China keeps pressure on Philippines despite US ally – Asia Times

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The Philippines and the United States ‘ annual Balikatan joint military exercises this year ( April 22 through May 10 ) broke new ground. Thus did China’s answer to it. The South China Sea and Taiwan Strait spots were demonstrated by the practice areas and the weapons deployed. Beijing’s rebellion amid the group’s show of force is exposed by a rise in Chinese vessel presence in Manila’s eastern exclusive economic zone and another harsh maritime incident over a disputed reef.

The display of strength and the response to it heightened tensions in the turbulent waters and posed concerns about the drill’s warning price. The parties are allowing more hazard while reducing the scope for politics, according to the symbolism and messages.

expanded and developed display of supporters ‘ power

The 39th Balikatan training was billed as the “most powerful, most ambitious and most complicated” however. It expanded on improvements made in more new drills, which had turned into a field testing facility for new defence ideas and arms.

In Cagayan, one of the Philippines ‘ northern provinces opposite Taiwan, US-made Patriot weapons were amphibiously inserted by land and sea in 2022.

In Zambales, a southern province facing the West Philippine Sea, live-fire demonstrations of Patriot and Avenger weapons took place last year. For the first time, a sinking exercise ( SINKEX ) was also conducted with a decommissioned corvette as a mock target hit by volleys from land, air, and sea platforms. The occasion was likewise held off Zambales, 235 km from Scarborough Shoal, a contested have between Manila and Beijing.

This time, it was the change of the Typhon floor- based weapon, with a range of 1600 kilometers, to appear in a mutual military exercise preceding Balikatan. Patriot missile missiles were likewise deployed for the first time at Clark, a former US airport in northern Luzon.

It’s interesting to watch whether these weapons will eventually be prepositioned in agreed locations under the Philippino-US Enhanced Defense Cooperation Agreement ( EDCA ). The Mod missiles have been stationed in unknown locations for a long time following the training, which has fueled speculation that they are now stationed in the nation. The number of EDCA foundations increased from five to nine next year, adding three new locations in southern Palawan and northern Luzon.

Will China react the same way it did when South Korea approved the installation of US Terminal High Altitude Area Defense ( THAAD ) missiles on its soil if they ever get fixed in these locations? If so, Manila’s waning relationships with its big cousin and largest business partner perhaps more crumble. Beijing condemned the weapon deployment. Wu Qian, a spokesperson for the PRC Defence Ministry, stated that the region was “heard a lot of risk of war” and that “intermediate-range missiles are proper and offensive weapons with a powerful Cold War colour.”

New Balikatan rounds have sharpened the additional defense and multi-domain orientation. Island security and conquering, air and missile protection, as well as security and information operations were included in this year’s iteration. The Philippine Coast Guard, an organization that is leading the charge against China in challenging circumstances, participated for the first time.

In Palawan, a crucial state facing the South China Sea, US HIMARS missiles were even fired.

In the state of Ilocos Norte, President Ferdinand Marcos Jr.’s official residence, a SINKEX was held, which is also in northeastern Luzon. Despite claims that the incident was accidental, a Chinese-made original naval tanker became the target.

Most notably, for the first time, sea activities went beyond the government’s 12 navigational- mile regional seas. France, which hopes to provide Manila with boats, dispatched a ship to visit their Filipino and American peers, who sailed from the Sulu Sea to the South China Sea. Paris’s entrance was its first. Fourteen states, including brother South China Sea littoral states Brunei, Indonesia, Malaysia and Vietnam, even sent spectators.

China: angry and unaffected

Manila’s extraordinary movements were met by Beijing’s strong measures. Near Spanish military installations in the South China Sea, Chinese government and army vessels were spotted. Three Chinese sea study vessels were among them when they were discovered in the Second Thomas Shoal, a new collision between the two companions. Another was seen off Catanduanes and Samar, manner off in the country’s south facing the Pacific Ocean.

Four Chinese PLA Navy vessels tipped off the allied fleet of four ships, two from the Philippines, one from America, and one from France, who were conducting international maritime drills in the South China Sea.

While Balikatan was afoot, a fresh event happened in Scarborough Shoal. Three Chin Coast Guard ships rammed and used water cannons to harm two Asian state arteries. That incident followed a March March incident in which two Chinese coast guard ships blew up a Philippine human vessel while also being impacted by high-pressure water blasting.

The assumption that Balikatan would urge China to behave politely and restrain from acting assertively sprang up, especially given the presence of foreign fleets. The most recent sea event was denounced by a number of nations. But beyond flouting international law and social costs, China’s rebellion made a strong statement: The upgraded exercising no longer deters Beijing, nor does Manila’s clarity travel in the contested water.

Will this cause the alliance to adjust its response? Despite suffering injuries to sailors and property damage, Chinese actions continue to fall short of the definition of an “armed attack” required to stoke the much-detested US pledges of ironclad commitment to its junior ally. China may be encouraged by the Scarborough Shoal water-blasting scandal. More untoward instances, in turn, may erode trust in the alliance’s ability to push back beyond rhetorical denunciations.

In order to ward off China, the Philippines has deepened defense relations with the US and other partners. This includes creating a more expansive and evolved Balikatan. A failure to obtain satisfactory outcomes may necessitate a new analysis. This may serve as a catalyst for China’s desire to lessen Manila’s strong ties with its former colonist and long-standing ally and to obliterate non-regional powers from the intractable sea dispute.

