Time for Albanese to meet with Xi Jinping

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Australian Prime Minister Anthony Albanese’s government has overseen a turnaround in Canberra’s relations with Beijing that hints at a larger scope for other countries to balance business and security in their dealings with China.

Albanese’s strategy is also enabling Australia to benefit from the diplomatic opportunities presented by China’s economic difficulties.

When Albanese took office in May 2022, Australia-China relations were in bad shape. After former prime minister Scott Morrison’s call in 2020 for an inquiry into the spread of Covid-19 from China, Beijing imposed trade sanctions on A$25 billion (US$17 billion) worth of Australian exports.

The Chinese Embassy shared an abrasive list of 14 grievances against Australia, while the former Australian defense minister Peter Dutton (now leader of the Opposition) made historical comparisons between China today and Nazi Germany and counseled to “prepare for war.”

Canberra’s poor reputation in the Pacific arguably helped Beijing to seal a security pact with Solomon Islands.

There were no ministerial meetings for more than two years and there had been no formal leader-level talks since November 2016.

What a difference a year can make. Albanese met Chinese President Xi Jinping on the sidelines of the Group of Twenty summit in November 2022 and communication between Australian and Chinese ministers is increasingly routine. Beijing has eased its bans on most Australian exports, though restrictions persist on barley, seafood and wine.

Foreign Minister Penny Wong has reinvigorated Australian diplomacy not only in the Pacific but also in Asia and the wider Indo-Pacific region. Australia’s steady pattern of dialogue with China now aligns with that of its main ally, the United States.

Most notable about the improvement in bilateral ties is that Albanese has not weakened Australia’s position on any of China’s stated grievances. Canberra is enhancing its support for the US-led security architecture, through avenues like the AUKUS partnership with the United States and the United Kingdom and the Quadrilateral Security Dialogue with the US, Japan and India.

Albanese has condemned Beijing’s alleged human-rights violations, endorsed the “de-risking” of economic engagement with China, and refused to extradite Australia-based democracy activists to Hong Kong.

To be sure, he has made tactical concessions, particularly by not unilaterally sanctioning Chinese officials implicated in abuses in Xinjiang, mainly because such moves are unlikely to change Beijing’s conduct.

A part of this shift in fortunes is Beijing’s situation. China’s economy is troubled. Growth has barely recovered after the lifting of its zero-Covid policy and is constrained by Beijing’s limited headway in resolving structural problems such as high debt, low productivity, declining demographics, international trade pushback, and an over-reliance on the property sector.

In this context, economic coercion – which has usually been expensive and ineffectual for Beijing – is less attractive, especially after Russia’s invasion of Ukraine elevated the importance of Australia’s commodity supplies.

But the Albanese government deserves substantial credit for taking advantage of this opportunity through sensible diplomacy, including level-headed statements, constructive interactions and strength-building through collective action with like-minded partners.

Australia-China relations would not have stabilized if Albanese had maintained the combative attitude of the previous government.

PM should go to Beijing

A next step for Albanese should be to visit China. This trip would preserve productive momentum in bilateral ties without diluting Australia’s dedication to a “rules-based international order.”

It would raise the chances of Beijing lifting residual trade controls. It would show regional countries that Canberra recognizes their and its own need to co-exist with China. It would reinforce the message of US cabinet members who have recently traveled to China, that strategic competition should not veer into conflict or preclude cooperation on global challenges.

It would also boost the probability that Australian detainees in China such as Cheng Lei and Yang Hengjun can return home.

Calls for Albanese to condition his travel on the prior removal of all trade impediments or the prior release of detainees are understandable, but doing so would unfortunately make these outcomes less likely. China has its own domestic politics and Albanese’s visit would be a diplomatic gesture that makes it easier for Xi to justify the ongoing climbdown from China’s failed coercive diplomacy.

Albanese should use Beijing’s moderating economic policies to press Australian goals.

Wong’s comment that a visit requires “continued progress” on trade disputes, Trade Minister Don Farrell’s warning that Canberra could resume a World Trade Organization case against Chinese tariffs on Australian barley, and Treasurer Jim Chalmers’ reinforcement of these messages to his counterpart are fitting ways to set expectations of normalized relations with Beijing.

Albanese has not restored the golden era of Australia-China relations – that is neither possible nor the right ambition; he has simply brought some calm.

This is probably as good as it gets for Australia-China relations in the readily foreseeable future, meaning regular meetings, firm yet non-belligerent political discourse, open economic exchanges in the vast majority of non-sensitive areas, and Canberra working with partners to advance its own priorities and encouraging China similarly to embrace multilateralism.

A stretch goal could be closer collaboration on transnational concerns like climate change and debt relief, if it is free of preconditions.

However, the Albanese detente is vulnerable to a US-China crisis or a resurgence in Beijing’s assertive diplomacy. Greater volatility is likely and Australia will choose to back itself and the United States in that event, yet measured rhetoric and coordinated responses would still reduce bilateral fallout.

The message for other countries is that strained Chinese economic circumstances present additional space to pursue independent foreign policies while continuing to do business with China. But capitalizing on this demands a strategy that is strong in its commitment to self-determination but also to dialogue, diplomacy and multilateralism.

This article was first published by East Asia Forum, which is based out of the Crawford School of Public Policy within the College of Asia and the Pacific at the Australian National University.

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5 agencies team up to fight scams

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PUBLISHED : 27 Jul 2023 at 05:17

Five state agencies are joining forces to suppress illegal financial transactions and money laundering along the nation’s borders, deputy government spokeswoman Traisuree Taisaranakul said on Wednesday.

The five agencies are the Royal Thai Police (RTP), the Revenue Department, the Securities and Exchange Commission (SEC), the Anti-Money Laundering Office (Amlo) and the Bank of Thailand (BoT).

Ms Traisuree said the RTP reported on progress made in cooperation with the other agencies in carrying out the task under the policy of Prime Minister Prayut Chan-o-cha to suppress and prevent all forms of scams, including those made by call centre gangs and suppress transaction routes operating from border areas.

The agencies agreed the criminals are using illegal digital asset platforms to make peer-to-peer transactions while doing business and exchanging currencies along the nation’s borders. This channel can be used for money laundering and transferring money earned from illegal activities to foreign countries.

The RTP has been working with the agencies to set guidelines to suppress the illegal digital asset trade along the border and assigned tasks to each agency to combat such illegal activities.

Ms Traisuree said the RTP has created a database of digital asset business operators and currency exchange operators in the border areas. The database has proven useful in expanding the investigation and is accessible by Amlo as it moves to prosecute offenders under the Anti-Corruption Act, she said.

Amlo has checked suspicious transaction routes assigned by the RTP to find related bank accounts and digital assets to suppress or freeze money trails. It is also considering reviewing some laws so they can be more effectively enforced, she said.

