The World Bank isn’t buying China’s stimulus talk – Asia Times

To anyone who hopes 2025 will be a less terrible season for China’s economy, the World Bank has some bad news for you.

The international lender anticipates that Asia’s largest economy’s growth will decline also further next year, creating new headwinds for the region. This is in spite of Beijing’s current moves to boost economic growth in response to negative pressures and an initial global investor response that was at least initially passionate.

” Just signaled fiscal support may raise short-term progress, but longer-term development will depend on deeper structural measures”, the World Bank said on October 8. For three years, it said,” China’s expansion has spilled over advantageously to its companions, but the size of that motivation is today diminishing”.

The World Bank might be misinterpreting China’s efforts to resurrect its financial situation. It&nbsp, cut borrowing costs, slashed businesses ‘ supply need numbers, reduced loan rates and unveiled market-support resources to put a floor under share costs. In Beijing, stronger macroeconomic stimulus measures are also being considered.

If the world’s house crisis is allowed to enhance, furthering negative forces, some economists worry about a lighter course. The uncertainty issue is demonstrated by the extreme volatility in Chinese shares over the past ten days.

When the World Bank mentions the need for “deeper architectural changes,” plunging house prices are at the top of their record. Yet&nbsp, Chinese leader Xi Jinping appears to think period is on Beijing’s part in repairing the critical business. It might not be, as Japan has demonstrated over the years, &nbsp, some economists say.

China’s existing real estate troubles and Japan’s negative loan problems of the 1990s are n’t essentially analogous. The important resemblance is a critical driver of economic growth stalling out indefinitely, triggering bad knock-on implications in different industries.

In China’s situation, this likewise means municipal governments around the country. Provincial leaders have relied on area sales and tax revenues from sizable construction projects for many years.

” China’s boom-and-bust housing market is largely driven by local governments ‘ heavy reliance on expanding the real estate business to provide a major source of income”, said Tianlei Huang, an analyst at the Peterson Institute for International Economics, a Washington-based think tank.

Since 2022, Huang added,” the decline in the housing market has hurt native state funds and exposed a&nbsp, prone system&nbsp, in need of reform”.

It’s a portrait of what ails China. And still, Xi’s Communist Party continues to treat the signs of financial issues, not the underlying problems themselves. The longer they fester, the stronger the resulting headwinds.

Rather than the 4.8 % the World Bank sees China’s economy growing this year, it sees the nation expanding at just 4.3 % in 2025. Both readings are below Beijing’s current 5 % target.

Of course, for an economy at China’s level of development, 4.3 % is effectively recession territory. And if Xi’s team does n’t act boldly and expeditiously to revive growth, that figure could prove too optimistic.

One wildcard is the&nbsp, November 5&nbsp, US election. The upcoming trade wars would disproportionately hit China if Donald Trump were to win.

During his first presidency from 2027 to 2021, Trump imposed harsh tariffs on China. Xi’s government has n’t seen anything yet if Trump comes back to power. Trump has already predicted a generalized global levy on all imports into the US and a 60 % tax on all Chinese goods.

” With higher US tariffs, a number of highly open economies in the Asia-Pacific are at risk of GDP falling below their baselines”, said Deborah Tan, an analyst at Moody’s Ratings. Along with China, they include Malaysia, Singapore, South Korea, Taiwan and Thailand.

According to Tan,” these are primarily economies with high participation in global value chains and high exposure to US and Chinese intermediate goods supply and final goods demand.”

Vietnam, for example, has a high export share of gross domestic product ( GDP ) with strong linkages with&nbsp, Chinese manufacturing&nbsp, supply chains. ” Our simulation shows that within Vietnam, the high-tech goods sector will take the largest hit to output”, Tan said. ” China, similarly, the high-tech goods sector takes the largest hit to output followed by the low-tech goods sector”.

As this threat percolates, Xi’s team in Beijing risks losing even more trust among global investors.

One thing is to discredit them on the stimulus front. The slower pace of fixing the housing sector, strengthening local government balance sheets, and establishing social safety nets so that households save less and spend more are the bigger issues.

However, these measures “do not replace the more thorough structural reforms that are required to promote longer-term growth,” according to World Bank economist Aaditya Mattoo. The majority of the measures and bond proceeds will carry over into the following fiscal year given the lead time for implementation of the policy.

Mattoo notes that “even then, consumers may be reluctant to splurge because a one-time transfer would not boost longer-term incomes or address concerns about aging, illness and unemployment”.

In the interim, billionaire Ray Dalio sees this as Xi’s party’s “do what it takes” to change the gloomy narrative that may be evoking global investor sentiment. Draghi’s 2012 declaration as head of the European Central Bank is referenced here.

Last week “was a big week” ,&nbsp, said Dalio, founder of Bridgewater Associates. ” In fact, I think that it was such a big week that&nbsp, it could go down in the market-economic history books as comparable to the week Draghi said that he and the ECB would ‘ do whatever it takes,’ if China’s policymakers, in fact, do what it takes, which will require a lot more than what was announced”.

A long-time China bull, Dalio is increasingly vocal about his worries Beijing is sleepwalking into a&nbsp, Japan-like funk&nbsp, that history shows is challenging to exit. It’s taken Tokyo 25 years to begin exiting quantitative easing and its zero-interest-rate policies, and even that is proving challenging for the Bank of Japan.

To avoid it, one must devise a “beautiful deleveraging” strategy that balances printing enough yuan to support growth without causing inflation to rise too quickly while restructuring the entire economy. ” Doing these things starts to rekindle’ bottom fishing ‘ ]in stocks ] and ‘ animal spirits,'” he said. ” That is clearly happening right now,” he says.

Any new deleveraging efforts by Xi and Premier Li Qiang, Dalio said, will undoubtedly disorient and likely lead to more wealth destruction. That, it follows, will require considerable political courage, with Xi and Li having to decide where the costs and fallout of debt losses will be concentrated.

To Dalio, it all depends on “how well China’s domestic debt-money-economy challenges will be handled”.

At the same time, demographics are complicating the deleveraging process. The numerous moving parts that Xi and Li are struggling to manage are given a unique dimension by China’s aging population and shrinking working-age population. &nbsp,

” While last week saw some amazing actions and words that I’m certain will be followed by highly stimulative policies that will greatly boost asset prices,” Dalio said.” I think there are several important other things to keep an eye on to see how well China’s domestic debt-money issues will be handled,”

That’s not to say there are n’t some reform wins that Xi and Li can tout. As Sherry Zhao, analyst at&nbsp, Fitch Ratings, pointed out, refinancing risks for China’s local-government financing vehicles ( LGFVs ) have “reduced in the short term following government debt-relief measures and policy support, which will limit systemic risk”.

Provincial governments, Zhao said, continue to issue special refinancing bonds to swap “hidden debt”. The central government, meanwhile, has increased transfers to shoulder more infrastructure spending.

However, Zhao stressed,” we believe those support measures focus on the prevention of short-term&nbsp, systemic risk rather than a full-scale bailout. There continue to be longer-term risks associated with&nbsp, LGFVs ‘ debt burdens, and their resolution will hinge on China’s overall economic and fiscal strength”.

The Third Plenum meeting in July made it clear that local and regional governments may have more revenue flexibility to better accommodate their expenditure demands. ” The credit effects”, Zhao said,” will depend on how the changes are implemented, and on local governments ‘ willingness to use any additional revenue-raising powers given to them”.

The official Fitch view is that overall&nbsp, LGFV&nbsp, debt growth will be curbed as local governments tighten control of new debt, especially in regions that Beijing views as a priority for debt resolution.

The danger, however, is that these regions ‘ long-term debt default risk “remains and may even rise because of imbalances in economic and debt growth, as well as the potential inability of local governments to generate sustainable revenue for debt service.”

There are encouraging indications that China is currently developing a plan to stabilize the financial system and lessen risks.

Zheng Shanjie, the head of the National Development and Reform Commission, told reporters on October 8 that Beijing is developing” comprehensive policy measures to help stop the decline in the real estate market.” Shanjie said this in response to the National Development and Reform Commission’s announcement to stop housing sales and prices.

