Syed Ahmad Fuqaha believes there’s blue in the red ocean, and, in letting startups fail while it’s cheap

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  • 10th month as&nbsp, businessman with Katsana, an business mobility solutions provider
  • Shutting down a significant item taught difficult lessons about adapting to business challenges.

Syed Ahmad Fuqaha, founder/CEO of Katsana, from row, right, with his team.

” To cultivate fresh companies, you have to let them fail. Let them flunk when they are still on the cheap, soars Syed Ahmad Fuqaha, the founder and CEO of Katsana, who founded it in April 2014. Reflecting on a decade of entrepreneurship, he does n’t mince words about the company ecology:” Currently, there’s almost no street to fail. It’s the epitome of entrepreneurs. Innovation is about failing, failing strong and profitably. If someone wanted to know what the government should be doing, I’d suggest they may provide more chances of failing.

As his business celebrates its 10th anniversary, Fuqaha activists for a dramatic change in how we nurture fresh companies. His message is clear: make more options for startups to neglect quick and inexpensively. It’s a theory that flies in the face of some government initiatives, which Fuqaha, who was a boss with business JomSocial which was sold in 2013 to a Silicon Valley company, &nbsp, sees as extremely safe. In his watch, real innovation thrives on the freedom to take risks, slip, and study from those mistakes. &nbsp,

This counterintuitive approach to developing technology has shaped Fuqaha and Katsana’s voyage from a budding company to a focused business provider offering integrated fleet solutions&nbsp, with&nbsp, over 3, 600 customers, while offering useful lessons for entrepreneurs. Along the way he has raised US$ 1.39 million ( RM6.5 million ) in funding from Axiata’s Digital Innovation Fund ( ADIF ) managed by Intres Capital in 2016&nbsp, and US$ 535, 200 ( RM2.5&nbsp, million ) in&nbsp, venture debt from Malaysian Debt Ventures ( MDV ) in 2022. &nbsp,

Lesson 1: Understand when to cut your loses

Syed Ahmad Fuqaha believes there’s blue in the red ocean, and, in letting startups fail while it’s cheapFuqaha’s words are n’t just rhetoric – they’re born from experience. The rise and fall of DriveMark, one of the bank’s first advances, was perhaps best illustrated by the company’s own trip, which is punctuated by calculated dangers and proper pivots.

A smartphone-based scoring system called DriveMark was created to bridge the gap between driver behavior and insurance premiums. It was intended to promote safer driving. At its peak, it boasted an impressive 80, 000 to 90, 000 users. ” We came up with a solution that is very much scalable, using smartphones”, Fuqaha explains, highlighting the system’s accessibility and initial promise.

However, DriveMark soon encountered challenges unique to the Malaysian market. Malaysian insurance premiums are comparatively low compared to those in the US or the UK, where young or first-time drivers can be exorbitantly expensive. ” In Malaysia, on average, if I’m not mistaken, takaful is around US$ 150 ( RM700 ). For general insurance, the premium is around US$ 192.7 ( RM900 ) on average”.

This pricing structure presented a fundamental challenge to the business model of DriveMark. The majority of users fell into a less exciting category, whereas the top performers with the highest DriveMark scores could receive significant rebates of up to RM160, which were entirely funded by DriveMark. ” For a majority of users, the RM15-RM20 in rebate is just too small to be meaningful”, Fuqaha explains, highlighting the bell curve distribution of benefits.

]RM1 = US$ 0.214]

Ultimately, DriveMark’s business model proved unsustainable. Relying on insurance renewal commissions that averaged only RM70 to RM80 per user, the economics did n’t work out. Two years into the pandemic, Katsana had to make the difficult but necessary decision to stop using DriveMark despite some respectable income. ” We just decided to kill it”, Fuqaha states, acknowledging the need to adapt to market realities

The decision was n’t made hastily. In fact, Katsana spent a year exploring ways to pivot and salvage the technology. After a year of refuting the idea and attempting to convert it to a method for businesses to measure Scope 3 carbon emissions, particularly those involving mobility emissions, we shut DriveMark down in 2022, Fuqaha said. &nbsp,

User privacy and data protection were key components of the process. ” The shut down meant erasure of user data, as we did not want to abuse the consent they gave to DriveMark”, Fuqaha explains. &nbsp,

This decision to shutter DriveMark, while difficult, exemplifies Fuqaha’s philosophy of adapting. As a provider of solutions, Katsana was able to refocus its resources on more promising areas of its business, which ultimately led to a more sustainable enterprise market. &nbsp,

The driveMark experience served as a valuable lesson in Katsana’s decade-long journey, emphasizing the importance of adapting to market conditions and being willing to let go of initiatives that do n’t align with the company’s core strengths or financial viability.

Katsana's latest win was with Universiti Teknikal Malausia Melaka (UTEM) in a partnership with AVIS to equip 10 shuttle buses with a suite of solutions in the KATSANA Fleet Management ecosystem.

Lesson 2: The pandemic pivot: Finding the silver lining

As with businesses worldwide, the Covid-19 pandemic forced Katsana to reevaluate its operations. However, Fuqaha views this disruption as a” silver lining” that allowed the company to sharpen its focus.