Yet, close calls and all, disputants still tolerate further risk. With its vigorous coverage of Chinese activities in tense situations and its involvement in coordinated activities with allies and partners, Manila continues to stand strong. No anticipated high-level discussion with Beijing has been sparked by diplomatic protests.

The first defense chiefs to meet on the sidelines of the this year’s Shangri-la Dialogue in Singapore since 2022, marked a stark contrast. As the US approaches elections in the late summer, it is one of a number of high-level official contacts to try to bolster ties between the two rivals.

Last April, Secretary of State Antony Blinken and Secretary of State Janet Yellen made quick trips to China. Blinken’s trip coincided with the early days of Balikatan.

The South China Sea is only one of the many contentious thorny issues that divide the two biggest powers, and it might not even be the most pressing one. Beijing, on the other hand, is not backtracking and exerts pressure on its smaller neighbor despite having a major ally nearby.

If China’s response to this year’s Balikatan shows the limits of deterrence, the South China Sea may be in for more turbulence.

Lucio Blanco Pitlo III, a research fellow at Asia-Pacific Pathways to Progress Foundation, is the president of the Philippine Association for Chinese Studies.

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Yen slumps to lowest since 1986, putting traders on alert

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Masato Kanda, a bottom dollar minister, stated on Monday that Japan was always ready to take action against extreme market movements, but traders ignored the warning after the most recent treatment failed to stop the selling. Because it’s not being supported by any shift in levels, Tuckey said, “perhaps thatContinue Reading

Energy transition will propel Malaysia’s economy, needs to ‘survive multiple administrations’: Economy minister

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MANAGING SOCIETAL IMPACT IS THE INTELLIGENT PART.

Companies and even the general public are aware that high-quality opportunities” come with needs for natural energy,” according to Mr. Rafizi. &nbsp,

” That realization sort of provides a balance to the negative social narrative against any plan that has a knock-on effect on the public.”

He claimed for CNA that controlling the impact on society is the trickiest element. &nbsp,

” I wo n’t say that we have done it well”, he said. There is still a long way to proceed, but we put significant factors first.

Malaysia has reached a crucial inflection point in its energy needs, he noted, referring to a name for a nation that goods more than it exports. Beyond this, he noted, it could become” a gross supplier” of oil and gas.

We are making our best efforts to inform the public that our energy mix is unsustainable if we do n’t pivot, he continued. &nbsp,

” And therefore, the sooner ( we ) pivot, the better” .&nbsp,

Continuous WITH SUBSIDY RATIONALISATION&nbsp,

In the discussion with CNA, Mr Rafizi furthermore defended the president’s move to cut domestic energy incentives as a vital part of fiscal combination.

Malaysia on Jun 10 cut most of its diesel subsidies, which the authorities said was costing the country RM4 billion ( US$ 849 million ) annually. &nbsp,

Following last year’s announcements to rationalize subsidies for chicken sales and electricity tariffs, the next government initiative was implemented to rebuild the country’s subsidy distribution system.

The changes are a result of a larger trend to stop paying for overly expensive cover grants.

The emphasis has always been on putting together the necessary system in place, according to Mr. Rafizi, “if you notice how we have managed the sequencing of sympathetic and significant policies, like the advertising of gas subsidies. &nbsp,

When it meets certain internal standards, the state will decide whether to roll it out.

Business observers are currently carefully monitoring the upcoming step in the payment rationalization program.

” But I hope at the same time, the market understands by now that we intend to do it, and we have done it”, said Mr Rafizi on the president’s intention to continue with the program. &nbsp,

Our fiscal combination strategy’s fundamental component is the payment rationalization program. It’s just that given the very dark of it and the awareness, it is best that the action- by- action is kept close to the president’s chest”.

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25-year weak yen obsession is blowing up on Tokyo – Asia Times

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Forex traders who are betting on a yen bounce should talk to policy veterans who are more knowledgeable and not the current ones.

Officials from the Bank of Japan, Shunichi, Suzuki, Masato Kanda, and Kazuo Ueda, the yen’s government, argued that the renminbi is a victim of the Japan-US offer gap, while the yen was at its lowest point over the past year.

This is bedroom, as Hiroshi Watanabe, past vice minister of finance for foreign affairs, tells Nikkei Asia. Yet if Tokyo participates suddenly, there’s little opportunity for the yen to march from 159 then history, say, 150 to the US dollar, he says.

In the days to come, the chances are that the yen will continue to decline. The purpose: Tokyo’s 25- year- ancient poor- yen strategy is blowing up on Asia’s next- biggest economy in real time, leaving the currency on a upward path.

” The level of japanese loss in recent years is startling”, says Robin Brooks, scholar at the Brookings Institution. The Turkish lira, which has traditionally been the weakest money in the major markets, has lost more in real terms than the renminbi. However, since the end- 2019 – since only before Covid hit – only one money, the Egyptian pound, has fallen more than the yen in true terms”.

Brooks adds that,” no surprisingly, the level of this loss has sparked controversy on its drivers and how much further it can expand”. On some level, he explains, “yen weakness stems from Japan’s extremely high debt, which forces the bank to cover long- term government bond yields via available- ended bond buying”.

Finally, Brooks concludes,” Japan is a sobering stories about letting debt fall unchecked. Countries can impose limits on state bond yields with the help of their main businesses, but doing so only leads to weak currency depreciation.

Now that Watanabe is no longer employed directly by the government and is leading a Tokyo think tank, he can explain why the yen should n’t be viewed as a safe haven asset. And why does the market wager that the Ministry of Finance’s intervention wo n’t succeed?

