The Treasury is considering a notification requirement for US investments in Chinese entities involved in less advanced semiconductors, and activities relating to certain types of artificial intelligence. China could exploit US investments to further its ability to produce sensitive technologies critical to military modernisation, the Treasury Department said. But itContinue Reading
What will work better between USA and China, short-term economic cycles or long-term systemic assets or baggage? The picture may look not so clear if seen from Beijing.
Beijing has just launched a whole array of measures aimed at compensating for lackluster growth at the beginning of the year, and its main thrust is about pouring money into the market – but this may exacerbate the situation, as Reuters reports:
Latest official data shows financial institutions issued 5.5 trillion yuan ($766.12 billion) worth of long-term deposits known as certificates of deposit (CD) in the first quarter of this year — the largest such quarterly issuance since the product was introduced in 2015.
Domestic investors have rushed into these CDs over the past year in a desperate search for returns as they withdraw from real estate and the stock market, both traditional investment options now looking treacherous because of regulatory and economic problems.
Companies have joined the scramble this year, adding to the drag on China’s economy. It effectively means businesses and households are hoarding cash rather than investing it, despite lower interest rates. This classic liquidity trap plagued Japan for years beginning in the 1990s.
It means that so far, people and companies don’t want to spend their money; it’s not that they have no money to spend in the market. In that case, Beijing’s cash injections will not work because supply-side answers don’t solve demand-side questions.
It looks like Japan’s 1980s liquidity trap. What can Beijing do to kickstart demand and give confidence to consumers and investors? Why do they lose confidence? This might be the crux of the matter, and it’s not simply financial.
At least three elements contribute to the situation. The real estate market, for over two decades the main driver of growth, collapsed. Now, it languishes, with possibly up to 100 million unsold finished apartments. Real estate accounts for some 60% of the outstanding bank loans.
No other engine can replace real estate at the moment. Infrastructure building was the other significant driver, with long-term and low returns; meanwhile, it blew up the local and national debt.
Moreover, investors and consumers have grown more timid. A decade of anti-corruption campaigns has scared many entrepreneurs who initially made money while cutting many corners. Plus, longstanding anti-Covid measures choked the markets for three years instead of one year for other countries. Now, many still feel the aftershocks. Finally, the tense international situation and the threat of sanctions cast a shadow over foreign trade.
The accumulation of all these problems could crush the Chinese economy and thus spread into society and politics. Chinese leaders know it. They are pragmatists, not ideologues, and before these issues, they radically changed course in the past. Then the question is whether we can expect a dramatic turn in China soon.
Some changes will happen for sure; however, how radical they will be is an open question because the Chinese are still unsure about the example America is giving them.
The Chinese see a list of intertwined problems in the US that make China look safer and better in comparison.
Here is a brief summary list:
Plus there is the American ballooning public debt with doubts about its sustainability, while this question sits in the middle of complex global trade situation. Can the USA fix it?
Conversely, Beijing feels that China has been outperforming the US in building long-term social resources. It has:
The list is simplistic and confusing, as many items would deserve deeper examination. But they are the nuts and bolts of any country, and China here feels, right or wrongly, that it has been outperforming America. Therefore, the present economic difficulties might just be hiccups that need to be fixed but do not require a significant U-turn.
Conversely, do the differing political systems favor China or the US in dealing with their respective problems?
Indeed, in both countries, there are vested interests that oppose systemic political change. But China may feel that its political system is better endowed with the levers to undertake necessary modification. Beijing, this time has started a series of measures to turn the economy around.
Conversely, Beijing feels that although Washington sees its problems, the Americans have been unable to make much progress on any of those issues for years. Many problems have gotten worse. The rich and well-off have good schools, health care, families and safe environments; the poor have none of those.
In this way, Donald Trump’s declared plan to vastly increase presidential powers seems to respond to this crisis of inaction. If Mr. Trump were to become president again, he would be unlikely to improve health care or primary education, which are not on his agenda. But the social divide, the distance between the entitled elites and the growing marginalized ordinary people, creates the resentment that fuels Trump’s outbursts.
In other words, seeing things from Beijing, Trump is the ugly face of an American necessity to change. The US reaction may look as if American elites are trying to eliminate Trump and what he stands for without making any difference. This may prove that there is systemic resistance to necessary US reforms.