Prior to the pandemic, Katsana was active in various telematics-related auto sector. The business also provided fleet management solutions for business clients like bus and taxi drivers, as well as GPS tracking solutions for private vehicles and the RunMark smartphone-based driver scoring system. They were also looking into potential opportunities in the insurance industry, and they were putting their knowledge and technology to use to create usage-based insurance products.

” We had a silver lining from the pandemic,” said the spokesperson. We made the decision to concentrate on the three areas that “made sense for us financially” and to stop providing tracking for private vehicles, Fuqaha said.

While there was money to be made in the private vehicle market, the economics simply did n’t work for Katsana’s high-touch operational model. ” For private vehicles, we have so many competitors out there. Fuqaha explains that there are numerous GPS trackers that can be purchased on Shopee for about RM70.

Katsana would primarily concentrate on its enterprise solutions, particularly fleet management for businesses, as a result of the strategic refocus. This allowed the company to leverage its strengths in developing sophisticated, tailored solutions that go beyond the capabilities of off-the-shelf products.

” What we are doing for enterprises, it makes a lot of sense and it is the best use of our capability”, Fuqaha explains. This change required removing the consumer market and concentrating on larger clients with more complex needs.

By streamlining its offerings, Katsana was able to focus its resources on developing more advanced fleet management solutions, including features for monitoring driver behavior ( building on its DriveMark experience ), vehicle performance, and operational efficiency.

This refocusing made it possible for Katsana to stand out in a noisy market. While many competitors offer white-label solutions from countries like China, Katsana’s intensified focus enabled it to develop unique, high-value offerings for enterprise clients. ” What we do is quite unique”, Fuqaha asserts, highlighting the company’s established expertise in providing sophisticated fleet management tools for larger operations.

Katsana went from being a company spread across multiple market segments to a more focused operation as a result of the pandemic-induced strategic realignment. This change enabled the business to escape the abyss of the pandemic and allowed for more sustainable expansion in the post-pandemic economy.

A Katsana exec installing fleet monitoring equipment on a truck.

Lesson 3: Strategic focus trumps rapid expansion

Fuqaha’s journey has included expanding regional, leading to ongoing projects in Indonesia and Brunei. This expansion predated the pandemic. However, he remains cautious about further expansion. ” It is an interesting proposition, but right now, if you want to have a broader presence over there, it is going to stretch us thin”.

This measured approach to growth demonstrates a maturation that comes from experience. Fuqaha has learned to play to its strengths and keep a laser focus on its core competencies as it continues to serve its existing regional clients as it pursues each opportunity rather than chasing every one.

When the pandemic struck, which presented significant challenges to businesses around the world, this strategic focus proved crucial. Katsana, however, managed to navigate the turbulent times without reducing its workforce, which currently stands at around 45 employees. The company’s resilience stemmed from a combination of its focused strategy and pragmatic decision-making.

” During the pandemic, we made a conscious decision not to hire anymore”, Fuqaha reveals, highlighting the importance of adaptability in times of crisis. He chose a more measured strategy as opposed to fighting against unchecked market forces. He also strategically used government funding, utilizing Malaysian Debt Ventures ‘ Covid Relief Fund for Startup program to boost finances.

Fuqaha was able to weather the storm effectively by maintaining its focus on its core competencies while utilizing government support mechanisms. &nbsp,

Looking to the future: A focused SaaS vision

Katsana enters its second decade with a more in-depth analysis and clearer vision than ever. ” Before the pandemic, we had a lot of things on our plate”, Fuqaha reflects. ” We are now more focused,” she said. No doubt, right before the pandemic, we were on the verge of profitability, even last year we were”.

This transition from a multi-faceted startup to a specialized enterprise solutions provider encapsulates many of the difficulties faced by tech companies in emerging markets. When focus and specialization are what is truly needed, Fuqaha’s story is one of learning to ignore the siren song of diversification.

Looking ahead, Fuqaha has set his sights on transforming Katsana into a Software as a Service ( SaaS ) company. This shift aims to leverage the company’s expertise in fleet management and telematics into a scalable, cloud-based solution. By adopting a SaaS model, Katsana can potentially expand its reach while streamlining its operations and lowering hardware reliance.

Fuqaha says,” We’re developing solutions that are quite unique,” giving a hint as to the sophisticated software features that will make up their SaaS offering’s foundation. This change allows Katsana to compete more effectively both domestically and internationally in line with global trends in enterprise technology.

As Fuqaha approaches his tenth year as a founder, his journey has revealed valuable lessons that could be applied to other startup founders. ” Opt for proven business models,” he advises, noting that red oceans still offer plenty of opportunities for those who understand their market and positioning. Startups are frequently encouraged to chase “blue ocean” opportunities. Red oceans frequently have enough space for multiple providers to coexist, each with their own distinctive offering.

Moreover, Fuqaha emphasizes the importance of nurturing existing customer relationships. The phrase” Existing customers are your best sales channel. Spend time with your current customers to become your supporters rather than just developing new features to make your products more appealing. Meet them at kopitiams, send them greeting cards, set up webinars. These are soft approaches that work”, he advises.