A number of Asian governments have been using a weak yen-only strategy to encourage growth and combat inflation since the late 1990s. After Chinese officials claimed they were moving away from the old beggar-thy-neighbor policies, the ploy gained perhaps more significance.

The Liberal Democratic Party’s resumption of power in late 2012 is referenced below. With a strong plan to boost the business, Prime Minister Shinzo Abe came back into power.

Abe compared victory to the warrior analogy, which depicts how three projectiles fired at a target. Abe’s bolts, aimed at slaying depreciation, included intense monetary easing, more imaginative macroeconomic policies and a reform Big Bang.

However, structural changes to cut red tape, revive innovation and productivity, enable people and attract more major global skills were few and far between. Similar to how to create a new fiscal stance. Over the past 14 plus years, debt has remained high.

Instead, Abe prioritized lower interest rates and a weaker yen. To further the quantitative easing initiative that Tokyo had instituted in 2001, he appointed Haruhiko Kuroda as governor of the Bank of Japan in 2013. The BOJ had more stocks and bonds than it had in 2013 and 2018, so much so that its balance sheet surpassed Japan’s US$ 4.7 trillion gross domestic product.

Count the ways this strategy is backfiring. As the Fed tightened in 2022 and 2023, the yen’s weakness deepened. That made Japan vulnerable to rising oil, food, and other important imports.

According to economist Atsushi Takeda of the Itochu Research Institute,” the ideal scenario would be for wage gains to be passed on to prices and for prices to rise steadily.” Instead, “bad” inflation imported from abroad is undermining household and business confidence.

Goushi Kataoka, a former BOJ board member, notes that” cost- push pressure is heightening at a degree never seen before, prodding firms to raise prices”.

The yen’s decline is also gaining new life. It is possible that yen selling as a result of a certain threshold, as long as US-Japan rate differentials are above a certain threshold, even with some rate differential narrowing, says Barclays ‘ strategist Shinichiro Kadota.

However, the yen is falling because of investor confidence in the currency. So far this year, the yen is down more than 13 %. Its current course is raising questions about whether China will decide to accept a lower exchange rate as well. The yuan is on the verge of breaking point since 2008;

A weaker yuan is suggested as the best way to address the deflationary pressures on China. However, Japan’s experience serves as a warning about the advantages of putting aggressive monetary policy policies before policies to boost competition and disruption.

The BOJ basically inaugurated the biggest political and corporate welfare scheme in history. Since the late 1990s, it has made it more important for the 13 governments to rebalance growth engines and establish level playing fields.

Corporate executives felt less pressure to innovate, change, and take significant risks. For two- plus decades, it’s been easier to harness BOJ support than for CEOs to disrupt industry. In 2024, Ueda’s BOJ team is currently plagued by that BOJ-enabled complacency.

The yen is sagging again because it is Tokyo’s only real policy, as Watanabe and other Japanese policy veterans now acknowledge. This explains, in part, why Ueda has avoided any chance even just to start the process of normalizing rates. Ueda has jumped at every chance he has had to signal that change is on the way in his 14 plus months in charge.

The yen is still in secular-declining mode even if the MOF intervenes in the coming days. Too quickly is the BOJ able to feel at ease braking against the economy. Nor does Tokyo’s political environment encourage tighter policy.

The approval rating for the LDP’s current prime minister, Fumio Kishida, who is now 21 %, is the only factor that is falling faster than GDP. Ueda wants to blame the BOJ for causing Japan to go into recession, but that is last. The BOJ keeps its foot on the gas, but the yen drops as it goes.

According to Kelvin  Wong, senior analyst at currency broker Oanda,” softer prints of Japanese economic data may cause BOJ to delay its next interest rate increase to September in addition to the near-term increase in geopolitical risk premium coming out of the Eurozone as a result of the looming first round of French legislative elections scheduled this Sunday, June, supporting potential bids on the US dollar due to safe-haven demand.”

Japan contracted 1.8 % year on year in the January- March quarter. The one bright spot is exports, which are “having a positive impact”, says Yeap Jun Rong, market analyst at&nbsp, IG Asia Pte.

There’s an argument, though, that Japan’s economy is in worse shape than the official data suggest. &nbsp, Marcel Thieliant, economist at Capital Economics, points to hopes that exports alone will save the day.

He claims that the majority of the rise in trade values was caused by the yen’s sharp decline rather than by any discernible increase in volumes.

One wild card is the November 5 US election. If Beijing lets the yuan weaken, too, exchange rates could become a big controversy in Washington. No issue brings together Republicans led by President Joe Biden and Donald Trump like beggar-thy-neighbor scheming in Asia. That could add fresh fuel to trade- war politics in Washington, provoking retaliation in Beijing.

However, making up a claim that Japan is responsible for Washington’s policy is ineffective is not more credible. The preponderance of the data refutes both contentions.

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Beijing: new Treasury rules amount to ‘decoupling’ – Asia Times

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Following Washington’s suggestion to establish a set of specific regulations that would hinder and track American investments in China for semiconductors, artificial intelligence, and classical computing, Beijing has expressed major problems. &nbsp,

The Chinese Commerce Ministry stated on Monday that, despite the US’s repeated efforts to say it has no intention of dissociating from China or preventing the country’s economic growth, Washington has insisted on preventing American firms from investing in China and preventing the government’s normal growth. &nbsp, &nbsp,

A spokesperson for the government referred to the meeting between Chinese President Xi Jinping and US President Joe Biden in the US in November as” a typical broad approach to national security,” saying that this method goes against the two faces of state’s discussion at the conference in San Francisco.