Zheng added that” we will take a number of potent and effective measures to try to boost the capital market in response to volatility and declines in the stock market.”

Even so, many economists and investors were disappointed that more short-term stimulus is n’t being deployed. ” Tuesday’s press briefing from China’s top economic planner … was supposed to be the big moment, the one where Beijing unleashed a&nbsp, stimulus bazooka“, said economist Stephen Innes at SPI Asset Management. ” Instead, it was more of a pop gun”.

Innes added that” Beijing’s reluctance to roll out a bigger package is seriously questioned about the viability of this rally” in stocks.

James Sullivan, head of Asia-Pacific equity research at JPMorgan, told CNBC that” the million-dollar question in China right now is, does the stimulus only flow into the supply side of the equation, or does it ultimately flow through into consumer demand? That’s not our expectation right now”.

Follow William Pesek on X at @WilliamPesek

Continue Reading

American citizen jailed for NS defaulting offences, brother faced similar charges

SINGAPORE: An American citizen was sentenced to nine weeks ‘ jail on Monday ( Oct 7 ) for offences linked to defaulting on National Service ( NS ) obligations.

According to his attorney, Mr. Danny Quah of CHP Law, Garrett Alexander Gan Kok Leng, 40, was born in the United States and spent the majority of his life it.

As his papa was Singaporean, he was certified a Singapore member by descent.

For residing outside Singapore for more than three times without a true exit force, from May 31, 2003 to September 28, 2006, Gan admitted guilt to two charges under the Enlistment Act.

Another two claims were taken into consideration.

According to the jury, Gan was 16 years old when he was first issue to the Enlistment Act.

He signed up for federal assistance in February 2002, and in April 2003, he was determined fit to serve.

An enrollment notice was sent to his listed target in Singapore when he turned 18 in September 2002, requiring him to turn in for recruitment in October 2003.

Yet, he did not show up. An enrollment investigator visited Gan’s Singapore home and sent an enlistment notice that Gan’s mother acknowledged.

Gan was required to report for recruitment the day before, but he once more failed to appear.

Studies revealed that Gan left Singapore in May 2003 without a true leave visa. He continued to live without authority until September 28, 2006.

On Sep 29, 2006, as Gan did not abandon his US citizen and take the oath of abandonment, allegiance and commitment within 12 months of turning 21, he immediately lost his Singapore citizen, said his lawyer.

Timotheus Koh, the deputy public attorney, claimed Gan “did not deliberately sacrifice.” He was arrested on Jan 22 this year at Changi Airport.

He “was conscious of his NS responsibilities but did not report to or often receive clarification from the Ministry of Defence regarding them during the abovementioned times and up until his arrest,” according to Mr. Koh.

He “did not at all fulfill his Na duty.”

Attorney Mr. Quah requested nine months in prison while Mr. Koh requested a nine-to-ten-week sentence for Gan.

Used MOST OF HIS Life IN US: Attorney

Mr. Quah claimed that Gan spent the majority of his youth in the US before immigrating to Singapore with his kids in June 1994.

In June 2003, Gan left Singapore to stay in the US, said Mr Quah.

He claimed that Gan, who had a stroke, requested temporary visa applications from the Immigration and Checkpoints Authority ( ICA ) to allow him to care for his father while he remained in Singapore.

” Mr Gan did not leave Singapore to prevent serving his Na duty, neglecting his duty while pursuing his own passions”, said Mr Quah. ” More, he left Singapore for the US where he was a member since birth”.

Gan, according to the attorney, has “never enjoyed the benefits of a Singapore passport,” having previously received one.

” Mr. Gan was born in the US, and he traveled with his US card.” Each time he entered Singapore, he was treated as a foreigner”, said Mr Quah.

He claimed that his customer was no consciously attempting to deceive the government, but that he had mistakenly assumed that any Na duty he might have had as a Singaporean were “extinguished” after ICA renounced his membership in September 2006.

The attorney said that his opinion was strengthened by the fact that he had never encountered any issues before entering and leaving Singapore. &nbsp,

” It was only when he was detained at Changi Airport on January 22, 2024 that he was informed of the recruitment finds that had been served to his target and that he was being looked into for crimes committed under the Enlistment Act,” he said.

Mr. Quah added that Gan’s mother passed away and that his brother spent some time behind bars for related paying offenses.

According to Mr. Quah, “it’s one of those terrible circumstances that seems to have fallen through the holes.” &nbsp,

In punishment, the prosecutor said the defendant’s situation might seem peculiar to him, but another criminals may have experienced this same situation.

However, he noted Gan’s capitulation and earlier plea of grief and imposed a phrase at the “low end” of the variety.

Since the High Court punishment framework for Na borrowers was established in 2017, a spokesperson for MINDEF said the overall number of borrowers sentenced to prison is 27, including Gan.

MINDEF “takes a strong stand against those who violate the Enlistment Act,” MINDEF stated.

” All female Singapore and permanent people have a duty to serve Na, and it is crucial that all Singaporeans have the support and commitment of course. We must adhere to the basic tenets of unity and capital in New Zealand in order to accomplish this, according to the spokesperson.

” We are not being good to the vast majority of our national troops who serve their country devotifully, and we are not going to allow Singapore people or PRs who are abroad to escape NS or select when they want to offer NS,” they say, and the establishment of NS may be undermined.

Continue Reading

Inside the US State Department’s weapons pipeline to Israel – Asia Times

This article was first published by ProPublica, a Pulitzer Prize-winning analytical news website.

Reporting features

  • More weapons: Because Israel has a “decades-long proven track record” of avoiding killing citizens, Ambassador Jack Lew urged Washington to send hundreds more weapons to them.
  • A thank-you: After State Department officials spent months working through weekends and after time on hands sales, the Israelis sent cases of wine to them just before Christmas.
  • A lobbying force: Defense companies and activists have also helped drive down important sales by leaning on State Department officials and lawmakers whenever there’s a flow.

Israel’s military demanded 3, 000 more weapons from the British government in soon January as the death toll in Gaza soared to 25, 000 and Palestinians fled their destroyed cities in search of safety. US Ambassador to Israel Jack Lew, along with other major officials in the Jerusalem ambassador, sent a wire to Washington urging State Department leaders to review the price, saying there was no probable the Israel Defense Forces would use the weapons.

The wires did not address the Biden administration’s common concerns over the escalating civilian casualties, nor did it solve well-known reports that Israel had dropped 2, 000-pound bombs on crowded Gazan areas weeks earlier, causing house collapses and the deaths of hundreds of Palestinians, many of whom were children. Lew was aware of the issues. Authorities say his own team had repeatedly noted episodes where large numbers of citizens died. Jewish airstrikes had targeted the homes of the ministry’s personal Israeli employees.

However, Lew and his senior administration argued that Israel may be trusted with this fresh package of weapons, known as GBU-39s, which are smaller and more accurate. They claimed that Israel’s air force had a “decades-long proven track record” of avoiding shooting civilians when using the American-made weapon and had “demonstrated an ability and willingness to use it in]a manner that minimizes money destruction.”

While that request was pending, the Israelis proved those assertions wrong. In the months that followed, the Israeli military repeatedly dropped GBU-39s it already possessed on shelters and refugee camps that it said were being occupied by Hamas soldiers, killing scores of Palestinians. The IDF then bombed a mosque and school where civilians were frightened in early August. At least 93 died. Parents had trouble identifying children’s bodies because their bodies were so mutilated.

Weapons analysts identified shrapnel from GBU-39 bombs among the rubble.

In the months before and since, an array of State Department officials urged that Israel be completely or partially cut off from weapons sales under laws that prohibit arming countries with a pattern or clear risk of violations. Top State Department political appointees have consistently rejected those appeals. Government experts have for years unsuccessfully tried to withhold or place conditions on arms sales to Israel because of credible allegations that the country had violated Palestinians ‘ human rights using American-made weapons.

Secretary of State Antony Blinken held a town hall for the organization at the State Department’s headquarters on January 31 the day after the embassy’s assessment was made, where he received sharp questions from his subordinates about Gaza. He said the suffering of civilians was “absolutely gut wrenching and heartbreaking”, according to a transcript of the meeting.