In a sector where many are looking for the next big thing, Katsana has found success by focusing on what it does best: offering top-tier fleet management solutions to businesses that are truly in need while also valuing and developing its existing customer base. After all, with a decade of hard-earned wisdom under its belt, Katsana, in the view of Fuqaha, is well-positioned to navigate the roads ahead, wherever they may lead.

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China: Xi Jinping tackles slow growth as economy ‘hits the brakes’

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China’s economy stumbled in the second quarter, standard data reveals, just as the country’s best leaders gathered for a important meeting to solve its slow progress.

It grew 4.7% in the three months to June, falling short of expectations after a stronger start in the first three months of 2024. The government’s annual growth target is around 5%.

” China’s market hit the brake in the June fourth”, said Heron Lim at Moody’s Analytics, adding that experts are hoping for answers from the conference under way in Beijing, even called the Third Plenum.

The country’s second-largest business is facing a prolonged residence problems, rough local government debt, poor consumption and high unemployment.

In China, the outcome of the Plenum has influenced the course of history. Deng Xiaoping first opened China’s industry to the world in 1978, and Xi Jinping made hints in 2013 about loosening the contentious one-child plan.

And so there are objectives of this year’s Plenum, where President Xi Jinping is presiding over a closed-door meeting of 370-plus high-ranking Chinese Communist Party people.

The language on state-controlled multimedia has undoubtedly been encouraging.

An editor in The Global Times said a “wide collection of reform-focused safeguards” are “high on the plan” and may usher in a “new book”. Xinhua referred to” complete” and “unprecedented” measures. A “new age of transformation and beginning up” was the subject of the People’s Regular newspaper, which Deng famously coined in 1978.

Spectators, however, are unaware of how much room there is for striking suggestions or controversy in the Party under Mr Xi’s heavily-centralised management. Some people view the appointment as merely a rubber-stamping exercise for already-made choices.

The appointment may provide a quick fix, according to economists, who are also skeptical.

It has “little effect on near-term growth”, says Qian Wang, Asia Pacific chief analyst at Vanguard, because its target will be on longer-term and more important measures to “unleash the long-term development potential”.

However, experts will become watching for disclosures that signal the Party’s financial priorities.

Separate data from Monday showed that June’s fresh home prices dropped at the fastest rate in nine times.

This provides more information of the global property issue that has decimated China’s housing sector and caused the bankruptcy of eminently successful companies like Evergrande. There’s a chance that it could spread to different sectors of the economy.

” There are more than 4, 000 businesses in China and over 90 % are smaller, regional institutions which are very exposed to the housing market and local authorities bill”, says Shanghai-based analyst Dan Wang.

She thinks that group leaders will “push for the consolidation of little banks.”

Another problem is falling pricing, which is a sign of weak demand. Retail sales increased by only 2 % in June, which is below expectations and a sign that consumers are still cautious about spending and uncertain about the future.

” A major problem is the loss of family, firm, and investor confidence in the government’s ability to navigate the deadly financial environment”, said Eswar Prasad, former head of the International Monetary Fund’s China division.

Questions remain about Beijing’s willingness to offer the kind of solution that would appeal to both observers and the markets.

” The government is reluctant to turn to short-term stimulus plans such as cash transfer to families”, Dan Wang said. Instead, we anticipate that they will focus on strengthening supply chains and high technology once more.

That is in line with Beijing’s bets on high-tech industries such as renewable energy, AI and chip-making, and exports to revive the economy. Last month, China reported a record trade surplus-$ 99bn ( £76.4bn )- as exports soared and imports struggled.

But even that wager has challenging odds. Important trading partners like the United States and the European Union have imposed tariffs and other restrictions on everything from EVs to cutting-edge chips made in China.

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Why is Brazil’s Lula building Brics?

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16 hours previously

By Robert Plummer, BBC News

Getty Images Brazil's Luiz Inácio Lula da Silva and China's Xi JinpingGetty Images

It’s been more than a year-and-a-half since Brazil’s Luiz Inácio Lula da Silva returned to the country’s president, up from the social dead after his judgment on fraud claims was considerably annulled.

In that time, President Lula’s return has given renewed power to one of the world’s most improbable financial alliances- the Brics, a gathering that unites Brazil with Russia, India, China and South Africa.

Lula played a key role in efforts to transform the Brics into a political force and an emerging counterbalance to the West during his past tenure as president from 2003 to 2010.

Now the bloc has momentum on its side once again. It’s come to be known as Brics Plus, after the original members agreed at a watershed summit in Johannesburg in August last year to admit a handful of new joiners, including Saudi Arabia and Iran.

Not bad for a grouping that was originally willed into being by sheer high-concept financial whimsy, the brainchild of economist Jim O’Neill, who saw it more as an investment opportunity than a new gang of nations.

” When the Brics were invented, it was very much an asset school”, says Monica de Bolle, senior fellow at the Peterson Institute for International Economics in Washington.

” But it caught on in Brazil, because it immediately spoke to Lula’s desires in international plan”.

At the Johannesburg meet, Lula was particularly bullish about the party’s long-term financial prospects.