He predicted that the restrictions may have a negative impact on Chinese and US businesses ‘ regular economic and trade cooperation, undermine the world’s economic and trade balance, and deteriorate global commercial and supply chains ‘ security and stability.

He added that China is entitled to take the same actions as the United States is against. He demanded that the US government prevent politicizing and stifling business.

Researchers at the Ministry of Commerce, Zhou Mi, predicted that Washington’s purchase regulations will make high-tech cooperation between the US and China more difficult. He claimed that it will also stifle global technical innovation and scientific advancement. &nbsp,

Beijing made the comments after the US Treasury Department released a notice of proposed rule-making ( NPRM ) on June 21 to implement Biden’s executive order, which was first announced in August and had the title” Addressing US investments in specific national security technologies and products in countries of concern.”

According to the Treasury, the NPRM establishes a procedure for creating a new federal security software to combat threats from foreign direct investments in China, Hong Kong, and Macau.

The proposed NPRM developments our national security by preventing, according to Paul Rosen, assistant secretary of the Treasury for Investment Security, the numerous benefits that some US opportunities offer besides only capital from supporting the development of delicate systems in nations that might use them to harm our national security.

The Treasury requests comments on the proposal through August 4 and anticipates that the regulation will be in effect by the end of this year. &nbsp,

The secretary of the Treasury must enact laws that prohibit US citizens from operating AI, chip, and quantum computing businesses in China, according to Biden’s executive order. &nbsp,

Additionally, the regulations should mandate that US citizens notify the Treasury of specific other transactions that might involve these products and technologies that could compromise US national security.

The NPRM said a” covered transaction” may be a prohibited transaction, or only a notifiable one. &nbsp,

Covered transactions include the provision of debt financing, the conversion of convertible debt, greenfield investments ( a type of foreign direct investment where a company establishes operations abroad ), joint ventures, and limited partner ( LP ) or equivalent investments.

China’s FDI

The Chinese Commerce Ministry reported on June 21 that its total foreign direct investment decreased by 31 % to US$ 57.9 billion in the first five months of this year from US$ 84.3 billion during the same time period in 2023. &nbsp,

FDI in China’s high technology manufacturing sector rose 2.7 % to US$ 6.9 billion. FDI coming from Germany and Singapore to China rose 24 % and 16 % year- on- year, respectively. However, the commerce ministry did not make the detailed FDI figures available for each country. &nbsp,

China’s high technology development certainly needs the participation of foreign funds, but it mainly relies on domestic funds and policy environment, said Xiang Ligang, director- general of the Zhongguancun Information Consumption Alliance, a Beijing- based telecom industry association.

China must now send a clear message that it needs to develop its own AI technology, according to Xiang, who stated that the proposed US investment restrictions were a result of this. He made mention of Beijing’s recent national policy to support Chinese technology startups.

On June 15, China’s State Council published a document to encourage local governments, state- owned- enterprises, banks, private equity and asset management firms and long- term fund management companies to provide loans, subsidies and funds to technology startups.

According to the statement, financial authorities should foster a favorable lending climate for technology companies to grow and raise money. China will tweak its laws in order to promote FDI, according to the statement. &nbsp,

In an article published on June 23, Guan Quan, a professor at the Renmin University of China, writes that the US has recently sent an official to Japan and the Netherlands and urged them to tighten their export controls for chip-making equipment. &nbsp,

Besides, he says, Washington also plans to add 11 Chinese chip foundries to its Entity List. He says all these moves have shown clearly&nbsp, that the Biden administration will not stop suppressing China’s chip sector.

He claims that until one day China can self-supply all the necessary chip-making tools, the only way to put an end to all these restrictions is to use technological advancements. However, Guan did not provide a roadmap or schedule for how China would go about accomplishing its objectives.

Chinese students repatriated

China can still use this opportunity to attract American investments into its high technology sectors, according to some commentators, because it may take up to six more months before the proposed US investment restrictions go into effect. &nbsp,

Meanwhile, the immediate effect of imposing a ban on Chinese students from studying or obtaining AI technology in the US is. &nbsp,

On June 22, China Daily, a state- owned publication, reported that four Chinese students who traveled to the US for academic conferences had recently suffered from the US border officers ‘ “unwarranted harassment, interrogation and repatriation” .&nbsp,

Border agents questioned the four science students, two of whom have research interests in AI, about their personal and family histories and whether they were affiliated with the Chinese Communist Party, according to the report. &nbsp, &nbsp,

It said the US has repatriated more than 30 Chinese students, mostly master’s or doctoral degree candidates in computer- related fields, in recent years.

Read: China hawk: Fix symbolic, ineffective US sanctions

Follow Jeff Pao on X: &nbsp, @jeffpao3

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Commentary: Putin-Kim meeting generates surprising agreement about China in South Korea

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South Korea has been a center of economic and diplomatic relations for decades. That was the game under the democratic world attempt, and Seoul did it well. The United States ‘ treaty alliance serves as the foundation of South Korean security, but it has n’t been construed as a factor in how the East Asian nation’s friends and partners would be.

This perspective can be seen in South Korea’s reaction to the Ukrainian military hostility from Russia. In contrast to the cases in Europe and North America, Russia’s conflict with Ukraine is not seen by all as a menace to world democracy.

One of the guiding factors in this opinion was the desire to keep business relations with Russia. Another explanation is that this conflict is never Korea’s: Getting involved you feel like being pushed around by Americans and granting them even more authority over international relations.