” But it is a question of making judgments”, Blinken said of his agency’s efforts to minimize harm. On October 7, we premised that Israel had the right to defend itself, and more importantly, the right to try to prevent October 7 from occurring again.

The embassy’s endorsement and Blinken’s statements reflect what many at the State Department have understood to be their mission for nearly a year. The unwritten policy, according to a former embassy official, was to “protect Israel from scrutiny” and to encourage the flow of arms no matter how many human rights violations are reported. ” We ca n’t admit that’s a problem”, this former official said.

The embassy has even historically resisted accepting funds from the State Department’s Middle East bureau earmarked for investigating human rights issues throughout Israel because embassy leaders did n’t want to insinuate that Israel might have such problems, according to Mike Casey, a former U. S. diplomat in Jerusalem. Our main objective is to address human rights violations, Casey continued. ” We do n’t have that in Jerusalem”.

The US Agency for International Development and the State Department’s refugees bureau, according to a ProPublica report from last week, concluded in april that Israel had purposefully stopped the flow of food and medicine into Gaza and that weapons sales should be stopped. But Blinken rejected those findings as well and, weeks later, told Congress that the State Department had concluded that Israel was not blocking aid.

The episodes uncovered by ProPublica, which have not been previously detailed, offer an inside look at how and why the highest ranking policymakers in the US government have continued to approve sales of American weapons to Israel in the face of a mounting civilian death toll and evidence of almost daily human rights abuses. This article draws inspiration from a trove of State Department records, including internal cables, email threads, memos, meeting minutes, and other documents, as well as interviews with current and former officials from the organization, the majority of whom spoke on the condition of anonymity because they were not authorized to speak in public.

The records and interviews also show that the pressure to keep the arms pipeline moving also comes from the US military contractors who make the weapons. Behind the scenes, lobbyists for those companies have frequently pressed lawmakers and State Department officials to approve shipments both to Israel and other contentious allies in the region, including Saudi Arabia. When one company executive pushed his former subordinate at the department for a valuable sale, the government official reminded him that strategizing over the deal might violate federal lobbying laws, emails show.

The Biden administration’s repeated willingness to give the IDF a pass has only emboldened the Israelis, experts told ProPublica. Critics claim that the risk of a regional war is as high as it has been in decades as Israel and Iran trade blows, and that the cost of that failure has increased.

” The reaffirmation of impunity has come swiftly and unequivocally”, said Daniel Levy, who served in the Israeli military before holding various prominent positions as a government official and adviser throughout the’ 90s. He later served as the president of the US/Middle East Project and one of the founding members of the advocacy group J Street.

Levy said there is virtually no threat of accountability for Israel’s conduct in Gaza, only” a certainty of carte blanche”. Or, as another State Department official said,” If there’s never any consequences for doing it, then why stop doing it”?

The conflict in Gaza has continued for almost a year without abating. There are at least 41, 000 Palestinians dead, by local estimates. In contrast to Hamas, which killed more than 1,100 Israelis, mostly civilians, on October 7 and continues to hold dozens of hostages, Israel claims its actions were legal and legitimate.

The US has been a stalwart ally of Israel for decades, with presidents of both parties praising the country as a beacon of democracy in a dangerous region filled with threats to American interests.

In response to detailed questions from ProPublica, a State Department spokesperson sent a statement saying that arms transfers to any country, including Israel, are done “in a deliberative manner with appropriate input” from other agencies, State Department bureaus and embassies. We anticipate that any nation that receives US security articles will use them in full compliance with international humanitarian law, and we have a number of ongoing investigations underway to check whether it is done.

The spokesperson also said Lew has been at the forefront of ensuring” that every possible measure is taken to minimize impacts on civilians” while working on a ceasefire deal to secure” the release of hostages, alleviate the suffering of Palestinians in Gaza, and bring an end to the conflict”.

Israeli military leaders generally support the Israeli military’s aerial assault on Gaza as a “military necessity” to put an end to terrorists hiding among the population. Prime Minister Benjamin Netanyahu has also publicly pressured the Biden administration to hasten arms transfers. ” Give us the tools and we’ll finish the job a lot faster”, he said in June.

ProPublica also emailed Israeli government representatives in-depth inquiries. A spokesperson said in a statement:” The article is biased and seeks to portray legitimate and routine contacts between Israel and the Embassy in Washington with State Department officials as improper. Its intention appears to be to cast doubt on the security cooperation between two close allies and friendly nations.

Weapons sales are a pillar of American foreign policy in the Middle East. Historically, the US gives more money to Israel for weapons than it does to any other country. The majority of those American tax dollars are used to purchase US-made weapons and equipment, according to Israel.

While Israel has its own arms industry, the country relies heavily on American jets, bombs and other weapons in Gaza. More than 50 000 tons of weapons have been shipped by the US since October 2023, according to the Israeli military, which is” crucial for sustaining the IDF’s operational capabilities during the ongoing war.” The air defenses that defend Israeli towns and cities — known as the Iron Dome — also depend largely on US support.

There is little sign that either party is prepared to curtail US weapons shipments. Kamala Harris, the vice president, has called for a ceasefire, lamented the death toll in Gaza, and said she supports the decision of President Joe Biden to halt a shipment of 2, 000 bombs in June. She has also echoed a refrain from previous administrations, pledging to “ensure Israel has the ability to defend itself”. Additionally, Harris added that she had no intention of opposing Biden’s Israel policy.

Republican nominee for president Donald Trump, who has described himself as the “best friend that Israel has ever had”, reportedly told donors that he supports Israel’s “war on terror” and promised to crush pro-Palestinian protests on college campuses. Trump was also recently a featured speaker at the Israeli-American Council’s summit, where he cast himself as the most pro-Israel choice in the coming election. He said to the crowd,” You have a big protector in me. ” You do n’t have a protector on the other side”.

In the early 1970s, the United States first started offering significant amounts of weapons to Israel. Until then, Israel had relied on an array of home-grown and international purchases, notably from France, while the Soviet Union armed Israel’s adversaries. Over the past half-century, no country in the world has received more American military assistance than Israel.

The US provides the Israeli government with$ 3.8 billion annually and much more during conflicts to keep its military might in the area. Congress and the executive branch have imposed legal guardrails on how Israel and other countries can use the weapons they buy with US money. If there is a pattern or real danger of breaking international humanitarian law, such as preventing food deliveries to refugees, or requiring the State Department to review and approve the majority of those large military sales, the State Department is required to shut off a nation. The department is also supposed to withhold US-funded equipment and weapons from individual military units credibly accused of committing flagrant human rights violations, like torture.

Initially, a country makes a request and the local embassy, which is under the State Department’s jurisdiction, writes a cable called a” country team assessment” to judge the fitness of the nation asking for the weapons. Because of the local expertise of the embassies, this is only the start of a complicated process.

Then, the bulk of that review is conducted by the State Department’s arms transfers section, known as the Bureau of Political-Military Affairs, with input from other bureaus. If the sale is worth at least$ 100 million for weapons or$ 25 million for equipment, Congress also receives final approval, as are NATO allies and Israel. If lawmakers try to block a sale, which is rare, the president can sidestep with a veto.

For years, Josh Paul, a career official in the State Department’s arms transfers bureau, reviewed arms sales to Israel and other countries in the Middle East. He eventually developed into one of the agency’s most in-depth experts on arms sales.

Even before Israel’s retaliation for October 7, he had been concerned with Israel’s conduct. He claimed that he had heard that the law required the government to withhold weapons transfers on numerous occasions. In May 2021, he refused to approve a sale of fighter jets to the Israeli Air Force. ” At a time the IAF are blowing up civilian apartment blocks in Gaza”, Paul wrote in an email,” I cannot clear on this case”. After Amnesty International published a report accusing Israeli authorities of apartheid, he would n’t agree to another sale the following February.

In both cases, Paul later told ProPublica, his immediate superiors signed off on the sales over his objections.

He wrote to a deputy assistant secretary at the time,” I have no expectation of making any policy gains on this topic during this Administration.”

