijing strategy is needed is that this is “really a structural issue more than a cyclical one,” says William Hurst, a China development expert at the University of Cambridge.

Since the mid-to-late 2000s, he says, there’s been a “strong over-reliance” on land use sales and property development and the problem just “got worse and worse.”

One reason Hurst argues that changing economic models is so hard: local governments are heavily dependent for their revenue on land and a tremendous amount of household wealth is in property.

The crossroads at which Xi and Li find themselves is that “massive new spending and/or lending now would make those asset price bubbles even worse,” Hurst notes.

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

“It would continue to crowd out consumption and more productive investments. And it would make it more difficult and costly down the road – maybe even prohibitively so – to do this again.”

The thing is, Hurst notes, “inflection points and critical junctures can only be clearly spotted in hindsight. But what we’re seeing in China is not the start of something new and probably not the very end of an unwinding of export-led growth that began 15 years ago.”

As Hurst sees it, “we’ll likely see serious debate – or at least evidence that it’s happening behind the scenes – and possibly a meaningful shift in at least short-term economic policy in China over the coming days and weeks. But any really big macro-level change will be slower in coming and harder to see in real-time.”

One of the biggest debates should be over the logic of releasing a GDP target that puts Beijing on the clock to deliver year after year.

If China doesn’t make its annual numbers like some corporate board determined not to disappoint shareholders, global investors reckon Beijing is failing. When China does make its goal, against all odds, many economists doubt the data is accurate.

This self-imposed distraction is coming to something of a head in 2024. China entered the year struggling with its worst deflationary streak since the 1990s amid the Asian financial crisis. Dueling troubles in property and local government finances, and volatile stocks, are only adding to the headwinds zooming Beijing’s way.

Given Beijing’s determination to alter the economic narrative following a uniquely chaotic 12 months, the impetus may be to set an ambitious target.

As Goldman Sachs analyst Maggie Wei notes, a headline-grabbing number and setting a target for consumer prices could convince skittish investors that Xi and Li are serious about stabilizing the economy. But this merely treats the symptoms, not the causes, of China’s troubles.

It’s far more important that Xi and Li redouble efforts to repair the property sector, strengthen capital markets, champion the private sector, recalibrate growth engines from exports to domestic demand, internationalize the yuan and build bigger social safety nets to encourage households to save less and spend more.

“Structural challenges including the aging population, weaker productivity growth and elevated debt levels will continue to weigh on potential growth over the medium term,” says Madhavi Bokil, an analyst at Moody’s Investors Service. “For now, the economic environment remains difficult, with factors that stymied growth in 2023 still present.”

Bokil notes that “protracted decline in the property sector, deterioration in regional and local governments’ strength, domestic policy uncertainty, slower global demand growth and high geopolitical tensions present hurdles to the growth outlook.”

The consumer and business sentiment “remain relatively low,” Bokil adds. “Property sector transactions and prices have yet to stabilize. Subdued price pressures, seen in the decline in producer prices of manufactured goods and the GDP deflator since 2023, reflect both moderating commodity prices and muted demand growth. Downward pressures on prices will likely remain in place in 2024 until the domestic economic momentum strengthens, resulting in inflation firming in 2025.”

The NPC is China’s chance to map out reform plans for 2024. One area of intense speculation is why Li won’t hold the traditional premier press conference on Tuesday, the first time it’s happened since 1993. As NPC spokesman Lou Qinjian announced today (March 4): “Barring any special circumstances, this arrangement will continue for the remainder of this term of the NPC.”

Some investors might read this as another sign China is becoming more opaque. The loss of this rare chance for China’s No 2 leader to interact with the public – and foreign reporters – coincides with the party clamping down on corporate data, court disclosure and academic documents while tightening further its grip on Hong Kong.

Others posit that it’s a sign Xi is further consolidating power. “This may be another way to downgrade the importance of the premier,” Dongshu Liu, an assistant professor at the City University of Hong Kong, told Bloomberg.

Either way, Tuesday will be a highly informative day for global investors on Xi’s efforts to promote more sustainable growth in the year ahead and beyond.

“We’re closely watching the government’s attitude toward the progress of the 14th Five-year Plan,” says strategist Xing Zhaopeng at ANZ Research. “We also expect the government to take the climate target seriously and more green policies are expected in the next two years.”