Seoul has provided humanitarian aid and non-lethal aid to Ukraine, but it has not yet broken its agreement to not provide weapons during an effective martial conflict. On Thursday, South Korea said it would rethink providing arms.

A MISSED OPPORTUNITY

In this view, Mr Putin’s attend reflects a missed chance, for South Korea, for North Korea, and for the wider region. Maybe Mr. Kim’s foreign entry would not have been the one from Moscow if Washington and Seoul had worked a little harder to encourage dialogue with Pyongyang.

Even though the symptoms are different, there is disappointment in Seoul over the Soviet attend to Pyongyang. Some attributed the North Korean command and its companions to be responsible. Other people view the causes as more complicated, with leaders from the United States and South Korea even being accused of adopting hostile postures that create a charged, philosophical, and Cold War-like tension.

However, anger is not the only positive thing South Korea does. The viewpoints are more flimsy, which suggests prudence when deciding Seoul’s future steps.

For better or worse, South Koreans are not on a campaign.

Erik Mobrand is Professor of Korean Research at Seoul National University’s Graduate School of International Studies. At the National University of Singapore, Hyejin Kim is the Top Lecturer of Political Science.

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US debt moving toward trillion isn’t whole story – Asia Times

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WASHINGTON – The most disturbing thing about forecasts that the US national debt will hit $50 trillion by 2034 is that the true figure surely will be much bigger.

The Congressional Budget Office noted that the federal debt will hit 122% of gross domestic product a decade from now, dwarfing America’s fiscal position after World War II. Funding the biggest drivers – defense, social safety net outlays and giant tax cuts unmatched by revenue increases – will only become costlier over time. Never mind if a deep recession or serious military conflict further alters this trajectory.

This slow-motion economic disaster could be sped up by political squabbling or by de-dollarization efforts among top emerging markets.

Case in point: the November 5 US election. Even if Donald Trump loses to current President Joe Biden, there’s a zero-percent chance the former US leader and his army of supporters go away quietly. The risk of a Capitol Hill insurrection 2.0 looms large. The earlier one, on Jan. 6, 2021, provoked Fitch Ratings to revoke Washington’s AAA rating. Might the next prod Moody’s Investors Service to yank away the last AAA?

Nor are Biden’s China tariffs buttressing global faith in the dollar or US Treasury securities, of which Beijing holds nearly US$700 billion. Those tariffs include a 100% tax on China-made electric vehicles.

Such moves won’t prod Detroit to make the better automobiles that consumers in Europe, Asia or even many Americans want. They won’t raise America’s innovative game. They won’t increase Chinese leader Xi Jinping’s desire to work with Washington on climate change, military-to-military communications, counternarcotics, AI-related risks or even just basic economic cooperation.

Biden has intensified Washington’s sharp mercantilist pivot since 2017. Then-President Trump slapped huge tariffs on Chinese goods and on global steel and aluminum. When Biden arrived, he left Trump’s trade war in place — and continued to add new layers of China-targeted curbs.

Now, as Trump threatens 60% tariffs on all Chinese goods, Biden is trying to out-do Trump. This trade-tax arms race is drawing retaliation threats from Xi’s government. It also has Global South countries viewing the US less and less as an adult in room when it comes to economic and geopolitical affairs.

The most obvious example of disillusionment over US fiscal excesses is the pivot away from the US dollar. The predicament is made worse by the bull market in political polarization in the halls of Washington power as the US debt hits $35 trillion.

“The current fiscal trajectory could eventually push the debt-to-GDP ratio to a point where stabilizing it would require a fiscal surplus of a size that has rarely been sustained historically,” says economist Manuel Abecasis at Goldman Sachs. “And while the conditions for a fiscal consolidation to succeed are currently in place in the US, there is little political momentum for deficit reduction.”

Abecasis adds that “the outlook for US fiscal sustainability has become more challenging over the last five years. Higher expected future interest rates in particular have substantially worsened the trajectories of the debt-to-GDP ratio and of real interest expense as a share of gross domestic product.”

Goldman’s economics team reckons that the US debt-to-GDP ratio will hit 130% by 2034 from 98% now – fully 8 percentage points higher than the CBO estimates. But could it end up being far higher than that?

In a June 18 op-ed for the Free Press news site, historian Niall Ferguson views America’s debt trajectory through a variety of financial prisms, both past and present. Most interestingly, he considers parallels between the collapse of the Soviet Union and the hubristic belief in Washington that titanically huge deficits don’t matter.

Historian Niall Ferguson. Photo: LSE

As Ferguson writes: “A chronic ‘soft budget constraint’ in the public sector, which was a key weakness of the Soviet system? I see a version of that in the US deficits forecast by the Congressional Budget Office to exceed 5% of GDP for the foreseeable future, and to rise inexorably to 8.5% by 2054. The insertion of the central government into the investment decision-making process? I see that, too, despite the hype around the Biden administration’s ‘industrial policy.’”

Economists, Ferguson explains, “keep promising us a productivity miracle from information technology, most recently artificial intelligence. But the annual average growth rate of productivity in the US non-farm business sector has been stuck at just 1.5% since 2007, only marginally better than the dismal years 1973–1980.”

At present, he says, “the US economy might be the envy of the rest of the world today, but recall how American experts overrated the Soviet economy in the 1970s and 1980s.”

As the CBO admits, the share of GDP going toward interest payments on the federal debt will increase to twice the amount Washington spends on national security by 2041. That’s partly thanks to the rising cost of the debt squeezing defense spending down from 3% GDP, now to a closer to 2.3%, 30 years from now.