Meanwhile, the Revenue Department has been checking tax payments made by business operators to see if they were using illegal digital asset platforms, for which the RTP database has proven useful. The BoT has okayed commercial banks to investigate and monitor any financial transactions to foreign countries originating from areas where illegal transactions are often detected.

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As global economy slows, SEA growth fights on

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James Villafuerte remembers a few months ago when onions became a luxury in the Philippines. 

Rising inflation, the reopened economy and heavy storms combined to spike in demand and short-circuited supply, sending the price of the pungent vegetable soaring to a 14-year high of $12.8 (700 PHP) per kilogram. 

“[It got] to the extent that flight attendants were caught smuggling onions from other countries to bring into the Philippines because of the high price,” said the regional lead economist at the Asian Development Bank (ADB).

Such anecdotes have become symbols of a global economy wracked with uncertainty, as the continuing war in Ukraine and increasingly urgent climate crisis fuel concerns over inflation and rising living costs. But a new report from ADB released this month and regional analysts are giving reasons for Southeast Asian optimism in the face of wider global challenges such as flagging growth numbers and rising inflation.

Workers push a trolley loaded with imported onions for delivery to stores in the Divisoria district of Manila on 26 January, 2023. Photo: Ted Aljibe/AFP

Released Wednesday, the Asian Development Outlook reported a “marginal” downgrade for Southeast Asia’s growth prospects – from 4.7% to 4.6% for 2023 and from 5.0% to 4.9% in 2024 – reflecting weaker global demand for manufactured exports. The latest edition of ADB’s flagship publication focuses on analyses and insights for individual and regional economies across Asia. 

Despite the foreboding outlook, experts still believe the region’s interconnectivity, resilient internal markets and the return of international travel will bolster Southeast Asia’s economies against the wider global challenges. Villafuerte noted that while growth projections have slowed, they still exceed those in other subregions and the global average. 

James Villafuerte, regional lead economist at the Asian Development Bank. Photo: supplied

“This is a region of 600  plus million people,” said Villafuerte. “Domestic demand remains intact and ‘revenge travel’ has really seen a huge leap in tourism, arrival and tourism related activities.” 

Villafuerte acknowledged that global headwinds from elevated prices had contributed to global inflation. On Tuesday, the Philippines central bank announced that policymakers were prepared to tighten monetary policy in view of continually rising inflation. 

His remarks came shortly after Kristalina Georgieva, managing director of the International Monetary Fund (IMF), the UN’s major financial agency, voiced similar concerns at last week’s G20 summit. The IMF’s own growth downgrades were predicted at 3.4% in 2022 to 2.8% in 2023, before settling at 3% in 2024.

Georgieva cautioned that economic activity is slowing, “especially in the manufacturing sector”, and called for a stronger “global financial safety net” to help support less-developed countries. But for now anyway, she said the broader economic system is withstanding the pressure. 

“The global economy has shown some resilience,” Georgieva stated. “Despite successive shocks in recent years and the rapid rise in interest rates, global growth – although anaemic by historical standards – remains firmly in positive territory, supported by strong labour markets and robust demand for services.” 

A history of interconnected trade 

Indonesia’s President Joko Widodo (centre) and Minister of Trade Zulkifli Hasan (centre left) visit a trade exhibition in Tangerang. Photo: Adek Berry/AFP

While international trade networks remain important, countries are also looking inwards to their own domestic economies. 

According to the ADB report, while global demand for manufactured goods slowed, domestic demand amongst Southeast Asian countries remained intact. Indonesia’s GDP expanded by 5.03% in the first quarter of this year, and economic growth remained steady, despite a slowing in exports. 

Strong national economies can help build on a history of intra-regional connectivity, according to Amanda Murphy, head of commercial banking at HSBC.  

Amanda Murphy, head of commercial banking at HSBC. Photo: supplied

“Southeast Asia has long been a bastion of free trade and sits at the crossroads of two of the world’s largest free trade agreements: the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” she told the Globe. 

These agreements, formed in 2018 and 2020 respectively, have strengthened bilateral relations within the Asia Pacific area, creating a network of trade avenues with the advantage of geographical proximity. There are signs this is already paying some dividends.

According to a recent HSBC survey, Murphy explained, over the next two years, Asia-Pacific corporations will place 24.4% of their supply chains in Southeast Asia, up from 21.4% in 2020.

“In particular, RCEP, with its tariff reductions and business-friendly rules of origin, is increasing the appeal of Southeast Asia as a manufacturing base, something more corporates are recognising,” she said.

China 

People look at models of the Intelligent Net-Zero container terminal at the Meijiang Convention and Exhibition Center during the World Economic Forum Annual Meeting of the New Champions in Tianjin. Photo: Wang Zhao/AFP

Within the Asia-Pacific region, Southeast Asian countries are planning their next steps with one eye on Beijing. Concerns over China’s slowing economy have caused ripples throughout international markets. 

“Weaker growth in the People’s Republic of China has actually weakened the demand for manufactured goods in the region,” said Villafuerte. However some Southeast Asian countries are benefiting from a “China+1” strategy, where global manufacturers look to move production out of China to diversify supply chains and mitigate their risk. 

“As businesses seek geographic diversification and adopt the ‘China+1’ strategy, Southeast Asia will continue to gain market share,” said Murphy. “Southeast Asia currently accounts for about 8% of global exports – there is every reason the share can increase.”

China’s exports in June fell to their lowest levels in three years, with a worse-than-expected 12.4% slump from the year before. On the other side of the world, the U.S. also saw a 2.7% export drop at the beginning of the year. 

But for Southeast Asia, as trade between superpowers slows, there may be an opportunity to enter new markets and build new relations. As the U.S. and the E.U. have faded as top destinations for Chinese export markets, the East Asian giant has diverged towards other destinations, including Southeast Asia. Chinese exports to ASEAN – the country’s largest trading partner by region – spiked by 20% in October. 

For ASEAN’s own export markets, building on critical sectors such as garment manufacturing will help strengthen the bloc’s overall economic outlook despite the global slow-down.

“Excepting [Myanmar], governments in the region are strongly committed to growth, which is fundamental. And this is export-led growth which is even better,” said Gregg Huff, professor of economic development and economic history in Southeast Asia at Oxford University. “Productivity increase is what enables real wages to increase. And if these increase it contributes to political stability.”

Domestic markets 

People walk in front of the DBS tower building in Singapore. Photo: Roslan Rahman/AFP

Private consumption was the main driver for economic growth, due to improved labour conditions and income across the region. Some demographics saw an increase in  disposable income, according to Singapore’s DBS Bank. 