A worker installs polycrystalline silicon solar panels as terrestrial photovoltaic power in Yantai, China. Photo: Twitter Screengrab

Yet few gestures would telegraph a major shift in China’s policy direction more than scrapping the GDP target.

Analysts at S&P Global have argued that “China’s best-case scenario would be to demote GDP to a position that it holds in most advanced economies. Rather than being an official target, GDP is seen as the outcome of decisions by households, firms and the government regarding consumption and investment.”

In other words, China’s GDP numbers are something bigger and more complicated than the government alone can manufacture. Allowing China to grow at the rate it grows, without explanation and drama, would free Xi and Li to worry less about big stimulus packages, white-elephant projects and giant bailouts for weak corporate links and make room for greater reform, disruption and risk-taking.

The longer China shackles itself to an arbitrary GDP goal, the more it incentivizes unproductive and ultimately unsustainable economic growth strategies.

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

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UOB Malaysia makes successful debut sukuk issuance | FinanceAsia

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The debut RM500 million ($ 106 million ) Basel III- compliant Tier 2 subordinated Islamic medium term notes ( Tier 2 Sukuk Wakalah ) has been successfully priced by United Overseas Bank ( Malaysia ) ( UOB Malaysia ).

The first people Level 2 Sukuk transaction to be issued by a foreign-owned banks on January 23 was the Malay ringgit business.

More than 40 investors participated in UOB Malaysia’s successful debut in the sukuk business with the tightest spread for a Baht Level 2 transaction, according to William Chua, managing producer, loan capital markets, investment banking, group retail banking, at CIMB.

One of the mutual direct managers for the transaction was UOB, who also served as the transaction’s shared lead manager.

According to a media release, this deal was timed to catch the window when the “market is beneficial with sufficient liquidity” is early in the year. &nbsp,

The Level 2 Sukuk Wakalah is rated AA1, whereas the Tier 1 UOB Malaysia is rated AAA with a robust prospect from RAM. &nbsp,

More than 72 members from 38 different organizations from across the investing area attended the owners ‘ conference on January 10 to support this agreement. &nbsp,

According to the transfer, the transaction was book-built with the deal size being beforehand announced to increase demand, which accelerated the identification of the actual interest and optimal pricing levels.

With a final order book of RM1.7 billion, which registered 3.39 times cover, UOB Malaysia was able to close the book at 4.01 %, the tightest end of the initial price guidance ( IPG). &nbsp,

Insurance at 25 %, asset management at 58 %, private banks at 2 %, banks at 11 %, and other corporations at 4 % were among the distribution partners for the issuance.

Plaza Media Limited. All trademarks are reserved.

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Banking on the next US financial crisis – Asia Times

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This is the first of a three-part series

Doomsaying, as Jonah complained to God, is a game that a doomsayer cannot win. This applies in spades to predicting a financial crisis. If proven wrong, the doomsayer is discredited. If proven right, he may be blamed for helping to precipitate the crisis by undermining public confidence.

Far be it from me, therefore, to predict a US financial crisis in the coming months. However, indicators that a US financial crisis might occur during this session of Congress, described by this first part of a three-part essay, warrant prompt attention, especially by the Republican Caucus of the House of Representatives, to two questions:

First, if a financial crisis does occur this year, will the still little-tested financial-sector-funded bail-ins authorized by Title II of the Dodd-Frank Act, enacted in 2010, prove adequate to obviate the Biden administration’s asking Congress again, as in October 2008, to appropriate funds to bail out the financial system? The second part of this three-part essay discusses why financial-sector-funded bail-ins might fail to obviate a bailout.

Second, if the Biden administration does ask Congress this year for funds to bail out the financial sector, then how might the House Republican Caucus best respond? For House Republicans to support another bailout of Wall Street, or even to fail to prevent one, would outrage tens of millions of populists who dominate Republican primary elections.

However, for House Republicans to nix a bailout needed to mitigate an incipient economic contraction could enable Democrats to shift onto the Republican Party the preponderance of public blame for that contraction.

The third part of this three-part series suggests that the House Republicans might best respond to a 2024 bailout request by conditioning their support for it on prior enactment of legislation eliminating obstacles to profitable private conversion of banks, which are limited-liability corporations, into proportional-liability financial firms that would be less prone to default and would not need government insurance of their depositors. 