“This decline,” Ferguson says, “makes no sense at a time when the threats posed by the new Chinese-led axis are manifestly growing. Even more striking to me are the political, social and cultural resemblances I detect between the US and the USSR. Gerontocratic leadership was one of the hallmarks of late Soviet leadership, personified by the senility of Leonid Brezhnev, Yuri Andropov and Konstantin Chernenko.”

By today’s US standards, the later Soviet leaders weren’t so old, Ferguson argues. Nor was the Soviet population, by some measures, appreciably less healthy than Americans today, he says. “The recent data on American mortality are shocking,” Ferguson says.

Life expectancy, he notes, “has declined in the past decade in a way we do not see in comparable developed countries.” He cites, too, a “striking increase” in deaths “due to drug overdoses, alcohol abuse, and suicide, and a rise in various diseases associated with obesity.”

The credit rating of the globe’s biggest economy – and printer of the reserve currency – don’t normally turn on such considerations. But, as Fergison argues, America is on a dangerous financial and socioeconomic course that few saw coming just a few years ago.

“I still cling to the hope that we can avoid losing Cold War II – that the economic, demographic and social pathologies that afflict all one-party communist regimes will ultimately doom Xi’s ‘China Dream,’” Ferguson says.

But, Ferguson adds, “the higher the toll rises of deaths of despair – and the wider the gap grows between America’s [elite] and everyone else – the less confident I feel that our own homegrown pathologies will be slower-acting. Are we the Soviets? Look around you.”

In the short run, the Federal Reserve’s reluctance to cut rates is prolonging the “higher for longer” era for US yields.

“The harmful effects of higher interest rates fueling higher interest costs on a huge existing debt load are continuing, and leading to additional borrowing,” says Michael A Peterson, CEO of the Peter G Peterson Foundation. “It’s the definition of unsustainable.”

Nassim Nicholas Taleb is even more worried. The author of the 2007 best seller The Black Swan: The Impact of the Highly Improbable thinks that a US debt “spiral,” coupled with political dysfunction in Washington, is a “white swan” risk in plain sight that could cost Washington its last AAA credit rating.

“The risk is right in front of us,” Taleb says. “If you see a fragile bridge, you know it’s going to collapse at some point.” Taleb adds that “a debt spiral is like a death spiral. We need something to come in from the outside, or maybe some kind of miracle.”

Last November, Moody’s Investors Service warned it might yank away America’s only remaining top rating. That came three months after Fitch Ratings downgraded the US to AA+ as Republicans and Democrats brawled over funding the government. And 12 years after a Standard & Poor’s downgrade amid partisan bickering over the debt ceiling.

“So long as you have Congress keep extending the debt limit and doing deals because they’re afraid of the consequences of doing the right thing,” Taleb says, “you’re going to have a debt spiral.”

As US political polarization hits a fever pitch, there seems little scope for a pivot toward fiscal sobriety. As Biden runs for reelection, his Democratic Party has zero plans for debt reduction. Nor do Republicans loyal to Trump, who are telegraphing giant new tax cuts.

“This makes me kind of gloomy about the entire political system in the Western world,” Taleb explains.

Former US Treasury Secretary Robert Rubin warns that fiscal challenges put the economy in a “terrible place.” Rubin tells Bloomberg that “the risks are enormous and some of them are materializing already, like higher interest rates.”

Rubin earned his fiscal bona fides in the early 1990s. Back then, as President Bill Clinton’s economic czar, Rubin struck a deal with the Fed: debt reduction in exchange for rate cuts. That led to a balanced US budget. Surpluses, too.

Now Rubin worries that the three-percentage-points surge in longer-term US yields is just the beginning. The fiscal outlook has darkened and inflation remains elevated. Rubin cautions that when markets are “out of sync with reality,” things “correct savagely.” 

Sadly, the political climate on Capitol Hill leaves little reason for hope lawmakers can head off catastrophe.

“Looking forward, we’re having to deal with both spending and taxes,” Rubin notes. But “when you get realistic about it, I think you’re going to have to” focus largely on the tax side to increase revenues.

As Rubin sees it, “there’s a lot of talk, but the talk is always divided politically between the Republicans, who refuse to raise taxes, and the Democrats, who won’t do entitlements.” His conclusion about Congress or the White House tackling the deficit is that “I wouldn’t bet on it.”

Nor is it safe to bet on the US debt only rising to $50 trillion a decade from now. As the real figure exceeds even the worst expectations, global markets could be in a world of hurt. And Washington will make it easy for Global South nations hoping to sideline the dollar.

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Rise of the far right is a 4th dimension phenomenon – Asia Times

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To really understand democracy, we have to take the long view. In the 1960s, populist parties won, on average, 5.4 % of the ballot in Europe– while immediately, following the European Parliament votes on June 9, more than 20 % of the public believes them with their vote.

Not all ideologues are right-wing, and some nationalist events, like La France Insoumise and the European Sahra Wagenknecht Alliance, fall on the left of the social spectrum. But, in today’s political landscape those making an impact are proper wing populist parties, who place the state front and center, and stockade, blame and discriminate against “others” defined in racial, national, social or religious words.

In the Strasbourg parliament, members of ultra-nationalist parties like the French National Rally, Alternative for Germany ( AfD ), and the Spanish Vox have emerged as significant influence. The far right came top of the elections in France, Italy, Austria and Hungary, and subsequent in Germany, Poland and the Netherlands.