” We have already surpassed the G7 and account for 32 % of global GDP in purchasing power parity”, he said.

According to estimates, emerging and developing markets will be those with the highest development rates in the foreseeable future, he continued.

This demonstrates that the Brics is the driving force behind the vitality of the market in the world north.

But that is deceptive on Lula’s piece, to say the least. The original creator of the word, who is now jubilant in the subject of Baron O’Neill of Gatley, has pointed out that all of the group’s economic growth has come from Xi Jinping’s China and Narendra Modi’s India.

“None of the other Brics has performed anywhere near as well as those two,” he said in an article written in reaction to the bloc’s expansion.

” Nigeria has surpassed Brazil’s share of the global GDP, while South Africa is not even the largest market in Africa,” according to Wikipedia.

He even points out that, in much the same way that the US dominates the G7, China “dominates the Brics by being twice the size of all the others combined.”

So what does slow-growth Brazil get from being dragged down in China’s financial peloton?

Rodrigo Zeidan, a Brazilian analyst based at China’s New York University Shanghai, tells the BBC that Brazil and China likewise see the Brics as a “hedge” in terms of international partnerships, rather than as a major concern.

” The Brics right then, for Brazil, cost about nothing”, he says. ” So if the rewards are not large, it’s okay. They are either a major benefit nor a deterrent”.

Brazil is pleasant maintaining close ties with Beijing because China is its biggest trading partner, even if the Brics gathering offers it some” strange matching,” as Mr. Zeidan puts it.

Lula has certainly maintained an ambiguous position on Russia’s war in Ukraine, but that is more due to Brazil’s traditional neutrality in foreign policy than to a wish to support a fellow Brics nation.

President Lula committed to the Brics because of his belief in improving relations between the large so-called world southern countries, according to Monica de Bolle at the Peterson Institute, who is herself a Portuguese analyst.

As a result, Brazil has then acquired” a China dominance” that could damage it in other international policy connections, she says.

” If you are in the US, you know that the US attitude on China is not going to change]whoever wins the presidential election in November ]”, she adds.

” In either case, it’s moving in the direction of greater anti-China attitude. At some point, that’s going to make more responses from China, which was placed Brazil in a very difficult place, because it’s perceived as being aligned with China”.

AFP Two men paddle a makeshift canoe down a flooded street in the Vila Farrapos area of Porto Alegre, Brazil, on 29 May 2024AFP

The New Development Bank ( NDB), a multilateral lender established by the Brics and described by Lula as” a milestone in effective collaboration between emerging economies,” is one tangible benefit for Brazil from the alliance.

Former Portuguese President Dilma Rousseff is currently in charge of it. She was President Lula’s social mentor, and succeeded him in 2011. However, her time in office came to an abrupt end when she was impeached in 2016 for breaking fiscal rules.

Since the company’s office are in Shanghai, the NDB has also made her indispensable in maintaining relations between Brazil and China.

” Dilma is undoubtedly great in terms of social image. Having Dilma around in Shanghai is very important for strengthening Brazil-China connections”, says Mr Zeidan.

Brazil has also benefited directly from NDB money. In June, Ms Rousseff and Brazilian Vice-President Geraldo Alckmin signed a loan deal worth more than $1.1bn (£880m) to help pay for reconstruction after widespread floods in the state of Rio Grande do Sul.

Regarding the NDB and Russia, the bank put all transactions involving the land on hold in March 2022, soon after Russia’s invasion of Ukraine. Additionally, Russia has complied with foreign punishment by the NDB.

However, midway through the middle of 2025, Russia is expected to assume the rotating presidency of the banks, and there is some confusion about what will follow.

In the interim, Ms. Rousseff is never hesitant to hold meetings with Russian President Vladimir Putin, who has praised her job at the NDB.

AFP Russia's President Vladimir Putin shakes hands with President of the New Development Bank (NDB) Dilma Rousseff during a meeting on the sidelines of the St Petersburg International Economic Forum on 6 June 2024AFP

President Lula is a staunch supporter of the Brics as a means of reforming global leadership and giving the developing world a stronger words.

He has criticised the “paralysis” of international organizations, while praising the growth of the Brics as strengthening the struggle for more different ideas.

However, other observers counter that China and India have their own internal conflicts, while Russia is at war in Ukraine and the Rs are themselves paralyzed by their own internal contradictions.

Unfortunately, says Ms de Bolle in Washington, the Rs are” a diverse group of countries that have nothing in common, apart from the point that they are big”.

” The Brics have no clear plan that has any real fat”, agrees Mr Zeidan in Shanghai.

” Right now, China does n’t ask much of Brazil. However, anyone that China asks, Brazil does.

When the bets are low, it’s okay to be a part of the Brics. But what if the margins rise?”

In other words, the result of the Brics, on Brazil and on the planet, may be small for now. However, if China decides to become more confrontational, things could change quickly and Brazil might have to make some miserable judgments.

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Thailand ready to host sixth Bimstec summit

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At the Delhi meet, foreign minister Maris provides updates on strategies for the September event for the local peers.