To convert all banks into such financial firms – without any change in their employees, payrolls, physical plant, equipment, deposits, depositors or financial assets including outstanding loans – would render financial crises less frequent and less acute, and would lastingly obviate government bailouts of the financial system when such crises do occur. 

The obstacles impeding profitable private conversion of banks into proportional liability financial firms appear to be wholly governmental. The greatest of them is government insurance of bank deposits, which reduces the profitability of such conversions.

By conditioning House approval of one last financial-sector bailout on prior enactment of legislation mandating imminent elimination of the governmental obstacles to the profitable private conversion of banks into financial firms that are less default-prone, need no deposit insurance and will generate fewer and less severe financial crises that will not require government bail-outs when they do occur, the House Republican Caucus could avoid blame for refusing to mitigate an incipient economic contraction in a way that does not alienate the affections of working-class populists who loathe having to bail out rich and systematically corrupt financiers. 

In doing so, House Republicans would also seize a rare opportunity presented by a financial crisis to remove governmental obstacles to a simple, robust, and profitable private reform of the financial system that would make it lastingly more efficient and more stable.  Opportunities to do so much good at so little cost are so rare that if a 2024 financial crisis presents one, all Americans might end up remembering that crisis as a blessing in disguise.

The Quarterly Banking Profile (QBP) for the third quarter of 2023, released by the Federal Deposit Insurance Corporation (FDIC) on November 29, reported that US banks’ “unrealized losses on [non-equity] securities totaled US$683.9 billion in the third quarter, up $125.5 billion (22.5%) from the prior quarter, primarily due to an increase in mortgage rates that reduced the value of mortgage-backed securities” – the same sort of financial instruments’ overvaluation that proved unsustainable in 2007-08, precipitating the last US financial crisis. 

That QBP stated that only $76.5 billion of those $683.9 billion in unrealized losses were held by community banks.  It also showed that US banks’ unrealized losses on non-equity securities, which were never greater than $75 billion for any quarter from the start of 2008 through the end of 2021, grew to nearly $300 billion in the first quarter of 2022, have exceeded $450 billion in every subsequent quarter and exceeded $650 billion in the third quarters of both 2022 and 2023.

On February 29, the FDIC announced that its QBP for the fourth quarter of 2023, will be released on March 7. For reasons not stated, it will be released a week later after the quarter’s end than the three prior QBPs, which were released on November 29, August 29 and May 29, 2023.

The unrealized losses quantified in the FDIC’s QBPs are merely those of US banks, deposits in which the FDIC may be obligated to insure against bank default. Data on the unrealized losses of the whole US financial system, including non-bank financial firms, seems not to be collected or published by any government agency. 

A former economics professor who has decades of bank risk-assessment experience working at the Bank for International Settlements, the US Federal Reserve, the IMF, the FDIC and the Basel Committee on Bank Supervision, recently suggested that the above-cited FDIC data may greatly understate the unrealized losses of the US “banking system in aggregate,” which he estimated to have amounted to about $1.5 trillion at the end of September 2023.

The extent to which the high-interest rates on US government debt that are now distressing the US financial system can still be blamed on money supply contraction seems questionable. Data for the broad US money supply, M2, released by the Federal Reserve on February 27, indicate that M2 increased from $20.565 trillion on October 30, 2023, to $20.949 trillion on January 8, 2024, before falling to $20.751 trillion on January 29 and rising to $20.877 trillion on February 5, 2024, the most recent M2 data publicly available.   

In the 99 days from October 30 to February 5, M2 grew by 1.52%, at a rate equivalent to more than 7.9% per year. Diverse indices suggesting that US aggregate price inflation has not decelerated in recent months seem unsurprising in light of the recent M2 data.

Moreover, the Federal Reserve fully controls only overnight interest rates. Even if it stops fighting inflation between now and this autumn’s elections, medium- and long-term default-risk-free interest rates may remain high if high future price inflation is widely expected. The central government’s burgeoning fiscal deficit may render such expectations increasingly difficult to dispel.

The US banking system is afflicted not only by default risk-free interest rates higher than those paid by banks’ long-term debt assets but also by the growing risk of collateral depreciation or default on debt held by banks.