Given the serious social have to slow and stop climate change, the consequences may be philosophical for both the European Union and, potentially, for mankind as a result of these parties ‘ calls for the return of sovereignty to specific states.

Activists against the AfD demonstrate down the road from an early 2024 conference hosted by the nationalist gathering in Freiienthal, a small town in Brandenburg, northeastern Germany. The evidence say: ‘ How many more Hitler films do you need?’ And: ‘ If the AfD is the answer, next how terrible was the query?’ Photo: Chris Stern / Cns

While the migrant crisis of 2015 and the financial crisis of 2008 both marked pivotal turning points for democracy in Europe, neither is totally accounts for how greatly it has rooted its foundation in the nation’s elections. But, there are structurally plausible long-term solutions that are inseparably linked to how we interact with period.

An accelerating earth

Our world is moving at a rate never before. We live in an era of exact- day delivery, of quick food and quick fashion. We read voicemails and podcasts at twice the rate that any lingering questions or lingering questions can be quickly found on our phones, avoiding any personal contact or uncertainty-related issues. Impatience has become the norm thanks to technology.

The economy is governed by instantaneous decisions made by the stock markets on Wall Street, in London, or in Shanghai. Contingency and transience rule supreme, whether in homes or at work. The idea that time is money is the norm wherever we look has accelerated our lives.

Populists take advantage of our fracturing relationship with time.

Right-wing populism profiteers from the fact that democracy is by definition slow, making it harder to respond to people’s most pressing needs. No other ideological current has acknowledged how out of step with the quick, even instantaneous pace of our societies and economies. Exploiting this disparity in the electoral market has had a significant impact.

For decades, opinion polls such as the European Values Survey have been sending worrying, yet unheeded, signals for the future of liberal democracy. Far right voters share the authoritarian tendencies most with a strong leader who does n’t have to worry about parliament and elections, and more and more people think otherwise. The younger generation’s favorable view of” strongman” leaders adds another layer of concern about the future of democracy.

What right-wing populists can say about politics is one based on haste, simplicity, and shortcuts in a world where patience is a more and more rare virtue and political systems are lagging behind.

This is exemplified by a number of obscene and impractical quick-track solutions. To stem migratory flows they speak of closing borders or “repatriating” migrants. Domestic and gender violence are, they argue, made up. In countries with peripheral nationalist movements, such as Spain, they promise to prohibit” secessionist” parties outright, a measure explicitly included in far right party Vox’s manifesto.

The late Spanish author Almudena Grandes made a clear distinction between the Far Right and modernity in her posthumous 2022 dystopian novel Todo va a mejorar ( Everything will get better ) the populist party is known as” Movimiento Ciudadano Soluciones Ya”! (” Citizens ‘ Movement, Solutions Now”! ). Grandes cited two crucial components of this ideological family as the party’s promise of quick solutions and its refusal to even refer to itself as a “party” in place of presenting itself as a political alternative.

A referendum on everything

Many far right governments hold regular national referendums, notably Hungary’s “national consultations” and similar measures in Poland when it was governed by Law and Justice. This is a measure to “popularize democracy” that populist right- wing parties include in their electoral programmes.

In Germany, many advocate for holding plebiscites according to the” Swiss model“. Marine Le Pen proposes calling an annual “great referendum” if she becomes president of France– a “revolution of proximity” that would allow the “people” to control government decisions. In Spain, Vox appeals to article 92 of the Spanish Constitution, which opens the door to holding votes on immigration, gender violence laws or the outlawing of pro- independence parties.

It is no coincidence that the issues subject to such plebiscites are always controversial or inflammatory – Hungary’s” consultations” have been criticized for asking biased, leading questions, and for not publishing their results.

Right wing populism appears to have found the key to success in our fast-paced society by abusing deliberation, a cornerstone of liberal democratic politics. Time to reflect or think seems to be nothing more than a hindrance to effective decision-making for an increasing number of voters, and this view is growing among the far right.

One of the greatest, most pressing challenges of our time is to reverse this democratic regression. Any remedy must be used to speed up political decision-making processes without detracting from the principles that underpin democracy.

The University of the Basque Country / Euskal Herriko Unibertsitate is a professor of the history of thought, social, and political movements, led by Jesus Casquete.

This article was republished from The Conversation under a Creative Commons license. Read the original article.

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Philippines accuses China of ‘piracy’ after coast guard boarded navy vessels in South China Sea

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“BARE Arms” After visiting the injured sailor in Palawan, Brawner described the incident as” a fight with our uncovered hands” and claimed that Filipino staff had “fought again with our uncovered hands” when Chinese coast guard staff from eight arteries boarded their rigid-hulled inflatable boats. ” They took weapons andContinue Reading

China’s GDP troubles point to need for bolder reform – Asia Times

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Due to Asia’s largest economy’s unsteady state, China’s home crisis is once more in the news for all the wrong reasons.

One of the catalysts that helped China become a global superpower was the country’s estate boom. Xi Jinping is currently facing the most difficult problem of his ten years as Chinese president due to the cover slump.

According to data from May, Xi’s inner circle had hoped that the government’s stimulus efforts to date were n’t gaining the support they had hoped. After falling 3 % in April, new home sales decreased by roughly 4 % last month. It’s the worst work for the business in roughly 10 years. &nbsp, Property investment&nbsp, is over 10 % since the start of the time compared to the January- Does period a year ago.

This data additionally supports the property industry’s continued dominance of growth this year, according to Lynn Song, ING Bank’s chief greater China economist, adding that Beijing if “ring some alarm bells.”