PUBLISHED: 13 Jul 2024 at 19: 59

Thailand ready to host sixth Bimstec summit
After the next retreat of the Bimstec foreign officials in New Delhi, Indian Prime Minister Narendra Modi and foreign affairs minister Maris Sangiampongsa shake arms. ( Photo: Ministry of Foreign Affairs )

According to Foreign Affairs Minister Maris Sangiampongsa, who will serve as the host nation’s representative, Thailand is prepared to host the seventh Bimstec Summit in Bangkok on September 4.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation is known as Bimstec. Seven South and Southeast Asian countries make up the foreign organization. The Bimstec member state — Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand — are among the nations centered on the Bay of Bengal.

Mr. Maris informed attendees that Thailand is prepared to serve as host at the next Bimstec foreign ministers ‘ retreat on Thursday in New Delhi.

He claimed that the private sector should be a key person in assisting with the implementation of state policies into concrete results. Thailand has suggested that Thailand hold the Bimstec Young Entrepreneur Forum in addition to the mountain in this regard. Members of the new era in member states will have a platform to exchange ideas for business at the forum, he said.

He addressed Prime Minister Narendra Modi in India and said Thailand was looking forward to welcoming him to the conference.

Mr. Maris also emphasized Thailand’s tactical position as a connection between Bimstec and Asean, which connects South Asian and Southeast Asian markets with a mixed population of more than 4 billion.

The foreign ministers ‘ surrender was chaired by the Minister of External Affairs of India and attended by the foreign ministries of Bangladesh, Bhutan, and Myanmar, the State Minister of Foreign Affairs of Sri Lanka, the Permanent Secretary for Foreign Affairs of Nepal, and the Bimstec secretary-general.

Participants discussed how to improve Bimstec in a range of fields, including crisis management, sustainable development, and the modern economy.

Mr. Maris even reaffirmed Bimstec’s desire to strengthen cooperation on non-traditional safety concerns. These include: food security, by quickly and effectively harnessing the wealthy and competent Bay of Bengal, especially fisherman resources, individual security through the promotion of medical tourism and education, and energy security, by deepening cooperation on clean and renewable energy.

He furthermore reiterated Thailand’s commitment to collaborate with member states to create a more successful and sustainable future.

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IN FOCUS: IPO drought, poor valuations: What can be done to revive Singapore’s ailing stock market?

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GOVERNMENT MEASURES

The Singaporean government has taken actions to increase the appeal of the regional stock market.

Two money – especially the S$ 1.5 billion Anchor Fund@65 and S$ 500 million EDBI Growth Investor Fund -&nbsp, were established in 2022 to help high-growth firms to raise capital through pubic listings around.

Fund managers assist companies in advising them on the SGX listing requirements as well as facilitating meetings with investment banks and market makers, according to a Ministry of Trade and Industry ( MTI ) spokesperson.

According to Mr. Chee, these funds have so far been invested in nine businesses, according to a statement released last week in Parliament.

When asked if this number meets any initial goals and whether the funds have been successful in revitalizing the local stock market, MTI would only respond that the last two years have been “more challenging for equity markets globally” with a decline in IPO activities as a result of the high interest rate environment.

According to the spokesperson, the region’s equity markets have experienced similar repercussions in Singapore and the region.

CNA inquired further about the nine businesses that received support, as well as whether additional investments are planned. MTI did not respond.

In addition, there are plans to cover SGX-listed companies ‘ research costs and help with listing costs. &nbsp,

The Monetary Authority of Singapore ( MAS ) offers grant amounts up to S$ 2 million that help offset listing-related expenses as part of the Grant for Equity Market Singapore ( GEM) scheme, which was launched in 2019.

As of May, this grant has supported a total of 46 listings from sectors ranging from new technology, media, healthcare to information technology, an MAS spokesperson said.

Ten of these included mainboard listings like Digital Core REIT and Nanofilm Technologies. The remaining 36, including newly listed SAM Holdings, are listed on the Catalist board.

A research development grant, which is also funded by GEMS, has supported more than 10 research institutions and has hired 38 research analysts as of the end of 2023.

Over 900 research reports covering more than 130 SGX-listed companies have been produced by these research firms, with information provided by these firms providing insights for retail investors and aiding in better decision-making, according to MAS.

The central bank’s spokesperson told CNA that “one of the factors that potential IPO aspirants take into account when considering a listing on our equities market is the GEMS grant funding.”

“MAS will continue to work with industry stakeholders on this goal and review new ideas and proposals to improve our equities market and support business growth,” according to the statement.

On its part, SGX introduced new rules in 2021 to permit the listing of special purpose acquisition companies, or SPACs, on the mainboard and more recently, a Thailand-Singapore Depository Receipt was launched to broaden access to capital and markets.

It also&nbsp, started a market maker and liquidity provider programme in 2014 to boost trading volumes. The market operator declined to reveal specifics of this programme, citing confidentiality.

Additionally, SGX declined to comment on other inquiries made by CNA for this article, such as whether it is reviewing its current initiatives to improve performance.

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China’s June export surge points to higher growth – Asia Times

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China’s June exports rose 8.6 % year-on-year in US dollar terms and 10.7 % in RMB, exceeding analysts ‘ expectations and pointing to higher-than-expected GDP growth for the second quarter.