This situation in America confirms that despite whatever temporary contingencies and vested interests are involved in keeping the Chinese system, Chinese elites may feel there are no compelling reasons to alter a political structure that may outperform the US in the long run. This opinion is not based on ideology but on pragmatic perceptions of results. The argument may be partial, tainted and inaccurate, but it is not ideological like the old Soviet communists’ arguments.
The next few years are crucial to see whether Beijing can get out of its present quagmire and boost domestic confidence, which will drive higher consumption and, thus, better economic performance.
The issue may have more to do with the domestic situation. People may need to feel safe about their assets and protected against future indiscriminate attempts of the authorities to encroach on their properties and to constrain their legal personal freedoms, as happened with the anti-corruption and anti-Covid campaigns.
Here we have a conundrum: These reforms would limit the present boundless power of the party, the one thing that drives the current changes.
Therefore, Beijing might become stuck, trying for lateral moves that won’t correct the big picture, or it might pull a rabbit out of a hat and offer an unexpected solution.
In all of this, it would behoove America to show real progress on all the issues that make the Chinese feel discouraged and hopeless about the US. Real reform in the US could bridge the gap with China and encourage steps in the same direction in Beijing.
On the other hand, if Beijing’s economic performance remains stagnant, it could start some other rethinking in China.
Still, there are historical examples that can be important for both the USA and China.
In the 1960s and 1970s, in the middle of the Cold War, with Presidents Kennedy and Johnson, the US undertook a series of welfare and civil rights reforms that improved the fabric of society and mended fissures that the Soviets could have used to break American social order apart.
The action transformed American life and created some conditions that made it possible for the West to beat the USSR. It wasn’t painless. Some of the problems those reforms brought about have not been digested yet, but they saved the day by addressing structural issues.
The USSR, with Gorbachev, started to address some of its social and political problems only after more than 20 years had passed, in the 1980s, and it didn’t go well. With hindsight, many blame the reforms for the fall of the USSR, while the issue was with the systemic faults of the Soviet state.
In other words, the Soviet problems of an almighty bureaucracy stifling all life, and the need for democratization, ought to have been addressed much earlier, when their domestic impact was clear but not so pervasive, at latest by the 1950s, after the war and Stalin’s death. The USSR didn’t address the problems, which festered, and when finally they were attended to it was too late; the system rejected the reforms and imploded.
Is China now starting its necessary reforms while the US is skirting them? From Beijing, it may look like it, creating an odd situation and a false sense of confidence. Still, the process is complicated and American difficulties are neither excuse for nor salvation from Chinese troubles.
China produced 210,000 tons of rare earths last year and remained the world’s largest exporter of the resources, according to Statista.com, with Chinese reserves amounting to about 44 million tons, followed by 22 million tons in Vietnam and 21 million tons each in China’s fellow BRICS members Brazil and Russia.
The US also has 2.3 million tons of rare earths but it has avoided exploring them due to environmental issues. This was thought to give Beijing some leverage in the current tech wars: Sanction China and we’ll whack your rare earths supply chain.
Enter Mongolia, the independent former Soviet-bloc country that borders China and Russia. A 2009 estimate by the US Geological Survey said Mongolia could have 31 million tons of rare earths reserves. The country has the potential to become a key rare earth exporter but it lacks the capital and equipment to explore them.
And now Mongolia has signed an “open skies” agreement with the United States. Predictably the move is being criticized by many Chinese commentators, who say it will hurt Beijing’s plan to use rare earths export control to retaliate against Washington’s technology sanctions.
US Transportation Secretary Pete Buttigieg and Mongolia Road and Transport Development Minister Byambatsogt Sandag on August 4 signed an agreement that aims at “expanding options for travelers and shippers, and encouraging closer people-to-people ties” between the two countries.
Since the launch of its open skies policy in 1992, the US has liberalized international aviation markets with 132 foreign partners around the world. China and Russia are not on its list.
In an official visit to Washington, Mongolian Prime Minister Oyun-Erdene Luvsannamsrai met with US Vice President Kamala Harris at the White House on August 2. Luvsannamsrai said Mongolia will strengthen its strategic “third neighbor” partnership with the US. Both countries agreed to explore the idea of mining Mongolia’s rare earths and critical minerals for use in US high-technology products.