But Elizabeth Huijin Pang, a DBS equity research analyst, was quick to stress at a press briefing that some sectors felt the hit of rising inflation and prices more than others. 

“There are still vulnerable groups who have seen the opposite [to our median customers],” she said. “Boomers saw expenses grow faster than income.”

Gig workers were another demographic spotlighted by the bank. DBS data revealed these informal workers to be Singapore’s most financially vulnerable group, with an expense-to-income ratio of 112%, almost double that of a DBS median customer. 

“[Gig workers should not be] lagging behind the rest of the population in terms of their longer-term needs,” said Koh Poh Koon, Singapore’s senior minister of state for manpower,  at a press conference last week. The remarks come shortly after the government’s agreement to accept recommendations from a workgroup for better representation for gig workers’ needs. 

New sectors and opportunities 

People walk past electric tricycles (e-trike) as the local government unit offers free ride in Manila on 6 March, 2023. Photo: Jam Sta Rosa/AFP

As well as focusing on vulnerable communities, shifts into new sectors are also a key part of Southeast Asia’s economic recovery. The region is one of the most vulnerable to climate change, and despite a recent decrease in green investments, a shift towards more sustainable business structures will likely be a key part of the region’s growth in its next economic era.

ADB has recently pledged $1 billion (54.4 billion PHP) towards the implementation of electric buses in Davao City, the Philippines’ largest road-based public transportation project.

“I think transforming our growth model into a more environmentally sensitive and green model of growth is important,” said Villafuerte. “When we analyse actually some of these green industries, we realise they also generate a substantial amount of jobs. … These will again be investment opportunities and also opportunities for employment.”

For Murphy, the rise of the regional digital economy is another key focus area for growth.

“Given that more than 75% of its population is online it’s not surprising that businesses are transforming their business models to cater to changing customer behaviour,” she said. 

The rise of real-time payments and recent initiatives to facilitate cross-border transactions, such as QR code payment agreements between Singapore, Malaysia, Thailand, Indonesia and the Philippines, are helping to boost the region’s economic connectivity. 

“When intra-Southeast Asia real-time payments become a reality, we can expect a jump in the velocity of transactions, whether they are business-to-business or business-to-consumer, which in turn will lead to greater economic activity in the region,” said Murphy. 

Transitioning through growing pains

As global crises continue, it is up to Southeast Asia’s private and public sectors to proactively plan their own paths forward. 

“Three long-term trends that businesses cannot overlook if they want to capture the opportunities in Southeast Asia are what I would call the 3Ts: trade, transition to net zero, and digital transformation,” said Murphy. 

Looking ahead to the future, Southeast Asian nations will have to take a proactive approach to adapt to these growing sectors. Moves are already being made at government level. Both Singapore and the Philippines both recently announced their first sovereign ESG (environmental, social and governance) bond and in April, Singaporean finance minister and Deputy Prime Minister Lawrence Wong revealed the Monetary Authority of Singapore’s finance plan for Net-Zero. 

For Vilafuerte, looking forward involves looking back. Governments and market response to the Philippines’ onion inflation earlier this year was almost immediate and prices and supply regulated. 

“These are temporary shocks and there are natural stabilisers,” he said. “Higher prices and inflation are a sign of a strong recovery. So I think this is just an adjustment period.”

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China’s anti-Mario Draghi moment surprises markets

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For weeks now, global markets have ricocheted between excitement over a Chinese stimulus boom and disappointment that Beijing was taking its sweet time to jolt a slowing economy.

It’s now clear that Xi Jinping’s team has settled on a strategy somewhere in between. And for the global economy, the signals from this week’s meeting of the Politburo, the Communist Party’s top decision-making body, seem short-term negative for world markets – but long-term positive.

As Bill Bishop, long-time China-watcher and author of the Sinocism newsletter, sees it, the policy direction being telegraphed seems “fairly dovish,” but “doesn’t seem to signal much more significant stimulus incoming near-term.”

That’s bad news for bulls betting on a new Chinese stimulus bonanza that lifts markets from New York to Tokyo. Under the surface, though, there are myriad hints that the arrival of Premier Li Qiang in March is putting reforms on the front-burner once again. In other words, Beijing cares more about avoiding boom/bust cycles going forward than just mindlessly fueling a 2023 boom.

As “no fiscal expansion plans have been revealed so far, the impact will only be felt very progressively,” says economist Carlos Casanova at Union Bancaire Privée.

Economist Wei He at Gavekal Dragonomics added that “the Politburo’s meeting on the economy shows that officials recognize weak demand is an issue. But the meeting mainly called for ‘precise’ policy adjustments.” As such, it “remains far from certain whether those can deliver a near-term turnaround in growth. The conservative stance points to, at best, a stabilization or weak recovery” in the second half.

Instead of aggressive plans for massive monetary easing and fiscal pump priming — as markets had assumed — the chatter is about prudent policymaking with an emphasis on lower taxes and fees and incentivizing increased investment.

Rather than sharp drops in the yuan to boost exports, Li’s reform squad is focused on catalyzing greater scientific and technological innovation and giving the private sector more space to thrive and create new good-paying jobs.

In lieu of scores of top-down decrees or public jobs-creation schemes, the zeitgeist is that developing a thriving micro, small and medium-sized enterprises (MSME) sector is a more forceful way to address record youth unemployment than large-scale stimulus.

What Xi and Li are telegraphing might be best called the “anti-Mario Draghi” approach to enlivening Asia’s biggest economy.

Theno-ECB President Mario Draghi holds a news conference at the ECB headquarters in Frankfurt in 2018. Photo: Asia Times Files / Reuters / Ralph Orlowski
Italian Prime Minister Mario Draghi, shown here during his tenure as European Central Bank president in 2018, has resigned. Photo: Reuters / Ralph Orlowski

The reference here is to the former European Central Bank president’s infamous pledge “to do whatever it takes” to stabilize the financial system via powerful monetary easing.

A year later, Draghi’s liquidity onslaught inspired then Bank of Japan Governor Haruhiko Kuroda to follow suit.

Haruhiko Kuroda. Photo> Asia Times Files / JIJI Press

On Draghi’s watch, the ECB unleashed stimulus on a level that would’ve been unfathomable to Bundesbank officials of old. In Tokyo, between 2013 and 2018, the Kuroda BOJ’s balance sheet swelled to the point where it topped the size of Japan’s $5 trillion economy.

Neither monetary boom did much, if anything, to make the broader European or Japanese economies more competitive, productive or, broadly speaking, more prosperous. Instead, executive monetary support generated a bubble in complacency.

Draghinomics — and Kurodanomics — took the onus off government officials from Madrid to Seoul to loosen labor markets, reduce bureaucracy, incentivize innovation, tighten corporate governance or invest big in strengthening human capital.

