BANGKOK: Forty-one Thai nationals, trapped in northern Myanmar amid a surge in fighting between junta troops and armed ethnic-minority groups near the Chinese border, returned to Thailand on Saturday (Nov 18), the Thai army said. Tens of thousands of people have been displaced across Myanmar as the military government, whichContinue Reading
The term “grand strategy” may perplex, but many employ the technique even if not naming it such. Most governments seek to build and then apply national power in their attempts to establish sought-after relationships with other states.
Grand strategies are whole-of-government, involving diplomatic, informational, military and economic power. They are of most use to states with limited power that need to focus scarce resources on their most important concerns.
The grand strategy methodology is a useful framework with which to consider Australia and its contemporary international policies and activities as a middle power.
Like other small and middle powers, grand strategy informs Australia’s statecraft, the application of diverse forms of national power. Grand strategy also involves building particular forms of national power in a manner appropriate to achieving the desired objectives.
Australia has developed a balance of power grand strategy that will be of a scale “sufficient…to deter aggression and coercion” and generate “a strategic equilibrium.” Such a grand strategy assumes that others can be stopped from achieving their ambitions by being as, or more, powerful than them.
Power is gained by building up military and economic might, by forming collective defense alliances with others, or by doing both. This grand strategy is clearly focused at the great power level and implicitly at China.
The balance of power grand strategy is steadily being implemented.
Diplomatically, AUKUS is strengthening the US alliance and UK partnership. Internally, Canberra is hardening societal resilience by criminalizing foreign interference, blocking specific foreign telecom firms, toughening foreign investment laws, strengthening critical infrastructure regulations and countering misinformation and disinformation actions.
In addition to the AUKUS submarines, Australia is buying new long-range strike missiles, getting anti-ship missiles for the army, upgrading northern defense bases and developing offensive cyber capabilities.
Building economic power actions include the National Reconstruction Fund which provides targeted investments in defense capability, advanced manufacturing and critical technologies.
Looking beyond the great powers, Australia has also devised an engagement strategy focused on middle and smaller powers. This grand strategy involves working with others to achieve common goals.
Australia will work with Southeast Asia and the Pacific “to enhance our collective security and prosperity.” Supporting regional states to be more resilient to outside pressures aligns with a balance-of-power grand strategy.
In recent years Australia reached numerous bilateral and multilateral economic agreements with Indonesia, the Pacific Islands, India, Japan and South Korea.
Australia also aims for greater trade and investment with the Association of Southeast Asian Nations (ASEAN) and the two sides have deepened ties with the Comprehensive Strategic Partnership and its associated Aus4ASEAN Futures Initiative.
The initiative includes financing smart cities, digitization, technology innovation, digital skills training and a scholarship program in the areas of maritime, connectivity, economic development and sustainable development goals.
The two grand strategies are “mutually reinforcing.” Having different strategies to achieve different outcomes is necessary as a single grand strategy cannot achieve all a state seeks and combining them has proven problematic.
The balance of power grand strategy will not solve the problem of a possible great power war. Instead, the strategic equilibrium must be maintained indefinitely until the risk of major war fades.
Australia has little control over what the great powers do, meaning its grand strategy must maintain a high level of defense expenditure and industry as well as a focus on major high-technology wars.
Australia is effectively trapping itself within a narrow range of possible domestic and foreign policy options. On the other hand, a great power war in the region is critically important to avoid. Reduced autonomy in the international system may be a price worth paying.
The engagement grand strategy brings its own complications. Australia’s new trade and investment strategy with Southeast Asia needs a whole-of-nation effort.
It calls for better Southeast Asia literacy across Australia’s business, government, education and community sectors, proposing sectoral business missions to the region, more capable business chambers, deeper SME links with the region and more professional exchanges and internships.
It also calls for Australia to be a substantial regional investor using monies from its corporations, capital markets, national savings and superannuation funds.
Ultimately, grand strategies must generally gain domestic approval to be successfully implemented. It’s not simply a national government endeavor. Instead, Canberra needs to persuade Australians of the merits of the two grand strategies by building legitimacy and crafting a strategic narrative that encourages buy-in.
A strategic narrative can provide an interpretive structure to make sense of these challenges and emerging issues. Such narratives should appeal to both people’s rational and emotional cognition.
The two grand strategies set out a path, even if their success is uncertain. More definite, is that over time they will impact all Australians.
Peter Layton is a visiting fellow at the Griffith Asia Institute, an associate fellow at the Royal United Services Institute and the author of Grand Strategy.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
Recent attractions include a 99m flagpole – the tallest in Southeast Asia – overlooking the Sarawak River, and the new Borneo Cultures Museum, the second largest in the region. To light up the city, the Darul Hana Bridge at the waterfront greets tourists with dazzling lights.