Chinese pundits said Mongolia failed to take Beijing’s feelings into consideration as Luvsannamsrai arrived in the US on August 1, a day when China’s export restrictions of gallium and germanium compounds took effect.
Gallium and germanium are not defined as rare earths as they do not occur naturally in the earth’s crust but are created as byproducts from the aluminum and zinc refining streams, respectively. The restrictions were announced by China on July 3 to counteract the US curbs.
It was thought that rare earths could be next. Xie Feng, the Chinese ambassador to the US, said last month that China would retaliate if Washington imposed more sanctions on China. Since then, some commentators have been saying that export control of rare earths could be an option.
“The US and other countries urgently need to find new suppliers” of rare earths, says Jiang Fuwei, a Hainan-based military columnist, in an article published on Monday. “In this case, Mongolia, with its rich rare earths resources, has entered the sights of the West.”
He adds that “Washington is now sparing no effort to win over Mongolia, which is adjacent to China in the south and Russia in the north and has the potential to become a strategic point against its neighbors. It also wants to disrupt the Power of Siberia-2 gas pipeline and other projects that are crucial to China and Russia.”
Jiang gives his imagination full rein, saying that China and Russia should pay attention to whether the US will use non-government organizations to infiltrate Mongolia, incite social unrest in the country and disrupt Mongolia-China-Russia projects. He says if the US pushes forward a “color revolution” in Mongolia, such political risks could spill over to China and Russia and threaten their national security.
He adds that it is a top mission for China and Russia to ensure that Mongolia will not lean towards the US, whether by forming economic ties with or asserting influence over the mineral-rich nation.
Originally the Mongolian prime minister was set to meet US President Joe Biden but the president was away from Washington on vacation. Biden is expected to sign an executive order to restrict US companies and funds from investing in China’s semiconductor, artificial intelligence (AI) and quantum computing sectors later this month.
On August 4, US Secretary of State Antony Blinken and Luvsannamsrai signed the Economic Cooperation Roadmap for the strategic Third Neighbor Partnership between the Mongolian and the US governments. They said the roadmap will serve as the foundation for increased commercial and economic ties between the two countries in the coming years.
A Shanxi-based writer published an article with the title “US and Mongolia plan to bypass China and Russia to ship rare earths by flights. Should they seek China’s approval?”
“Civil airplanes usually fly at a height between six and 12 kilometres while the internationally-recognized territorial airspace is 100 kms above the sea level,” says the writer. “It means that Mongolia’s rare earths transported by the US will enter China’s airspace. According to China’s aviation rules, foreign flying vehicles must apply to China and get approval before entering its airspace.”
The writer says Mongolia has suggested that it rent a 10-hectare site in Tianjin Port for half a century but China may not agree as this will directly connect Mongolia and the US, especially when the Mongolian side has no plan to pay China any transit fees. He says Mongolia can ship its rare earths to South Korea but they will also pass through territories of China and Russia.
“China does not want to stop Mongolia from making money,” he says. “But at this time, a rare earth cooperation between the US and Mongolia is, in a sense, putting pressure on China. The US hopes to get rid of its dependence on China’s rare earth supply chain with the help of Mongolia.”
“In the period when the competition between China and the US is becoming increasingly fierce, Mongolia’s move does not take into account China’s feelings and positions,” he says, adding that those in the West may be issuing empty checks while they are not good enough to replace China and Russia as Mongolia’s good neighbors.
After the Qing government collapsed in 1911, Mongolia became independent from the Republic of China. It had been politically influenced by the Soviet Union during the Cold War between 1947 and 1991. It has walked on a democratic path since the 1990s but suffered from serious corruption problems.
In recent years, the country has stepped up its anti-corruption fight in a bid to attract more foreign investments.
Luvsannamsrai told the media in the US last week that countries like Mongolia would suffer if the conflicts between the US and China escalated in a so-called new Cold War.
“I fear that the new Cold War will be very different and more difficult from the first Cold War,” he said. “We cannot bear a new Cold War situation.”
He said Mongolia hopes to maintain good relations with both China and the US. He also described the US as Mongolia’s “guiding Polar Star for our democratic journey.”
He said major powers should be responsible and avoid drastic negative effects on many countries around the world.