China, it seems, is determined to go the other way. In the months since Xi started his third term — and Li arrived on the scene as his number two — Beijing has confounded the conventional wisdom on Chinese stimulus.

The start of this week’s Politburo is no exception. Markets were betting on major stimulus moves. Instead, China unveiled a 17-point plan to attract more private capital its way.

In a note to clients, analysts at Capital Economics said that “the absence of any major announcements of policy specifics does suggest a lack of urgency or that policymakers are struggling to come up with suitable measures to shore up growth.”

One possible interpretation was that Xi’s inner circle wants to put some actions on the scoreboard before next month’s annual huddle in the resort of Beidaihe to discuss long-term policy direction. Yet the tenor of steps seems more about supply-side reforms than fiscal and monetary pump-priming that might squander progress in reducing financial leverage.

Instead of talking about reaching this year’s 5% growth target, the government said the priority now is that “good foundation is laid for achieving the annual economic and social development targets.” Officials admitted, too, that “economic recovery will show a wavy pattern and there will be bumps during progress.”

In other words, the instant gross domestic product gratification that investors came to expect in Xi’s first two terms has been replaced with a more pragmatic approach. While there will be “prudent monetary policy” and at times an “active fiscal policy,” the bigger objective is to “extend, optimize, improve and enforce tax cuts and fee reductions.”

Stimulus will indeed emerge when, and where, needed. The Politburo said, for example, that it would “accelerate the issuance and use of local government special bonds.” 

This means it’s entirely possible that local governments may be allowed to “dig into” remaining special bond quotas, including from previous years, says economist Yu Xiangrong at Citigroup, who estimates the quota to be about 1.1 trillion yuan (US$154 billion).

But there was far more discussion of ways to “adapt to the major change in supply-demand relations in the property market,” and, in timely fashion, to “adjust and optimize real estate policies.” That, Beijing says, means steps to “increase construction and supply of low-income housing,” and “revitalize all types of idling properties.”

To economist Zhiwei Zhang at Pinpoint Asset Management, “this is an interesting signal as the property sector downturn is arguably the key challenge the economy faces now.” As such, “it seems the government has recognised the importance of policy change in this sector to stabilize the economy.”

Just as important, arguably, is the government saying it’s committed to “effectively prevent and resolve local debt risks, make a package of plans to resolve the debt.” The same goes for commitments to “concretely optimize private firms’ development environment” and “build and improve the routinized communication mechanism with companies.”

Furthermore, the party’s latest phraseology includes pledges to “firmly crack down on excess fee and fine charging, resolve the receivables governments owe to companies” and “accelerate the fostering and growing of strategic emerging industries.” The plan, the party notes, is to “strengthen financial regulation, steadily push for the reform and risk resolution at small and medium-sized financial institutions of high risks” as a means to “stabilize the basic market of foreign trade and investment.”

Such language is more the stuff of Adam Smith and Milton Friedman than Mao Zedong. More Hans Tietmeyer of Bundesbank fame than Draghi or Kuroda. One possible area of optimism is that Xi’s government is finally serious about fixing the underlying troubles in the property sector – not just treating the symptoms.

Casanova points to the Politburo’s statement that authorities would recalibrate property policies based on the “local property market situation” and consider developments related to “demand and supply imbalances.” To him, “that last point is new, suggesting a change in the macroprudential regime, as the government now sees a structural shift, requiring bottom-up measures to better reflect local conditions.”

That’s not to say Xi and Li won’t support demand where needed.

Chinese Premier Li Qiang and President Xi Jinping in March 2023. Photo: Xinhua

“We expect the government to roll out modest fiscal support in the second half of 2023, but no aggressive fiscal stimulus,” says economist Ning Zhang at UBS AG. Even so, Zhang says, “some policy room may be kept to support economic growth in 2024.”

Additional stimulus measures that Zhang expects Beijing to prioritize: an acceleration of special local government bond sales; a resumption of policy banks’ special infrastructure investment funds; Beijing providing credit to clear up local governments’ arrears to corporate suppliers; modest property policy easing and credit support for stalled property projects; a modest credit growth rebound; and perhaps a small official rate cut.

There also could be “some small-scale and targeted support” for selected consumption categories as well, Zhang says.

Mostly, though, the signals coming from Beijing this week suggest a greater emphasis in increasing confidence via reform and more vibrant safety nets than runaway stimulus. Bottom line, China’s Draghi days seem over – and that’s a good thing.

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Is Elon Musk right to ditch the Twitter logo?

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Elon Musk said Twitter would be known as XGetty Images
By Natalie Sherman
Business reporter, New York

When Jean-Pierre Dube saw the news that billionaire Elon Musk was scrapping Twitter’s blue bird logo in favour of an Art Deco-style black and white X, the marketing professor thought it was a joke.

“Why take a recognised brand, with a lot of brand capital around it and then completely throw it away and start from scratch?” said Prof Dube, who teaches at the University of Chicago Booth School of Business.

“In the short-term, it seems weird.” But in the long term, could it work?

Mr Musk’s takeover of Twitter last year has been punishing for the social media platform.

Advertising revenue has dropped by half, Mr Musk said this month, as big brands pulled back, wary of changes he has made, including how the firm handles verified accounts and moderates content. Abrupt layoffs and unpaid bills have also led to bad press and lawsuits.

Estimates by Fidelity, which has a stake in the company, suggest it is now worth just a third of the $44bn ($34.3bn) that Mr Musk paid for Twitter in October.

Consultancy Brand Finance recently estimated that the firm’s brand was worth $3.9bn, down 32% since last year – a fall it attributed to Mr Musk’s “aggressive business approaches”.

Research suggests that rebrands can pay off – particularly if a firm is in trouble or wants to change direction, said Yanhui Zhao, a professor of marketing at the University of Nebraska Omaha.

His review of 215 rebranding announcements by publicly listed companies found that more than half of those businesses saw positive returns after they rebranded.

That means Mr Musk’s moves could be timely, he said, noting the multi-billionaire’s ambition to transform Twitter into an “everything app” similar to China’s WeChat, a social messaging service on which users can send money, hail taxis, book hotels and play games, among other functions.

“This is a much needed rebranding because of the strategic re-direction of Twitter,” he told the BBC, by email.

But success becomes less likely when a company is in turmoil, warned Shuba Srinivasan, marketing professor at Boston University’s Questrom School of Business. She said it was an especially risky move, given all the social media competitors, such as Mark Zuckerberg’s Threads, rushing to fill Twitter’s role.

“The rebranding is likely to confirm the fear of many Twitter users that the acquisition by Musk signalled the end of the Twitter they knew,” she said.

Nor is it clear that a rebranding addresses Twitter’s problems – many of which stem in part from Mr Musk, Prof Dube said.