During that same time period, Paul circulated a memo to some of the agency’s senior diplomats with recommendations to strengthen the arms sales review process, such as including input from human rights groups. Paul warned that the Biden administration’s new arms transfer policy — which prohibits weapons sales if it’s “more likely than not” the recipient will use them to intentionally attack civilian structures or commit other violations — would be “watered down” in practice.

The December 2021 memo stated that the sale of precision-guided weapons to Israel and Saudi Arabia “posses an undisputed significant risk of civilian harm.” The US government has been historically unable to hold itself to its own standards, he wrote, “in the face of pressure from partners, industry, and perceived policy imperatives emerging from within the government itself”.

The memo’s recommendations do n’t appear to have been followed either. Paul resigned in protest over arms shipments to Israel last October, less than two weeks after the Hamas attack. It was the Biden administration’s first major public departure since the start of the war. Local authorities claimed that at least 3,300 Palestinians had been killed by Israeli military operations in Gaza as of that time.

Internally, other experts began to worry the Israelis were violating human rights almost from the onset of the war as well. According to those who participated in the creation of some of them, Middle Eastern officials sent at least six dissert memos to senior leaders praising the administration’s decision to continue arming Israel. The content of several memos leaked to the media earlier this year. The agency says it welcomes input from the dissent channel and incorporates it into policymaking decisions.

A group of experts from various bureaus claimed in a previously unreported memo from November that they had not been consulted before several policy decisions regarding arms transfers made immediately after October 7 and that there was no effective vetting process in place to assess the repercussions of those sales.

That memo, too, seemed to have little impact. State Department staff worked overtime, frequently after hours and on weekends, in the early stages of the conflict to process Israeli requests for more weapons. Some in the agency have thought the efforts showed an inappropriate amount of attention on Israel.

The Israelis, however, felt different. Staff in the arms transfers bureau entered their Washington, DC, office in late December, and they discovered cases of wine from a winery in the Negev Desert, along with personalized letters on each bottle.

The gifts were courtesy of the Israeli embassy.

According to the State Department, employees are permitted to accept donations from foreign governments that are less than the dollar amount. ” To allege that any of their allegiances to the United States should be questioned is insulting”, he added. ” The accusation that the Department of State is placing a disproportionate attention on Israel is inconsistent with the facts”.

The embassy frequently sends individual bottles of wine ( not cases ) to many of its contacts to celebrate the end of the year holidays, according to an Israeli government spokesperson.

One month later, Lew delivered his endorsement of Israel’s request for the 3, 000 precision GBU-39 bombs, which would be paid for with both US and Israeli funds. Lew, who has served in various administrations, is a significant figure in Democratic circles. He was President Barack Obama’s chief of staff and then became his treasury secretary. He has also been a top executive at Citigroup and a major private equity firm.

Rear Admiral Frank Schlereth, the US’s defense attaché to Israel, also authorized the January cable. In addition to its assurances about the IDF, the memo cited the Israeli military’s close ties with the American military: Israeli air crews attend US training schools to learn about collateral damage and use American-made computer systems to plan missions and “predict what effects their munitions will have on intended targets”, the officials wrote.

Many experts criticized Israel’s use of American-made, unguided “dumb” bombs, some of which were thought to be as much as 2, 000 pounds, as indiscriminate in the beginning of the conflict. But at the time of the embassy’s assessment, Amnesty International had documented evidence that the Israelis had also been dropping the GBU-39s, manufactured by Boeing to have a smaller blast radius, on civilians. Months before October 7, a May 2023 attack left 10 civilians dead. Then, in a strike in January of this year, 18 civilians, including 10 children, were killed. Amnesty International investigators found GBU-39 fragments at both sites. ( Boeing referred ProPublica to the government and declined to comment. )

At the time, State Department experts were also cataloging the effect the war has had on American credibility throughout the region. Hala Rharrit, a career diplomat based in the Middle East, was required to send daily reports analyzing Arab media coverage to the agency’s senior leaders. Her emails frequently featured graphic images of Palestinians dead and wounded along with US bomb fragments in the rubble, and described the collateral damage from airstrikes in Gaza.

” Arab media continues to share countless images and videos documenting mass killings and hunger, while affirming that Israel is committing war crimes and genocide and needs to be held accountable”, she reported in one early January email alongside a photograph of a dead toddler. These videos and images of carnage, particularly those of children who are repeatedly injured and killed, are traumatizing and enrage the Arab world in unheard ways.

Rharitt, who later resigned in protest, told ProPublica those images alone should have prompted US government investigations and factored into arms requests from the Israelis. She said the State Department has “willfully violated the laws” by failing to act on the information she and others had documented. Rharitt continued,” They ca n’t say they did n’t know.”

Rharitt said her superiors eventually told her to stop sending the daily reports. ( A spokesperson for the State Department claimed that the organization continues to take perspectives from Arab media into account when conducting regular internal analyses. )

Lew’s January cable makes no mention of the death toll in Gaza or the incidents of the Israelis dropping GBU-39s on civilians. Eight current and former State Department officials with expertise in human rights, the Middle East or arms transfers said the embassy’s assessment was an inadequate but not a surprising distillation of the administration’s position. Charles Blaha, a former human rights director at the agency, described it as an exercise in checking the boxes.

The State Department declined to comment on the status of that request other than to say the US has provided large amounts of GBU-39s to Israel multiple times in past years.

While the US hoped that the smaller bombs would stop unnecessary deaths, experts in the laws of war contend that it does n’t matter if a civilian is killed more than the military targets ‘ justifications. Lieutenant Colonel Rachel E VanLandingham, a retired officer with the Air Force’s Judge Advocate General’s Corps, said the IDF is legally responsible for doing all it can to know the risk to civilians ahead of any given strike and to avoid indiscriminately bombing densely populated areas like refugee camps and shelters. ” It seems extremely plausible that they just disregarded the risk”, VanLandingham added. It “induces serious concerns and indicators of a violation of the law of war”

According to officials at the embassy in Jerusalem and elsewhere in Washington, Lew has been the subject of similar concerns before, but his first reaction was to defend Israel. In a separate cable obtained by ProPublica, he told Blinken and other leaders in Washington that” Israel is a trustworthy defense articles recipient” and his country team assessments ahead of past weapons sales have found that Israel’s “human rights record justifies the sale”.

Lew went even farther and said the IDF’s system for choosing targets is so” sophisticated and comprehensive” that, by defense attaché Schlereth’s estimation, it “meets and often exceeds our own standard”, according to the cable. Lew and Schlereth have made similar statements at internal meetings, according to two State Department officials who spoke to ProPublica. ( The Navy did not make Schlereth available for an interview or respond to a list of questions. )

In addition to numerous other incidents involving civilians, diplomats at the embassy also reported that Israel had dropped bombs on some of the embassy’s own employees at the start of the war.

As to why Lew’s cables failed to reflect that kind of information, one official said,” My most charitable explanation is that they may not have had the time or inclination to critically assess the Israelis ‘ answers”.

In Israel’s New York consulate, weapons procurement officers occupy two floors, processing hundreds of sales each year. One former Israeli officer who worked there claimed that while his American counterparts tried just as hard to sell them, he tried as hard to buy as many weapons as possible. ” It’s a business”, he said.

According to ProPublica, lobbyists for powerful corporations have intervened in the background to pressure and advance the deal if government officials took too long to process it.

Some of those lobbyists formerly held powerful positions as regulators in the State Department. In recent years, at least six high-ranking officials in the agency’s arms transfers bureau left their posts and joined lobbying firms and military contractors. In July, Jessica Lewis, the bureau’s assistant secretary, resigned and began working at Brownstein Hyatt Farber Schreck. The company is the largest lobbying firm in Washington, by lobbying revenue, and has represented the defense industry and countries including Saudi Arabia. ( Lewis and the company did not respond to requests for comment. )

Paul Kelly, who was the top congressional affairs official at the State Department between 2001 and 2005, during the US invasions of Iraq and Afghanistan, said he regularly “got leaned on” by the private sector to push sales to lawmakers for final approval. ” They would n’t bribe or threaten me, but they would say … ‘ When are you going to sign off on it and get it up to the Hill?'” he told ProPublica.