The greatest source of collateral depreciation or default risk to US banks appears to be commercial real estate (CRE) mortgages, especially office building mortgages. On February 12, the Mortgage Bankers’ Association reported that $929 billion in US outstanding commercial real estate mortgages, including $441 billion held by banks, will come due this year – a 28% increase from the $728 billion that matured in 2023.  

A large proportion of these CRE mortgages maturing in 2024 are mortgages on office buildings that may have a market value substantially less than their book value due to unprecedentedly high office vacancy rates resulting from increased electronic working-from-home by white-collar workers during and since the Covid lockdowns of 2020-2021. 

During 2023, the US office vacancy rate rose to an all-time high and hit 18% in January 2024, according to one industry report, and 19.7% according to another.  Diverse reports suggest that a large proportion of outstanding US office mortgages have been bundled into transferable commercial mortgage-backed securities (CMBS) comparable to the residential mortgage-backed securities, Wall Street’s systematic and arguably fraudulent overvaluation of which helped sustain the decades-long US housing bubble that burst in and after 2006. 

The same commercial-mortgage industry analysis firm that estimates that the US office vacancy rate was 19.7% in January 2024 also estimates that the delinquency rate (by loan balance) of office mortgages securitized into CMBSs tripled during the past year, from 1.9% in January 2023 to 6.3% in January 2024.

Although US office listing prices reportedly fell only 1.8%, on average during 2023, Capital Economics reportedly estimated in December 2023 that average US office prices paid fell 11% in 2023 and will fall another 10% in 2024. Morgan Stanley reportedly has projected that US office prices may fall as much as 30% from pre-Covid levels.

Some partly empty office buildings that have been able to service decade-old maturing mortgages with interest rates of around 3% a year may prove unable to renew their mortgages at the higher rates now required. Many outstanding office mortgages reportedly are “zero-principal” or “interest-only” debt that leave the creditor owning 100% of the equity in an office building when the mortgage matures. 

When such an office mortgage matures and cannot be renewed, the mortgage creditors realize a loss – which only creative accounting can delay booking – equivalent to 100% of the decline in the market value of the office building.

On February 20, the Financial Times reported that US banks’ delinquent commercial real estate loans had grown to about $24.3 billion, equivalent to about 70% of their reserves, from $11.2 billion, equivalent to about 45% of their reserves, a year earlier.  The same article reported that the value of delinquent commercial real estate loans held by the six largest US banks has nearly tripled, to $9.3 billion, during the past year.

Of those six banks, only one, JPMorgan Chase, now has reserves greater than the value of its delinquent commercial real estate loans; two of the six banks, Citigroup and Goldman Sachs, have reserves worth less than half the value of their delinquent commercial real estate loans, the FT report said.

Growing default-risk threats to the US banking system are also posed by rising delinquencies on relatively short-term consumer debt, notably credit card debt and automobile loans.   

The “charge off rate” on consumer loans from US commercial banks –the proportion of nominal par value lost to default, net of collateral recovery – rose every quarter throughout 2022 and 2023 to 2.65% in the fourth quarter of 2023 – a level higher than has been observed since 2008-2011. 

The portion of US consumers’ credit card debt and auto loans that is delinquent by at least 90 days rose throughout 2022 and 2023, to over 6% and nearly 3%, levels not observed since 2007-2011.

US credit card delinquency increased by an even larger proportion in terms of value, for the value of US credit card debt rose steadily from a Covid-lockdown low of 770,000 billion in the first quarter of 2021 to an all-time high of $1.13 trillion in the fourth quarter of 2023.   Similarly, US auto loan delinquencies are a growing proportion of a growing volume of US auto loans, driven in part by rising auto prices.

That these credit card and auto loan delinquencies may continue to grow is suggested by an underappreciated datum in recent editions of the Employment Situation Report released monthly by the US Bureau of Labor Statistics (BLS): during 2023, all the growth in US employment was in part-time jobs, while full-time employment shrank. 

This trend continued and accelerated in January 2024, during which, per the BLS, “The average workweek for all employees on private nonfarm payrolls decreased by 0.2 hours to 34.1 hours in January and is down by 0.5 hour over the year.” 

