BANGKOK: Major Japanese auto manufacturers will invest 150 billion baht (US$4.34 billion) in Thailand over the next five years, a Thai government spokesperson said on Monday (Dec 25), supporting the Southeast Asian country’s transition to making electric vehicles. Toyota Motor and Honda Motor will invest about 50 billion baht each, whileContinue Reading
Advocates for harm reduction principles have expressed their concerns about Thailand’s Narcotics Code, saying it will be challenging to enforce a law against drugs which promotes decriminalisation and harm reduction at the same time.
Speaking on the sidelines of a forum organised by the International Drugs Policy Consortium in Cebu, the Philippines titled “Building Media and Legal Allies for Drug Law Reform in Southeast Asia”, they urged law enforcement agencies to respect internationally recognised human rights principles in their implementation of harm reduction policies.
The activists were referring to sections 113 and 114 of the Narcotics Code in particular, which mandate any person who is arrested for drug use to attend treatment in a rehabilitation facility until they are certified as having completed treatment, at which point the offence will be expunged from their record.
Rawitsara Piakhuntod, Human Rights Officer for the Institute of HIV Research and Innovation (IHRI), said the law effectively forces drug addicts to undergo rehabilitation in exchange for having drug charges against them cleared.
The law, she said, overlooks the fact that not all drug addicts are willing to be rehabilitated, especially those who are considered “functioning addicts” who lead seemingly normal lives.
As such, she said, the code actually goes against the principles of harm reduction, as it makes their liberty and human agency contingent upon enrolling in a rehabilitation programme.
“The law considers anyone convicted of a drug offence as an addict in need of rehabilitation, but in fact it is not like that,” Ms Rawitsara told the Bangkok Post.
“First of all, it needs to be understood that people who use drugs are not all drug addicts. People use drugs in different ways and amounts, for instance, to unwind or enhance their working capacity so they can earn more money. Most know their limits in using drugs,” she said.
“So, it is unfair for them to be forced to enter a rehab programme, when they only use drugs once in a while,” she said.
Besides sections 113 and 114 of the code, Ms Rawitsara said she was also concerned about Section 115.
Section 115 says police and narcotics officers can insist on a urine analysis test when they suspect someone has taken drugs.
The section also allows them to hold a suspect for 24 hours for questioning, and if the testimony is considered incriminating, it can result in immediate prosecution.
The problem, Ms Rawitsara said, is that a search can be ordered at the discretion of law enforcement officials.
She said this might open a window of opportunity for the police and anti-narcotics authorities to abuse their power as they aren’t required to seek court approval or a warrant for a search.
“When it comes to searching entertainment venues, police and drug officials may use suspicion as a reason to take photos of ID cards or personal documents of a suspect, which is an abuse of their human rights and personal liberty,” she said.
Harm reduction
According to the principles of harm reduction, she said that once people who use drugs are arrested by law enforcers, they must retain the right to manage their lives and their addictions through choice and not coercion.
And if they are drug dependent, they must be treated as patients, Ms Rawitsara said.
The primary goal of harm reduction is to save lives and protect the health of both people who use drugs and their communities, she said.
She said the authorities must not generalise and assume all those who use drugs are addicts.
Law enforcement officials need to refer cases to health officers to confirm an addiction with a thorough test after someone is found with drugs in their possession.
If they require treatment, they should have a role in deciding which treatment is the most suitable for their condition.
Some may just need counselling to understand the root causes of their drug abuse to move on with their lives.
“Harm reduction does not mean criminal punishment. The death penalty, imprisonment, custody, fines and confiscation are approaches which are only suitable for those who traffic drugs,” Ms Rawitsara said.
Thissadee Sawangying, director of Health and Opportunity Network (HON), said while law enforcement agencies have worked with the Public Health Ministry to better understand the principles of harm reduction, they continue to insist on rehabilitation in lieu of criminal prosecution.