Harris said the US and Mongolia will work together on global challenges, including the climate crisis, will uphold democracy and human rights and will address threats to the international rules-based order. She said both countries will work together to strengthen their space cooperation.
Last month, some Chinese commentators criticized Mongolia for adopting SpaceX’s Starlink internet services, which they said would pose a potential military threat against China and provide Chinese people a possible way to get around Beijing’s strict censorship regime on perceived “harmful” foreign websites.
“Mongolia is willing to become a ‘pawn’ of the West against China and Russia, but at the same time, it continues to gain economic benefits from China and Russia,” a Sichuan-based columnist says. “Mongolia’s moves really make China feel sad.”
While some Chinese pundits and netizens said Beijing and Russia should punish Mongolia, Yan Zeyang, an assistant researcher at the Institute of Northeast Asian Studies, China Institutes of Contemporary International Relations, says in an article that people should have confidence in Sino-Mongolian relations, which will not be changed by Luvsannamsrai’s single trip to the US.
Yan says there is a long way to go before Mongolia can really produce rare earths a the country will eventually have to rely on China’s refinery and logistics services. He says China is willing to deepen its strategic partnership with Mongolia but it hopes the nation’s politicians will stand on the right side on major issues.
Read: Mongolia-SpaceX deal provokes a security stir in China
Read: Interview: Mongolian ministers have a revival plan
Follow Jeff Pao on Twitter at @jeffpao3
The fear of artificial intelligence is largely a Western phenomenon. It is virtually absent in Asia. In contrast, East Asia sees AI as an invaluable tool to relieve humans of tedious, repetitive tasks and to deal with the problems of aging societies. AI brings productivity gains comparable to the ICT (information and communications technology) revolution of the late 20th century.
China is using AI as an integral part of the Fourth Industrial Revolution, which brings together different “Industry 4.0” technologies – high-speed (fifth-generation) communications, the Internet of Things (IoT), robotics, etc. Chinese ports unload container ships in 45 minutes, a task that can take up to a week in other countries.
Today’s fear of AI has many parallels to the fear of machines at the end of the 19th century. French textile workers, fearing mechanical weaving would endanger their jobs and devalue their craft, threw their “sabots” (clogs) into weaving machines to render them inoperable. They gave us the word sabotage.
In the 20th century, machines and a multitude of power tools relieved humans of most physical labor. In the 21st century, AI will relieve humans of most mental labor.
But AI’s challenge to the human mental faculty has created a growing community of AI alarmists. Much of this can be traced to science (cyber) fiction, which often features out-of-control AI systems.
Paranoia is part of AI history. The new science emerged in the 1960s on the back of cybernetics, the first coherent computer science for digital (binary) computers. The autopilot used in airliners is a textbook example of a cybernetic system.
AI is cybernetics with a self-learning function. Rather than naming it Cybernetics 2.0, its developers used the intriguing name “artificial intelligence,” assuming it would make it easier to attract funding. And they were right.
The AI pioneers predicted that a machine as intelligent as a human being would exist in no more than a generation, and they were given millions of dollars to make it happen. They didn’t bother to define the word “intelligence,” and after a few years, the project was shelved. That led to the so-called “AI winter.”
In the 1990s, IBM’s “Big Blue” put AI back on the front pages when it beat world chess champion Gary Kasparov. The landmark achievement was possible thanks to dramatic advances in computing power. While impressive, a computer beating a human at chess was a matter of number-crunching. Big Blue could simply calculate more winning moves faster than Kasparov could.
Thirty years later, ChatGPT has once again rekindled interest in AI, as well as the old paranoia. In March this year, a group of AI experts called on all AI labs “to immediately pause for at least six months the training of AI systems more powerful than GPT-4” (the current iteration of ChatGPT).
The open letter, signed by such luminaries as Elon Musk, piled on the paranoia. They ask: “Should we develop non-human minds that might eventually outnumber, outsmart, obsolete, and replace us? Should we risk the loss of control of our civilization?”
Other AI experts go even further, calling AI a bigger danger to humanity than climate change. Some voice the fear that humanity is at risk of being enslaved by AI. But none of these experts provide concrete examples of how such doomsday scenarios would occur.
All AI systems, whether Big Blue, a self-driving car, or ChatGPT, are domain-specific. An AI system designed for an autonomous vehicle can’t play chess. They are designed to perform a specific task within the parameters set by the designers.
