Zubin Rada Krishnan succeeds Salim Dhanani as acting group CEO
BigPay currently has 1.3mil users representing nearly 50% growth YoY
BigPay, a Capital A venture company and fintech in Southeast Asia has announced the appointment of Zubin Rada Krishnan (pic) as acting Group CEO.
Zubin was the Malaysia country head for BigPay the past year and…Continue Reading
Turkish Aerospace (TA) and Turkish Defense Industry Agency have unveiled the T929 ATAK 2 heavy attack helicopter, a heftier and larger version of the T129 that it intends to replace in Turkish service, according to a Jane’s report.
The T929 is envisioned to be operated by the Turkish Armed Forces and export customers and is expected to make its maiden flight in the coming weeks.
The Janes report notes that the T929 follows the typical attack helicopter layout with a stepped tandem cockpit, stub wings and fixed-tailwheel-type landing gear.
Janes says the T929 cockpit is armored against .50 caliber rounds and has a large display area. Its stub wings can carry 1,200 kilograms of ordnance, such as air-to-surface and air-to-air missiles, guided and unguided rockets, and a chin-mounted T-30H 30-millimeter chain gun and Aselsan forward-looking electro-optic/infrared turret.
Janes says that the T929 prototype is powered by two Ukrainian Motor Sich TV3-117VMA-SBM1V Series 1 turboshaft, in contrast to the US-made twin LHTEC T800s on the T129.
The use of LHTEC T800s on the T129 caused delays to Philippine export sales due to US sanctions on Turkey, stemming from Turkey’s purchase of Russian S-400E air defense systems in 2019. The Janes report notes that production models will have twin TS1400 turboshafts from domestic manufacturer TUSAS Industries.
The T129 is smaller than its US and Russian counterparts, which may present some design limitations such as smaller fuel and armaments load.
Comparing the T129 to the US AH-64 Apache, SOFREP notes in an August 2022 article that the T129 can outrange the AH-64 by nearly 100 kilometers while the AH-64 is faster by 80 kilometers per hour.
In addition, SOFREP says that the T129 and AH-64 can carry roughly the same amount of ordnance, with the T129 capable of carrying eight UMTAS 160-millimeter long-range anti-tank missiles, 76 unguided 70-millimeter rockets for close air support, 16 CIRIT 70-millimeter missiles, or eight Stinger air-to-air missiles.
The report mentions that the AH-64 can carry equivalent weapons, such as the Stinger, AIM-9 Sidewinder, Sidearm, and guided and unguided 70-millimeter rockets. It also says that the T129 has a 20-millimeter cannon with 500 rounds, while the AH-64 has a single-barrel 30-millimeter gun that has a 1,200-round-per-minute rate of fire.
SOFREP says that the AH-64 has the advantage over the T129 as the former has higher speed, heavier and more varied armaments, state-of-the-art avionics and sensor packages, and better-trained crews.
The T929 is just one of the several high-end products that Turkey’s defense industry has lately started to produce.
Significantly, Turkey may already be poised to join the elite club of countries capable of making fighter jets. Last December, Asia Times reported on Turkey’s progress on its TF-X fighter, photos of which show the type in the early stages of construction with a complete fuselage and wings while its engines, avionics, and control fins remain out of view. It is designed for air-to-air operations with a secondary emphasis on air-to-ground attacks.
This January, The Warzone reported that the TF-X is in an advanced stage of production, with a complete nose section with faceted enclosures for what seems to be a dedicated infrared search and track sensor system (IRST) in front of the cockpit and a multi-purpose electro-optical targeting system (EOTS) under the forward fuselage.
The source notes that no other fighter in production has the same configuration.
Turkey has also developed a stealth drone following a trend of smaller powers building affordable robotized air forces. Last November, Asia Times reported on Turkey’s Kizilelma stealth drone, which is envisioned to perform air-to-ground and air-to-air missions in heavily-defended airspace. A naval variant is planned to operate from the TCG Anadolu light carrier.
The TCG Anadolu was envisioned to operate the F-35B short take-off and vertical-landing (STOVL) fighter. Still, due to Turkey’s removal from America’s F-35 program in 2019, the ship was converted into a drone carrier, proving some aircraft carrier capabilities such as power projection for a fraction of the cost.
Turkey has also developed a mini-submarine which it hopes will be a hit in the global market and a potential game-changer for naval warfare.
Asia Times reported on Turkey’s ST-500 mini-submarine, which may be effective in littoral operations due to its small magnetic and acoustic signature which is further obscured by blending into background noise such as shipping traffic.