“I didn’t think there was a brand problem and brand identity problem as much as a leadership problem,” he said.

In a May interview with satire site, The Babylon Bee, Mr Musk previewed the change, saying he thought he needed to “broaden the branding for Twitter” to help him succeed at pushing the company beyond the short text posts that made it famous.

But some analysts said that the potential of this vision being successful faces long odds.

In June, advisory firm Forrester Research published a report called “The super app window has closed,” which argued that tech giants such as Google and Apple currently offer super app-like functions to billions of users in the US and Europe, while tough regulatory hurdles and fierce competition limits opportunities for others.

It noted that WeChat, the example that has been cited by Mr Musk, became dominant in China early, before other payment services emerged – and in part as a result of technical issues, such as limited phone memory, which discouraged downloading multiple apps.

“While Musk’s vision is to turn X into an ‘everything app,’ this takes time, money, and people – three things that the company no longer has,” Mike Proulx, a research director at Forrester, wrote after Mr Musk’s announcement, adding that he thought the firm would shut or be be bought out in the next 12 months.

Even if Twitter’s core users in media, politics and finance stay loyal, as they have in the past, making X successful would require participation from a far broader user base – no small challenge, said Harvard Business School professor Andy Wu.

But he added that, Twitter faced difficulties before Mr Musk’s takeover and would benefit from some risk-taking.

“We can debate whether those changes are in the right direction, but Twitter does need changes,” he said.

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What comes next as China’s tech crackdown winds down

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More broadly, Xi’s administration blames widening social disparities in part on the internet boom, particularly in the pandemic era, and is moving to address any public discontent that could threaten its authority. That led to the “common prosperity” program, which has faded from public view but still guides the activitiesContinue Reading

What will Pheu Thai Party do next?

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What will Pheu Thai Party do next?
Srettha: ‘Perfect fit’ for the current situation

After two months of waiting in the wings, the Pheu Thai Party (PT) is now having a go at forming a coalition government.

The party, however, faces the same obstacle as the Move Forward Party (MFP) over how to secure enough votes for its prime ministerial candidate in the joint parliamentary session on Thursday.

MFP leader Pita Limjaroenrat, the MFP’s sole candidate, has been blocked twice from being selected due to the party’s flagship policy to revise Section 112 of the Criminal Code, known as the lese majeste law.

The military-appointed Senate and parties opposing Mr Pita have sent a loud and clear message that they will not endorse any Pheu Thai candidate if the MFP remains in the coalition.

At this point, Pheu Thai is sticking with the eight-party alliance, so it has to figure out a way to persuade the senators and those outside the bloc to change their stance.

Political analysts believe that Pheu Thai, which has three prime minister candidates to choose from, has a few cards up its sleeve to help it secure majority support in parliament.

Nevertheless, the party has remained coy about who among the three — Srettha Thavisin, Paetongtarn Shinawatra, and Chaikasem Nitisiri — it will nominate on Wednesday.

Srettha is most likely

Deputy Pheu Thai leader and list-MP Sutin Klungsang said Mr Srettha is deemed the perfect fit for the current political situation and is likely to get the nod, as suggested by Ms Paetongtarn.

Early last week, the daughter of former prime minister Thaksin Shinawatra and the head of the Pheu Thai family said the party would go with the property tycoon if Mr Pita was rejected a second time.

Mr Sutin said the main hurdle keeping Mr Srettha from getting the required vote is the condition that the MFP must not be in the coalition. The party and its seven prospective partners has hard work ahead in the coming days.

“The eight parties are still on the same team, so they must thrash out solutions together,” he said.

A source in Pheu Thai said there are not so many options if the eight-party bloc still fails to secure the required vote after Pheu Thai takes the lead in forming the coalition and nominates its own candidate.

“Either the bloc ends up in the opposition camp or some parties have to go. If we have to part ways, we have to — otherwise we’ll lose it all. It’s better than getting nothing,” said the source.

But the party is likely to negotiate with the senators to see if they can relax their conditions and ask the MFP if it can back down from its policy to amend the lese majeste law, said the source.

If the senators and the MFP cannot meet each other half way, the bloc will have to decide, the source said, adding that no matter what the decision is, Pheu Thai will make sure Mr Srettha is elected in the July 27 vote.

“It must be done at the first attempt. No matter what the coalition looks like, it must not drag on,” the source said.

Seeking support

Without the MFP, which has 151 seats, Pheu Thai will try to put together a 280-seat coalition and it has had a positive response from the Chartthaipattana and Democrat parties which have 35 seats combined, according to the source.

Rumours have spread that more than half of the Democrat MPs are in talks to join a Pheu Thai coalition, but these were denied by spokesman Ramet Rattanachaweng.

The Democrat Party has yet to select a new executive committee and a new leader to succeed Jurin Laksanawisit, who stepped down after a disastrous showing at the polls.

The United Thai Nation Party (UTN) and the Palang Pracharath Party (PPRP), with 76 seats, are waiting to see the lie of the land and they may request the interior or defence portfolios. Bhumjaithai, the third largest party with 71 seats, is also likely to be brought in, according to the source.

According to the source, while Pheu Thai wants the prime minister vote to be concluded this Thursday, it may nominate Mr Chaikasem to test the waters if it is not sure about its chances.

The Pheu Thai source said Pheu Thai is aware of the huge risks it faces if the party chooses to abandon the MFP.

The party will be seen as betraying its ally and will face a public backlash and tight scrutiny from the MFP which would be pushed into opposition. But the party can turn things around if it gets things done right after grabbing power.

“Not only does the party have to make good on its promises, its MPs have to communicate with voters and strengthen their support bases. This may help voters forgive and forget,” said the source.

Following Mr Pita’s renomination, the Pheu Thai candidates will likely get just one shot each.

Toughest time for Pheu Thai

Stithorn Thananithichot, director of the Office of Innovation for Democracy at King Prajadhipok’s Institute, said Pheu Thai has a few moves to play and it may go with Mr Chaikasem in the next round of voting if the current bloc remains intact.

The party’s possible narrative to back Mr Chaikasem’s nomination is that he is a legal expert and should take charge of the home-coming arrangements for Thaksin who faces the spectre of legal action.

The deposed prime minister plans to return to Thailand before July 26, his 74th birthday, to care for his grandchildren, but his plan is likely to be delayed to avoid any political turbulence.

“Mr Chaikasem is not a real candidate and he is the choice in case the MFP is still in the bloc. But this move is risky because parliament may endorse him. Pheu Thai has to make sure the other parties and senators understand that the move is designed to push the MFP away,” he said.

Mr Srettha will be nominated once the MFP is out of the picture and the Pheu Thai-led coalition will include Bhumjaithai and the PPRP to compensate for the MFP’s exit, he said.

