IN FOCUS: Low birth rate, ageing society could cripple Thailand but it’s not a done deal yet

Its Hire Me project – “Jangwan Ka” in Thai – seeks to provide jobs for people who cannot enter the employment system due to factors such as old age.

“Thailand hardly provides jobs for the elderly … they’re often perceived as having less ability to work,” said the Hire Me project manager, Mr Sittiphol Chuprajong.

“Actually, many of them still want to be employed because working isn’t just about earning income but also living their life, socialising and having friends,” he added.

Since 2020, Hire Me has attracted 160 participants and counting. Most of them are the elderly and about 20 per cent are people in their fifties who do not have enough funds to start a new life on their own.

Today, Mr Wattana earns 2,500 baht per week from working in the foundation’s warehouse. He can afford to pay 2,100 baht a month for a room, pay for his meals and buy a second-hand mobile phone to watch TikTok videos during his free time.

“It’s like my life was illuminated again after everything had gone dark. There is hope,” he said.

“I’m happy, very happy.”

SAVE UP FOR RETIREMENT

Thailand is facing considerable challenges as the elderly population shifts in the opposite direction to the birth rate.

Even should moves be made to return the elderly to the workforce, concerns remain over their financial security and health issues as well as how existing infrastructure can accommodate more seniors.

Ms Kingkan Ketsiri from the Bank of Thailand told CNA not much has been done to improve their welfare benefits and that the burden would fall on the working-age population in the future if nothing changes.

“Given that we have fewer newborn babies, we may not have enough people to take care of the elderly and that means more responsibilities for working-age individuals,” said Ms Kingkan, assistant director of the macroeconomic department.

Continue Reading

Hazardous smog moves to North, West

Hazardous smog moves to North, West
The map from Gistda shows colour-coded PM2.5 levels in the country on Thursday morning.

The levels of particulate matter smaller than 2.5 microns, known as PM2.5, reached dangerous levels in parts of the North and the western region on Thursday morning, while Samut Songkhram was the only province in the red zone, indicating PM2.5 readings exceeded the acceptable standard of 50 microgrammes per cubic meter (µg/m³) of air.

The Geo-Informatics and Space Technology Development Agency (Gistda) reported at 9am on Thursday that the central province of Samut Songkhram, located west of Bangkok, recorded 77.1 microgrammes of PM2.5 per cubic metre of air over the past 24 hours.

Meanwhile, 26 other provinces experienced orange levels of PM2.5, ranging from 38.3 to 69.9µg/m³.

In a descending order of the levels, these provinces were Samut Sakhon, which is adjacent to Samut Songkhram, Ratchaburi, Nakhon Pathom, Phetchaburi, Nonthaburi, Kanchanaburi, Ayutthaya, Suphan Buri, Chai Nat, Ang Thong, Pathum Thani, Lamphun, Uthai Thani, Lop Buri, Bangkok, Saraburi, Nakhon Sawan, Sing Buri, Samut Prakan, Prachin Buri, Prachuap Khiri Khan, Chiang Rai, Nakhon Nayok, Lampang, Tak and Nakhon Ratchasima.

The South and parts of the Northeast, the Central Plains and the East reported safe levels of PM2.5, with the safe threshold set at 37.5µg/m³.

The lowest level, 14.4 µg/m³, was measured in the northeastern province of Amnat Charoen, followed by 15.2 in Krabi, 16.2 in Trat, 18.0 in Phuket and 18.1 in Surat Thani in the South.

Comparatively, Thursday’s situation was an improvement over Wednesday morning, with 27 provinces facing unsafe PM2.5 levels, down from 33 on Wednesday. The highest level recorded was 95.2µg/m³ on Wednesday morning, reduced to 77.1µg/m³ on Thursday morning.

Continue Reading

Yuan’s rising global role is opportunity to hasten reforms

Amid considerable doom and gloom in China’s economy, President Xi Jinping has at least one 2023 milestone to celebrate: a near-doubling of the yuan’s role in global payments.

The yuan’s 3.6% share might not sound too impressive considering the US still commands 47% of payments. But the rate of increase from 1.9% over the last 11 months since January is sure to catch Washington’s attention.

The key now, of course, is for Xi’s team to lean into the trend by accelerating financial reform efforts. Hastening it depends on Xi’s ability to earn investors’ trust.

Developed economies have something in common: They build credible and trusted financial systems before trillions of dollars of overseas capital arrive. They methodically increase transparency, prod companies to strengthen governance, devise reliable surveillance mechanisms, develop an independent credit-rating system and erect a robust market infrastructure before the world shows up.

As 2024 approaches, investors will be paying closer attention than ever to whether Xi’s reformers can keep up with the yuan’s rise.

This week, China’s Central Economic Work Conference convened in Beijing to plot the next steps for Asia’s biggest economy. Xi’s Communist Party vowed to boost domestic demand, tackle the real-estate crisis and accelerate the development of strategic sectors to raise China’s competitive game.

“China’s economy has achieved a recovery, with solid progress made in high-quality development in 2023,” party leaders said, according to state-owned Xinhua. “China still has to overcome some difficulties and challenges to further revive the economy.”

And to continue building on the yuan’s increasing popularity. The yuan’s international profile is growing at a moment when questions about the US dollar’s dominance are surging. Concerns hit a fever pitch in mid-November when Moody’s Investors Service threatened to deprive the US of its last AAA credit rating.

US fiscal policy

That news dropped soon after America’s national debt topped $33 trillion. Moody’s also cited political dysfunction amid Washington lawmakers playing politics with the nation’s basic functioning.

“Fiscal policymaking is less robust in the US than in many AAA-rated peers, and another shutdown would be further evidence of this weakness,” Moody’s analysts argue.

“After having negotiated a contentious bipartisan debt-limit deal in June, US Congress is yet again renewing internal party disagreements that threaten a government shutdown and clearly reflect the political hurdles to US fiscal policymaking.”