The ST-500 mini-submarine can also be an option for countries seeking to build undersea warfare capabilities on a tight budget, such as the Philippines and Ukraine.
Airforce Technology notes multiple reasons Turkey seeks to build its domestic defense industry. Airforce Technology notes that the Ukraine war has opened a massive rift between Russia and NATO, creating a potentially huge market for Turkey.
Airforce Technology notes that as Russia may be unable to fulfill international arms orders due to sanctions on its defense industry and the need to replace battle losses, countries that have placed orders for Russian weapons may look to Turkey for replacements.
It also mentions that Turkey’s struggling economy makes it imperative for the country to look for other sources of revenue, with its burgeoning defense industry capable of making significant profits.
These ambitious defense projects tie into the grander aspirations of Turkey’s foreign policy. In an article last month for the peer-reviewed Journal of the Human and Social Sciences Researches, Serdar Yilmaz and Murat Yorulmaz argue that Turkey’s ramped-up defense industry is indicative of an active and assertive foreign policy.
Yilmaz and Yorulmaz mention that Turkey’s defense industry investments aim to reduce reliance on external powers, enable a more flexible and transactional approach in foreign affairs, open new opportunities for international collaboration and serve as a muscular bargaining tool for Turkey’s economic and security interests.
With more than half of Turkey’s eligible voters made up of millennials and those from the younger Generation Z, the opposition may think they have a chance finally to unseat President Recep Tayyip Erdogan after 20 years in power.
But while 51% of the 64 million voters are young – 20 million voters were born after 1981, including 13 million Gen Zers and 6 million who are eligible to vote for the first time – they are far from a certainty at the presidential and parliamentary polls on May 14.
Meet Turkey’s Gezi Park generation, an apolitical and politically apathetic group who have grown weary of politics and have little to no belief they live in a functioning democracy.
In such a crucial election, young people appear to lack a voice or be included in any candidate’s political platform, including that of Erdogan, 69, or his main challenger Kemal Kilicdaroglu, 74.
It would seem Kilicdaroglu could benefit from the generational angst. Eight out of 10 Gen Zers believe it is harder to be a young person in Turkey than in any country in the European Union.
A report by Turkish researcher KONDA in October revealed that four in five Turks between ages 18 and 30 said they were not affiliated with any political party. Furthermore, 90% rated the functionality of Turkey’s democracy 5 on a scale of 10, and 62% said the country is poorly managed.
These young Turks have never really experienced a time when the ruling Justice and Development Party (AKP) and its leader, Erdogan, were not in power.
These weren’t exactly the salad days of their young lives. Fifty-four percent of those between 17 and 30 said in a recent survey that they are in need of psychological help. Meanwhile, 71% said they are unable to imagine a different future.
Under the two-decade reign of the AKP, young people’s lives have become worse. Although Turkey’s older population argues otherwise, labeling younger generations as ungrateful, the numbers speak a different truth.
Opportunities are scarce for young people amid Turkey’s deteriorating economy. Research shows 69% of Turks between the ages of 18 and 29 are financially dependent on their families.
Meanwhile, the unemployment rate is 21% among people between 15 to 24, while other estimates put the figure as high as 33%. If included with European countries, Turkey has the fifth-highest youth unemployment rate in the region.
The low employment rates do not stem from a lack of higher education. Turkish Statistical Institute (TUIK) data from 2019 show the number of unemployed university graduates in Turkey has increased tenfold in the past 15 years. One out of four unemployed people is a university graduate.
This has all led to a massive brain drain under the AKP’s watch. According to TUIK, between 2019 and 2021, more than 250,000 citizens aged between 20 and 29 left the country. And those who have stayed want to leave – and in big numbers.
Research by Kondrad-Adenuer-Stifftung in 2021 found that 72% of those between 18 to 25 would live in another country if given the chance. And who can blame them? In the past two years, the annual inflation rate has risen more than 100%, the Turkish currency has been mired at record lows, and a devastating earthquake has claimed the lives of thousands.
All these factors have immensely lowered the living standards of young people in Turkey. No wonder 82% believe they are worse off than in 2021.
The fact the opposition has done so little to woo young voters amid this turmoil is mind-boggling. More than 80% of young people between 18 and 35 said they do not believe any party can solve their problems, according to an October report by the nongovernmental organization SOMDER.
The campaign of Kilicdaroglu’s Republican People’s Party has made some gestures including a pledge to not tax purchases of mobile phones, vehicles and video-game consoles. But this does not appear to be enough to support its promise of a better future for the younger generation.
Kilicdaroglu will, however, be buoyed by the response to a video message to young people in which he discussed his Alevi identity. The tweet itself received more than 110 million views.