She said that the Office of Narcotics Control Board’s harm reduction programme should be there to reduce harm in society, not harm the people it is supposed to serve.
Measures such as mandatory urine testing, or the prosecution of recreational users can backfire.
“The law is there to promote peace and security, yet authorities still arrest drug users and force them to undergo a rehabilitation programme under the guise of ‘harm reduction’, but that is a misinterpretation.
“The principles are meant to reduce harm threatening peace and security, not the people themselves. How can we achieve peace and security in society if the people themselves are not at peace?” she said.
The principles of harm reduction must also be applied to former inmates, Ms Thissadee said.
She said there are no post-release physical or mental checkups, no economic assistance or support of any kind provided for ex-inmates.
“Harm reduction is about serving all the needs of the individual — not just their health needs, but also psychological, economic and social needs,” she said.
SMALL BEGINNINGS VNG was born in 2004 as Vinagame, a start-up with just five people, who prepared the launch of their – and Vietnam’s – first online game by travelling the country on motorcycles. They plastered posters for the game across 5,000 internet cafes, the founders say. They have nowContinue Reading
Nippon Steel’s plan to acquire US Steel has triggered an uproar among the US Congress, the United Steelworkers and economic nationalists alarmed by the buyout of an American icon and the US$14.9 billion deal’s potential implications for US employment and the economy.
The reaction has been particularly strong in President Joe Biden’s birth state of Pennsylvania, where US Steel’s headquarters and several plants are located. Senator John Fetterman, a member of Biden’s Democratic Party, issued a populist statement saying:
I live across the street from US Steel’s Edgar Thompson plant in Braddock. It’s absolutely outrageous that US Steel has agreed to sell themselves to a foreign company. Steel is always about security – both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign sale.
This is yet another example of hard-working Americans being blindsided by greedy corporations willing to sell out their communities to serve their shareholders. I stand with the men and women of the [United] Steelworkers and their union way of life. We cannot allow them to be screwed over or left behind.
Fetterman was joined in opposition to the deal by a bipartisan group of politicians including Senator Bob Casey (Democrat, Pennsylvania), Senator J D Vance, (Republican, Ohio), Senator Josh Hawley (Republican, Missouri), Senator Marco Rubio (Republican, Florida), Congressman Chris Deluzio (Democrat, Pennsylvania) and Pennsylvania State Senator Jim Brewster (Democrat).
Do they have a case? On December 18, Nippon Steel and US Steel announced the signing of an agreement under which Nippon Steel will acquire 100% of US Steel in an all-cash transaction priced at $55 per share, equivalent to an equity value of $14.1 billion, Nippon will also assume US Steel’s debt, bringing the deal’s total enterprise value to $14.86 billion.
The purchase price is nearly 40% above US Steel’s closing stock price on December 15 of $39.33 and 57% more than the rival offer made by iron and steel company Cleveland-Cliffs last August, which valued US Steel at $35 per share.
US Steel’s share price jumped 26% to a 12-year high the day the Nippon transaction was announced and closed at $47.97 on December 22. Nippon Steel agreed to pay about 12 times earnings for US Steel, which is almost twice its own current valuation.
The Wall Street Journal noted, “that by shelling out so much for US Steel, Nippon [Steel] is actually making a bet that the American manufacturing renaissance will succeed, with steel demand heading structurally higher.” But, it continued, “That still won’t stop politicians from taking potshots.”
Cleveland-Cliffs CEO Lourenco Goncalves issued a statement saying:
We identified US Steel as an extremely undervalued company with significant synergy potential when combined with Cleveland-Cliffs, creating a union-friendly American champion among the top 10 steelmakers in the world.
Even though US Steel’s board of directors and CEO chose to go a different direction with a foreign buyer, their move validates our view that our sector remains undervalued by the broader market, and that a multiple re-rating for Cleveland-Cliffs is long overdue. We congratulate US Steel on their announcement and wish them luck in closing the transaction with Nippon Steel.