Such political brinkmanship risks doing additional damage to the dollar. So is the collateral damage from 11 Federal Reserve interest-rate increases in 18 months. And fallout from President Joe Biden using the dollar as leverage in efforts to punish Russia over its Ukraine invasion.

But this milestone is the payoff for Xi’s policy of internationalizing the yuan.

The effort began gaining traction in 2016, when the governor of the People’s Bank of China at the time, Zhou Xiaochuan, secured a place for the yuan in the International Monetary Fund’s “special drawing rights” program. It marked the yuan’s inclusion in the IMF’s exclusive club of reserve currencies, joining the dollar, euro, yen and pound sterling.

In the years since, Xi’s team steadily increased and broadened the channels for foreign investors to access mainland China stock and bond markets. Mainland stocks were added to the MSCI index, while government bonds were included in the FTSE Russell benchmark.

That, and moves to increase financial transparency, boosted global demand for the yuan. More recently, Beijing’s tolerance of stronger yuan has given Xi’s Ministry of Finance some street cred in market circles as the yen plunged.

This year, the yuan overtook the euro to become the world’s second-most-utilized currency in global trade, according to data from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT. As of September, the yuan’s share of SWIFT payments hit 5.8%.

Yet as 2024 beckons, Xi’s party stands at something of a fork in the road. Accelerating yuan use in global trade and finance requires a clear and bold commitment to structural reforms.

Priorities include pivoting toward full yuan convertibility, increasing local-market liquidity and the availability of heading tools, modernizing a giant and opaque state sector and internationalizing a rudimentary credit-rating system that obscures risk and enables the chronic misallocation of capital.

Slowing growth

Xi and Premier Li Qiang also must get a handle on regional governments, namely, containing risks in the local government financing vehicles (LGFV) space. Even as China’s property crisis festers, Beijing needs to head off a reckoning involving roughly $9 trillion of off-balance-sheet municipal debt.

That’s easier said than done as China grows the slowest in 30 years and deflationary pressures mount. So far, Xi and Li have tried to do so without major public bailouts that might squander progress reducing financial leverage across sectors. Weak consumer prices and talk of “Japanification,” though, have economists betting on a more strenuous response.

Deflation could work at cross-purposes with Xi’s hopes of increasing global demand for the yuan. Chinese consumer prices fell 0.5% in November from a year ago, the worst decline since the height of the Covid-19 pandemic.

“The lingering softness in core CPI suggests domestic consumer-demand conditions may have remained weak,” write JPMorgan analysts in a recent report. Economists at Goldman Sachs argue that “weak” prices are “likely reflecting sluggish domestic economic momentum in the near term.”

Again, not the way Xi’s inner circle hoped to close out the year.

“China’s deflation problem could be a welcome disinflationary restraint for the West,” says economist Albert Edwards at Société Générale.

Edwards adds that “the fly in the ointment might well be that, if a US hard landing is imminent – reflected in weak money supply Société Générale and triggers a collapse in US domestic inflation anyway, importing an extra slug of Chinese deflation would then be extremely unwelcome and throw the Fed into a tizzy. Mind you, at least US bond investors would be delighted.”

Strategist Thierry Wizman at Macquarie Bank notes that “the longer that China fails to show that it can recover, the likelier that inflation expectations will decline in the West, as fears that China can export its deflation to the rest of the world through international trade will gain ground.”

This is hardly a narrative that a government hoping to increase the use of its currency wants.

There’s optimism, of course, that efforts by Xi and Li to boost fiscal stimulus and targeted PBOC action could turn the tide. At the same time, a 0.5% year-over-year increase in exports suggests steady external demand for Chinese goods.

Yet even here, caveats abound. Though overseas shipments might benefit from a “global upswing” in demand, economists at Nomura Holdings Inc. write that it’s “still too early to call the bottom.” The bigger picture, Nomura argues, is that “there might yet be another economic dip in spring 2024 due to a worsening property sector.”

Last week, Xi admitted that China’s economic recovery is “still at a critical stage” amid sluggish domestic demand and the drag from a staggering property sector.

According to state media, Xi delivered the comments at a meeting of the Politburo, China’s top decision-making body. There, Xi reportedly said “the development situation facing the country is complex, with increasing adverse factors in the international political and economic environment” and called for growth-stabilizing measures.

Importantly, Xi stressed that “it’s necessary to focus on accelerating the construction of a modern industrial system, expand domestic demand, (and) prevent and defuse risks.” This, he said, includes achieving greater “self-reliance” in key science and technology sectors, and moves to “accelerate the construction of a new development layout.”

The clock is ticking, though. This month, Moody’s downgraded the outlook for Beijing’s credit to “negative” from “stable,” highlighting “broad downside risks to China’s fiscal, economic and institutional strength.”

Though Xi’s Finance Ministry was “disappointed with Moody’s decision” and stressed that such worries are “unnecessary,” such headlines are the last thing Xi wants as investors plot 2024 capital-allocation plans.

Along with local-government debt levels, Moody’s fears troubles are deepening in the default-plagued property sector. Property, says Ting Lu, chief China economist at Nomura, remains “the single largest drag affecting China’s economy.”

He adds that “despite the multitude of stimulus measures announced recently,” real estate is a clear and present danger.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, speaks for many when he says “it’s unclear if exports can contribute as a growth pillar into next year.”

Getting reforms back on track

The good news is a late-2023 pivot back to structural reforms that moved to the back-burner amid the pandemic. At this week’s Central Economic Work Conference, Xi’s party pledged to defuse property-sector risks and to get a handle on debts plaguing both local government and medium-sized financial institutions.

Priorities include a renewed push to build affordable housing, address record youth unemployment, support for private enterprises, catalyze greater innovation in science and technology, strengthen domestic supply chains, accelerate China’s transformation toward a greener economy and develop the digital space, including artificial intelligence.

Other vital initiatives include boosting China’s declining fertility rates and the population ages. 