This is consistent with recent massive layoffs of full-time employees and with the widely-noted transition of the US to a “gig economy” in which employment increasingly is temporary, part-time and with fewer benefits than employers are obligated to give to full-time employees.  

Delinquencies and defaults on residential mortgages remained very low but that is scant comfort for the financial institutions that own those mortgages, which typically originated years or decades ago, when interest rates were far lower than they are now and which pay rates lower than banks must pay depositors today. 

For those institutions, which now commonly might lose less by repossessing the mortgaged homes than by selling those mortgages, non-default is no blessing. 

US consumers are increasingly defaulting on short-term high-interest credit cards and auto loans that are profitable to banks while dutifully servicing long-term low-interest mortgages that are unprofitable to banks. In addition, a growing number of US corporations are at a growing perceived risk of defaulting on debt securities that they have issued, some of which may be held by US banks.

Furthermore, on January 24, 2024, the Federal Reserve announced that on March 11 it would end its Bank Term Funding Program (BTFP), which it began a year earlier, the day after Silicon Valley Bank failed. 

The BTFP was set up to lessen temporarily the insolvency risk of US banks by enabling them to borrow funds from the Fed for up to one year against the collateral of debt securities “valued at par” – valuations that can be far higher than market value due to recent interest rate rises. US banks have borrowed more than $160 billion of outstanding loans subsidized by the BTFP.

They appear obligated to repay, by June 12, 2024, the $102 billion that they borrowed under the BTFP between March 11 and June 12, 2023.

“Ichabod” is a former US diplomat.

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On the decline of work and rise of boredom – Asia Times

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George Bernard Shaw, of Pygmalion/My Fair Lady fame, raised the question: “Have you ever wondered why I am a communist?” His answer: “Well, it is largely because of my sense of the great importance of leisure in civilized society.”

Indeed, people need time to read books, be they about literature or science, or Mao, Marx and Shaw himself; debate them and go to movies and theaters; surf the internet or go to Church. 

But Shaw neither looked into how either the increased leisure would be financed or induce the expanded leisured classes to read, reflect and debate substantive issues rather than spend time on Tik Tok, taking endless selfies, gobbling conspiracies and avoiding debates by joining echo chambers.

However, Shaw did write that for leisure to create and sustain his image of civilization, people must be “informed, trained and disciplined.”

If not, the result would be just the opposite: With “too much leisure” a society emerges that will be wholly sterilized “for cultural purposes, as if you brought them up to work as slaves to the limit of human endurance without any effective leisure at all.”

The outcome of undisciplined use of leisure is “that the little religion and art, literature and science we can obtain, would be frightfully corrupt.”

This happens as, with too much leisure, the “idlers” –  Shaw’s term for members of the “cultural and academic” sectors – certifiably “come to loathe education, culture, literature and everything suggestive of intellect” and “use their freedom from toil to cultivate the art of amusing themselves or letting other people amuse them.”

As a result, without self-restraint and discipline, people end up neither civilized nor uplifted. Pretty prescient: Recent Gallup polls show that teenagers between 13 and 19 spend 4.8 hours daily on mainly TikTok and YouTube, far more time than they spend on homework.

Shaw was not the only one to make the latter observation.  Long before him, Voltaire wrote repeatedly that “Work saves us from three great evils: boredom, vice and need.”

More recently, Eric Hoffer, in his “The True Believer” on the rise of radicalism and mobs had this to say:

There is perhaps no more reliable indicator of a society’s ripeness for a mass movement than the prevalence of unrelieved boredom.  In almost all descriptions of the periods preceding the rise of mass movements there is reference to vast ennui, and in their earliest stages mass movements are more likely to find sympathizers and support among the bored than among the exploited and oppressed … They must be wholly ignorant, easily persuaded and led… Experience is a handicap.

How is boredom, avoiding work inadvertently, created and financed? The coming celebrated holiday of Freedom – the Exodus – is a good reminder what not to do and that freedom, accompanied by massive welfare without requiring discipline and self-restraint, bring boredom and mobs betting on false idols.  

Strangely, as in romantic Hollywood movies, the collective memory about the exodus from Egypt and slavery stops with the “happy ending” of escaping to “freedom” and pays no attention to the events that followed, though history is rhyming.