But the overall tone-deaf approach to young voters highlights an unspoken problem within Turkey: the exclusion of the young from the conversation about the country’s present and future.
The age distribution of the current parliament is reflective of the ageism tilted in favor of the older generations. Out of 600 members of parliament, 319 are aged 40 and above while only eight are below 30.
Turkey, with a median age of 31, is considered a relatively young country, but like most countries it is run by people decades older. The upcoming election should represent a generational clash, however neither side is fighting for the rights of the youth. That is why it is safe to call millennials and Gen Zers Turkey’s betrayed generation.
Not only have these young people lost all hope for the future, they live with the constant notion that their future has been stolen. Although youth have the power to sway elections, they have been bullied into silence and robbed of a will to take part in their own destinies.
This article was provided by Syndication Bureau, which holds copyright. Follow Alexandra de Cramer on Twitter @aedecramer.
It was the ultimate chip war that never was: German officials denied that Berlin planned to stop exporting specialty chemicals for chip fabrication, Reuters reported on April 27 – a day after Bloomberg News claimed that the government of Olaf Scholz “was in talks” on the subject, presumably under prodding from Washington.
The stock prices of BASF and Solvay, the largest makers of the specialty products, plunged on Thursday after the Bloomberg report appeared but recovered sharply on Friday after the government’s denial.
More than a dozen chemicals including acids, bases and solvents are indispensable to etching microcircuits onto silicon wafers, and an interruption of supplies would cripple China’s fabrication capacity. Restricting these chemicals would escalate the chip war far beyond the scope of the Biden Administration’s October 7 controls on semiconductor equipment and design software for the most advanced chips, used in high-end smartphones, servers and artificial intelligence applications. The target would include all chips including so-called mature processes.
In related news, US Commerce Secretary Gina Raimondo announced on April 26 that the US will consider banning exports to Chinese cloud-computing companies, including Alibaba as well as Huawei. Raimondo responded to a letter from a group of Senators led by Bill Hagerty (R-TN) warning that Chinese cloud computing threatens US “national security and economic security.”
The Biden Administration is also expected to ban US investments in yet-to-be-announced high-tech industries in China.
Republicans on the House Foreign Affairs Committee meanwhile are wrapping up a three-month investigation of the Commerce Department’s enforcement of chip controls and have offered legislation that would give the Defense Department responsibility for enforcing the ban. Gregory Allen of the Center for Strategic and International Studies argued in congressional testimony April 13 that “China’s export control evasion activities are significant and growing. My primary recommendation is that Congress focus on concrete strategies to tighten this enforcement and shore up remaining gaps that risk allowing China to close the AI gap.”
Washington is scrambling to restore credibility to its effort to contain China after a streak of Chinese diplomatic victories, including the Beijing-mediated restoration of diplomatic relations between Iran and Saudi Arabia, French President Emmanuel Macron’s visit to Beijing in a show of independence from Washington and the visits of Brazilian President Lula and Malaysian President Anwar Ibrahim.
Ukraine President Zelensky’s telephone call with Xi Jinping and the dispatch of a special Chinese envoy to Ukraine, moreover, raise the prospect that China will pick up the pieces in Ukraine, after a drumbeat of damaging Pentagon leaks revealed how badly America stumbled.
In the advent of the 2024 presidential election, the Democratic administration is sensitive to Republican claims that it is too easygoing towards China.
China’s economic success in the Global South threatens to lure key countries out of the American orbit. As of March, China’s exports to ASEAN countries rose 35% year-on-year and exports to Central Asia (including Turkey and Iran) rose 55%, Asia Times reported April 25. China now exports more to the Global South than it does to developed markets.
Washington’s controls on the export of high-end chips and chip-making technology to China, announced October 7, 2022, were intended to deny China access to cutting-edge hardware that supported the most advanced AI applications. By contrast, the Commerce Department has shown flexibility in allowing semiconductor equipment manufacturers to ship machines that produce mature chips.
The Biden Administration adapted its strategy from a September 2022 report by the Special Competitive Studies Project, chaired by former Google CEO Eric Schmidt. This offered a response to China’s growing military power as imagined by Silicon Valley software venture capitalists: An “Offset-X strategy” including “distributed and networked operations, human-machine collaboration, human-machine teaming, primacy in software-centric warfare, resilience and greater technological interoperability and interchangeability and partners.”
That was a Silicon Valley futurist’s view of warfare, unrelated to military technology that will prevail for the foreseeable future. Both the US and Chinese military use older-generation chips for sensing, targeting and processing information. The older chips are more robust and easier to harden, as a February 2022 Rand Corporation study explained.