“It’s an ambitious document heavy on aspiration and light on details,” observes Bill Bishop, longtime China-watcher and author of the Sinocism newsletter. “I think you can find reasons to start feeling more constructive on the [Chinese] economy, but still lots of reasons to be skeptical.”

Bishop notes that the “main issues are insufficient effective demand, overcapacity in some industries, weak social expectations, and still numerous risks and hidden dangers. There are bottlenecks in the domestic big cycle, and the complexity, severity, and uncertainty of the external environment are increasing. It is necessary to enhance the awareness of potential dangers and effectively address and resolve these issues.”

On the whole, Bishop says, “the favorable conditions facing China’s development outweigh the unfavorable factors. The basic trend of economic recovery and long-term improvement has not changed, and it is important to strengthen confidence and resolve.”

All this will benefit Xi’s yuan internationalization push. So are US policies, both in terms of fiscal mismanagement and global sanctions. Biden’s sanctions regime versus Russia played into Beijing’s hands as governments around the globe buzzed about a “weaponized” dollar.

The measures spurred China to step up its campaign to eclipse the dollar and other Group of Seven currencies. The past year saw Xi’s efforts to prod nations to use the yuan in trade make progress. Xi’s Cross-Border Interbank Payment System is gaining traction. And the Belt and Road Initiative has acted as something of an accelerant for cross-border use of the yuan.

Now, the onus is on Xi and Li to step up the reform process to increase the yuan’s appeal in global markets. Discussions at this week’s China’s Central Economic Work Conference show Beijing knows what’s needed to stabilize the economy and show the dollar who’s boss. Implementation has been more vital to China’s trajectory.

Continue Reading

Chinese forces approached close to Taiwan coast to ‘intimidate’ voters before key elections: Sources

TAIPEI: Taiwan’s military drove away four attempts by Chinese forces to approach the island’s sensitive contiguous zone last month, Taiwan security officials said, in what they see as a ramped-up Chinese campaign to “intimidate” voters before key elections. Taiwan officials have repeatedly warned that China is trying to sway votersContinue Reading

Moody’s warns US, China it’s time to change their ways

Moody’s Investors Service is actively and innocently prodding the two largest bears in the world economy.

Experts at the agency threatened to remove Washington’s final AAA credit score next month. The increase in US 10 time bond yields to 17-year peaks was exacerbated by that volley.

Beijing was the next city to speak Moody growl this week. As Asia’s largest economy struggles with an economic slowdown and a worsening real estate crisis, Moody’S changed its outlook on the Chinese government of debt from” stable” to “negative” on Tuesday ( December 5 ).

A day later, Moody’s went even further by telegraphing potential rating steps against state-owned bank tycoons, numerous Foreign government-backed organizations funding system assignments, and even Hong Kong and Macau.

Threatening downgrades for the Industrial and Commercial Bank of China Ltd., China Development Bank, and another behemoths will undoubtedly work if Moody’s is attempting to capture the attention of Chinese leader Xi Jinping. It will also affect international investors who are concerned that Beijing is n’t moving quickly enough to contain contagion risks.

In general, the urge is to respond violently to these instructions. The group of US President Joe Biden carried out that action.

Treasury Secretary Janet Yellen responded to Moody’s risk to drop by saying,” This is a choice I disagree with. Treasury securities continue to be the world’s top safe and liquid asset, and the American market is ultimately strong.

China is also pushing up. Issues of Moody about the aspirations of China’s economic development and fiscal sustainability are unnecessary, the Ministry of Finance of Xi stated on Tuesday, expressing its “dissatisfaction.”

Beijing added that the fallout from financial and property issues is” stable” and that it is working to “deepen measures to tackle risks and challenges.” However, it’s important to take into account the potential benefits of rating agencies like Moody making a timely call for stronger action against the two economical powers.

Janet Yellen, the US Treasury Secretary, disagrees that the country merits a upgrade. Asia Times files / AFP picture

The rules of economic gravity however apply, as Moody’s served as a helpful warning to Biden, Yellen, and Jerome Powell, chairman of the Federal Reserve, in the case of America.

Faith in the money is rapidly eroding as the US federal loan surpasses$ 33 trillion, Biden’s White House raises spending, and the Fed tightens its restrictions with the most vehemence in years.

The price increases in gold and cryptocurrencies are merely the most recent example of how traditional Bretton-Woods economic realities are clashing with contemporary disregard for the ways in which markets you influence perhaps the largest economies.

China, as well. The 24 members of the Communist Party’s Politburo will soon meet to discuss policy priorities and determine rise objectives for the upcoming year. Following that, a course may be charted by the annual Central Economic Work Conference, which will bring up municipal and central government leaders.

A development goal of around 5 % is anticipated for 2024, according to economists at JPMorgan, Standard Chartered, and other major investment bankers.

An optimistic growth target, according to Goldman Sachs economist Maggie Wei,” may help lessen the risk of China falling into a self-fulfilling cycle of melancholy expectations, more depressing growth, and reinforcing negative expectations.”

However, Moody’s is reminding group leaders that economic gravity is more difficult than that.

According to Moody’s, the government and larger public sector may help financially strapped regional and local governments and state-owned enterprises in China, according to its reasoning.

When Moody’s warns of “increased dangers related to functionally and consistently lower medium-term economic growth and the continued reduction of the property sector,” it also speaks for many.

However, it is implied in bold font between the lines that many international investors are n’t buying Xi’s promises to carry out audacious structural reforms. And how new stimulus increases are then “posing wide downside risks to China’s macroeconomic, economic, and institutional strength,” according to Moody.

Chinese President Xi Jinping claims that he now favors more expansion driven by the private sector. Online Screengrab image

China’s finance minister responded by saying that mainland growth is improving in the October–December quarter and that the Chinese economy will account for more than 30 % of global GDP in 2023. That would be consistent with predictions made by the International Monetary Fund ( IMF).

However, there is no timeline for taking action to grow&nbsp, better, rather than just faster, in China’s new rhetoric. According to scholar Lee Lu at Nomura Holdings, more stimulus may become necessary in the short term. We also think it’s too early to say the bottom, he says, “despite the numerous trigger actions announced recently.”