The events were these: Despite the miracles, the new God performed in Egypt and when parting the sea, the freed slaves complained non-stop, ready to stone Moses. The water was not as good as it was in Egypt and there was not enough of it. 

Moses struck rocks and fresh spring water came. But the food was more plentiful and tastier in Egypt, they complained, so God orchestrated the Fall of Manna, or free food catered to please any desired taste.  Briefly, the multitude became in no time a fully subsidized, food-stamped welfare mob. 

All miracles notwithstanding, as soon as Moses goes to the mountain to bring down the 10 commandments set in stone (eight of which are “no’s” requiring self-restraint) but does not return on the promised 40th day, the welfare mob loses faith, abandons the God that brought them to freedom, reverts to old deities and builds the Golden Calf. Moses promptly crashes the stones and the written commandments turn to dust.

Exodus spends seven chapters ​(25-31) describing in tedious detail how the tribe-in-the-making must build the Tabernacle before Moses destroys the stones. Then, following his outburst, another six chapters ​(35-40) repeat in minute detail the materials and intense non-stop work required for the Tabernacle’s construction.   The repetition is not as strange as it appears.  

Though the 10 commandments appear orally before (Chapter 19), the multitude, used to “solid” deities, saw nothing in writing. Why bother, then, to work so hard? They do commit to hard work only when Moses comes down for a second time with the re-written stones intact – and also putting the fear of God in the multitude by instructing the killing of 3,000 of them.

This is an unacceptably harsh lesson on how now to restore self-restraint, discipline and induce people to get off welfare and start working – though weaning masses of youngsters passing for “students and scholars” from massive subsidies (started with the 1958 National Defense Education Act’s good intentions) and restoring law and order may help. 

Hoffer was prescient about this, too, when writing:

[An] individual is free of boredom only when he is engaged either in creative work or some absorbing occupation… Pleasure-chasing and dissipation are ineffective palliatives. Where people live autonomous lives and are not badly off, yet are without abilities or opportunities for creative work or useful action, there is no telling to what desperate and fantastic shifts they might resort in order to give meaning and purpose to their lives.

Recall, too, that in 1968 Harvard’s president at the time called in the police to restore order when students occupied buildings renaming a hall as “Che Guevara,” sang “Sieg Heil” and shoved banana down the throats of professors before pushing them down the stairs. Though even then only one Harvard professor stood up to denounce his complacent colleagues. 

The article draws on Brenner’s Force of Finance and recent sequence of articles on universities and student debt forgiveness

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Two sessions: Can a rubberstamp parliament help China’s economy?

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Delegates attend the opening session of the Chinese People's Political Consultative Conference (CPPCC) at the Great Hall of the People, in Beijing, China, 04 March 2023.EPA
By Stephen McDonell
BBC News, Beijing

The Chinese government is under massive pressure to come up with solutions for its troubled economy.

So people will be watching the National People’s Congress to see what’s on offer when it starts on Tuesday.

Nearly 3,000 NPC delegates gather annually, for just over a week, inside Beijing’s cavernous Great Hall of the People to pass laws, approve personnel changes and delegate the operation of government to smaller groups which meet throughout the year.

It is, for the most part, a political performance which rubber-stamps decisions already made behind closed doors.

But given that the messages delivered have been thought through by those in power, analysts will be looking out for any change in the official Party line and what it might mean for China and the world.

For example, a certain new phrase might signal a change in industrial policy or a potential new law governing investment rules.

Crucially, the lens through which to view all of this is that there is nothing more important to the Communist Party than ensuring the longevity of its rule in China. For the current leader, Xi Jinping, it is absolutely paramount in virtually all aspects of life.

This has not seemed like much of a struggle in recent decades, as business boomed and living standards improved for most, year after year.

But now Asia’s engine of growth is locked in a real estate crisis which has dissolved the life savings of many families who paid for flats which were never delivered; it has armies of university graduates who can’t find good jobs and it is burdened by huge amounts of local government debt, which has robbed policymakers of the ability to inject funds into infrastructure in the same way they used to be able to, whenever times were tough.

It had been the case that a new road project, or a series of bridges, could soak up a lot of unemployment, unused steel and excess concrete capacity. But this is a period of much more uncertainty.