The Biden Administration gravely underestimated the power and importance of mature chip technologies (14 nanometers and higher), which comprise 95% of the global chips market and power 5G infrastructure, industrial productivity applications, and other so-called Fourth Industrial Revolution technologies. Semiconductor fabricators depend on mature chips for most of their revenues, and China’s massive investment in a domestic supply chain threatens to erode the financial base of the whole Western chip industry, as Dimitri Alperovitch of Silverado Incubator has observed.
One problem is that cutting off the Chinese market may have devastating consequences for the revenues of Western high-tech companies. The Atlantic Council warned in a March 2023 report, “While the steps taken by the Biden administration to constrain China’s progress in producing cutting-edge semiconductors appear calibrated to avoid widespread industry disruption, the policy has painful consequences that cannot be downplayed….the bottom-line impact may be felt in terms of what the industry terms a ‘significant loss of scale’ that could yield fewer resources for R&D and new investments…. It is essential that the semiconductor industry – and US allies, as discussed below – have a voice in assessing the potential impact of additional proposed constraints. Communication is essential to avoid unintended consequences.”
To make matters worse, American sanctions on the sale of high-end chips to China are extremely difficult to enforce. To comply with sanctions Nvidia reduced the clock speed on a variant of its GPUs, the standard for high-end servers, while selling substantially the same product to China.
In addition, the global market in chips is so complex and opaque that Chinese companies can buy whatever they want on the gray market, and the enforcement capacity of the Commerce Department is woefully inadequate to prevent this, Allen stated. Chinese sources say that high-end GPUs are freely available at a 10% premium to the going price.
Chinese commentators compare the chip war to China’s civil war. By concentrating on low-end chips, and undercutting the prices of Western manufacturers, “Observer” columnist Chen Feng says, China will “encircle the cities from the countryside,” a reference to Mao’s successful military strategy during the Civil War of the 1940s. The United States “can only go to Menglainggu [the site of a decisive 1947 Communist victory) by relying on high-end chips.” As noted, analysts like Alperovitch have already flagged the danger.
On March 27, Huawei announced that it had developed its own chip design software for 14 nanometer and wider mature nodes; if true, that would represent a major step towards Chinese independence from US design firms Cadence and Synopsis, which have had a near monopoly on the technology.
As the Atlantic Council suggested, the Biden Administration appears to have given US firms considerable leeway in exports to China. LAM Research, a leading US manufacturer of semiconductor equipment, predicted an increase in sales to China during the remainder of 2023, after receiving “clarification” of export rules from the Biden Administration. The Dutch chip lithography giant ASML also projected an increase in Chinese sales this year, and its CEO Peter Wennink stated that “the mature semiconductor space is very important and needs to grow. And this is where China is very strong.”
The reported Berlin ban on semiconductor chemicals might have misfired, but it was the first salvo of what will be a long tech war of attrition.
The US debt ceiling will be increased by$ 1.5 trillion, according to a deal between Democrats and Republicans. Markets do not, however, expand quickly, and the price of default insurance ( CDS ) on US government bonds is still skyrocketing.
Why don’t people support the bill put forth by House Speaker Kevin McCarthy? It all revolves around President Joe Biden’s reluctance to give in or, more accurately, reduce public investing. In the end, the leader will reject it even if both houses of Congress vote” Yes.”
Treasury securities are dissipating in the interim, and the offer on a 13-week Treasury bill is approaching 5 %. At this rate, Elon Musk’s anticipation that the nation will mistake will be realized sooner rather than later. The challenge of the US default, on the other hand, is by no means different.
Researchers at Fitch Ratings predict that the US institutional leveraged loan default price will end in 2023 at 2 to 3 % despite the CDS spike, escalating economic headwinds, and recessionary danger. Therefore, never actually 50 %, so there is still nothing to worry about.
What happens if the veil comes down?
Even if the nation doesn’t repay its loans on time, it will still be considered a professional default, in which case the debts, including the interest, may be settled. The primary remaining query is when. In the worst-case approach, the nation’s credit rating might be lowered, which might raise the price of loans.
Speaking of the repercussions for the US market, prices could drop on the one hand, and the challenge of a recession would be even more clear in light of declining borrowing and spending. Everyday Americans’ retirement addresses would also be impacted.
According to Moody’s Analytics, real GDP could fall by more than 4 %, resulting in a reduction in the number of jobs lost and the potential for an employment rate of over 8 %. Additionally, at the worst of the downturn, stock prices could drop by nearly a fifth, wiping out$ 10 trillion in home income.