Three other State Department officials who currently or recently worked on military assistance said little has changed since then and companies that profit from the wars in Gaza and Ukraine frequently call or email. ( The agency representative told ProPublica that arms transfers are” not influenced by a particular company. ) The pressure also reaches lawmakers ‘ offices once they are notified of impending sales. Those measures include frequent phone calls and regular daytime meetings, according to an official familiar with the communications.

The efforts may have veered into dubious legal territory in some instances. In 2017, the Trump administration signed a$ 350 billion arms deal with Saudi Arabia, an extension of Obama’s former policy before he suspended some sales because of humanitarian concerns. In the process of attacking Houthi militant targets in Yemen, the Saudis and their allies have used American-made jets and bombs for years, killing thousands of civilians.

The following February, the State Department was weighing whether to approve a sale of precision-guided missiles produced by Raytheon to Saudi Arabia. A vice president at the company named Tom Kelly — the former principal deputy assistant secretary of the State Department’s arms transfers bureau — emailed a former subordinate, Josh Paul. Kelly requested to schedule a meeting with Paul and a coworker to “talk through strategy” for advancing the sale, according to an email exchange.

Paul wrote back that such a meeting could be illegal. According to him,” we are prohibited by the Anti-Lobbying Act from coordinating legislative strategies with outside groups,” he said. ” However, I think the potential bumps in the road are relatively obvious”. Those bumps were a reference to recent media articles about mass civilian casualty incidents in Yemen.

” No worries,” Kelly said. ” I’m sure I’ll see you around”.

In response to requests for comment, Kelly and Raytheon did not respond.

The State Department ultimately signed off on the sale.

Mariam Elba contributed research.

Continue Reading

Thai Airways aims for stock market return by next year

Thai Airways International ( THAI ) expects to exit rehabilitation and be relisted on the Stock Exchange of Thailand ( SET ) by the second quarter of next year, according to Piyasvasti Amranand, chairman of the airline’s debt rehabilitation administrator.

The growth follows the firm’s record-high gains of 28.1 billion ringgit last year and a steady increase in profits in the first quarter of this year, which Mr Piyasvasti said was due to a successful three-year treatment.

He claimed that the owners ‘ financial statements showed a purple 40.42 billion baht as of June 30 of this year.

Through a fresh funds reform plan, which is a component of the treatment, the airline intends to write off the remaining debts in the investor financial statement.

He said that the program includes a debt-to-equity transfer programme and rights offerings, or the offering of more shares to existing shareholders, which will make THAI for the precise relisting.

Despite this money reform, the Ministry of Commerce may still retain its main investor position, he said, adding the restructuring is expected to finish this year before the airline’s new board of directors is appointed.

He claimed that the airline would file a complaint with the Central Bankruptcy Court to leave the court-ordered recovery and would be relisted on the SET, perhaps by the second quarter of next year.

Chai Eamsiri, THAI’s CEO, said the airline’s capacity and power have been maximised once again, considering various measures, including available chair miles ( ASK), aircraft usage, and house issue. Request measures customer carrying capability.

Last year, the aircraft served about 13.8 million people, a 9 million increase from the previous month, while its gross income was recorded at 165.49 billion ringgit in 2023, which was 105.21 billion ringgit more than that of 2022, he said.

Following these developments, THAI has developed a new company credo,” Fly for The New Pride”, which signifies the airline’s fresh ambitious goal to do even better while sustaining company growth, he said.

With the aid of professional business reform, Mr. Chai stated,” We are moving forward to sustainable growth.” This will hopefully help to win back the trust of all Thai citizens in their country’s flag carrier once more.

THAI logged 12.63 billion baht or a 15.2 % profit growth in this year’s second quarter.

Continue Reading

IHH Healthcare snaps up Malaysia’s Island Hospital for 6m | FinanceAsia

A consortium led by previate equity player Affinity Equity Partners has sold its 100% stake in Malaysia’s Island Hospital to IHH Healthcare (IHH), a Kuala Lumpur-headquartered international healthcare group.

The 100% sale at a value of RM4.2 billion ($966 million) includes Affinity’s 78% stake, with the remainder of the shares belonging to the founder & CEO, Mark Wee, and senior doctors of the hospital.

Founded in 1996, Island Hospital (pictured) is a leading 600-bed healthcare provider in Penang, Malaysia, with 119 specialists across 40 medical and surgical specialties. Island Hospital attracts around one in three inbound foreign patients to Malaysia, according to a statement from Affinity. Medical tourism is one of the fastest growing parts of the Malaysian private healthcare market.

Under Affinity’s ownership, Island Hospital expanded its original 300-bed facility, through the development of the adjoining Peel Wing during the pandemic. Additional land has been acquired with approvals secured for future development, a media announcement said. 

Since Affinity bought the hospital in 2015 for an undisclosed amount, Island Hospital expanded its medical and surgical offerings through recruitment and investments in medical infrastructure, resulting in a tripling of foreign patient volumes. During this period, profitability more than tripled, driven by mofd complex cases, and higher operating efficiency from the doubling of bed capacity, according to the announcement. 

Island Hospital also invested in its core specialties of orthopaedics, gastroenterology and general surgery, and established new centres of excellence in cardiology and cancer.

Rippledot Capital Advisors acted as the sole financial advisor to the Affinity-led consortium on this transaction.

“Island Hospital’s evolution into a leading healthcare institution that positively impacts the community, stakeholders, and serves as a beacon of medical excellence in Malaysia and beyond . . .  I’m confident that Island Hospital will continue to thrive under the IHH platform,” said Tang Kok Yew, founding chairman and managing partner, Affinity Equity Partners, in a statement.

Affinity Equity Partners is one of the largest independent private equity firms in Asia Pacific (Apac), investing in Asia Private Equity since 1998. Affinity has $14 billion of assets and funds under management, and is currently investing out of Fund V, a $6 billion fund. Affinity’s investment focus includes Korea, Australia, New Zealand, Southeast Asia, and Greater China. 

For more FinanceAsia M&A deals click here


¬ Haymarket Media Limited. All rights reserved.

Continue Reading

Islamic finance players eye Middle East growth | FinanceAsia

The main banks and financing method used by Muslim communities is Islamic finance. The Shariah-compliant section was created in accordance with Islamic law, which forbids specific activities like the collection of interests and investments in dangerous businesses like tobacco and pornography.

Islamic finance accounts for around 3 % of the global financial markets by valued assets, with key activities in Southeast Asian ( SEA ) markets such as Indonesia, Malaysia and Brunei, and the Middle Eastern region. Islamic finance consists of Islamic banking, Sukuk ( fixed income ), Islamic equity funds and Islamic insurance, among other lines of business. &nbsp,

In the Middle East, the Islamic finance market is estimated to be worth$ 2 trillion in 2024 and is expected to reach$ 2.57 trillion by 2029, according to reports. Iran and Saudi Arabia are two of the world’s largest markets by Shariah-compliant assets, with over$ 400 billion in both countries.

According to S&amp, P Global Ratings, the Gulf Cooperation Council ( GCC ) countries had the highest percentage of Islamic banking assets in 2023, making up 70 % of that percentage.

In this part, FinanceAsia spoke to promote players to find out where they see the most options.

Sukuk: an alternative funding cause

Data from S&amp, P Global Ratings suggested that 37 % of the Sukuk securities in 2023 came from manufacturers based in GCC places, revealing a growing Islamic money have from Arab businesses. Saudi Arabia has been the major growth drivers, especially in dollar-denominated Sukuk securities.

Some proceeds from the Sukuk issuances are channelled to activities related to energy transition and sustainability, on top of general business operations, according to Sue Lee, director and Asia Pacific ( Apac ) head of index investment strategy at S&amp, P Dow Jones Indices.

This coincides with a trend across the majority of Arab governments to cut back on oil-related economy. New technologies like natural technology and clean energy are higher on the agenda in the context of the growth travel. For instance, Saudi Arabia wants to use 50 % of alternative energy by 2030 and has a goal of going from zero to zero by 2060.