“This year’s NPC will be held at a time of unusual ferment and volatility, particularly over economic policy,” says Richard McGregor, author of The Party, which examines China’s structures of government.

He told the BBC that there are “rumours swirling about the government looking for a large statement of some kind to restore confidence and lift growth. There is widespread unhappiness about the state of the economy, and in turn about the direction Xi Jinping has set for the country”.

In the past, when enormous changes generated great concern – like the flooding of entire historic areas to make way for the Three Gorges Dam project – there have been protest votes registered at the NPC.

But it would take an exceptionally brave Party representative to try that under Xi Jinping.

Mr McGregor said he doesn’t expect denunciations of leadership during this Congress, as “all of the delegates have learnt to stay very much on message”. However, he added that “even critical murmurs will be significant”.

Professor Ann Lee from New York University said the session could see legislation providing more support to the private sector.

“This is a tacit recognition that China’s economy needs more entrepreneurial investment in order to meet Xi’s high-quality growth goals,” she said.

‘New productive forces’

A phrase Mr Xi has been using since the end of last year in reference to the direction of the country is “new productive forces”. This is likely to be peppered through speeches in coming weeks as well.

But what does it mean?

Dr Jon Taylor from the University of Texas at San Antonio said that Mr Xi is referring to “an emphasis on the development and commercialisation of technology and science, digitisation, and high-end manufacturing centring on emerging intelligent and eco-friendly technologies”.

He added that, while this is a “quite interesting catchphrase”, it is going to take time for these types of industries to take off, partly because “these sectors of China’s economy are relatively small”, and “the problem is that China faces some serious challenges, thanks to an underperforming economy”.

He said that the new emphasis on technological innovation may pay off in the long term, but that “in the short term, China remains dependent on infrastructure spending and a wobbly property market”.

People walk inside a shopping district in Beijing, China, 09 December 2023.

EPA

One interesting aspect of Mr Xi’s “new productive forces” was when he told the Politburo in January that such forces would be “freed from traditional economic growth mode and productivity development paths”, which would seem to suggest that the coming high-tech breakthroughs could be organised by and for the Party.

According to the former Chief Economist at multinational investment bank UBS, George Magnus, “this emphasises the party’s leadership, control and power to leverage ‘new productive forces’ for ideological work. This, in turn, means an industrial policy that serves to strengthen the Party’s dominance in the economy’s core digital and scientific spaces”.

Professor Lee sees the use of this phrase as important because it shows that “Xi is determined to reinvigorate the Chinese economy after setbacks from its real estate sector and the ongoing trade tensions with the West” and said that it “may signal a turning point”.

Choreographed questions, mountains of jargon

This mass political gathering starts with a marathon speech from the Premier, in which he reads out the Government Work Report, which summarises – in a very formulaic fashion – how China has performed over the past 12 months over a wide range of areas: the economy, the environment, in agriculture and so on.

Then it moves on to what the Party’s plan for the next year is. This is a key place to pick up any shifts in government thinking, but a magnifying glass may be required to spot it amongst the mountain of jargon.

During the NPC, there will also be a series of highly choreographed press conferences in which only screened questions are permitted and virtually all answers rehearsed.

Over recent years, the Party has also placed fake foreign correspondents into these press briefings, who seemingly represent the international media but are really from front companies based overseas but controlled by Beijing.

“The days of relatively candid press conferences from various ministries and provincial delegations on the sidelines of the Congress are pretty much gone,” said Mr McGregor.

This vast meeting may be an elaborate show – with loyal delegates head down in turgid reports – but that doesn’t mean it will be without important developments.

According to Dr Taylor, “while the Congress tends to be a decidedly performative autocratic exercise, there are elements of policy innovation and promulgation that bubble up”.

These are trying times for China, he said.

The country “faces several challenges that it will continue to struggle with this year: encouraging foreign direct investment in the midst of decoupling, systemically addressing local government debt, restoring private sector confidence, developing greater technological and scientific self-reliance, and ramping up consumer demand”.

There are significant problems facing this superpower and the moment for answers is upon it.

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PM supports study for new airport

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In: South-East Asia

PUBLISHED: 4 Mar 2024 at 04:38

PM supports study for new airport
Srettha Thavisin, the prime minister, is scheduled to meet with her in Kalasin on Saturday. Royal Thai Government in pictures

Srettha Thavisin, the prime minister and finance minister, has backed the construction of a new airport in Kalasin, the province’s northern territory.