The S & amp, P 500, fell 17 % in 2011 as a result of the political unrest in Washington over the country’s debt limit. The recovery of past worth took about seven weeks. The results may be even worse if things do not go as planned this day.
Is there a place to hide then?
There are devices like the ProShares Trust Ultrashort 20 Year Treasury ETF, the Rydex Inverse Government Long Bond Fund, and the Powershares DB US Dollar Bearish Fund for those who think a proxy is inevitable. Finally, but most importantly, gold( XAUUSD ) might increase.
EPAThe size of Sri Lanka’s worst economic crises in more than 70 years has been determined by the country ‘ central banks.
The bank explained in its yearly report how wages fell short of the skyrocketing cost of everything from bread to fuel last year.
According to the bank,” a number of natural flaws” and” policy mistakes” contributed to causing the South Asian country to experience severe financial problems.
The lender next anticipates a resurgence of economic growth in the coming year.
The Central Bank of Sri Lanka forecast the economy will shrink by 2% this year, but expand by 3.3% in 2024.
Compared to the International Monetary Fund ( IMF ), which predicted a 3.5 % contraction in 2023 and 1.5 % growth the following year, the prediction is more upbeat.
The report from the central bank also described how prices of fresh fruit, wheat, and eggs more than doubled in September, causing headline inflation to reach almost 70 %.
The cost of travelling and basic services like electricity and water increased even more quickly at the same time.
The nation’s economy contracted by 7.8 % last year, and it made its first foreign debt default since gaining its independence from the UK in 1948.
Failures occur when governments are unable to fulfill all or some of their debt obligations to debts.
Its history with creditors was damaged as a result, making it more difficult to take out loans on foreign markets.
According to the state,” the Sri Lankan business experienced its most difficult year in its post-independence history.”
It continued,” An” unsustainable” financial style” steered the country towards a varied catastrophe.”
Sri Lanka owes China and India approximately$ 7 billion(£ 5.7 billion ). Both nations decided to rebuild their payments in February, giving Sri Lanka more time to pay them back.
The IMF agreed to lend Sri Lanka$ 3 billion last month. That was on top of the World Bank’s$ 600 million payment from the previous year.
Before the IMF evaluates the environment in September, Sri Lanka’s authorities is presently negotiating its mortgage payment with borrowers and creditors.
BJT eyes kitchen hub goal, NPL vows jobs
The Pheu Thai Party has reaffirmed its plan to shore up rubber prices as it met farmers in Thung Song district of Nakhon Si Thammarat on Thursday.
The party’s leading figures took their campaign to the district, a key logistical centre located between the Andaman and the Gulf of Thailand.
The party says it is tailoring its campaign policies to southern voters based on input from labour groups there.
On Thursday, labour groups told the party tapping and selling rubber was the only source of income for most families in the district. The low rubber prices have kept them from making ends meet.
Despite a sufficient supply of rubber, road connectivity and more warehouses were needed for the effective distribution of the commodity. The groups also asked Pheu Thai to upgrade Thung Song to a province if the party forms the next government.
Srettha Thavisin, a Pheu Thai prime ministerial candidate, said when the party was in power, it tried to negotiate with the world’s major rubber producers to maintain high rubber prices.
The party also supports technological innovations that increase latex yields, he said.
He said the country’s exports must be promoted overseas to help open up new markets such as the Middle East and Africa.
Mr Srettha said even though the party never won a seat in the South while it was in power, the Pheu Thai-led administration was committed to working for the benefit of the region and its residents.
Kitchen allure
The Bhumjaithai Party is confident of securing a clean sweep in Mae Hong Son by offering to turn the upper northern province into the main supplier of farm produce for the “Thai Global Kitchen” project, it said.
At a campaign stop in the province’s central stadium on Thursday, party leader Anutin Charnvirakul said the party had designed an election policy specifically for the province.
Nanthiya Wongwanich, Bhumjaithai’s candidate in Constituency 1, told the crowd of supporters the party would boost employment and income while also widening people’s access to public health facilities. The mountainous province is hard to reach in many places.
She added the transport network, telecommunications, and farming sector would all be upgraded. At the same time, fine dust pollution in the region would be reduced, she noted.
Bhumjaithai supervises the public health and transport ministries.
The candidate said the party has figured out ways to designate land in the province for growing organic fruit and vegetables to be supplied as fresh ingredients for cooking Thai food overseas under the “Thai Global Kitchen” project.
The province will also be marketed as a cultural tourism destination with abundant natural landscapes, she said.
Workers upgrade
The Nation Building Labour Party (NLP) has vowed to provide permanent jobs to temporary employees in the state sector if it is able to form the next government.