The good news is that Premier Li Qiang is thought to have received Xi’s approval to speed up efforts to reinvigorate the private sector. Li’s team unveiled a 25-point plan package next month to level playing fields and increase funding for private companies.

Eight economic officials and firm tanks are involved in the program, including the All-China Federation of Industry and Commerce, the People’s Bank of China, National Administration of Financial Regulation, China Securities Regulatory Commission, &nbsp, and National Development and Reform Commission.

The goal is to significantly raise the loan to private enterprise ratio in order to increase innovation and productivity and support more powerful supply chains. According to Li’s group, the goal is to guarantee” ongoing revenue solutions” for private businesses that refrain from “blindly stopping, suppressing, withdrawing or cutting off money.”

The NDRC stated this week that China “is comfortable and more capable of achieving long-term robust growth, and constantly bringing new impetus and options to the earth through China’s accelerated advancement.”

According to scholar Diana Choyleva of Enodo Economics,” Beijing is serious about getting funds flowing to the healthier components of the home field, whether it be personal or state-owned.” &nbsp, They are not satisfied with entrusting the choice to the businesses, which have discriminated against the private market for a number of factors.

Jumpstarting the creation of a high-yield bond market to expand China’s money markets universe is an essential component of the business. Theoretically, a lively and varied range of debt offerings would boost options for private sector financing and boost China’s appeal to investors.

These, Xi’s efforts to make the yuan more popular on international businesses are advantageous. As concerns about the US dollar rise, the battle is gaining momentum. Nothing could hasten that progress more quickly than swiftly and openly putting in place significant reforms.

Here is where Xi and his team needed to win back the confidence of international investors. It is important to note that The Moody’s news did n’t destroy Chinese assets.

The most significant lesson from the Moody’s statement, according to economists at advisory organization China Beige Book, is that their team takes years longer than the majority of China viewers to reach an obvious conclusion. Little brand-new around. Continue.

However, analysts at Citigroup Global Markets predict that in 2024, China’s investment-grade payment issues will be more alluring than those of US counterparts. Following the Moody’s information, Citi experts wrote,” The market has now priced this in to some extent, and China investment-grade has some price.”

In Chongqing, China, a butler is seen strolling along dingy bridges with brand-new residential properties in the distance. Photo: Zhang Peng, LightRocket, CNBC Screengrab, and Getty Images

As Beijing works to regulate real estate markets, Citi experts also cited China’s” stronger, but still fragile micro story.” Chinese money bonds with an investment class are currently up about 5.4 % in 2023.

According to Citi researchers,” China risks are primarily in the price.” The Chinese offshore credit market, which is regarded as an asset and money diversifier for regional investors, tends to do well in times of inland equity-market volatility.

Analysts ‘ concern that China’s time of raising GDP rates solely through stimulus and funding is over, however, is where Moody makes a point.

For starters, “remaining plan room may be limited, as we believe central authorities needs to balance moral liability problems when supporting local governments with substantial debt burdens,” according to scientist Samuel Kwok at Fitch Ratings.

Another is that the quality of mainland growth can only be improved by strong financial retooling that unlocks China’s longer-term growth potential. This trend toward trigger over reform explains why S&amp, P Global Ratings predicts that China will grow below 5 % into 2026.

According to S&amp and P record analyst Eunice Tan, China’s real estate market is still under stress despite stimulus. The cash patterns of property developers and heavily indebted regional government borrowing vehicles are being dented by limited access to credit assistance and higher corporate debt utilize.

As a result, S&amp, P’s Tan claims that the rise website for the Asia-Pacific is moving from China to South and Southeast Asia. Tan notes that this change may limit China’s lenders ‘ medium-term face while enhancing those of India, Vietnam, the Philippines, and Indonesia.

China’s imports decreased by 0.6 %, despite data released on Thursday showing a 0.5 % increase in exports in November year over year. More policy supports are required to promote demand, according to a word from UBS analysts, and the data more dashed hopes of regaining China’s consumption-led economy.

According to OANDA researcher Kelvin Wong, “domestic need has remained weak in China despite continued revival efforts by policymakers via intended monetary and fiscal stimulus steps.”

Therefore, according to Wong,” It seems that the previous one-month treatment of transfer growth recorded in October is probably a “blip” and November’s bad year-on-year growth rate suggests the rolling twelve months of bad growth trend in imports remains intact.”

At the Horgos Port in the autonomous region of north China’s Xinjiang Uighur, business containers can be seen. Image: Xinhua

Global traders are anxiously anticipating the Politburo’s next chamber event as difficulties mount. This once-every-five-year program typically takes place in early December.

The fact that it has n’t been scheduled yet has led to rumors that Xi wants to address a number of pressing issues, such as rising local government debt, deflationary pressures, and real estate to record youth unemployment.

As a madly polarizing 2024 presidential election draws near, the US even faces significant obstacles. The US government’s estimated annualized loan interest payments have increased to the$ 1&nbsp, trillion level, among other things.

Shareholders are free to disregard the financial paths in Washington and Beijing that Moody’s, S&amp, P, and Fitch have to say. However, as payment prospects deteriorate, it is important to keep in mind that some observers, analysts, and investors are n’t buying the party line, despite Biden and Xi’s insistence that they are on top of their individual debt problems.

Following William Pesek on X, previously Twitter, at @WilliamPess

Continue Reading

False prophet of new age protectionism misleading India

The two presumptions that the plan is being implemented in a very different setting than in the past and that various devices are being deployed are the basis for expectations that trade substitute in India may be successful this time around. &nbsp,

However, each of the nation’s prior import substitution shows failed because they varied from one another along these dimensions.

One could accept their argument if import substitution industrialization proponents base their success solely on their ability to create and maintain the intended industry. The market offers significant room for trade substitute, with goods exports at 21 % of GDP in 2022 as opposed to less than 5 % in 1970. &nbsp,

Numerous products are imported in large quantities, which indicates that there is local need for them. By preventing their imports, regional suppliers of those same items or comparable substitutes will be able to emerge.