Stithorn: May opt for Chaikasem

In this scenario, PPRP leader Gen Prawit Wongsuwon is unlikely to be part of the cabinet and Pheu Thai will try to get the economic positions, including the energy post to boost the government image and public confidence and deflect pressure, according to Mr Stithorn.

However, he believes Pheu Thai will not severe ties with the MFP so as to maintain leverage over Bhumjaithai and the PPRP, and will offer the MFP a chance to play hero.

“Even if it doesn’t join the coalition, the MFP may still vote for the Pheu Thai candidate to block Gen Prawit’s chances. This would give MFP something to show their supporters,” he said.

Perhaps… Paetongtarn

Thanaporn Sriyakul, director of the Institute of Politics and Policy Analysis, has a different theory about who the real candidate is and believes Mr Chaikasem will never be nominated, with Mr Srettha used as a tool to pressure the MFP to withdraw from the coalition.

After Mr Srettha is rejected, Pheu Thai will have to bring in other parties, which will make the MFP reconsider its position, he said, noting the MFP once suggested the 312 seats are enough to create a “parliamentary dictatorship”.

When this happens, Ms Paetongtarn, who is the party’s genuine prime minister candidate, will be nominated, said Mr Thanaporn.

It remains to be seen which parties between Bhumjathai and UTN will be courted to join the Pheu Thai-led coalition, according to Mr Thanaporn.

He said Thaksin, who is widely seen as the de-facto leader of Pheu Thai, has a history with Newin Chidchob, Bhumjaithai’s patriarch who deserted him, while core figures of the UTN are known to have campaigned for Thaksin’s ouster.

According to the analyst, Thaksin is likely to settle for the one he holds the least grudges with.

Thanaporn: Plot to push MFP aside

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What will PT do next?

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What will PT do next?
Srettha: ‘Perfect fit’ for the current situation

After two months of waiting in the wings, the Pheu Thai Party (PT) is now having a go at forming a coalition government.

The party, however, faces the same obstacle as the Move Forward Party (MFP) over how to secure enough votes for its prime ministerial candidate in the joint parliamentary session on Thursday.

MFP leader Pita Limjaroenrat, the MFP’s sole candidate, has been blocked twice from being selected due to the party’s flagship policy to revise Section 112 of the Criminal Code, known as the lese majeste law.

The military-appointed Senate and parties opposing Mr Pita have sent a loud and clear message that they will not endorse any Pheu Thai candidate if the MFP remains in the coalition.

At this point, Pheu Thai is sticking with the eight-party alliance, so it has to figure out a way to persuade the senators and those outside the bloc to change their stance.

Political analysts believe that Pheu Thai, which has three prime minister candidates to choose from, has a few cards up its sleeve to help it secure majority support in parliament.

Nevertheless, the party has remained coy about who among the three — Srettha Thavisin, Paetongtarn Shinawatra, and Chaikasem Nitisiri — it will nominate on Wednesday.

Srettha is most likely

Deputy Pheu Thai leader and list-MP Sutin Klungsang said Mr Srettha is deemed the perfect fit for the current political situation and is likely to get the nod, as suggested by Ms Paetongtarn.

Early last week, the daughter of former prime minister Thaksin Shinawatra and the head of the Pheu Thai family said the party would go with the property tycoon if Mr Pita was rejected a second time.

Mr Sutin said the main hurdle keeping Mr Srettha from getting the required vote is the condition that the MFP must not be in the coalition. The party and its seven prospective partners has hard work ahead in the coming days.

“The eight parties are still on the same team, so they must thrash out solutions together,” he said.

A source in Pheu Thai said there are not so many options if the eight-party bloc still fails to secure the required vote after Pheu Thai takes the lead in forming the coalition and nominates its own candidate.

“Either the bloc ends up in the opposition camp or some parties have to go. If we have to part ways, we have to — otherwise we’ll lose it all. It’s better than getting nothing,” said the source.

But the party is likely to negotiate with the senators to see if they can relax their conditions and ask the MFP if it can back down from its policy to amend the lese majeste law, said the source.

If the senators and the MFP cannot meet each other half way, the bloc will have to decide, the source said, adding that no matter what the decision is, Pheu Thai will make sure Mr Srettha is elected in the July 27 vote.

“It must be done at the first attempt. No matter what the coalition looks like, it must not drag on,” the source said.

Seeking support

Without the MFP, which has 151 seats, Pheu Thai will try to put together a 280-seat coalition and it has had a positive response from the Chartthaipattana and Democrat parties which have 35 seats combined, according to the source.

Rumours have spread that more than half of the Democrat MPs are in talks to join a Pheu Thai coalition, but these were denied by spokesman Ramet Rattanachaweng.

The Democrat Party has yet to select a new executive committee and a new leader to succeed Jurin Laksanawisit, who stepped down after a disastrous showing at the polls.

The United Thai Nation Party (UTN) and the Palang Pracharath Party (PPRP), with 76 seats, are waiting to see the lie of the land and they may request the interior or defence portfolios. Bhumjaithai, the third largest party with 71 seats, is also likely to be brought in, according to the source.

According to the source, while Pheu Thai wants the prime minister vote to be concluded this Thursday, it may nominate Mr Chaikasem to test the waters if it is not sure about its chances.

The Pheu Thai source said Pheu Thai is aware of the huge risks it faces if the party chooses to abandon the MFP.

The party will be seen as betraying its ally and will face a public backlash and tight scrutiny from the MFP which would be pushed into opposition. But the party can turn things around if it gets things done right after grabbing power.

“Not only does the party have to make good on its promises, its MPs have to communicate with voters and strengthen their support bases. This may help voters forgive and forget,” said the source.

Following Mr Pita’s renomination, the Pheu Thai candidates will likely get just one shot each.

Toughest time for Pheu Thai

Stithorn Thananithichot, director of the Office of Innovation for Democracy at King Prajadhipok’s Institute, said Pheu Thai has a few moves to play and it may go with Mr Chaikasem in the next round of voting if the current bloc remains intact.

The party’s possible narrative to back Mr Chaikasem’s nomination is that he is a legal expert and should take charge of the home-coming arrangements for Thaksin who faces the spectre of legal action.

The deposed prime minister plans to return to Thailand before July 26, his 74th birthday, to care for his grandchildren, but his plan is likely to be delayed to avoid any political turbulence.

“Mr Chaikasem is not a real candidate and he is the choice in case the MFP is still in the bloc. But this move is risky because parliament may endorse him. Pheu Thai has to make sure the other parties and senators understand that the move is designed to push the MFP away,” he said.

Mr Srettha will be nominated once the MFP is out of the picture and the Pheu Thai-led coalition will include Bhumjaithai and the PPRP to compensate for the MFP’s exit, he said.