In order to accomplish these objectives, significant funding is required to support the development of the region’s facilities and engineering, which in turn increased the volume of fixed income bonds issued.

Sukuk, as a Shariah-compliant alternative to conventional ties, provides lenders with a diversified revenue resource by tapping into a unique investment pool, Lee said. For instance, markets in SEA, such as Malaysia, are long-time officials within the Islamic banking area.

In the first quarter of 2024, Sukuk items performed statistically better than its competition on the secondary marketplace.

Lee explained that this is related to a shorter Sukuk lifespan on average, which is typically less than five centuries. Short-term lending has become advantageous for the Muslim fixed income solution in a market with rising interest rates.

However, green Sukuk is growing rapidly from a small foundation, supporting the energy transition of Arab countries.

Equity money: growing buyer demand

Munirah Khairuddin, chief executive officer ( CEO ) Malaysia and managing director, strategic distribution and institutional client relations, Southeast Asia and global Shariah, at Principal Asset Management, said that the teams is seeing growing interest from Middle Eastern investors, especially those based in Saudi.

” As Middle Eastern markets grow and expand, there will be an increased need for Shariah-compliant purchase goods. Traders who are guided by Islamist beliefs will look for opportunities that are in line with their beliefs, she said.

A premium is currently relevant to other asset lessons as well as Shariah-compliant opportunities.

For example, the S&amp, P 500 Shariah, an index which covers all Shariah-compliant constituents of S&amp, P 500, offers a 1-year return at 26.77 %, slightly higher than that of S&amp, P 500 at 26.15 %. Over the past five decades, according to Lieu, Shariah-compliant global capital indices generated on average 2.5 % extra return per year compared to their regular counterparts. &nbsp, &nbsp,

The Shariah-compliant index, filtered with Shariah rules, taking out monetary stocks and high-leveraged sectors such as energy, which in turn leads to an increased conduct of other sectors such as technology stocks. Islamic indices will typically outperform financials in times of outperformance for the information technology ( IT ) sector.

Steven Larson, investment manager, world stocks, at Principal Financial Group, echoed these views, expecting boosting returns generated from IT, logistics, medical and biological sectors.

He claimed that the worldwide Islamic finance sector’s assets are just growing swiftly in a select few key markets.

Larson added:” Additionally, we see an increased appetite for private market materials, however, the market lacks shariah-compliant structures to cater to the rising demand. However, we are seeing more efforts from property managers to create more shariah-compliant strategies in real property, private financing and secret equity”.

On top of that,” Shariah rules share a lot of commonalities with environmental, social and governance ( ESG) principles. And as more buyers look to these rules while investing, results of ESG or Shariah-compliant firms may get affected”, Lee pointed out.

She said that a rise in silent property should be a potential prospect because Islamic cash ‘ percentage of quiet assets under control is much lower than that of regular ones.

Meanwhile, Kuala Lumpur-based Khairuddine pointed out how regional initiatives and partnerships can help standardise practices, enhance liquidity and create larger markets. To make Islamic finance more accessible, improvements are also made to trading platforms, settlement systems, and regulatory frameworks.

Digitising Islamic finance

Islamic finance also faces a problem of limited products, as well as investment appetites. Saif Khan, founder of iFintechpro, a fintech player focussing on Islamic finance, said enhances in technology and digitisation would help.

Middle Easterners are increasingly using digital products, with more and more people opting for them. The landscape is shifting towards a digital-first approach”, he told FA.

These include digital Islamic banking, digital Sukuk issuances, and tokenisation of real-world assets, on which Khan’s team is working on. He claimed that the blockchain technology would lower thresholds and improve risk profiles of investment projects, thereby making Islamic investment more accessible. For example, assets like buildings, solar farms and agricultural projects can be tokenise, enabling retail investors to invest and benefit.

” Technology can reduce the wealth gap by making high-quality investment products available to everyone”, he said. &nbsp, &nbsp,

Khan claimed that some Middle Eastern markets have already established a welcoming regulatory framework despite the fact that the practice is still in its infancy. The Dubai Financial Services Authority ( DFSA ) introduced its rules over investment tokens in Dubai in 2021 as part of its digital asset regime. Qatar and Saudi Arabia have also put in place the same guidance.

According to Islamic law, tokenization of Waqfs, which refers to endowments of property that are given for religious and charitable purposes, could be a useful application.

” This can lead to tremendous social impact by providing transparency, traceability and greater trust”, he explained. ” With smart contracts on chain, updates could be automated and simplified for stakeholders”.

To press ahead, more communication between regulators and different players is needed, Khan added. For example, legal structuring, investor protection, liquidity and market education are some aspects to carefully consider.

¬ Haymarket Media Limited. All rights reserved.

Continue Reading

GLICs begin targeted capital deployment under MOF’s Gear-uP programme to boost key sectors

  • attempts to use US$ 29.1 billion over the course of five times to stimulate economic growth.
  • Initiative aims to boost M’sian business, increase the rakyat’s quality of life

Panel Session Group Photo at Invest Malaysia 2024 featuring (from left) CEO Bursa Malaysia, Muhamad Umar Swift, CEO Employees Provident Fund (EPF) , Ahmad Zulqamain Onn, managing director Khazanah Nasional, Amirul Feisal Wan Zahir, CEO Kumpulan Wang Persaraan (Diperbadankan) (KWAP), Hajah Nik Amlizan Mohamed and chief executive Lembaga Tabung Angkatan Tentera (LTAT) , Mohammad Ashraf Md, Radzi.

Malaysia’s Government-Linked Investment Companies ( GLICs ) reiterated their joint commitment to supporting the Ekonomi Madani framework through targeted capital deployment in high-growth, high-value sectors at the Invest Malaysia 2024 Conference, themed” Where Policy Meets Progress”, launched recently by Anwar Bin Ibrahim in Johor.

During a panel session, GLIC heads highlighted their focus areas within the Ministry of Finance ( MOF ) -led Gear-uP initiative, which aims to deploy US$ 29.1 billion ( RM120 billion ) over the next five years to drive economic growth. The eyes of KWAP, EPF, Khazanah, and LTAT discussed areas for targeted investment, including agriculture, the semiconductor business, the venture capital habitat, system, clean energy, data centres, care, and biopharmaceuticals.

The Malaysian economy has shown significant growth in the first half of 2024, expanding by 5.1 % year-to-date (YTD ). The Ringgit’s 5.1 % increase against the USD YTD reflects this good trend. Also, the Malay equity market has outperformed the place, with the KLCI rising 13.5 % YTD and reaching a multi-year substantial of 1, 678.8 in August. The Ekonomi Madani Framework’s success, particularly in terms of financial reform and governmental measures, is reflected in this consistent economic efficiency.

Building on this success, the Gear-uP initiative seeks to further strengthen Malaysia’s economic foundations, with GLICs leading efforts to” Raise the Ceiling” of Malaysia’s economic stature and” Raise the Floor” of the rakyat’s quality of life. By concentrating on domestic investments, the initiative aims to bring about new financial ecosystems and gain Malaysians equally.

Hajah Nik Amlizan Mohamed, CEO of KWAP, said,” KWAP is implementing a new Strategic Asset Allocation ( SAA ) to optimise our portfolio’s risk-return profile, aiming to diversify further with private market investments. This is in line with our goal, which is to maximize returns while also advancing the national agenda of creating a vibrant local personal market in accordance with the framework of the Madani Economy.

She added,” We have identified three key strategic focus areas: agriculture and food security, the semiconductor industry, and the venture capital ecosystem. Our crops goal is to promote nationwide food security by supporting novel agribusinesses. We want to advance Malaysia’s reputation internationally by moving away from simple production to more sophisticated production processes like chip design and difficult presentation. Through our walk money efforts, we are cultivating an ecology that encourages innovation, creativity, and risk-taking”.

” These proper investments aim to gain significant long-term worth while contributing to Malaysia’s economic growth. By focusing on these businesses, KWAP is positioned to drive technology, create high-skilled career, and help sustainable economic growth, benefiting our partners and reinforcing KWAP’s function as a vital institutional investor in Malaysia’s financial landscape”, she concluded.