However, this level of success may be comparable to India’s earlier attempts at buy substitution, which it pursued for a number of decades after gaining its independence. India properly established many sectors during that time, including steel, copper, fertilizer, substances, and automobiles, behind a defensive wall.

The domestic supply answer is probably going to be quicker this time around because there are no purchase licensing requirements, less stringent labor and capital markets, no limitations on large-scale creation, more freedom for foreign investors to enter, and no restrictions on tech imports. &nbsp,

Because there is less of a distinction between import prices and domestic production costs, the security loss brought on by the import taxes is also reduced.

But, the true success of import substitution may be determined by its capacity to speed up the expansion of the whole economy, not by how well it can establish and maintain guarded industries. Along this parameter, the trade substitute argument falls apart. &nbsp,

India is increasing the number of iPhone council processes. Photo: Online

The opposite is true for exposed products, which frequently cost more to produce domestically than worldwide. Protection encourages tools to walk into and out of higher-cost products in order to support them.

The idea that import replacements can be successfully pursued alongside export promotion to increase GDP is a common mistake among policymakers. That overlooks the fact that supporting a small number of business means discouraging others when there is merely ONE set amount of resources available at any given time.

An analysis of the full import and export series for any nation over a ten-year period or long shows that when import substitution effectively reduces overall imports, complete exports also decrease.

Import taxes on inputs are one way that import taxes hurt exports and the ultimate import of alternative goods. Whether the inputs are exported or sold internally, these duties lower the profitability of the final products using them. &nbsp,

Real exchange price appreciation is a more widespread way that tariffs hurt imports. The supplier receives fewer Indian pounds for every US currency’s value of exports as a result of currency appreciation.

The success of an advocate buy substitution industrialization policy has been further undermined by two new developments that are mutually reinforcing. &nbsp,

Second, the cost of moving products and information over long distance has significantly decreased thanks to advancements in communication and transportation technologies. &nbsp,

Next, present technology has produced sophisticated mass-consumption products like smartphones and tablets with extensive style and information-related content. Additionally, it has made it possible to more effectively divide up the production of both new and old materials.

Due to these advancements, it is now possible to achieve productivity by locating product development, product design, component production, and assembly across numerous countries, depending on their cost advantages. &nbsp,

The phone is a good example; its innovation, design, manufacture, and assembly of various components are dispersed across twenty-two nations. Modernization that emphasizes buy substitution discourages industrialization by putting barriers in the way of this global specialization.

It is important to avoid mistaking India’s economic prospects for despair when expressing skepticism about trade substitution industrialization. India has been making the right decisions in almost all other areas, despite reverting to a moderate form of ISI. &nbsp,

Through expanding economic reforms, it has also been removing barriers from the product and factor markets. It has been rapidly expanding its infrastructure, concentrating on roads, railways and waterways as well as ports, ports and digital platforms.

In their” China Plus One” strategy, the central government and a few state governments have also been courting multinational corporations to become the” Plus One.” Despite the achievement of import substitution industrialization, these services understand how crucial it is to interact with global markets. &nbsp,

By involving like-minded nations in free trade agreements (FTAs ), India can increase its appeal to multinational corporations as the” Plus One” destination.

India has opened the India-Middle East-Europe Economic Corridor to its north. The assumption of FTAs with the EU and the UK can significantly increase its impact. Perhaps more crucial is India’s relationship with its eastern allies. &nbsp,

Joining the Regional Comprehensive Economic Partnership (RCEP ) would have been the best way to achieve this, in my opinion. However, this has lost social traction in the wake of the recent uprising over the border with China. &nbsp,

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the other significant FTA of the area, should be joined by ASEAN as the next best course of action. India runs the risk of ceding control of the area to China absent these actions.

The imports of some products have been reduced as a result of the American coverage regime, which includes transfer substitution, but no import and exports overall. &nbsp,

At the Jawaharlal Nehru Port Trust facilities in Mumbai, a contractor oversees box stacking. Asia Times Files / AFP image

Full goods exports have remained strong, increasing from a pre-Covid- 19 peak of US$ 518 billion in 2018 to$ 721 billion by 2022. Exports of goods increased from$ 337 billion in 2018 to$ 456 billion by 2022. Exports of services have performed also better.

If history is any indication, ten years from now, proponents of buy substitution may assert that India’s accomplishment was a result of its pursuit of it, in defiance of opposing advice from free trade ideologues. &nbsp,

After all, the story that industrial policy played a role in South Korea, Taiwan, China, and Singapore’s success is still pervasive. However, this assertion is untrue. India may succeed despite import replacements, not as a result of it.

At Columbia University, Arvind Panagariya holds the positions of Jagdish Bhagwati Professor of Indian Political Economy and Economics.

Continue Reading

The dangers of guerrilla triumphalism in Myanmar

Over a month after the launch of the most successful campaign by anti-junta resistance forces in Myanmar’s civil war, some overarching realities are emerging from events that have been widely hailed as a turning point in the conflict.

The most important is arguably the least obvious: the dangers of triumphalism and a rush to victory by guerrilla forces that are militarily still ill-prepared to confront a trained army in conventional combat.

Those dangers are arguably today playing out on the streets of Loikaw, the capital of eastern Karenni state, and in other smaller towns where lightly armed fighters have been thrown into battles against heavy artillery and unremitting air strikes launched by a military that appears unconvinced by reports of its own imminent demise.

As widely reported and opined, the sweeping insurgent offensive across the north of Shan state by the tripartite Brotherhood Alliance of Kokang Chinese, Palaung and Rakhine ethnic insurgents which opened on October 27 was unprecedented on a range of levels.

Operation 1027, named after its launch date, seized a string of towns along the Chinese border, claimed to have overrun up to 200 military posts and bases capturing huge stocks of munitions, and saw the surrender of three Myanmar army battalions.