Closing the deal, however, could be difficult amid the nationalistic backlash. Senator Vance said, “Today, a critical piece of America’s defense industrial base was auctioned off to foreigners for cash.”
For cash plus the assumption of debt, actually, and a lot more than the competing offer. In short, a great deal for US Steel shareholders.
Nippon Steel’s share price declined after the announcement, dropping more than 5% on December 19. Since the end of November, when word of the transaction may have been circulating, it is down 13%. This raises a question: Is Nippon Steel making an overpriced mistake?
Judging from the reaction of the United Steelworkers, it might be. In both the announcement of the acquisition and its presentation to investors, Nippon Steel emphasizes that all of US Steel’s commitments to its employees and agreements – including collective bargaining agreements – with the union will be honored.
But United Steelworkers International President David McCall has his doubts. “We remained open throughout this process to working with US Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company,” McCall said.
“Neither US Steel nor Nippon [Steel] reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires US Steel to notify us of a change in control or business conditions,” he said.
“Based on this alone, the USW does not believe that Nippon [Steel] understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract,” McCall added.
Labor has good reason to fear corporate takeovers, but it is American, not Japanese, management that is known for mass lay-offs.
In fact, US Steel’s workforce shrank from 29,000 in 2018, when then-president Donald Trump slapped a 25% tariff on imported steel, to less than 23,000 in 2022. That figure is set to drop by another 1,000 due to the downsizing of the company’s plant in Granite City, Illinois, which was announced on November 28 this year.
All in all, US Steel’s workforce has been slashed by 25% since 2018. Trump’s tariff was supposed to protect American jobs but had the opposite effect, and the union couldn’t and apparently still can’t do anything about it.
Ironically, Dan Simmons, president of United Steelworkers Local 1899, which represents the workers in Granite City, told reporters that “The optimistic side of this [the acquisition] is that Nippon [Steel] was a part of a joint venture back many years ago with National Steel, when I was an employee then and they were a good partner to have.”
Rather than downsizing, Simmons says, “The right decision would be to fire those furnaces back up and make steel again because prices are very good.”
Nippon Steel may do just that. Its rationale for the acquisition includes the attractiveness of the US steel market, where quality standards are high and the rebuilding of manufacturing and infrastructure are expected to support long-term growth in demand.
It also needs to get behind the wall of tariffs first erected by Trump and built out by Biden that is unlikely to be dismantled regardless of who wins the presidential election in November 2024.
Nippon Steel has been operating in the US through joint ventures and largely- or wholly-owned subsidiaries since the 1980s. Wheeling Nippon Steel began as a joint venture with Wheeling-Pittsburgh Steel in 1984 and is now a 100%-owned subsidiary.
It was followed by the establishment of Nippon Steel Pipe America, International Crankshaft, the Indiana Precision Forge and Suzuki Garphyttan steel bar and wire companies, Standard Steel (steel wheels) and the steel sheet joint ventures NS Bluescope and AM/NS Calvert, which ArcelorMittal and Nippon Steel bought from ThyssenKrupp in 2014.
Nippon’s acquisition of US Steel, if it is completed, will be its ninth investment in the US. It would add US Steel’s integrated steel mills in the US and Slovakia to those of Nippon Steel in Japan, India, Thailand, Brazil and Sweden. Nippon Steel has downstream operations in China, Southeast Asia, the Middle East, Brazil and the US.
The deal would raise Nippon Steel’s total annual crude steel capacity from 66 to 86 million metric tons as calculated using the methodology of the World Steel Association – i.e., the sum of the nominal full production capacity of companies in which it has a 30% or greater equity interest.
Nippon Steel would then vault from 4th to 2nd place in the world steel rankings, overtaking Ansteel and ArcelorMittal to become nearly two-thirds the size of China’s top-ranked Baowu Steel, which has an annual crude steel production capacity of about 130 million metric tons.