As part of the Gear-uP initiative led by the Ministry of Finance, KWAP has committed to allocating US$ 9.7 billion ( RM40 billion ) to Malaysia’s private sector, contributing to the collective US$ 29.1 billion ( RM120 billion ) pledged by six major GLICs.

Employees Provident Fund ( EPF ) CEO Ahmad Zulqarnain Onn stated that the company’s reallocation into domestic direct investments supports our national strategy for sustainable growth while remaining compliant with the broader national agenda for sustainable growth. A significant portion may be directed towards infrastructure projects, including clean energy, data centres, and critical transportation centers like airports and burden roads —sectors necessary to Malaysia’s long-term growth. As we anticipate the growing demands of an aging population, our health is also at the forefront of our strategy to ensure our investments deliver long-term value while ensuring our mission is to provide a secure and dignified retirement for Malaysians.

Khazanah Nasional’s managing director, Amirul Feisal Wan Zahir, stated that the company will continue to leverage its strategic position to deploy capital across the continuum of capital, starting with the National Fund-of-Funds initiative and pursuing initiatives for Mid-Tier Companies and efforts in the semiconductor sector. Khazanah’s ‘ A Nation that Creates ‘ framework will focus on boosting national productivity through investments in productivity, innovation, and business transformation. We will prioritise connectivity, energy transition, and digitalisation to raise the ceiling for all Malaysians”.

He continued,” To raise the floor, we will concentrate on sustainable economic development with an emphasis on capacity building through talent upskilling and reskilling to align with global megatrends.”

Lembaga Tabung Angkatan Tentera ( LTAT ), the company’s CEO Ashraf Radzi, emphasized LTAT’s commitment to strengthening Malaysia’s pharmaceutical value chain by promoting local biopharmaceutical production through its investee company, Pharmaniaga Berhad.

” This strategic focus aims to lower import dependence and ensure the supply of crucial pharmaceutical products, while enhancing public access to essential healthcare. He continued,” Investing in the domestic pharmaceutical sector contributes to the creation of a self-sustaining healthcare supply chain that benefits Malaysians and adds value to the national economy.”

Click here for more information on the MOF-led Gear-uP programme.

Continue Reading

Cause to buy, cause to sell China’s new bull market – Asia Times

As Beijing’s signal campaign sends China stocks skyrocketing, matter analyst Stephen Jen&nbsp, among the bull who think China’s biggest protest since 2008 is just getting started.

” Foreign equities&nbsp, are really devalued”, says Jen, the chief executive officer of Eurizon SLJ. Because “investors are so thin everything Taiwanese”, he notes,” a severe rally is entirely feasible”.

Chinese shares rose for a ninth straight day on Monday ( September 30 ) thanks to China’s bold moves last week to slash interest rates, lower mortgage rates, relax regulations for homebuyers in major cities, reduce the amount of cash banks must keep in reserve, and telegraphed moves of stimulus to come.

Today’s wave by as much as 9.1 % in the standard CSI 300 Catalog is the biggest since 2015, a month drenched in relevance for President Xi Jinping’s state. In July and August 2015, Shanghai shares plunged to a third of their worth in just three months.

Fast-forward to the present, the People’s Bank of China’s ( PBOC ) actions, coupled with the US Federal Reserve’s big easing and falling global oil prices, mean China’s risk assets “ought to do very well”, Jen says. ” After the US vote, I expect world stocks to march profoundly into year-end”, he adds.

No so fast, warns Stephen Roach, past Asia-region chair for Morgan Stanley. Is China’s long-term financial problem over now that the Politburo has issued a message of further emergency meetings, asks economist Roach? If it were only that easy”.

Roach remains “increasingly concerned that China was at risk of falling into a&nbsp, Japanese-like quagmire&nbsp, –&nbsp, a&nbsp, balance strip recession&nbsp, characterized by slowdown and depreciation as an extension of the bursting of a big debt-fueled property bubble”.

Matter Roach among the academics wondering what, oh what, the share bulls rushing China’s means are thinking.

In fact, investors are rushing up into everything China without project plans to restore the still troubled real estate market, rebalance growth engines toward services and apart from exports, enhance local governments ‘ struggling balance sheets, and create strong safety nets to encourage China’s families to save less and spend more.

President Xi’s staff should be focused on the gap between those reversing China little posts, which Bank of America Corp discovered was one of the most crowded industry in the world, and the unrelenting China bears if it wants to keep the bulls work going.

That means entering the march with bold plans to carry out the liberalizing measures his Communist Party has promised to do since 2013 but has failed to deliver.

For today, China’s rapid return to economic stimulus setting has the nation’s attention. However, Zhiwei Zhang, an economist at Pinpoint Asset Management, is right to say that” the key policy to address the macro challenge remains to be fiscal.

In order to help China meet its 5 % economic growth target, local media are buzzing about an additional 2 trillion yuan ( US$ 285 ) worth of bond sales. Much more may be needed, nevertheless, to improve poor household demand and offset headwinds from overseas.

Japan’s increase in interest rates to their highest level since 2008 poses a risk to other countries. Another shows signs of strain in the US economy as a contentious election draws near, with both Democrats and Republicans threatening new tariffs on everything made in China.

Last week, PBOC Governor&nbsp, Pan Gongsheng&nbsp, unveiled a barrage of support measures, including a reduction in the seven-day reverse repurchase rate to 1.5 % from 1.7 %. Additionally, the PBOC announced the largest-ever rate reduction for its one-year policy loans, cutting loan prime rates and deposit rates.

The Politburo, Beijing’s top decision-making body, called for a “forceful” implementation of these and other measures supposedly to come. Additionally, it highlighted a new need to” stop declining” the real estate market.

These efforts might include removing some of the restrictions on home purchases that are still in place. Top cities could impose restrictions on visitors who are not from their own neighborhoods. In other words, liberalizing China’s “hukou” residence permit system.

Beijing has n’t yet provided a detailed timeline or procedure for getting bad assets off the balance sheets of large property developers to lessen their default risks. Or to encourage local governments to purchase unfinished real estate projects without further deteriorating their already fragile fiscal standing.

Premier Xi Qiang’s team has also made significant efforts to make more market space available for small and medium-sized private companies by reducing the dominance of state-owned enterprises. And global investors still are n’t clear on the state of Xi’s crackdown on China’s biggest tech companies.

Roach is one of the people who is concerned that last week’s Politburo statement only “paid lip service to fiscal stimulus imperatives,” even on fiscal issues. These actions were more likely to be viewed as broad promises than as a comprehensive list of planned actions.

Roach points out that while the Politburo vowed to stop the housing market’s decline, policy choices were made in support of this goal, primarily through lower mortgage rates, downpayment requirements for second homes, and lower interest rates on so-called social housing.

Roach remarks that the long-awaited fiscal program, which would absorb the surplus of unsold homes and turn it into low-income public housing, had a notable lack of detail.

China continues to be wary of implementing the kind of fiscal bazooka that was so successful in sparkeding its recovery in 2009-10, like Japan, where fiscal actions in the 1990s were repeatedly strained by rising public sector indebtedness. And perhaps that’s with good reason”, he says.

Roach points out that the Chinese government’s debt-to-gross domestic product ratio was 85 % in early 2024, nearly three times what it was in 2009. Following Lehman Brothers ‘ demise in the US, Beijing finally started using the stimulus apparatus.

It’s imperative, though, that Team Xi do more to deal with investors ‘ underlying concerns about China’s financial system than just throw money at the problem, economists say.

Last week, the PBOC cheered stock punters by unveiling a new 500 billion yuan ($ 71 billion ) swap facility that funds, securities firms and insurance companies can tap to buy equities. The facility could be increased to 1.5 trillion yuan ($ 214 billion ).

Beijing is also introducing a lending facility for publicly traded companies to buy back shares and increase holdings. It will start at 300 billion yuan ($ 42 billion ) and possibly grow to 900 billion yuan ($ 128 billion ). Additionally, a type of market stabilization fund might be in the works.

Last week, Wu Qing, the chairman of China Securities Regulatory Commission, said Beijing will roll out moves to encourage mergers and acquisitions.