Even in the darkest days of early 1968 when Communist Party of Burma (CPB) forces surged into northeastern Shan state from launchpads inside China, the Myanmar Army had never suffered such a rapid and crushing series of defeats.

But northern Shan state is not Myanmar and to imagine that the conditions that produced these successes can be easily replicated in very different operational contexts in other parts of the country is surely illusory.

The 1027 campaign’s striking advances emerged from three essential factors: surprise and coordination at the strategic level and sophisticated deployment of armed drones that compensated significantly for a lack of artillery at the tactical level.

Brought to fruition over many months of planning, these factors were peculiar to 1027 and it is worth examining each in turn. The element of surprise was strikingly manifested in the first hours and days of the operation and then, as the military reacted, became obviously less important. 

The diminishing impact of surprise was clearly reflected in the timelines of key engagements. The fight for the border town of Chin Shwe Haw was won by the Kokang-Chinese Myanmar Nationalities Democratic Alliance Army (MNDAA) within a matter of hours on the morning of October 27 when the element of surprise was overwhelming.

The battle for the town of Kunlong, home to the main Salween River bridge linking Kokang to the rest of the state, took until November 13 to achieve victory. The final assaults by the ethnic Palaung Ta’ang National Liberation Army (TNLA) that seized the town and base of Mong Kyet came on November 23 after weeks of relentless but ultimately vain military air strikes.

Members of the Ta’ang National Liberation Army (TNLA) ethnic army train at a camp in Myanmar’s northern Shan state, March 8, 2023. Image: Twitter Screengrab

At the strategic level, the element of surprise is now long gone. If it was not before, the Myanmar Army is now fully alert, irate and assessing its limited strategic options.

Battlefield coordination between the Brotherhood Alliance, which in addition to the MNDAA and TNLA also includes the ethnic Rakhine Arakan Army (AA), also critically underpinned 1027’s success. 

But such coordination is not achieved over a few months. Often forgotten amid the current euphoria is that the Brotherhood Alliance has been operating closely together in the relatively narrow battlespace of northern Shan state since at least 2014 – or an entire decade. 

The trio’s first major joint offensive came in early 2015 with a full-scale though ultimately abortive attempt to seize Kokang from the military. Further coordinated operations followed, most notably in August 2019 when the Brotherhood – for the first time operating under that name – launched a campaign that in many respects served as a test run for 2023’s Operation 1027.

Far smaller in scale and deployment of manpower, the joint operations in 2019 were not aimed at capturing entire towns but did overrun small posts, blew bridges effectively severing major trade routes to the Chinese border and involved a powerfully symbolic rocket attack on the garrison town of Pyin Oo Lwin overlooking Mandalay.

It is difficult to underestimate the importance of years of regular liaison and joint operations in establishing trust between different military organizations. And in this respect, the Brotherhood is unquestionably unique in Myanmar’s context.

No other ethnic resistance organizations have achieved this level of cooperation and interoperability either with each other or with newly formed anti-coup People’s Defense Forces (PDFs) that do not come under their direct command and control. This has obvious implications for the campaigns in central Myanmar in the coming year.

The third element underpinning the success of Operation 1027 was the tactically innovative deployment of drones, something that armed forces commander-in-chief Senior General Min Aung Hlaing has himself acknowledged and for which he has blamed foreign experts.

He needs to give Myanmar citizens rather more credit: As his troops in the field have become painfully aware, drone warfare is hardly a new element in Myanmar’s armed conflict.

First launched at a relatively amateur level in late 2021 by local PDFs in Sagaing region, the deployment of attack drones – unmanned combat aerial vehicles or UCAVs in military jargon – have made remarkable advances since. Dedicated PDF drone units such as the Federal Wings now operate under the anti-junta National Unity Government (NUG), flying relatively sophisticated armed quadcopters among other UCAVs.

Where the 1027 campaign appears to have achieved a striking new level of tactical innovation was in the marriage of the expertise and experience already established by PDFs and the organization, coordination and resources brought to the fight by the Brotherhood.

This in turn reflected the relatively new cooperation between the NUG and the Brotherhood that respected Myanmar analyst Ye Myo Hein dates from early 2023. This cooperation, translated into both lift capability allowing for heavier payloads and UCAV numbers.

Images emerging from Shan state in November indicate that larger quadcopters and hexacopters used typically for agricultural purposes such as crop-dusting and commercially available in China for between US$8,000 and $16,000 were converted into makeshift UCAVs.

Able to lift large caliber 120mm mortar rounds (which weigh 14.4 kilograms and have a lethal radius of around 25 meters), these larger drones were then deployed in swarms calculated to overwhelm handheld drone-jamming guns issued to many army units and soften up defenses for ground assaults.

Over the first two weeks of the campaign, the results appear to have been striking but will take time and resources to replicate on fronts in other regions of the country.

Myanmar’s military has an artillery advantage in its war against insurgents. Photo: Facebook

Indeed, even in northern Shan state the key elements of surprise, coordination and drone tactics are now meeting clear limits.

The major cities of Laukkai, the capital of the Kokang region, Lashio, the military headquarters of the Northeastern Regional Command, and Muse, the largest trading hub on the Chinese border, remain in regime hands and will not be captured by Brotherhood forces without potentially protracted urban fighting that sucks up manpower and munitions.

What this looks like has already been demonstrated beyond Shan state where post-1027 euphoria has inspired other resistance groups operating in very different conditions with very different capabilities to make their own quick-win lunges for urban centers with results that have been mixed at best.

The district center of Kawlin in upper Sagaing region which fell to a joint force of Kachin Independence Army (KIA) and local PDF units on November 6 offered a positive example in the immediate aftermath of 1027 and in a region where the KIA has been deeply engaged since 2021.

Very different results emerged from the short-lived battle for Pauktaw in Rakhine state where late on November 15 Arakan Army units seized the riverine town close to the state capital of Sittwe in a surprise assault only to be driven out by a rapid counterpunch from regime ground, air and naval forces.