The acquisition was unanimously approved by the boards of directors of both companies. It is subject to approval by US Steel shareholders and regulatory authorities, neither of which is expected to oppose the deal.
Nippon Steel plans to fund the transaction primarily through borrowings from Japanese banks, from which commitment letters have already been received. The deal is expected to close in the second or third quarter of 2024.
If US Steel had instead accepted Cleveland-Cliff’s offer, the combined entity would have had a monopoly on blast furnace steel production in the US and a dominant share of the market for steel used in the US motor vehicle industry.
As part of the Nippon Steel Group, the US steel industry will remain competitive. US Steel will retain its brand name and headquarters in Pittsburgh under the deal.
On December 19, Senators Fetterman and Casey and Representative Deluzio sent a letter to Treasury Secretary Janet Yellen, who is also chair of the Committee on Foreign Investment in the United States (CFIUS), urging her to block the proposed acquisition. They wrote:
With the passage of the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, the United States has acted to make the US market the most competitive in the world and to reshore critical supply chains. Allowing for the ownership of a major industrial participant in infrastructure and clean energy investments to be acquired by a foreign entity would be a step backwards in our commitment to supply chain integrity and economic security.”
We question whether a foreign company that has been found to be dumping steel into the US market at prices below fair market value is the best buyer for US Steel. Of further concern, Nippon Steel has facilities in the People’s Republic of China, a foreign adversary of the US.”
Senators Hawley, Vance and Rubio likewise wrote to Secretary Yellen, saying in a statement:
The transaction was not entered into with US national security in mind… [It] was not the product of careful deliberation over stakeholder interests, but rather the result of an auction to maximize shareholder returns.
Trade protections can and should induce foreign investment that expands domestic production and creates American jobs. This corporate takeover is out of step with those goals. Allowing foreign companies to buy out American companies and enjoy our trade protections subverts the very purpose for which those protections were put in place.
NSC [Nippon Steel Company] does not share US Steel’s storied connection to the United States, and its financial interests are tied into those of Japan. Earlier this year, NSC received more than $3 billion in subsidies from Japan’s Ministry of Economy, Trade and Industry. And NSC has even flouted American trade law. As recently as August 2021, NSC was found guilty of unlawfully dumping flat-rolled steel products into the US market.
The world’s leading business dailies have taken issue with these nationalistic views. The Wall Street Journal, for one, criticized both what it sees as a throwback to protectionism and the inability of politicians to distinguish between Japan and China. It asked: “Do they think the Japanese are going to bomb Pearl Harbor?”
The Financial Times, in an editorial entitled “The misguided US backlash against Nippon Steel raises a question of trust,” asks “If Japan does not count as a legitimate buyer of assets in the US, who does?”
Japan’s Nikkei said “US Steel takeover opposition sends the wrong message to Japan” and quotes Joshua Walker, president of the Japan Society, saying that “It sends all the wrong messages. We can’t celebrate Japan as our most important and critical ally and then attack Nippon Steel with the type of xenophobic rhetoric we are seeing.”
All this puts Biden, a self-proclaimed strong supporter of both labor unions and the US-Japan alliance, in a tight spot. In a statement issued by the White House, National Economic Advisor Lael Brainard said:
The President believes US Steel was an integral part of our arsenal of democracy in WWII and remains a core component of the overall domestic steel production that is critical to our national security. And he has been clear that we welcome manufacturers across the world building their futures in America with American jobs and American workers. However, he also believes the purchase of this iconic American-owned company by a foreign entity—even one from a close ally—appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.
At this point, it seems likely Biden will pass the buck to Treasury’s CFIUS to approve or reject the deal. But the final decision may not be made until June or even September, which will put the US Steel-Nippon deal in a politicized spotlight in the run-up to the November 2024 election in an important swing state.