Supplies to Central Asia increased the most, reflecting China’s expansion of transportation and other network through the Belt and Road Initiative.

Graphic: Asia TImes

Export to Azerbaijan, Armenia, Kazakhstan and Kirgizstan rose year-on-year by more than 30 %, as China expands bridge and other transportation services across the European continent. Some of the overall might be a result of implicit imports to Russia.

But export were solid across the board, with particularly strong performance in Taiwan, Indonesia, Vietnam and the Philippines. Exports to Brazil and Mexico, China’s two largest Latin American markets, rose by 17 %.

China’s exports to created markets have increased significantly over the past four years, while exports to developed markets have doubled.

Graphic: Asia Times

However, capital goods and parts are a part of China’s growth in exports to the global north for American ultimate sales.

Graphic: Asia Times

China’s export to the Global South rose from about US$ 60 billion a month to$ 140 billion a month. US imports from the Global South increased at the same time, increasing from$ 60 billion to$ 90 billion annually.

Depends on US demand for roughly$ 30 billion per month of China’s incremental$ 80 billion per month of exports to the Global South. Although the 25 % tax on the majority of Chinese exports severely affects direct export to the US, America is all the more dependent on Chinese supply chains via third places.

Strong imports from China to the US jumped by 7.5 % year-on-year, although the amount remains well below the Covid top.

America’s trade deficit in goods now stands at a record US$ 1.2 trillion per year, compared to$ 800 billion a year before Covid. By boosting transfer payments to US citizens, the Biden administration increased consumer goods demand, while real-time investment in building tools in private US US plants decreased.

After inflation, nondefense orders for capital equipment ( excluding aircraft ) fell to$ 35 billion ( in constant 1982 dollars ) a month in 2024 from$ 38 billion in 2019, following a long-term trend of decline.

Graphic: Asia Times

Biden’s governmental policy caused a storm of goods, either directly or indirectly, from China.

That leaves America in a quandary. Some experts to former president Trump have suggested that higher taxes to deter Chinese imports would raise prices for American customers.

And an overall price, favored by some prominent Trump campaign figures, may raise the cost of capital goods, deter expense, and increase America’s dependence on imports also more.

Following David P Goldman on X at @davidpgoldman

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3rd Plenum will treat economy with Chinese medicine – Asia Times

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The eagerly awaited Third Plenum in China, which will take place in Beijing from July 15 to 18, is being watched carefully by the business. In China, key policy shifts and economic reforms have been a key focus since this event generally. Market participants and China watchers hope the Third Plenum will be able to address this time around with a very distinct question: Will there be enough growth-boosting actions announced to bring the country’s economy back from years of stagnant growth?

Based on how officials and Chinese academics have been setting the ground for this event, there has n’t been much hope that groundbreaking reforms will be announced at the Third Plenum. The issues that have been accumulating over the past few years are, nevertheless, getting worse, rising from real estate stagnancy to the challenging economic conditions of local governments, as well as the fast declining return on assets, all of which are caused by overinvestment and the negative pressures in the economy. &nbsp,

The secret to all these woos, as aired by the Chinese leadership over the past few decades, is by expanding China’s manufacturing capacity under the guise of the” New Production Forces.” There is, nevertheless, little indication of demand measures, especially those supporting exclusive usage. At most some additional consumption tickets are anticipated, but not without establishing a happiness condition. Xi Jinping has vehemently denied having any interest in a unit of this nature.

More source without boosting domestic demand will have to stop somewhere, possibly leading to an even greater trade surplus. As the West and some important emerging markets have started putting restrictions on Chinese goods, this seems increasingly difficult. The result, hence, will be more negative pressures.

The same very gradual approach to resolving China’s key imbalance ( the persistently low domestic consumption ) will likely be used to address other pressing concerns, such as the fiscal deterioration, especially those of local governments, who have long been financed by land sales, which have fallen since 2020.

The economic pressure on local governments is, by then, well known. Both local government employees ‘ earnings and those of the public service are affected. One should anticipate measures to improve the local authorities finances at the Fourth Chamber given the lack of other governmental income and the growing interest rate burden that regional governments must bear.

The exchange of use taxes to local institutions is the one that seems most probable right now. The code will be coordinating government investing in addition to profit. The state will need to compromise the increase in income and health costs thoroughly, given the shrinking working-age inhabitants. This will likely involve the removal of the retirement years, which was previously made public but now with real effect.

A longer-term problem is clearly aging, which has been tackled in the previous chamber with announcements on the lessening of China’s system to handle local migration, the hukou. Although these measures should promote urbanization, the reality is that China does not have a sizable portion of its population who is willing to migrate ( with 63 % of the population in urban areas as opposed to less than 30 % before WTO entry ), and that, most importantly, the employment opportunities in cities are declining.

Lastly, China would profit from more lax monetary and fiscal policies, despite the fact that the area is not really that, despite the quick issue of the policy mix. The RMB is currently at record lows as a result of the government’s commitment to 100 % of GDP and interest rates are now very low, particularly in comparison to the US. This is why, not even on the combination of require policies, can we hope any radical change from the Third Plenum.