A similar scenario unfolded in Taze in the center of Sagaing region where an attempt by joint PDF forces to overrun an important town close to Shwebo city was beaten back on November 29 by airstrikes and reinforcements of heliborne infantry.

The battle for Loikaw

But by far the most sobering example of triumphalist overreach has been the attempt by Karenni resistance forces led by the Karenni Nationalities Defense Force (KNDF) to seize the state capital of Loikaw, a large city and headquarters of a Regional Operations Command that lies only 125 kilometers from the Naypyidaw Capital Region.

Spurred on by the successes of 1027, the Karenni resistance announced its own “Operation 11.11” on November 11 with the primary objective of capturing the city.

Moving into the urban areas from the northwest, the attackers met with some initial success, not least around the university where video footage of shaken and wounded army troops surrendering at the gates of the strongpoint was shared globally and appeared to promise early victory.

Two weeks on, however, the grinding battle for a largely empty city continues as a garrison several battalions-strong pounds the resistance with artillery while calling in helicopter-delivered resupply and close air support which on one day in late November was reported to have escalated to a remarkable 60 strikes.

For their part, the resistance forces have been limited by light weaponry compounded by the difficulty of mounting drone strikes on army strongpoints given the geofencing around Loikaw airport, which lies only three kilometers from the city center. On November 25, fresh columns of insurgent fighters were filmed moving into the city to reinforce an operation that was clearly not on the cusp of victory.

Under these conditions and depending on events elsewhere, it is entirely possible that the battle for Loikaw could last weeks or even months, exacting a steady toll on resistance forces that might perhaps have been better directed against less ambitious and far more vulnerable garrisons in other parts of the state.

As the war moves into an inevitably bitterly fought dry season, opposition commanders will face the critical challenge of calibrating the right balance between, on the one hand, a headlong rush to exploit the momentum of 1027, and, on the other, limiting further potential advances through an excess of strategic caution.

Karenni Nationalities Defense Force fighters on the march in a file photo. Image: KNDF

Striking that balance is certainly not made any easier by the absence of a unified insurgent command that results in local and regional forces, as in Karenni State, making their own uncoordinated assessments of the “big picture” and acting accordingly.

But that calibration will increasingly be made in light of two related considerations emerging from events surrounding Operation 1027. The first is that while the Myanmar military has suffered a signal defeat in a campaign that arguably marks a tipping point in a wider war, it is certainly not on the brink of collapse.

Strategically it continues to benefit from cohesion of command while tactically it still enjoys a clear edge in artillery and, self-evidently, a monopoly of airpower, both of which it will continue to deploy with zero regard for civilian casualties.

Lessons learned from a range of protracted guerrilla conflicts over recent decades suggest that ultimately neither tactical capability can stave off defeat in a conflict also critically impacted by shortfalls in military manpower and deteriorating economic and political conditions. But both artillery and airpower will remain increasingly lethal factors in the coming months.  

The second relates to psychology. Myanmar of December 2023 is not Afghanistan of August 2021 and allowing dreams of a domino-style collapse to cloud realistic assessments of the military’s capacity and resolve invites serious reverses and human losses that will severely impact morale – both in resistance ranks and among the wider civilian population.

The proposition advanced by some analysts that the current situation is nothing new and involves merely a replay of setbacks suffered by an army that has been under siege many times before in its history is undoubtedly misguided.

The geographic scope and military scale of the challenges currently confronting an over-extended and wounded military are without precedent and, short of a negotiated ceasefire, threaten its survival as the dominant politico-military institution it has been since the 1950s.

However, to believe that the advances achieved by 1027 mean the war in Myanmar has abruptly entered the final phase of a “strategic offensive” that requires the seizing of towns and a “march on Naypyidaw” is no less misguided and indeed dangerously delusional.

It risks abandoning a gradualist resistance strategy that has evolved since late 2021 based on relentless attrition, the severing of national communication and trade arteries, and forcing the steady retreat of regime forces into increasingly isolated and ultimately unsustainable urban enclaves.

But lessons from history also suggest that Operation 1027 is an unlikely pointer to future strategy and that in other conflicts overconfident but unprepared insurgent forces have still managed to snatch defeat from the jaws of victory.

Continue Reading

Afghan Hazara refugees live in fear of being deported by Pakistan

A worker from the National Database and Registration Authority (NADRA), along with police officers, speaks to a resident while checking identity cards, during a door-to-door search and verification drive for undocumented Afghan nationals, in an Afghan camp on the outskirts of Karachi, Pakistan, November 21, 2023.Reuters

In the shaky mobile phone footage, women’s voices can be heard panicking. The camera moves in and out of focus, positioned through a crack in a door frame.

Across the yard, Pakistani police are outside a property, looking for undocumented foreigners. The officers flip through papers as several men sit expectantly inside.

Then the video cuts out.

Across Pakistan, unannounced arrivals of police are becoming increasingly common in a crackdown on hundreds of thousands of foreigners who do not have the right documents to stay.

The vast majority affected are Afghans, who now face the threat of deportation.

Afghan refugee women and children sit at a registration centre after arriving from Pakistan near the Afghanistan-Pakistan border in Spin Boldak district of Kandahar province, Afghanistan, 28 November 2023

EPA

Many have reason to be fearful of returning to their country, after the Taliban seized power in 2021.

They include journalists and human rights activists, members of the LGBT community, contractors who worked for US-led forces or the Afghan military, and women and girls who can no longer receive an education in their country.

But the raid in the footage the BBC was sent by the family who filmed it, was targeting an area in Pakistan known for a particular ethnic group – the Hazara. Predominantly Shia Muslims, they have long been persecuted by Sunni extremists.

Members of these two branches of Islam share many beliefs but differ on many other aspects of religion – and the sectarian divide has torn communities apart over the years. Out of fear of persecution in Afghanistan, many Hazaras decided to cross the border to Pakistan.