Follow this writer on Twitter: @ScottFo83517667
SINGAPORE: People’s Park Complex may be considered for conservation due to its “high heritage significance” and the collective sale effort should take that into account, the Urban Redevelopment Authority (URA) said on Friday (Dec 22). Completed in Chinatown in 1973, People’s Park Complex was the first mixed-use commercial and residentialContinue Reading
Japanese insurer Sumitomo Life said on Friday it will acquire TPG Inc’s 35.5 per cent stake in Singapore Life Holdings (Singlife) for S$1.6 billion (US$1.21 billion) to expand its footprint in Southeast Asia. Sumitomo Life intends to acquire the shares from all remaining stakeholders in the Singapore insurer, effectively acquiringContinue Reading
China’s expanding naval presence in the Pacific Ocean and the South and East China Seas has become a major focus for Australia, the US and its allies.
Australia’s latest strategic defense review, for instance, was prompted, in part, by the rapid modernization of China’s military, as well as its increasing naval presence in the South China Sea.
According to the US Department of Defense’s most recent annual report to Congress, China’s navy has been strengthened with the addition of 30 new warships over the past 12 months. By 2030, the total number of ships is expected to increase to 435, up from the current 370.
But China is not the only potentially adversarial maritime power that is flexing its muscles in the Indo-Pacific region. Russia is becoming a cause for concern, too, even though the 2023 strategic review did not mention it.
My latest research project, Battle Reading the Russian Pacific Fleet 2023–2030, recently commissioned and published by the Royal Australian Navy, shows how deeply the Russian military is investing in replenishing its aging, Soviet-era Pacific Fleet.
Between 2022 and October 2023, for instance, it commissioned eight new warships and auxiliaries, including four nuclear-powered and conventional submarines. On December 11, two new nuclear-powered submarines formally joined the fleet, in addition to the conventional RFS Mozhaisk submarine, which entered service last month.
These figures may not look as impressive as the new Chinese vessels mentioned above, but it’s important to recognize that the Russian Navy has the unique challenge of simultaneously addressing the needs of four fleets (in the Arctic and Pacific oceans and Black and Baltic seas), plus its Caspian Sea flotilla.
Furthermore, Russia’s war in Ukraine has not had a considerable impact on the Pacific Fleet’s ongoing modernization or its various exercises and other activities. Between early 2022 and October 2023, for instance, the Pacific Fleet staged eight strategic-level naval exercises, in addition to numerous smaller-scale activities.
In addition to rebuilding its once-powerful navy, the Russians are committing enormous resources to building up naval ties in the Indo-Pacific and strengthening their key maritime coalitions.
In recent months, for instance, a naval task group of the Pacific Fleet embarked on a tour across Southeast and South Asia. This tour made international headlines but was effectively overlooked by the Australian media.
The Russian warships spent four days in Indonesia, then staged their first-ever joint naval exercises with Myanmar and another exercise later with India. The ships then visited Bangladesh for the first time in 50 years, followed by stops in Thailand, Cambodia, Vietnam and the Philippines.
The tour signals a widening of Russia’s scope in the region, though its most important naval partner remains China.
According to my findings, between 2005 and October 2023, the Russian and Chinese navies have taken part in at least 19 confirmed bilateral and trilateral (also involving friendly regional navies) exercises and three joint patrols.
The most recent was carried out in mid-2023, when the Russian and Chinese joint task force was deployed to the North Pacific, not far from the Alaskan coast.
Canberra’s preoccupation with China should not make us blind to other potential adversaries that could threaten our national security in the medium to long term.
According to my estimates, by the time the Royal Australian Navy commissions its first Hunter class frigate and the first Virginia-class, nuclear-powered attack submarine begins operations in 2032, the replenished Russian Pacific Fleet would have a battle force of at least 45 core warships.
This is expected to include 19 nuclear-powered and conventional submarines, supported by minor combat and auxiliary elements. Most of these units would be newly designed and built.