With all that, there’s little doubt the stimulus floodgates have been opened. We believe that the persistent growth weakness has hit policymakers ‘ pain threshold, and the policy put has been triggered, as Goldman Sachs analysts wrote in a note.

Yet Team Xi needs to combine supply-side actions to further strengthen China’s investment environment for the long run to ensure the bull run continues.

As Roach explains, comparisons with Japan are far from perfect. There are many characteristics of China that are fundamentally different from those that contributed to Japan’s numerous “lost decades,” he claims.

” Other than being a large developing economy with several still untapped sources of future growth– namely, &nbsp, household consumption, urbanization, and&nbsp, insufficient capital endowment&nbsp, of its large workforce – China also benefits from understanding the lessons of Japan”.

For now, Roach admits,” China’s seemingly outsized policy stimulus took most of us by surprise”. He adds that” the financial authorities apparently came to the rescue with their own version of a “big bazooka” just as we had grownaccustomed to Beijing’s grudging response to increasingly serious economic problems. ‘&nbsp, At least that’s the verdict of the Chinese equity market”.

Follow William Pesek on X at @WilliamPesek

Continue Reading

Monetary policy remedies have gone awry – Asia Times

A new group of US millionaires revealed their desire for renting as opposed to owning homes on September 16 in the Wall Street Journal&nbsp title. The idea of the article has the ability to lead to a significant change in government and central bank policies that favor real estate in lending.

Central bankers are able to accomplish two things effectively. One is to maintain the value of a nation’s money. The other is to manage financial establishments. Since the US Federal Reserve was established in 1913, the dollar has lost 99 % of its getting strength in gold, which suggests that it has not performed so well on the primary matter. &nbsp, &nbsp,

The US Savings &amp, Loan problems, the Long Term Capital Management fiasco and the 2008 global financial crisis demonstrate that the Fed did not do well on the second consideration, either. &nbsp,

The mistake common of these three crises was the financial sector’s extension of too much credit to” junk” consumers,” junk” companies and” junk” countries, with two of the crises related directly to misguided real estate policies. &nbsp,

The Federal Reserve Act embraced the so-called” True Payments” theory in 1913. The doctrine stated that there can never be” too much” money if banks gave credit only against short-term commercial bills, backed by “real” transactions. &nbsp,

The Board holds that there is little chance that the funds created and distributed by the Federal Reserve Banks will be in extreme volume if it is only limited to effective uses, according to the Fed’s 10th Annual Report from 1923.

As the earth was then on the silver standard, the report did not mention that for the theory to operate, it needed an “outside” outlet serving as an “alarm signal”. Then, there could&nbsp, be extra liquidity, prices and crises – as however turned out to be the case.

John Law ( 1671-1729 ) came up with this doctrine, though his name is associated now with the” South Sea Bubble” .&nbsp, He sought a solution for the problem of how much currency and credit creation there can be without stoking inflation. &nbsp,

His answer was a “land-collateralized” word concern that drew on three principles: money’s purchasing power should be firm, issuing credit has anticipate&nbsp, “real” trade, and land should be the collateral.

His error was that he overlooked how increasing prices, particularly land prices, are raised, which falsely rationalizes more credit expansion and thus initiates a vicious cycle. &nbsp,

Adam Smith made the mistake and suggested using industrial paper as the collateral rather than subjective land-based collateral. He also recognized the need for specie ( gold ) convertibility under the” Real Bills” doctrine to limit the growth in the amount of money and protect the value of contracts. &nbsp, &nbsp,

With this second condition in place, the price level is already set, and there is no need for complicated and statistical ( mis)calculating of price indices.

Devaluation to silver is not a necessary condition for the” Real Payments” to work: responsibility for the price of silver becoming the “alarm signal” is plenty. The price of gold may indicate errors caused by either excessive or insufficient bank payment and currency. This philosophy was adapted from the Bretton Woods agreement. &nbsp,

It failed, however, because institutions did not enforce two of its crucial phrases: &nbsp, allowing for occasional depreciation and penalizing places accumulating extra reserves. Paul Volcker, a participant in the discussions over reneging on the Bretton Woods agreement, noted that it never went down well. &nbsp, &nbsp,

Here are some sketches of the financial crises in the US and Japan that illustrate how they came about as a result of false real estate assumptions. &nbsp, &nbsp,

The 2008 crisis began with the drastic reduction of real estate’s and bonds ‘ capital gains tax exemptions from 1977. Predictably, investment poured into real estate as it became more of an “asset class” than before, with neither the Fed nor the statistics bureaus noticing the implications. &nbsp,

Subsequently, Congress required banks to give loans to lower-income earners on the idea that home equity would offer them collateral. Subprime loans went from 2 % of total loans in 2002 to 30 % in 2006, accompanied by much fraud and no collateral-creation. &nbsp,

Banks packaged the loans as CDOs that rating agencies rated AAA &nbsp without doing enough due diligence. Investment banks, both in the US and around the world, bought them without doing due diligence either. These notes, which were the US’s largest capital export at the time, entice foreign investment.

Unsurprisingly, the loans started to default, and regulators made mistakes by altering the accounting standards for commercial and investment banks, resulting in significant write-offs. Real estate is solid collateral, but forget that if it is n’t backed by future incomes, it melts into thin air as a result of this series of events. &nbsp,

Japan’s decision to use “real estate” as its main collateral had its origins during the 1930s following the&nbsp, 1920s and 1930s crises both in the US and Europe and a large number of Japanese defaults in 1931. &nbsp, &nbsp,

The government established the Bond Issue Arrangement Committee ( BIAC ) to manage the collateral for both convertible and regular government bonds, which makes it illegal to issue corporate bonds without the support of real estate or specific government bonds. This requirement left the Japanese corporate bond market without a market for them, allowing the banks to take over the majority of corporate finance. &nbsp,

Only in 1979 was the rule relaxed, with Sears Roebuck Tokyo issuing the first uncollateralized bond since the 1930s. However, the rules continued to exclude financing to small and medium-sized companies that most needed to raise funds by issuing convertibles and warrants, thus limiting investment opportunities. &nbsp,

At the same time, well-established firms issued convertibles, turning them from net borrowers to net suppliers of funds to the banking system. Flush with funds, the banks lent against land – as it continued to be the approved collateral. &nbsp,

Thus, Japan entered the John Law mess. Land prices increased and, as large companies held more and more land as collateral, their stock prices rose. The Bank of Japan fueled the inflation by lowering interest rates from 5 % in 1985 to 2.5 % in 1987. &nbsp, &nbsp,

By the end of the boom, &nbsp, 10 % of corporations owned over 80 % of company-owned land in Tokyo. While loans to the real-property industry by banks made up 11.5 % of all their loans, the non-bank lending sector’s exposure to real estate was 36 % of its total loan portfolio. &nbsp, &nbsp,

The most notable example of this is the Rockefeller Center acquisition, which Japan also completed in foreign real estate. ( Mitsubishi lost$ 1.4 billion on the deal once the credit creation–land–stock spiral deflated. ) Japan did not heed Adam Smith’s lessons.

Additionally, it made mistakes worse by correcting what were monetary errors through a number of fiscal errors. Those errors included the imposing a 20 % withholding tax on savings, a capital-gains tax on equity sales, a security transfer tax, a 3 % consumption tax, a 6 % tax on new cars, &nbsp, and a 2.5 % surtax on corporate profits among others. &nbsp,

At the end of 1989, it introduced the Basic Land Law, which focused on suppressing land” speculation” – drastically raising capital gains taxes. The changes were complex, but they actually caused 20 % to 50 % of real estate capital gains taxes if individuals or businesses sold land before the ten-year holding period. The crash of 1991 in land and stock prices was thus hardly “irrational”.

In total, both crashes and crises were caused by labeling land as being “real” despite the fact that it frequently melted into thin air. A more stable financial future may require a more accurate understanding of the qualities of talent and capital, all being held accountable for performance, as opposed to policies encouraging people to hold onto immobile parcels of land. &nbsp,

The article draws on Brenner’s Force of Finance,” How the Financial Crisis Did Not Change the World”, and” Toward a New Bretton Woods Agreement”.

Continue Reading