Sarawak’s Premier Abang Johari Openg has big plans to promote Sarawak’s rich culture and biodiversity in a bid to drive the state’s economic recovery after the COVID-19 pandemic.
In an interview with CNA, he explained about his proposed move to take over domestic carrier MASwings to turn it into a regional airline by the middle of next year.
“It is part and parcel of connectivity that we have to establish between Sarawak and the outside world,” said Mr Abang Johari, adding that it would be a small airline that allows Sarawak to be connected to the Far East and the rest of Southeast Asia.
“Basically, this airline will stabilise airfare between Peninsular Malaysia and Sarawak. As long as we cover the overhead, it’s okay.”
To get ready for the expected increase in tourist arrivals, existing hotels are being refurbished and new ones are being built.
Sarawak’s Minister of Tourism, Creative Industry and Performing Arts Abdul Karim Rahman Hamzah said there will be more offerings next year.
For a start, the Niah National Park in coastal city Miri is set to be listed as another United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage Site after Mulu National Park.
Reuters could not independently verify the report and a junta spokesperson did not respond to request for comment. Pauktaw is about 500km northwest of Myanmar’s main city of Yangon. The offensive, which the insurgent alliance calls “Operation 1027” after the date it was launched, is the biggest the junta hasContinue Reading
Youth gained exposure to digital skills & basic AI knowledge
Workshop aims to enhance individuals’ digital skills for improved career prospects
MY E.G. Services Berhad (MyEG) has collaborated with Yayasan Chow Kit (YCK) to foster digital inclusivity for marginalised youth in and around Chow Kit area in Kuala Lumpur.
In a statement, the leading…Continue Reading
Another nearby destination with a comparable cost of living is Chiang Mai. Temperatures dip as low as 14 degrees Celsius at the start of the year, providing a much-needed respite for travellers who prefer mountains to beaches. Sabrina Tan, who left her job as a Fraud Investigator in Kuala Lumpur to work remotely in Chiang Mai as a translator and travel writer, said,
“Chiang Mai was the digital nomad capital of the world back in 2017. There were a lot of co-working spaces at affordable prices and it was very expat-friendly. Connectivity was cheap as SIM cards would cost around 1,000 THB (S$38) a month for unlimited internet.”
In 2017, renting a two-bedroom landed property cost around 13,000 THB (S$492) per month. Similar to digital nomads in Bali, she got around by renting a scooter from Chloe Motorbike Rentals or a car from Facebook pages with a rating of at least 4.5 stars.
“The most difficult part about living in Thailand for a long period of time is dealing with visa extensions at Thai immigration. The rules change all the time and sometimes it can be hard to keep up. So it’s important to check in with other nomads and the official website for the latest information,” Sabrina suggested.
To stay in Thailand legally without the need to leave the country every month, the Malaysian digital nomad signed up for a 6-month Thai language course, which turned out to be a rewarding endeavor in the grand scheme of things.
“Currently, the most affordable destinations (to work in) are definitely still in Southeast Asia. Personally, I would stay in Chiang Mai, Taipei, and Hanoi for the quality of life that I’ll get per dollar spent.”
Vietnam, as Sabrina astutely pointed out, seems to be an underrated hotspot for digital nomads. Sharlyn Seet, a student and content creator, suggests cities like Ho Chi Minh and Da Nang and recommends living close to the city centre.
PUBLISHED : 17 Nov 2023 at 04:08
TikTok has expressed interest in setting up a training centre in Thailand for Thai users to promote Thai food and soft power as tax incentives will be offered to the company, Prime Minister Srettha Thavisin said.
The PM made the remarks after talks with TikTok executives on the sidelines of the Asia-Pacific Economic Cooperation (Apec) summit in San Francisco.
Mr Srettha said Thailand has about 43 million TikTok users.
“We have to find ways to help each other — helping them operate a good business and helping Thais, such as by promoting Otop [One Tambon, One Product] products.
“I told them that Thailand does not have only Bangkok, Chiang Mai, or Phuket. There are also several other provinces which need to promote their products and services, soft power, and food.
“Several business operators uploaded cooking video clips onto TikTok with lots of viewers. I asked TikTok to open a training centre in Thailand to give advice on how to make optimal use of the social media platform.
“The Board of Investment has also offered tax incentives, and TikTok is interested,” Mr Srettha said.
Developed and owned by the Chinese technology company ByteDance, TikTok is a popular video-sharing social media app.
According to figures released by TikTok, there are over 325 million active monthly users in Southeast Asia, while 15 million small businesses use the platform each month in the region.