AI systems consist of an algorithm that has access to an internal or external database. They operate on Boolean logic to process the information they can access (true/false/if/then/or, etc). They don’t make up facts and don’t have a will of their own.
Chat systems are impressive and will impact or even eliminate many jobs and will render entire professions obsolete, but they are only one part of a much broader technological (Industry 4.0) ecosystem. The technology is already transforming nearly all areas of the Chinese economy.
Health care: AI is used in China’s health-care industry for medical imaging analysis, disease diagnosis, and drug research. AI algorithms analyze medical images and help doctors detect abnormalities or assist in diagnosing diseases.
Smart cities: Chinese cities are deploying AI technologies to create smart urban environments, including traffic management, energy efficiency, waste management, and public safety systems that utilize AI to optimize operations and enhance citizen services.
Education: AI is integrated into China’s education system to improve personalized learning experiences. Intelligent tutoring systems and adaptive learning platforms use AI algorithms to tailor educational content and provide personalized feedback to students.
Agriculture: AI has been deployed in agriculture for crop monitoring, pest detection, and yield optimization. Drones equipped with AI algorithms survey farmland, analyze crop health, and identify areas requiring attention.
Cultural factors, including pragmatism, explain why China has a higher level of acceptance and trust in technology than the West. The Chinese see AI as just one part of a larger development in the transition to the Fourth Industrial Revolution.
Accidents and mistakes can happen in the development of technology, and AI needs guardrails, just like the atomic energy industry and civil aviation do. If an algorithm is allowed or enabled to get out of control, the programmer is at fault. Common sense dictates that any system able to impact the lives of millions is tested behind a firewall.
It is commonly said that in AI, the US leads in innovation and China leads in application. That may be true, but the US should be concerned that it does not innovate itself into oblivion by neglecting its infrastructure.
To be fully transformative, AI needs to operate in an Industry 4.0 ecosystem. That’s where China had a head start, and would be a better focus of concern in the American AI community.
However, learning certain dances was not an easy feat for Megan due to her condition.
“Some of the dance moves are fast and challenging, and I couldn’t catch the tempo. It was very difficult and I needed more encouragement to not give up,” she said.
Her mother Jasmine Lai said it was a proud moment to see her child on the national stage.
“This feeling is very strong for us because we have seen what Megan has gone through in the past. There were times she has told us that she just wanted to give up and didn’t want to try any more.
“The moment we saw her on the screen, we thought that Megan has really transformed into a young lady. It was also at this moment we felt that dancing is the right choice for her to pursue.”
After starring on the national stage, Megan hopes to achieve her dreams of becoming a dance instructor and dancing on a global stage.
Mdm Lai said that she hopes people will understand Megan and others like her through the parade and her performance.
“I feel that people will understand Megan is actually like everyone else and she is able to pursue her dreams with the determination that she has. She can tell her story in her own way, and be able to inspire others.”
WASHINGTON: The incoming hereditary ruler of Cambodia, a country Washington is keen to pull out of Beijing’s orbit, could meet CEOs of US firms interested in investing there in New York next month, the head of the US business lobby for Southeast Asia told Reuters. Cambodia’s long-ruling Prime Minister HunContinue Reading
Miho Oda, a meteorologist with the Japan Weather Association, said,” I’m always watching the action of winds, but the approach this one is acting is extremely uncommon.” Even though summer storms move in a very complex manner, this one is still very strange. The fact that it’s going back theContinue Reading
shabby picturesChinese tech shares decreased after the nation’s internet regulator suggested restricting smartphone use by kids under 18.
On Wednesday, stock of companies like Alibaba and the video-sharing website Bilibili dropped, and on Thursday, they lost even more.
Children would only be permitted to use their apps for a maximum of two hours per day under the proposed legislation.
It has been four years since gambling restrictions were imposed on kids in the nation’s second-largest economy.
Children will also be prohibited from accessing the internet on mobile devices between 22:00 and 06:00 local time under the rules proposed by the Cyberspace Administration of China( CAC ).
The CAC’s proposal calls for industry participants, such as manufacturers of mobile phone devices, software developers, and app stores, to create a feature called” minor mode” to set use boundaries, which change with age.