The Third Plenum conference scheduled for this month is set to be illuminated by all of this in a better than ever light. This meeting takes place every five times to examine big-picture reform ideas.

The event was actually scheduled for October 2023, but it was postponed due to uncertainty in the physical economy. However, the meet is a fantastic opportunity for Xi to rekindle his reformist momentum and discuss how steps can be taken to stop the property crisis.

At the moment, says Fitch Ratings analyst Brian Coulton, “domestic desire has weakened in China as the&nbsp, property&nbsp, industry decline worsens and personal intake growth remains sluggish. However, exports have rebounded, which has helped true GDP, and governmental policy is being relaxed. Negative pressures are, nonetheless, widespread”.

An apostrophe is required for all the engines currently propelling China.

The ultra-long special sovereign bonds Beijing began selling in May have the potential to support the country’s gross domestic product of 1 trillion yuan ($ 138 billion ). The goal is to achieve China’s 5 % yearly growth target by reducing public debt and funding for equipment.

According to scholar Louise Loo at Oxford Economics, “unconvincing onshore action speed outside of the “new” companies in May suggests that the current increase in house and fiscal stimulus has not yet improved buyer and investor sentiment.”

The physical sector, however, is even more questionable, yet if mainland exports are on a break. In spite of the escalating US-China trade tensions, overseas shipments increased by 7.6 % year over year at their fastest rate in more than a year.

According to Tatiana Orlova, an economist at Oxford Economics,” We anticipate that the Chinese trade value recession will provide a valuable tailwind in the battle to bring emerging market inflation back to destination.”

Problem is, the international scene is awash in winds. In the US, the Federal Reserve’s reticence to relieve means the “higher for more” time for provides may persist indefinitely. At the same time as the Bank of Japan is considering a rate increase, Tokyo is avoiding recession once more. Europe is muddling along as Germany stagnates.

What’s urgent is a renewed effort to rebalance growth engines and incentives. Short- term stimulus is plenty needed, as evidenced by the marked downshift in mainland&nbsp, demand.

Many people anticipate Beijing to increase its efforts since April to encourage businesses and households to upgrade outdated machinery with government subsidies, with an emphasis on automobiles.

” The upcoming implementation of the trade- in replacement scheme will positively impact household and business demand, hopefully inducing demand- led inflation somewhat” ,&nbsp, says Kelvin Lam, an economist at Pantheon Macroeconomics.

The main point will be however, how Xi and Premier Li Qiang’s plans to speed up structural upgrades are to be discussed.

” The Third Plenum may conclude with a pledge of comprehensive reform in areas spanning the private sector, manufacturing, innovation, social security, economic management and more”, says Mark Williams, chief Asia economist at Capital Economics. That may give rise to significant change, but the Party believes that it has engaged in comprehensive reform for the past ten years.

Carlos Casanova, economist at Union Bancaire Privée, adds that “while nobody can know the scope of reforms ahead of time, we expect to see changes to&nbsp, housing&nbsp, sector policies. More cities are announcing a complete end to macroprudential restrictions on investment properties. The central government has so far remained silent, suggesting a more formal pivot during the summer. Stay tuned for more”.

That “more” could include Beijing going further than it has to date to help highly indebted property developers, regardless of “moral hazard” risks.

In order to maintain growth at 5 %, Xi’s top priority in 2024 is encouraging consumers to spend more and save less. That entails boosting incomes and creating stronger social safety nets to encourage spending. It implies developing more reliable capital markets so that the typical Chinese can invest in both stocks and bonds, not just real estate.

Until now, Beijing’s extreme focus on juicing consumption time and time again is counterproductive, many economists say. It makes China vulnerable to boom-and-bust cycles that necessitate urgent attention at the expense of reinvigorating the economy. And China’s heavy reliance on exports leaves the economy vulnerable to Washington ‘s&nbsp, trade- sanction antics.

Part of the strategy is accelerating and broadening China’s evolution as a high- tech powerhouse, development experts agree. And indications are, this is precisely the pivot Xi and Premier Li Qiang are making as 2025 approaches.

Xi’s” Made in&nbsp, China 2025″ vision has Beijing investing aggressively in making China the dominant power in 5G, electric vehicles, semiconductors, artificial intelligence, renewable energy and other dominant “future” industries. &nbsp,

Yet unless China tends to cracks in its economic foundations, boom- bust cycles will remain a challenge for Xi’s inner circle. Lau notes that a robust increase in domestic demand will require bold actions to address” the current economic malaise” in the real estate sector and rising local government debt levels.

” The&nbsp, property&nbsp, sector is a major problem”, says&nbsp, Wei He, &nbsp, economist at Gavekal Dragonomics. Policymakers announced new support measures in the middle of May, but the lack of improvement in daily sales figures suggests that they will almost certainly need to do more to restore consumer confidence.

Odds are, He says, “policymakers may opt to wait, at least for now. They are not complacent about economic growth, as the Politburo’s call in April for more support demonstrated. However, they may not feel any urgency either because real GDP growth is likely running above the full-year target of around 5 %.

To be sure,” that prospect is unwelcome to market participants”, He adds. Equity and commodity markets have slowed since late May, according to the statement from the Politburo meeting, which started in late April.

There are no obvious catalysts for a change in market sentiment until further policy support is found, he asserts, or the upcoming Third Plenum results in an unexpectedly market-friendly outcome. ” Unless the economic data worsen, policymakers may keep markets waiting”.

Follow William Pesek on X at @WilliamPesek

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