Stithorn: May opt for Chaikasem

In this scenario, PPRP leader Gen Prawit Wongsuwon is unlikely to be part of the cabinet and Pheu Thai will try to get the economic positions, including the energy post to boost the government image and public confidence and deflect pressure, according to Mr Stithorn.

However, he believes Pheu Thai will not severe ties with the MFP so as to maintain leverage over Bhumjaithai and the PPRP, and will offer the MFP a chance to play hero.

“Even if it doesn’t join the coalition, the MFP may still vote for the Pheu Thai candidate to block Gen Prawit’s chances. This would give MFP something to show their supporters,” he said.

Perhaps… Paetongtarn

Thanaporn Sriyakul, director of the Institute of Politics and Policy Analysis, has a different theory about who the real candidate is and believes Mr Chaikasem will never be nominated, with Mr Srettha used as a tool to pressure the MFP to withdraw from the coalition.

After Mr Srettha is rejected, Pheu Thai will have to bring in other parties, which will make the MFP reconsider its position, he said, noting the MFP once suggested the 312 seats are enough to create a “parliamentary dictatorship”.

When this happens, Ms Paetongtarn, who is the party’s genuine prime minister candidate, will be nominated, said Mr Thanaporn.

It remains to be seen which parties between Bhumjathai and UTN will be courted to join the Pheu Thai-led coalition, according to Mr Thanaporn.

He said Thaksin, who is widely seen as the de-facto leader of Pheu Thai, has a history with Newin Chidchob, Bhumjaithai’s patriarch who deserted him, while core figures of the UTN are known to have campaigned for Thaksin’s ouster.

According to the analyst, Thaksin is likely to settle for the one he holds the least grudges with.

Thanaporn: Plot to push MFP aside

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Bank of Japan tiptoes toward financial bedlam

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In: Asia

TOKYO — Has Bank of Japan (BOJ) Governor Kazuo Ueda, 103 days into the job, already blown it?

Inquiring minds in trading pits everywhere can’t help but wonder as inflation and gross domestic product (GDP) diverge in dangerous ways. And markets are getting exactly the last thing you’d want from Ueda’s BOJ: crickets.

Data released on Friday (July 21) showed that core inflation, which excludes fresh food, rose 3.3% in June year on year, faster than in the US. Japan’s inflation surge shows how quickly price dynamics can shift — and perhaps get away from a central bank.

This adds an economic exclamation point to next week’s BOJ policy meeting. The two-day event ending July 28 is shaping up to be the BOJ’s last chance to salvage its reputation in world markets.

The odds the BOJ will do just that aren’t great. “Although we don’t rule out some yield-curve-control-related change at the BoJ’s upcoming policy meeting, our base case is for the central bank to stick to its guns,” says Stefan Angrick, senior economist at Moody’s Analytics.

Norman Villamin, group chief strategist at Union Bancaire Privée, adds that “the Bank of Japan may once again be forced to defend the policy via liquidity injections moving through the summer.”

Given Ueda’s recent comments, Mitsuhiro Furusawa, a former vice minister of finance for international affairs, told Bloomberg: “It’s unlikely that the bank will modify the instrument at the upcoming meeting. In the past, I thought July is possible, but the way he’s speaking, if he moves next week, it’ll be a major surprise.”

This crisis of confidence confronting the BOJ has many fathers, of course. Blame must be shared by Prime Minister Fumio Kishida’s ruling Liberal Democratic Party (LDP) for squandering the last decade. The same goes for a succession of BOJ leaders who forget about what William McChesney Martin said about punch bowls 70 years ago.

It was in 1951 when Martin, then chairman of the US Federal Reserve, famously quipped that a central banker’s job is to remove the punchbowl just as the party gets going. Far from internalizing this mindset as, say the Bundesbank of old did, the BOJ has been refilling and refilling the punchbowl for decades.

First, with the quantitative easing that the BOJ pioneered in 2000 and 2001, just after cutting rates to zero in 1999. The unsurprising result is a level of financial intoxication that no Group of Seven (G7) economy had ever known.

Japanese 10,000 yen bank notes spread out at an office of World Currency Shop in Tokyo on August 9, 2010 Reuters/Yuriko Nakao.
Easy money: Japan has a long history of quantitative easing Photo: Agencies

Twenty-plus years ago, when then-BOJ leader Masaru Hayami served up quantitative easing (QE), it was meant to be a special monetary cocktail available for a limited time only. Over time, though, the Tokyo political establishment got hooked on loose monetary policy.

One government after another prodded the BOJ leader at the moment to keep the liquidity flowing — and to up the dosage. This cycle got supersized in 2013, when the LDP hired Ueda’s predecessor, Haruhiko Kuroda.

At the time, then-prime minister Shinzo Abe said he was mixing up his own cocktail of badly needed structural reforms to end deflation. Abe promised a mix of Ronald Reagan and Margaret Thatcher with Japanese characteristics. Mostly, though, Abe just prodded Kuroda to add more punch bowls.

It backfired. As Kuroda fired his monetary “bazooka,” the yen plunged and exports soared. That generated a corporate earnings boom, one that propelled the Nikkei Stock Average up 57% in 2013 alone.

But those gains never made it to the average Japanese as wages flatlined. That’s because Abe’s party failed to implement the supply-side revolution it promised.

Moves fell by the wayside to cut red tape, liberalize labor markets, increase innovation and productivity, empower women and restore Tokyo’s place as Asia’s financial hub. Instead, Abe bet it all on ultraloose central bank policies, the likes of which modern economics had never seen before.

In short order, the Kuroda-led BOJ drove the yen down 30%, hoarded more than half of all outstanding Japanese government bonds and morphed the BOJ into a giant hedge fund by gorging on stocks. By 2018, the BOJ’s balance sheet topped the size of Japan’s US$5 trillion economy, a first for G7 members.

None of it generated real inflation, though. That took Vladimir Putin’s invasion of Ukraine. The massive boost to oil prices had Japan importing too much inflation too fast via an undervalued exchange rate. The Putin factor collided with Covid-19 era supply chain price pressures.

Japan suddenly had the inflation it sought for a decade. It was the “bad” kind, though, generated more by supply shocks than rising consumer demand. It also came too quickly, catching BOJ officials flat-footed.

On Thursday (July 20), Kishida’s government dramatized the problem by projecting that inflation will likely hit 2.6% this fiscal year.

That’s the highest in at least three decades and well above the BOJ’s 2% target. Worse, it’s double the government’s GDP expectations, now projected to expand 1.3% in the current fiscal year ending in March 2024.

In December, with his retirement less than four months away, Kuroda tested out how declaring “last call” might go down. Not well: Kuroda’s December 20 move to let 10-year yields drift as high as 0.5% caused bedlam in markets.