“Life under the Taliban felt like a prison, they didn’t see us as Muslim, they called us infidels. We never felt safe with them,” Shakeba, a 17-year-old Hazara from Afghanistan, told the BBC. She arrived in Pakistan in early 2022.

Shakeba

Shakeba has seen police raids on her neighbourhood but so far they haven’t been to her house.

She’s terrified that she or her family will be picked up if they leave its four walls – they’ve been in hiding for the last three weeks.

“Our faces look different. Even if we wear Pakistani clothes, we are easily identifiable. They identify us and shout ‘Afghani, Afghani!’.”

Hazaras are of ethnically Mongolian and Central Asian descent; their features differentiate them from much of Pakistan and Afghanistan’s populations.

Like other Afghans in this article, Shakeba’s name has been changed to protect her identity.

Afghans make up almost all of the estimated 1.7 million foreigners that Pakistan says have no right to live in the country.

Its move to expel undocumented foreigners came after tensions soared following a spike in cross-border attacks. Islamabad blames them on Afghanistan-based militants, a claim the Taliban government in Kabul denies.

In the last two months, more than 400,000 people have crossed from Pakistan to Afghanistan.

A highly uncertain future awaits them – some are staying in camps, others have set off across the country to start life again, often taking little with them as winter approaches.

An Afghan refugee has himself wrapped in a quilt against the cold at a tent camp after returning from neighbouring Pakistan, at the Afghanistan-Pakistan border in Toorkham, Afghanistan, 18 November 2023

EPA

Many new arrivals from Afghanistan since 2021 have faced long delays securing any form of formal documentation in Pakistan, including those with refugee claims. This left them with two main options when the new policy was announced – leave and take their chances back home in Afghanistan or stay and risk the knock on the door from the police.

For Shakeba, there was no hesitation.

“It wasn’t a decision,” she says. She and her family arrived in Pakistan after they received multiple threats to their lives, she says. “I said to my family, we will stay here until they force us to go back. It is not a place for Hazaras, it is better to be here and pray for our luck.”

Fida Ali, another Hazara, said: “Of course there is radicalism in Pakistan, but Afghanistan is on a completely different level.”

A former teacher, he arrived in Pakistan just over two years ago, soon after the Taliban seized power as foreign forces evacuated. “When the internationally supported government collapsed, so did many of the institutions we were working for. The second reason for leaving is that as a minority, we were a number one target.”

The fear of return

For Hazaras, Pakistan has not always felt like the safer alternative to its neighbour, but when the Taliban retook power many joined huge numbers of Afghans who fled over the border.

People walk past a shrine in Ghazni

Getty Images

“Yes, Hazaras face persecution in Pakistan but many feel that they are being brought back to the slaughter house if they return to Afghanistan,” says Jalila Haider, a lawyer and human rights activist.

She is a Pakistani Hazara and has been offering legal aid to many who have been arrested and threatened with deportation in the last few weeks. She explains that there is a significant lack of trust between the Hazaras and the Taliban because of recent history.

Shakeba says this led to a real fear.

“We were scared of the Taliban, that they might kill us like they did before,” she told the BBC.

When the Taliban were last in power from 1996-2001, Hazara fighters fought against them. Hazaras were killed in their thousands by the Taliban, according to Human Rights Watch who accuse the Taliban of carrying out massacres at Mazar-i-Sharif in August 1998, Yakaolang in 2001 and Robak in May 2000, not distinguishing between combatants and civilians.

A Taliban spokesperson said this was not true, and that these deaths were part of armed conflict, with casualties on both sides.

Amnesty International says it has documented instances of torture and executions of Hazaras since the Taliban returned to power. The Taliban government denies these accusations too. Hazaras are also regularly the target of militant groups such as so-called Islamic State.

Taliban spokesperson Suhail Shaheen said the Pakistan policy of deporting so many Afghans in the run-up to winter is “an attempt to put pressure on the young Islamic government in Kabul”.

“We welcome Afghan refugees of all ethnicities including Hazara to return to their country. And we assure them that their life, property and honour is protected and they can lead a normal life in Afghanistan,” he told the BBC.

Fida Ali

Pakistan’s caretaker Prime Minister Anwaar-ul-Haq Kakar has promised that at-risk individuals will not be sent back.

“The database of such individuals is with the Ministry of Interior,” he told Arab News in a recent interview.

How such individuals are identified is unclear and the ministry did not respond to a BBC request for comment. No list has been made public. Pakistan’s Commissioner for Afghan refugees Abbas Khan has also said any suggestion Hazaras were harassed by police was “fabricated”.

But Ms Haider says she has seen many people go into hiding.

“In towns, I have seen many of the shops and businesses run by Hazaras and other Afghans closed because they are afraid. I fear it will create another human tragedy. How will they eat?

“There is no mercy for the Hazaras. There is a very low chance they can get jobs or opportunities in Afghanistan. They face the challenges many other Afghans face, but more intense because of their ethnic group.”

Under the previous Afghan government, Hazaras found new opportunities.

In 2004, they were formally recognised as citizens. Many took more prominent positions in civil society, government and the military.

“There is no doubt that within the last two decades, the Hazara people were supportive of the process,” Fida Ali says of the government the Taliban unseated.

“Now that means we are accused of supporting the allies. It is another factor that means we face extreme danger.”

Baqir and family

All the Hazaras the BBC spoke to show the same frustration, fear and hopelessness.

Baqir, who worked with the military and government in Afghanistan, is laying low with his family. They arrived in Pakistan about two years ago and he says returning would be “like playing with my life”.

“We can’t go back to our own country, maybe death will be awaiting us there; and here no-one hears our voice – we are totally lost!”

With no documents, no certainty and no recognition as refugees, all say they can only wait and hope.

“We really don’t know where to go or what to do,” Shakeba says. “We have lost everything. The dreams I have for my life are all gone.”

line

You might also be interested in:

This video can not be played

To play this video you need to enable JavaScript in your browser.

Continue Reading