The state has set aside money for a feasibility study for an aircraft, according to Mr. Srettha, who visited the area over the weekend. He declared that the government did take into account the study’s findings and act appropriately.

Due to its strategic location between Kalasin and Maha Sarakham, which would help the fresh aircraft to provide both of its regions, Yang Talat area is being considered as the airport’s area.

According to him, the novel airports may be called Sarasin, which is a mixture of Maha Sarakham and Kalasin.

According to him, Kalasin needs its own airport to draw in more tourists to its tourist attractions, increase imports, and entice more opportunities, he added.

The authorities held a public platform to ask people for their opinions on the construction of an airport in Kalasin in June 2021.

They applauded it, so the next move was to conduct a study to assess the value of constructing an aircraft in the area. The Transportation Ministry will receive the results.

Mr. Srettha expressed his concern over the state of health care in Kalasin following the visit, and he has urged the case to demand more funding.

He also emphasized the government’s dedication to combating domestic debt and the spread of cocaine.

Suriya Jungrungreangkit, the ministry’s transportation minister, stated that the government’s” Burn Thailand, Aviation Hub” vision will be realized more quickly with the West Expansion and the South Terminal at Suvarnabhumi Airport.

In the next five decades, Suvarnabhumi Airport will be one of the best flights in the world, according to Mr. Srettha’s announcement last year, and Thailand will become a regional aircraft hub.

Before the president’s term expires, Mr. Suriya said the government plans to organize bidding to find companies for the task. He did, however, claim that the North Expansion did never continue for the time being.

When Skytrax travels to Thailand in the first few days of the month, Mr. Suriya said he will meet with Skytrax members.

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OSK Ventures International charts US.5m income amidst a challenging 2023 for private equity

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In: Technology
  • delivered y-o-y revenue growth of 32 %, US PAT of US$ 5.04mil&nbsp,
  • One company exited with five new deals into its investment portfolio.

Some of the promising portfolio companies that OSKVI has invested in.

In a filing to Bursa Malaysia last week, OSK Ventures International Bhd, a private equity company, disclosed its fourth quarter ( 4Q2023 ) and full-year results for the financial year ended 31 December 2023. The company recorded income of US$ 6.5 million ( RM30.8 million ), a 32 % increase over US$ 4.93 million ( RM23.4 million ) in FY2023, with a profit after tax of RM23.9 million.

[RM1 = US$ 0 211]

The Group claimed that despite hard business conditions in both the public and private sectors, it delivered a strong financial performance that was characterized by regular development across its venture capital segments.

The endurance of our investment strategy and the persistence of our investment companies are a testament to our progress performance. We continue to expand our goods offerings, taking advantage of this interest and understanding of other assets like opportunity equity and venture debt, as prompted by the growing interest in modern companies in the personal markets, said Amelia Ong, OSKVI CEO.

The Group properly exited one investment firm for FY2023, welcoming five new transactions into its secret purchase collection in the business tech, fintech, and e-commerce sectors. It is developing a new account and has 37 businesses in its portfolio.

OSK Ventures International charts US$6.5m income amidst a challenging 2023 for private equityAmelia ( pic ) stated in a statement to Digital News Asia that Project Tapir and OSKVI had just announced a strategic partnership. By combining, OSKVI aims to help the smooth integration of Singapore fintechs into the Indonesian business landscape, creating a powerful expansion chance for both parties involved.

By promoting their respective hobbies in neighboring nations,” This program will benefit the desires of both the Singaporean and Malaysian governments,” said Amelia. She added that Malaysia is highlighted as an attractive location for international investments while Singapore fintechs are supported in expanding overseas.

Following shareholder approval at the approaching Annual General Meeting, OSKVI proposed a final single-tier income of 2 sen per discuss for FY2023.

The Group’s shareholders ‘ funds as of December 31st, 2023, had a total of RM258.6 million in total assets and a total market capitalization of RM106.1 million ( based on OSKVI’s most recently quoted share price at the end of the FY2023 ).

OSK Ventures International charts US$6.5m income amidst a challenging 2023 for private equity

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