Then-Bank of Japan governor Haruhiko Kuroda has a QE problem. Photo: Asia Times Files / AFP

The yen surged, Japanese stocks cratered and Wall Street panicked. Kuroda’s response was refilling the punchbowl — again — and then passing bartending responsibilities to Ueda.

It now falls to Ueda to devise a 12-step program for Tokyo without crashing global markets. The trouble is, 23 years of open-bar policies made it okay for investors everywhere to drink free on Japan’s dime.

The arrangement gave way to the so-called “yen-carry trade.” Two-plus decades of zero rates made Japan the premier creditor nation. Investors of all stripes got into the habit of borrowing cheaply in yen to fund bets on higher-yielding assets everywhere.

This strategy has kept aloft everything from Argentine debt to South African commodities to Indian real estate to the New Zealand dollar to cryptocurrencies.

This explains why Kuroda’s flash of sobriety in December caused a mini earthquake globally. When the yen or JGB yields surge, the bottom falls out from under markets across the globe. Asian markets in particular don’t tend to fare well amid big yen gyrations.

These pivots back toward “risk off” crouches often blow up a hedge fund or two. And, clearly, the last thing China needs right now as GDP slows, exports stall and questions linger about the depths of its real estate problem is financial turbulence from Japan.

“Given the BOJ’s outlier status among global central banks that have spent the better part of the last two years fighting inflation,” says economist Udith Sikand at Gavekal Research, “even the smallest of changes to its policy stance could create a ripple effect through foreign exchange markets that have gotten used to the yen being a perennially cheap funding source.”

All of which explains why next week’s BOJ meeting is so crucial. It may be Ueda’s last chance to guide yen-denominated assets instead of being overwhelmed by negative market forces, not least the so-called “bond vigilantes.”

The reference here is to activist traders who take matters into their own hands to highlight government, monetary or corporate policies they deem as unwise or dangerous. They make their voices heard by driving up bond yields and boycotting debt auctions, thereby raising government borrowing costs.

If Ueda isn’t careful, the financial forces that the BOJ has long held at bay could strike back. At the very least, his team must emerge from the July 28 meeting with a plan to begin winding down decades of QE.

“We expect the BOJ to widen the fluctuation range for 10-year JGB yields,” says economist Takeshi Yamaguchi at Morgan Stanley MYFG. “That said, we do not see a meaningful rise in yields. We would see a potential knee-jerk negative equity market reaction as a buying opportunity.”

It’s easier said than done, of course. The last thing Ueda’s team wants is to tank the Nikkei — or Japan’s broader economy. Ueda, of course, has the events of December 20 on his mind. But the lessons from the 2006-07 era of BOJ policymaking also loom large.

At the time, then-BOJ governor Toshihiko Fukui tried his hand at weaning Japan Inc off the monetary sauce. QE, after all, was meant to bring the economy back from a kind of near-death experience; it was never meant to be permanent.

Fukui decided it was time to get Japan clean. First, he ended QE. In July 2006, he pulled off an official rate hike and then a second one in early 2007.

Not surprisingly, global markets struck back when investors, banks, companies and politicians howled in protest. Before long, Fukui was on the defensive and the rate hikes stopped.

By 2008, after Masaaki Shirakawa took over as BOJ governor, Tokyo was slashing rates back to zero and restoring QE. Then came Kuroda in 2013 to turbocharge QE.

Kazuo Ueda has a decision to make. Image: Facebook

Ueda also has lessons from Washington on his mind, namely the collapse of Silicon Valley Bank (SVB) amid aggressive US Fed tightening moves. As Ueda’s team understands, some of the conditions imperiling US lenders seem eerily familiar to headwinds facing Japan’s regional banks.

All too many of these 100-plus institutions saw profits squeezed by an aging and shrinking population. The communities they service have been hit by an exodus of companies keen on headquartering in Tokyo rather than the provinces.

The BOJ’s rigid “yield curve control” regime, which makes it hard for banks to borrow at one part of the maturity spectrum and lend at the other, is an added blow. So many regional lenders hoard bonds rather than lending SVB-style. This makes these embattled lenders vulnerable to BOJ tapering or tightening.

On the other side of the risk list is that the BOJ might be letting inflation become ingrained. Earlier this year, Japanese unions scored the biggest wage gains for workers in 31 years. The average 3.91% increase could add fuel to the BOJ’s inflation troubles and exacerbate concerns among traders worried the Ueda-led BOJ is already losing the plot.

“It’s a close call, but we still think yield curve control tweaks are possible, given that recent data support steady inflation growth and a sustained economic recovery,” says economist Min Joo Kang at ING Bank.

The only thing clear about the July 27-28 meeting, however, is that the BOJ will be in the global spotlight as rarely before.

Follow William Pesek on Twitter at @WilliamPesek

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Elon Musk: Tesla may cut prices again in ‘turbulent times’

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Tesla chief executive Elon Musk gets in a Tesla car as he leaves a hotel in Beijing, China.Reuters
By Annabelle Liang
Business reporter

Tesla chief executive Elon Musk has signalled that the electric carmaker will continue to cut prices as the world economy is in “turbulent times”.

The multi-billionaire’s comments came after the company reported that its profit margins had been squeezed as it faced tough competition.

In recent months, Tesla has cut its prices several times in major markets, including the US and China.

The firm’s shares fell by more than 4% in after-hours trade in New York.

Tesla reported that its profit margin had fallen to the lowest level in four years.

The company said its gross profit margin fell to 18.2% for the three months to the end of June, down from 26.2% for the same period last year.

During a call with Wall Street analysts, Mr Musk signalled that he was open to cutting prices further if needed.

“One day it seems like the world economy is falling apart, next day it’s fine. I don’t know what the hell is going on,” he said.

“We’re in, I would call it, turbulent times,” Mr Musk added.

Investors are concerned about the possibility of more price cuts at Tesla, Arun Sundararajan, a Professor at the NYU Stern Business School, told the BBC.

“This feels like a price war with no long term strategy to raise margins if Tesla wins the war,” he added.

Earlier this year, Mr Musk said he believed pursuing higher sales, with lower profits, was the “right choice” for Tesla.

The firm has lowered prices in markets including the US, UK and China to compete with rival manufacturers.

Earlier this month, the company said it delivered a record number of vehicles in the three months to the end of June.

It comes as more carmakers have agreed to adopt Tesla’s electric vehicle (EV) charging technology.

On Wednesday, Japanese motor industry giant Nissan said its EVs in the US and Canada would be equipped with Tesla-developed charging ports from 2025.

Nissan Americas’ chairperson Jérémie Papin said the firm was committed “to making electric mobility even more accessible”.

The announcement follows similar moves by US car manufacturers Ford and General Motors.

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