NLP leader Manas Kosol said the party has been compiling input from workers nationwide, who are its main target in terms of voters, and using this to formulate its policies.
He and other party executives were touring the Soi Thep Prathanporn community while on the campaign trail in Khlong Luang district of Pathum Thani yesterday.
Mr Manas said the party’s goal was to lift the standard of living for workers.
He said the NLP’s policies were centred on tackling bread-and-butter issues through practical policies designed by a working group comprising labour and legal experts as well as owners of small and medium-sized enterprises.
NLP spokesman Sornsart Namuang said if the party was part of the next government, it would push to have temporary-contract workers in state agencies elevated to the status of civil servants.
The temporary contracts have taken away workers’ career advancement and made them insecure about their job prospects, he said.
Chinese industrial firms made lower profits in the first quarter than a year ago as the United States’ “near-shoring” and “friend-shoring” strategy has started showing a negative impact on the Chinese manufacturing sector.
China’s industrial firms’ profits fell 21.4% year-on-year to 1.52 trillion yuan ($220 billion) in the first three months from 1.93 trillion yuan a year ago, the National Bureau of Statistics said Thursday. The year-on-year decline was 22.9% in the first two months of this year.
Of the 413 billion yuan drop in industrial profits in the first quarter, the computers, telecommunication and other electronic equipment sector contributed 20%. The rest was attributable to the chemical, metal and oil refinery industries, which are more sensitive to changes in commodity prices.
Manufacturers of computers, telecommunication and other electronic equipment saw their revenue down 6.4% to 3.24 trillion yuan in the first quarter from a year earlier while their profits contracted 57.5% to 60.73 billion yuan.
Chinese officials concluded that the shrinking profits were a result of weak external demand but some analysts suggested that the problem is more of a structural one.
Zhang Zhongjie, an economist at Huajin Securities, writes in a research report that the export of electronic products has regained its growth momentum in the first quarter of 2023 from the fourth quarter of last year after China ended its zero-Covid policy last December. He says, however, the recovery was slowed by the protectionist US policy.
Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, has recently said on two occasions that the decline in China’s industrial profits was caused by not only a slowing external demand but also the restructuring of the US supply chains.
“At present, the biggest challenge for China’s foreign trade is the decoupling of the Sino-US supply chain,” Zhang says. “In 2018, the US used trade disputes to push forward ‘re-shoring’ and ’near-shoring,’ and now it is promoting ‘friend-shoring’ to achieve its decoupling goal.”
He notes that the US has recently forced its companies to reduce their purchases in China while some traditional foreign customers have also encouraged Chinese manufacturers to relocate to some Southeast Asian and South Asian countries.
“Geopolitics can cause huge and far-reaching damage to the stability of the global supply chain, and this will have a major impact on China’s future foreign trade situation,” he says. “China is now selling more and more intermediate products to South and Southeast Asia, Eastern European and Mexico, which will do the processing and assembly and then ship the end products to the US and Europe.”
Zhang says China can boost industrial profits by strengthening its research and development to fight for high-value manufacturing orders, and also partnering with overseas scientists, engineers and entrepreneurs to sell professional services.
Since the Sino-US trade war began in 2018, US officials have pushed forward a “re-shoring” and “near-shoring” strategy, encouraging companies to produce their goods in Mexico and the US.
In June last year, the Biden administration said it would waive tariffs on solar panels imported to the US from Cambodia, Malaysia, Thailand and Vietnam for 24 months. The move provided incentives for Chinese solar panel suppliers to move to these four countries.
Last November, Treasury Secretary Janet Yellen visited India to promote the US “friend-shoring” drive, which will also benefit Vietnam and Indonesia.
Meanwhile, other industries performed differently in terms of their profitability during the first quarter.
Automakers recorded a 1.3% growth in revenue to 2.14 trillion yuan but their profits contracted 24.2% to 81.9 billion yuan due to a price war in the sector. In March, their profits climbed 9.1%, in sharp contrast to a decrease of 41.7% in the January-February period.
Many metal suppliers and oil refiners recorded shrinking profits as the selling prices of their products fell faster than their raw materials. The electricity and thermal supplying sector recorded a 49% growth in profit while the electrical machinery and equipment manufacturing sector saw a 27.1% profit growth.
“Overall, the profit drop of Chinese industrial firms remains significant while the scope of profit losses for some companies is large,” NBS statistician Sun Xiao said in a media briefing on Thursday. “Hopefully, the easing of raw material prices will help improve the profitability of Chinese firms.”
Sun added that China has seen some signs of recovery in March when industrial profits dropped only 19.2% year-on-year, compared with a slump of 22.9% in the first two months.