This clearly shows that if war someday breaks out in the Pacific, the Russian Pacific Fleet could present a formidable challenge to Australian and allied naval fleets in the western and northwestern Pacific, as well as the Arctic.
Australia’s decision to acquire nuclear-powered platforms from the United States and United Kingdom suggests our intent to support and engage in long-range maritime operations with our allies, possibly as far as the northern Pacific and Arctic oceans.
And in times of crisis short of open war, Russia will also have more assets to support operations around Southeast Asia and in the Indian Ocean, extending its reach closer to the Royal Australian Navy’s areas of immediate concern.
Finally, the deepening naval cooperation between China and Russia could become a risk factor in its own right as the two countries seek to counter the AUKUS security pact. This is especially true with the possibility of expanded joint naval operations in the Pacific.
Despite the tyranny of distance between Australia and Russia, we are no longer irrelevant in Moscow’s strategic planning. Russian Defense Minister Sergei Shoigu made this clear in recent remarks blasting AUKUS as a threat to stability in the Asia-Pacific region.
This means Australia’s navy and its maritime ambitions are increasingly being viewed as a risk factor to the Kremlin.
During the Cold War confrontation in the Asia-Pacific, the Soviet Union’s naval power in the region was a primary point of strategic concern for Australia, the US and its allies. This is once again proving to be true.
Alexey D Muraviev is Associate Professor of National Security and Strategic Studies, Curtin University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Today’s extreme focus on the Bank of Japan is pivoting to how the People’s Bank of China plays the economic minefield that lies ahead in 2024.
Over the next 12 months, China will stress test Asian economies as rarely before. Beijing’s dueling priorities of stabilizing growth and reducing the frequency of boom/bust cycles will center on the actions of Governor Pan Gongsheng at PBOC headquarters.
Since taking the PBOC’s reins in July, Pan has been a study in monetary restraint. Even as the all-important property sector stumbles, Pan’s team has avoided channeling giant waves of liquidity into the market. Targeted blasts, yes. But Team Pan is foregoing the powerful easing moves that traders came to expect from previous PBOC leaders.
One reason is that the yuan is under growing pressure in global markets. Nothing would get China closer to this year’s 5% growth target faster than a lower exchange rate. Pan, though, is prioritizing yuan stability over stimulus in ways that continue to confound hedge funds betting on a weaker currency.
This patience is partly about China’s default-plagued property developers. Each drop in the yuan makes paying off offshore debt more expensive and challenging. It’s also about the PBOC’s determination not to reward bad behavior through moral hazard-encouraging bailouts.
Yet this balancing act may become more precarious as China’s domestic economy underperforms at the same time the external sector disappoints.
This isn’t the only way China will stress test Asia’s economies. Writing in the latest Global Polarity Monitor newsletter, Asia Times’ David Goldman argues that China will engage in “limited, stylized probes of Asian governments’ pain threshold” in naval and military matters.
Questions about the region’s economic pain threshold vis-a-vis China’s slowdown loom large as 2024 approaches.
Though the US has beaten the odds and avoided a recession, this luck might be running out. The cumulative effects of 11 US Federal Reserve rate hikes in 18 months – and the highest Treasury debt yields in 17 years – are generating intensifying headwinds. Europe is facing a treacherous 2024 as the German economy contracts.
“The fiscal woes of the last month have clearly left their mark on the German economy, with the country’s most prominent leading indicator showing just how difficult it will be for the economy to bounce back,” says ING Bank economist Carsten Brzeski.
Japan, meanwhile, may already be in recession. Data since the economy’s 2.9% contraction in the July-September period offers little hope Japan isn’t ending 2024 in the red. The sense of fragility was buttressed by the Bank of Japan’s decision on Tuesday (December 19) to leave quantitative easing in place.
Following the no-action on rates announcement, BOJ Governor Kazuo Ueda said it would be “inappropriate to think that we will rush to change our policy because the Fed is likely to move within the next three to six months.” That, he added, means the BOJ will “observe the situation for a little longer.”