Children under the age of eight will only be given eight minutes of screen time per day, while those between the age of 16 and 18 will have two days.
The request is now available for public comment.
According to Ray Wang, the founder and CEO of Silicon Valley-based firm Constellation Research, tech giants will likely be held accountable for enforcing the rules, much like how it handled game restrictions.
There are alternatives, of program. Although children can access their parents’ devices’ passwords, the general consensus is that games restrictions have been very well put into place, according to Mr. Wang.
On Wednesday, Alibaba’s stock closed in Hong Kong more than 3 % lower. That of Bilibili decreased in the region by almost 7 %.
By midday on Thursday, Bilibili was over by 0.5 % while Alibaba was trading about 2 % lower.
Tencent, a tech behemoth, had shares that closed about 3 % lower but were 0.1 % higher in Hong Kong.
According to authorities, video game addiction is harmful to children’s health, so China has taken some steps to reduce it.
Between 22:00 and 08:00, players under the age of 18 were prohibited from playing electronically. Additionally, they were only allowed to play for 90 days on weekends and three days on weekends and holidays.
Authorities forbade kids from entertainment for more than three days a week about two years later.
Online games had been branded by a state media outlet as” religious morphine.”
Depending on who’s telling the tale, US near-peer adversaries China and Russia may have accomplished a significant paradigm shift in their cyber operations by targeting civilian infrastructure – or they may simply be doing the same sorts of things Washington is doing with its own cyber warfare plans.
In National Defense magazine this month Josh Luckenbaugh says that, while the US and Western countries consider civilian infrastructure off-limits, its adversaries do not abide by those principles. He says that US near-peer adversaries plan to use such effects-based operations to change the US political calculus by impeding decision-making and causing social panic.
Luckenbaugh also says that since US near-peer adversaries are looking for new ways to attack critical infrastructure, looking for new ways to partner with the private sector becomes imperative, as most US critical infrastructure is privately owned.
He also notes that the US military does not own and operate critical infrastructure, necessitating new forms of public-private partnership that secure the latter but do not affect the political calculus between free enterprise, privacy, and state security.
In the latest tit-for-tat in the ongoing cyberwar between the US and China, the US has exposed extensive Chinese cyberattacks aimed at critical infrastructure to disrupt the former’s military rescue operations in the event of an attack on Taiwan from the Chinese mainland.
A recent New York Times report says that the Joe Biden administration is hunting for malicious computer code it believes China has hidden deep inside sensitive networks controlling power grids, communications systems, and water supplies that feed US military bases around the world, according to US military, intelligence, and national-security officials.
The Times notes that the first public hints of the Volt Typhoon malware surfaced in May when Microsoft detected mysterious code in Guam’s telecommunications systems and elsewhere in the US.
The paper says that the intrusion detected by Microsoft was just the tip of the iceberg, with more than a dozen US officials confirming that China’s espionage effort goes beyond telecommunications systems and long predates the May report. The cited officials said the US government’s efforts to hunt down and eradicate the malicious code had been under way for some time.
The Times reports that the discovery of the malware has raised fears that People’s Liberation Army hackers have inserted code to disrupt US operations in case of a conflict over Taiwan or if China moves militarily against the self-governing island in the coming years.
A US congressional official cited by the Times calls the malicious code in essence a “ticking time bomb” that could allow China to slow or interrupt US military deployments or resupply operations by cutting off power, water, and communications to US military bases.
US officials cited in the report also note that the malicious code could have far more devastating effects, as civilian businesses and homes depend on the same infrastructure.
The newspaper says that the malware’s discovery touched off a series of meetings in the White House Situation Room involving officials from the US National Security Council, the Pentagon, Homeland Security and various spy agencies to understand the scope of the problem and prepare a response.
The source also says the Biden administration has briefed Congress members, some state governors, and utility companies about its findings.
Such a long-running attack with unknown scale of damage and compromised information may have put into question US defensive capabilities.
However, the US may also be guilty of cyber-warfare practices similar to those it accuses China of carrying out.
In May, China’s National Computer Virus Emergency Response Center (CVERC) and the Chinese cybersecurity company 360 accused the US of using “powerful cyber-weapons” to orchestrate attacks on critical information infrastructure, aerospace, research institution, oil and petrochemical industries, large internet companies, and government agencies in various countries, with such activities traceable as far back as 2011, according to a report by the South China Morning Post.