To accelerate the recovery of industrial profits, Sun urged efforts to expand market demand, perk up confidence and give enterprises reason to feel positive about the future.
On Wednesday, the General Office of the State Council issued a circular laying out measures to improve the scale and structure of foreign trade to ensure its stable and high-quality growth.
Governments at all levels should promote the full resumption of important domestic offline expos for better supply and purchase matchmaking, and facilitate cross-border business personnel exchanges, according to the circular.
Efforts will be made to enhance market development services to stabilize exports to developed economies and guide enterprises to further develop markets in developing countries, ASEAN and other regional markets.
The circular came after some Chinese manufacturers said they met fewer buyers from Europe and the US at the Canton Fair, the largest trade show in China, which is being held in Guangzhou between April 15 and May 5.
They said they saw more buyers from Latin America, Africa, Southeast Asia and Russia but these customers may provide lower margins.
Read: US sanctions turn away Canton Fair’s Western buyers
Follow Jeff Pao on Twitter at @jeffpao3
TOKYO – Judging by the dearth of volatility in yen trading, investors aren’t expecting fireworks from the Bank of Japan tomorrow (April 28).
Surprises do happen at BOJ headquarters, of course. But this being Kazuo Ueda’s first policy meeting as governor, the odds are low that Tokyo is about to shock global markets with an about-face in its 20-plus-year experiment with quantitative easing.
That would be wise considering the worrisome mix of troubles bubbling up under the surface of the world’s third-biggest economy. Those include worries about a Silicon Valley Bank-like blowup among Japan’s 100-plus regional lenders.
Another: the high likelihood of political blowback in Tokyo if Ueda made radical monetary policy moves right out of the gate.
This latter point is often underappreciated in analyses of the BOJ’s latitude to take risky steps. Though “independent,” the BOJ in reality is on a shorter leash than many observers like to admit. Case in point: Haruhiko Kuroda leaving the BOJ governorship earlier this month with zero effort to wind down QE.
Granted, the BOJ had already been deep in the QE matrix for 13 years by the time Kuroda arrived in 2013. But he turned Japan’s QE era up to 11 and then some. And with limited success, clearly, as wages flatlined amid record corporate profits compliments of a plunging yen.
Still, the big gains in Nikkei stocks and relative macroeconomic stability earned Kuroda considerable political capital at home. Capital he could’ve spent on his way out the door plotting ways to reduce the BOJ’s US$5 trillion balance sheet.
Kuroda didn’t, leaving Ueda with what’s arguably the worst job in global economics. As Ueda presides over his first policy deliberation as governor, memories of December 20, 2022 loom large.
On that day, all hell broke loose in markets after Team Kuroda announced the slightest of tweaks to its “yield curve control” policy. The move to let 10-year bond yields rise as high as 0.5% was meant to limit the gap between US and Japanese interest rates. That, Kuroda figured, would reduce pressure on the BOJ to intervene in markets day after day.
The Kuroda BOJ spent the next two weeks cleaning up the move’s mess by making countless unscheduled asset purchases to reassure global investors that QE is here to stay.
Then came the Silicon Valley Bank crisis in the US. Next, UBS having to save Credit Suisse, which served to spike global paranoia levels to the next level.
Now, comes news this week that San Francisco-based First Republic Bank’s troubles are far from over. And, it follows, concerns about new US bank failures are intensifying by the day.
This is the limited option environment into which Ueda steps. Reports from Bloomberg that US regulators may downgrade First Republic’s prospects are making headlines just as Ueda sits down to mull BOJ policy. It’s worth noting, too, that Japan’s economic performance thus far in 2023 has not been stellar.
“Although the recent decline in government bond yields might seem to open the door for tweaks to yield-curve control, such a step could backfire,” says economist Stefan Angrick at Moody’s Analytics. “Economic data of late haven’t been good. Disappointing GDP growth means the economy is still smaller than before the pandemic. Employment conditions are showing signs of softening, and wage growth is trailing inflation.”
Complicating matters, recent “shunto” wage negotiations yielded the biggest wage gains since 1993 – an average 3.8%. Trouble is, coming amidst the highest inflation in 40 years, the timing of the pay bump could fan overheating risks. Here, China’s rebound adds to the risk of global inflation getting a second wind.
As Angrick notes, “notwithstanding a strong shunto spring wage round, it is unclear that this year’s gains will be repeated next year. Recent financial market disruptions abroad have only added risk. Given the BoJ’s history of premature policy tightening, the bungled yield curve control tweak in December, and the cold water poured on the idea of a change at the first press conference with the BOJ’s new leadership, it is unlikely the BOJ will move soon.”