To economist Krishna Guha at Evercore ISI, this means the BOJ will “methodically” prepare the ground for a first hike to exit negative rates rather than shock markets with a surprise exit, perhaps by April.
Yet that might depend more on how China fares in the months ahead than any other variable. As China’s economy loses altitude, “the case for early [BOJ] normalization is in jeopardy,” says Carlos Casanova, senior economist at Union Bancaire Privée.
As of now, the “conditions for [a] BOJ to pivot” away from QE “have not yet been met,” Casanova says. The first condition, he adds, is for 10-year Japanese government bond (JGB) yields to be at or slightly above the “new upper bound” of 1.0%. The second is for inflation to remain above the BOJ’s 2.0% target for an extended period. Both conditions remain uncertain.
Here, the BOJ isn’t operating in a vacuum. Economist Louis Gave at Gavekal Dragonomics notes that “assuming that the Fed is sounding dovish more for political reasons than any genuine concerns, the next few months should see a weaker US dollar.”
If, at the same time, Gave says, the “Bank of Japan eventually abandons its negative interest rate policies and China’s stimulus attempts start to gain a modicum of traction – and the People’s Bank of China has ramped up liquidity injections of late – we could end up with a setup that is bearish for long-dated bonds across OECD countries. Most, but especially, in the US.”
Among these central banking powers, the PBOC is a real wildcard in 2024. Odds are the BOJ will be forced to “taper” a bit in the months ahead, says Kelvin Wong, senior market analyst at OANDA. “It seems that mounting pressure from the public and private sectors has arisen.”
Wong notes that prominent Japan business lobby Keidanren head Masakazu Tokura is urging the BOJ to “normalize monetary policy as early as possible.” Intriguingly, Economy Minister Shindo attended the BOJ’s December 19 meeting as a representative from the Cabinet Office.
“It’s rare,” Wong says, “for a Cabinet minister to attend BOJ monetary policy meetings as such ‘attendee roles’ are usually assigned to deputy ministers. In the past meetings that cabinet ministers attended had resulted in major monetary policy changes such as the launch of the mega quantitative asset-buying program in April 2013.”
Headwinds from China are among the forces complicating BOJ rate decisions.
The same goes for Bank of Korea officials in Seoul. Sputtering mainland demand has caused an about-face in South Korean exports. In recent months, the BOK cited weak global demand, led by China’s slowdown, as depressing demand for tech goods, undermining the country’s outbound shipments.
Taking a longer-term perspective, economists are mulling what China’s downshift means for the region.
“The Chinese economy has grown at an unprecedented pace since the 1980s, gaining importance globally, particularly after the country joined the World Trade Organization in 2001,” notes economist Sewon Hur at the Federal Reserve Bank of Dallas.
However, Hur notes, “the pace of growth is likely to slow as China’s economy matures because of its demographic structure and its increasing proximity to economic and technological frontiers.”
Additionally, Hur argues, “China may face more significant headwinds than would be typically expected. Notably, the country’s growth in total factor productivity — the efficiency of production — the largest contributor to China’s growth, has steadily declined since 2000. This trend is projected to continue over the next decade and beyond.”
As Chinese President Xi Jinping and Premier Li Qiang get a handle on the economy’s troubles, Southeast Asia might come into its own as a regional growth engine, argues Eunice Tan, a credit analyst at S&P Global Ratings.
“This shift could constrain the medium-term upside for China’s issuers while improving those of issuers in India, Vietnam, the Philippines and Indonesia,” Tan says.
S&P projects that China’s gross domestic product will slow to 4.6% by 2026 after growing at a 4.8% pace in 2025. By comparison, S&P sees India growing 7.0% by 2026, while Vietnam grows 6.8%, the Philippines expands 6.4% and Indonesia accelerates at a roughly 5% pace.