The Chinese also said information collected from foreign governments, companies, and citizens would be provided to US decision-makers for national-security intelligence and security risk assessments.
They said the CIA has been instrumental in fomenting political unrest in countries at odds with US interests, and that the US spy agency has provided political opposition movements with tools to circumvent censorship, such as the Tor browser, and communications tools for organize protests, such as Stampede – software that has enabled tactical-level command and control.
Earlier, in September 2022, the SCMP reported that CVERC and 360 identified the US National Security Agency’s Computer Network Operations (CNO) as the culprit behind a cyberattack against China’s Northwestern Polytechnical University in Shaanxi province, noting that the university receives funding from China’s Ministry of Industry and Information Technology and is involved in projects such as fighter-jet development.
That report claimed that the CNO used proxy servers in Japan, Germany and South Korea as springboards to infiltrate the university’s operation and maintenance network, carried out thousands of cyberattacks against the university over time, controlled multiple critical servers and stole core data using sophisticated malware.
It also said that by controlling the monitoring system and message servers of infrastructure operators, CNO could access the personal information of people with sensitive identities, package that information, encrypt it and send it back to NSA headquarters.
The tit-for-tat cyberespionage between the US and China illustrates the danger of proliferating covert cyber operations.
In a 2015 article for Clingendael Institute, Sico van der Meer and Frans Paul van der Putten argued that the US retaliation approach against major cyberattacks would be detrimental to international stability.
There’s current evidence for their point: The 2023 National Cybersecurity Strategy states that the US will use all instruments of national power to disrupt and dismantle actors whose actions threaten its interests. The strategy notes that these efforts may integrate diplomatic, information, military (kinetic and cyber), financial, intelligence, and law-enforcement capabilities.
Van der Meer and van der Putten cited an obvious risk of escalation, normalization of covert retaliation against governments that are suspected of being involved in cyberattacks and proliferation of cyber threat actors – making cyberspace dangerous and unstable for all.
Further, they suggested that US allies urge the US to avoid seeking cyber deterrence through retaliation against China and other countries. Instead, they suggested that the US and its partners work together to establish norms halting the proliferation of state-sponsored cyber espionage and covert cyber operations across borders, which they said would be the foundation of a genuinely effective deterrence strategy against state-sponsored cyber-attacks.
Japan’s central bank left interest rates unchanged last week despite rising inflation, but suggested that it could gradually discontinue years of ultra-cheap money, sending the yen soaring and stocks tumbling.
The Bank of Japan (BOJ) said it kept unchanged its short-term interest rate at minus-0.1% and maintained its target for the yield on 10-year government bonds at around 0%.
But the central bank of the world’s third-largest economy also noted that it would employ a more flexible stance to controlling the yield on government bonds, which affects borrowing costs, “diluting a key pillar of its long-standing ultra-loose monetary policy,” as an analyst on CNN recently said.
With Japanese inflation now at 4.2%, there are growing calls, perhaps unsurprisingly, for the BoJ to tighten monetary policy much faster.
For instance, the sooner the BoJ moves to a “more normal structure and let bond markets, equity markets do their work that they need to do,” the better it will be for financial markets, Kevin Hebner, global investment strategist at TD Epoch, told CNBC’s Squawk Box Asia on Monday.
However, instead of rushing to increase interest rates, the Bank of Japan should focus on complementing its monetary policy with clearer fiscal plans, as advocated by Prime Minister Fumio Kishida’s government.
Enhancing worker productivity and supporting innovation in the private sector would be instrumental in achieving sustained wage growth, aligning with the 2% target.
However, the current debate in Japan primarily revolves around the government’s inclination to raise defense spending and fund it through methods like the potential sale of shares in telecoms company NTT, which can be seen as mere gimmicks.
If Japan is indeed approaching sustainable inflation levels and is getting closer to achieving its target, it is crucial for the government seriously to consider implementing a fiscal policy that aligns with this economic environment.
While the BoJ governor’s initiatives may have shown promising results, it’s essential now to recognize that the Bank of Japan cannot tackle this challenge singlehandedly.
Collaborative efforts between the government and the central bank are necessary to ensure the success of any economic measures aimed at maintaining stable and on-target inflation.
Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.