All in all, aspirations for China’s long-awaited conference for transformation, the Third Plenum, may be managed carefully. Even though China’s health problems are getting worse, the announcements will resemble Chinese medicine more than a shock therapy.

This has significant effects on the global economy, including that China’s need for imported goods will be restrained and that Chinese businesses will continue to rely on foreign businesses to succeed. This suggests that trade war are still raging in newspapers and possibly going on beyond.

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Yellen’s de-dollarization fears will only get worse – Asia Times

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US Treasury Secretary Janet Yellen made an unusual attendance in the middle of a commonplace Parliamentary hearing on July 9: De-dollarization is then her greatest concern.

It’s a sharp turn-around for a US market king who has long said the dollar is in danger of losing its position as the world’s dominant reserve currency due to sanctions or other plan errors, despite the obviousness of it. In March 2022, for example, &nbsp, Yellen&nbsp, said” I do n’t think the dollar has any serious competition and it’s not likely to for a long time”.

The original Federal Reserve chairman remarked that” when you think about what makes the money a reserve money, it’s that we have the deepest and most liquid investment businesses of any country on earth. Treasury assets are safe, secure and exceedingly liquid. We have a strong economic and financial structure, as well as the rule of law. There is n’t really a reserve currency that can compete with it.

What a change two decades have made. Doubts of a “weaponized” dollars have the Global South joining forces with increasing necessity to find an alternative. &nbsp,

And two factors in Washington are accelerating this energetic in real time. One is the rising US national debt, which is$ 35 trillion in the air. The other is a US election cycle that is getting more and more off the rails, like what international owners have never seen.

Now, Donald Trump is telegraphing 60 % taxes on all Chinese products, at least. The former US president has threatened to impose a 1 % taxes on all US-bound vehicles. That results in Joe Biden’s troubled White House competing with Trump to win the China trade battle.

Add to the uncertainty about whether Biden will even be the Democrat Party candidate. Questions abound about the senator ‘s&nbsp, mental health&nbsp, following his disastrous June 27 argument over Trump.

Asia is instantly confronted with the” Project 2025″ sport program devised by his caregivers as the chances of a Trump 2.0 White House rise, despite worries that Trump does get another chance at some contentious things on his 2017-2021 want list.

There is talk of ending the Federal Reserve and switching to a gold-backed money as part of the 900-page Project 2025 program created by the Heritage Foundation. Trump in the past has hinted at defaulting on US loan, devaluing the money and shaking down supporters that number America forces – such as Japan and South Korea– for&nbsp, protection&nbsp, income.

Also if he loses the November 5 election, Trump will almost certainly claim scams. Now, Trump and his best friends refuse to undertake to accepting a loss, almost ensuring another Capitol Hill&nbsp, insurrection&nbsp, equivalent to January 6, 2021.

It’s important to keep in mind that the social discord that caused that riot led to Fitch Ratings ‘ decision to revoke Washington’s AAA status in August 2023. Since then, Moody’s Investors Service, the guard of Washington’s sole remaining AAA, has pointed to conflicts over funding the government and raising the legal debt sky as threats to view.

The consequences from a possible Moody’s drop worries Asia significantly. This area has the largest stocks of US Treasury securities everywhere, accounting for roughly US$ 3 trillion. Japan has the most at US$ 1.2 trillion, &nbsp, China&nbsp, is second with$ 770 billion.

However, Yellen’s career might be remembered as the one when the dollar’s velocity actually changed. It was evident by 2022 and 2023, argues analyst Stephen Jen, CEO at Eurizon SLJ Capital, that the economy’s loss of business share was accelerating. It was last year when the dollar’s tally of total global official reserves fell to 58 % from 73 % in 2001 – back when it was, in Jen’s words, an “indisputable hegemonic reserve”.

” The buck suffered a spectacular collapse in 2022 in its market share as a supply money, probably due to its muscular usage of restrictions”, Jen argues. ” Outstanding actions taken by the US and its supporters against Russia have startled big reserve-holding countries” – most of the Global South, emerging markets.

Though King Dollar also reigns, Jen argues, its ongoing supremacy “is not preordained” amid work among the BRICS – Brazil, Russia, India, China, South Africa – and abroad, including Southeast Asia, to de-throne the&nbsp, US money.

” The prevalent see of’ nothing-to-see-here’ on the US dollars as a reserve money seems to trivial and complacent”, Jen argues. The World South is unable to completely avoid using the money, but a large portion of it has now become disinclined to do so, according to what needs to be appreciated by investors.

So why would the Washington establishment been lending its support to those who are most interested in devaluing the dollar?

During the time that Chinese leader Xi Jinping has been in power, localization has been top of the list. There is great news that China’s economy will become more and more influential globally.

Yet Beijing’s hesitancy to allow complete devaluation limits the dollar’s power. So do questions about the yuan’s trajectory, suggesting Xi ‘s&nbsp, de-dollarization&nbsp, drive is working better overseas – in terms of trade and official support – than at home.

One solution is for Xi and Premier Li Qiang to accelerate changes in the sectors of imports, regional state funding, capital markets growth, and innovation-focused growth engines. Beijing also needs to completely convert the yuan to raise trust.