“Despite stimulus,” Tan says, “China’s property sector remains stressed. Constrained access to credit support and high corporate debt leverage are denting liquidity profiles, particularly of property developers and heavily indebted local government financing vehicles.”
At the same time, Tan adds, “we expect regional interest rates to likely stay high, given the US Federal Reserve will maintain a tight monetary policy to bring inflation within target. Our base case sees the US and Europe avoiding a recession in 2024, but the risk of a hard landing remains, which could affect Asia-Pacific’s exports to these regions.”
Making matters worse, China’s stumble could generate any number of downside surprises in the year ahead. The problem is that the government still hasn’t “addressed the most important issue: credit risk related to developers,” analysts at Macquarie Bank write in a report.
“Without a lender of last resort, a self-fulfilled confidence crisis could easily happen as falling sales and rising default risks reinforce each other,” Macquarie argues. “Indeed, some large developers have recently seen their credit risks rising rapidly.”
Economists at Nomura add that “China’s property sector has yet to bottom out. Markets appear to have been a bit too optimistic about the property stimulus policies over the past two months.”
If there’s any good news in the short run, write economists at Citigroup, Beijing’s “continued emphasis on supporting real estate financing and local government financing vehicle (LGFV) debt resolution will continue [to help] prevent risks [from] escalating.”
Citi analysts note that “as fragile growth continues to call for an accommodative monetary environment” by the PBOC, “more supports are still needed to boost private sentiment.”
Last month, Moody’s threatened to cut China’s credit rating, highlighting concerns over the slow pace and cost of bailing out highly indebted local governments and state firms slammed by the property crisis.
The specter of an actual downgrade of the second-biggest economy only adds to the ways China will stress test Asia in the year ahead.
Follow William Pesek on X, formerly Twitter, at @WilliamPesek
Oxford Economics projects Malaysian economy to grow by 4.3% in 2023
2024 Budget shows govt exercising fiscal discipline, reduce budget deficit
Economic momentum has picked up in Q3 2023 in Southeast Asia, but there are concerns about potential headwinds in 2024, finds Oxford Economics in its recent research commissioned by the Institute of…Continue Reading
Mr Perry said that while Coconuts had its fair share of success, such as winning journalism and entertainment awards and being frequently cited “by the biggest media companies in the world”, it had not translated to commercial success.
“Like many other independent news publishers, we have found financial sustainability to be incredibly elusive despite our best efforts,” he added.
In March, Coconuts’ Hong Kong office announced that it would conclude its operations and gave similar reasons.
A letter on the website on Mar 1 read: “In recent years, we have faced increasing journalistic and commercial challenges that have made it difficult for us to continue publishing regularly in Hong Kong.”
Hong Kong Free Press reported that the closure of the Hong Kong office came after Mr Vim Shanmugam took the helm as general manager and chief marketing officer, following Mr Perry’s relocation to the United States, where he became Coconuts Media chairman.
In the letter, Mr Perry also thanked his employees for their contributions.
“I also personally want to thank all of the staff – past and present – who have put so much time, effort, drive, creativity and intelligence into making Coconuts great.
“I am truly grateful for your service and I wish you the best in your careers.”
TODAY has reached out to Coconuts to ask about the number of workers across their offices and in Singapore who will be affected by the closure.
Mr Perry added: “We want to give a profuse and heartfelt ‘thank you’ to our readers. Our core mission was always to inform and entertain you, and we hope that we’ve succeeded in that regard for the last 12 years.”
He also said that Coconut’s archives will remain up “for all to read for (we hope) eternity”.
Coconuts Media will continue to operate as a business, with other websites BK Magazine and Soimilk still running along with its in-house brand studio, Grove.
BK Magazine is a lifestyle website on the best places to eat and visit in Bangkok. Soimilk is a Thai youth-focused website.
Mr Perry ended the letter by saying that he hopes to re-launch Coconuts “one day”.
This article was originally published in TODAY.