The reference here to wage uncertainties for next year deepens the plot for Ueda. On the one hand, the new governor doesn’t want to let inflation become even hotter. On the other, Tokyo’s political establishment would pounce if BOJ “tapering” spooked CEOs into closing their wallets anew.
As Naoko Tochibayashi, a World Economic Forum analyst in Tokyo, notes, even now “it remains to be seen if similar wage rises can be seen in small and medium-size enterprises, which make up 70% of employers and are key to Japan’s economic revival.”
This dramatizes the precarious balancing act Ueda faces. So does the fragile state of Japan’s regional bank network. Many of these lenders service rapidly aging communities in already sparsely populated areas of the country. That squeezed profits well before the banking shocks of the last 15 years, including fallout from the 2008 “Lehman shock.”
That episode, graying customer bases and an accelerating exodus of companies to Tokyo had regional banks hoarding government and corporate bonds instead of lending BOJ liquidity. It was a similar practice that blew up SVB and New York-based Signature Bank.
As of the end of December, SMBC Nikko Securities estimated that regional lenders were sitting on about $10.5 billion of unrealized losses on foreign bonds and other securities. Such figures raise a difficult question Ueda now has to answer: how big might losses get on domestic debt if Japanese government bond yields rose above, say, 1% or more?
The good news is that many Japanese banks tend to prioritize bonds that can be sold rather than holding to maturity SVB-style. As such, SMBC Nikko analyst Masahiko Sato reckons the threat to capital ratios, on average, is only about 2%. Therefore, Sato does “not think potential losses are on a scale with systemic implications.”
BOJ tapering or even a rate hike or two could change this calculus, and fast. If regional banks face profit pressures with rates at zero – and the BOJ is still in 24/7 ATM mode – just imagine the valuation losses if Ueda were to hit the monetary brakes.
Yet Ueda’s pedigree suggests he could be more of an out-of-the-box thinker than currency strategists grasp.
During his time as a BOJ board member in 2000, Ueda dissented on a move to end the zero-rate strategy. His background as a Massachusetts Institute of Technology-trained economist, meanwhile, could be its own wildcard.
At MIT, Ueda was a pupil of Stanley Fischer, a former senior official at the Fed, the Bank of Israel and the International Monetary Fund. Fisher also taught former Fed chief Ben Bernanke, former European Central Bank head Mario Draghi and former Treasury Secretary Lawrence Summers.
Other members of the MIT monetary club: Reserve Bank of Australia Governor Philip Lowe and former Bank of England governor Mervyn King.
In February, Summers called Ueda “Japan’s Ben Bernanke.” Ueda and Bernanke, it’s worth noting, made their economic reputations exploring the lessons from the Great Depression, including Japan’s late-1920s to mid-1930s policies.
For Ueda, that entailed a keen focus on the 1930s policies of Korekiyo Takahashi, who’s often called the John Maynard Keynes of Japan.
Takahashi served as finance minister, BOJ governor and even prime minister in the 1920s and 1930s. His super-aggressive monetary easing, fiscal expansion and “debt monetization” efforts were as pioneering as economic policy gets.
There’s also reason to think Ueda could be a rather conventional central banker. He’s said so far, for example, that there’s no urgency to alter the BOJ-government framework that mandates the central bank target 2% inflation.
“If needed, Ueda likely will request the government to revise the joint statement so that the BOJ can respond flexibly, without sticking with the continuation of monetary easing,” says JPMorgan Chase & Co economist Benjamin Shatil. “We continue to see an exit from yield-curve control in coming months.”
Yet odds are decidedly low that Ueda would choose tomorrow (April 27) to toss financial explosives into jittery markets. And that seems wise for now.
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Whether the additional taxes will cool the market is uncertain. Property players have already posted on social media urging investors to quickly purchase residential properties, before ABSD rates are adjusted even higher in future.
It is worth noting that the April cooling measures did not address one major pain point for the residential segment: Persistently high rents, which affect not only people who have called Singapore home for years, but Singaporeans waiting for their new homes to be completed.
The MAS macroeconomic review said home rental pressures may ease in the coming months as a significant supply of new housing units – almost 40,000 – will be completed across public and private housing markets in 2023.
But until high rents are tamed, foreigners and Singaporeans alike will be griping about housing affordability and the lack of options. How the situation will unfold in a fragile economic environment would be interesting to observe.
Ku Swee Yong is a director of real estate consulting firm International Property Advisor Pte Ltd and a researcher with the Singapore University of Social Sciences focused on autonomous vehicles and urban planning.