According to Alexandra Prokopenko, a senior fellow at the Carnegie Russia Eurasia Center, “it’s believed that the yuan ca n’t become a full-fledged reserve currency because of the current restrictions on capital transactions in China.” Although Russia and other significant economies are using the Yuan to “help the Taiwanese authorities make it into an international reserve currency,” according to Prokopenko, structural limitations prevent it from being a “reliable replacement” for the dollar at this time.

Also, Xi’s “yuanization” strategy is gaining traction. In March, the yuan hit a&nbsp, record high of 47 % of global payments by value.

Team Xi has consistently made significant and regular progress toward replacing the dollars as the economic system’s statement since 2016. That time, Beijing secured a spot in the International Monetary Fund’s” special&nbsp, drawing-rights” system. It put the yuan into the world’s most unique currency team along with the money, euro, yen and the lb.

According to SWIFT, the yuan held the position of the world’s currency with the fourth-largest share of international payments in 2023. &nbsp, It also overtook the dollar as China’s most used cross-border monetary unit, a first.

Trump’s engineering of a weaker dollar would significantly improve the strategy. That would greatly reduce trust in US Treasury securities, a cornerstone holding for central banks around the globe, boosting America’s borrowing costs.

The scheme would imperil Washington’s ability to defy financial gravity. Thanks to reserve-currency status, the US enjoys any number of&nbsp, special&nbsp, benefits. This “exorbitant privilege”, as 1960s French Finance Minister Valéry Giscard d’Estaing famously called it, allows Washington to live far beyond its means.

All this explains why the dollar continues to rise even as Washington’s national debt approaches US$ 35 trillion. &nbsp, The&nbsp, dollar is up 13 % &nbsp, so far this year versus the yen and 11 % versus the euro.

Biden’s White House also imperiled trust in the dollar. Along with continued debt accumulation, Team Biden’s decision to freeze portions of Russia’s currency reserves over its Ukraine invasion crossed a line with many global investors.

Dmitry Dolgin, economist at ING Bank, thinks yuanization remains largely on the agenda. Beijing has n’t let up on broadening currency swap arrangements, promoting yuan transactions and expanding China’s Cross-Border Interbank Payment System ( CIPS) aiming to replace SWIFT.

According to Dolgin,” It appears that China’s expanding trade ties and financial infrastructure indicate that the potential for further yuanization has not been exhausted.”

Neither have efforts to create a BRICS currency. BRICS has even greater firepower, considering it’s allying with Iran, Egypt, Ethiopia, the United Arab Emirates and others. At last week ‘s&nbsp, Shanghai Cooperation Organization&nbsp, summit, China, Russia and their geopolitical comrades did their best to” to show the world that the West’s attempts to contain them are not working”, notes Tom Miller, analyst at Gavekal Research.

In June, the yuan’s share of&nbsp, Russia’s foreign exchange market hit 99.6 %. The Moscow Exchange had to stop selling dollars and the euro as a direct result of sanctions. &nbsp, In May, prior to the implementation of new US sanctions, the yuan’s share was just 53.6 %.

Not everyone is persuaded that the dollar will never run out. Analysts at the Atlantic Council’s GeoEconomics Center think the dollar’s dominance is actually growing. Its brawn is driven by a buoyant US economy, attractive yields and geopolitical uncertainty.

One problem, they write in a recent report, is that China’s currency is n’t ready for prime time. &nbsp,

According to Atlantic Council analysts,” this is possibly due to reserve managers ‘ concern about China’s economy, Beijing’s position on the Russia-Ukraine war, and a potential Chinese invasion of Taiwan, which contribute to the perception of the renminbi as a geopolitically risky reserve currency.”

But the preponderance of available evidence suggests that, as 2024 unfolds, Yellen’s fears about de-dollarization are n’t just valid – they’re being realized by the day.

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New ASEAN Express cargo rail service spanning 4 countries expected to lower costs, open markets

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From Laos, the ASEAN Express trips to Kunming in China’s southwestern Yunnan state, before arriving in Chongqing.

The road service is 30 per cent cheaper than road transportation on regular, said KTMB, and is also a brighter and more lasting solution.

” A GOOD START”

The first freight support from Malaysia to China has been hailed as ancient by rail experts.

” This is a good start. Even though it is smaller, it is grow”, said Mr Rosli Azad Khan, expert and managing director of MS Traffic Planners.

He added that this would enable Malaysia to expand its vehicles industry, enabling it to become a dominant player in the nations that the ASEAN Express serves.

” I think Malaysia should take the lead in this- it is a great opportunity”, he said.

Professor Khalid Hasnan, mind of Malaysia’s Industry Centre of Excellence for Railway, noted:” If you can influence the market that you can provide fast, effective, cheap, and yet the dignity of your goods is assured, they will go for it”.

The experts added that they anticipate a decrease in logistics costs in addition to improving local bridge connection.

According to Mr. Rosli, rail services would be more appropriate to meet their requirements than roads because passenger and freight requirement is “very great” in all four nations.

” In the future, we don’t rely on highways to assist us, both for individuals and for transport. We have to go back to the railway”, he added.

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