Government spokesman Chai Wacharonke said the prime minister invited TikTok to help Thailand promote its soft power in provinces which have their own Otop goods and services, apart from major provinces. TikTok executives appreciated that there are numerous TikTok users in Thailand, Mr Chai said, adding the company also plans to diversify into the field of education.
Mr Srettha said he also talked with executives of Booking.com, an online booking platform where hotels and other types of accommodation make their rooms available to travellers around the world.
He said the number of people visiting the website has increased seven-fold since the visa-free policy for Chinese and Kazakh tourists was announced.
He also said the executives would contact the Tourism Authority of Thailand’s governor to discuss ways to benefit both sides.
Deputy finance minister denies scheme will be abandoned if Council of State rejects loan idea
PUBLISHED : 16 Nov 2023 at 21:07
The digital wallet handout, estimated to cost the government 500 billion baht, is two to three months behind schedule, which may result in diminishing economic stimulus effects, says Deputy Finance Minister Julapun Amornvivat.
Originally scheduled to launch in February, the plan to give 10,000 baht in digital money to some 50 million people is now expected to start in May. However, the government still requires parliamentary approval of a lending bill to borrow 500 billion baht to fund the scheme.
Mr Julapun said the Ministry of Finance has not yet drafted the bill, pending an opinion from the Council of State, the government’s legal advisory body.
He declined to say whether the government would cancel the project if the Council of State disagrees with state borrowing as a funding option. Mr Julapun said the council would probably provide an explanation rather than simply saying it agreed or disagreed with the project.
Under Section 53 of the 2018 State Fiscal and Financial Discipline Act, the government can pass a borrowing bill if there is a justification for an urgent handout to solve an economic crisis.
There is a wide disparity between economists and the government, as the latter views the current situation as a crisis, conceded Mr Julapun.
Pheu Thai Party officials have been repeating the message that in their view, a decade of GDP growth averaging less than 2% a year — one of the poorest performances in Southeast Asia — constitutes a crisis.
Mr Julapun said that borrowing 500 billion baht by issuing government bonds would not create an instant burden for the government as the loan would be taken out only after the digital money was exchanged by businesses or cashed out from a state bank. The government could create incentives for people to hold the digital money for as long as possible, said Mr Julapun.
He said the government’s stimulus measures, which include the digital wallet, a trillion-baht southern land bridge, and incentives to attract foreign direct investment, should increase gross domestic product growth. The government has set a target for average annual GDP growth of 5%, about double the current level.
In any case, Mr Julapun said he believed the ratio of public debt to GDP would either remain steady at its current level of 63% or decline.
He also denied the government plans to halt the digital wallet project if borrowing under the Loan Act is blocked by the Council of State.
“We never had any intention to end the project. We want to see the successful implementation of this initiative,” said Mr Julapun.
He said the Thai economy is in crisis and economic growth is inadequate to provide the government with sufficient income to support the country’s ageing demographics over the next 4-5 years, particularly as welfare expenses rise.
MANILA – The annual Kamandag exercises now underway in the Philippines are making a multinational splash with an estimated 2,749 participating troops, including 1,732 from the Philippines, 902 from the US, 57 from South Korea, 50 from Japan and eight from the United Kingdom.
Significantly, the show of unified force comes as the Philippines and China joust over disputed features in the South China Sea, with some speculating rising tensions over the Second Thomas Shoal could soon teeter toward open conflict.
The seventh edition of the massive drills is being held in three major theaters, namely the northern island of Luzon, including provinces close to Taiwan; the western island of Palawan, which juts into the South China Sea; and the southern regions of Zamboanga City and Tawi-Tawi, which have historically grappled with insurgencies and extremist militant groups.
2023 Kamandag, or “Cooperation of the Warriors of the Sea”, aims to enhance interoperability as well as the overall capacity for a joint response to emergency situations among the five allied nations, according to the organizers. Although China was not directly mentioned, the wargames were staged to combat a China-like foe.
Philippine Major General Arturo Rojas said that the purpose of the exercises was to signal a shared commitment to resist “those who may seek to disrupt the peace [in the Indo-Pacific region].”
The Philippines is increasingly leveraging its wide and growing network of security partners to hold the line vis-à-vis China in the South China Sea. At the same time, Manila is becoming pivotal to US-led efforts to deter any near-term Chinese invasion of Taiwan.
In many ways, the Philippines under President Ferdinand Marcos Jr is emerging as a linchpin state, singularly significant to determining the fate of the US-led regional security architecture and intensifying US-China rivalry in the Indo-Pacific.
In that direction, given the Philippines’ direct stakes in the South China Sea to the west and its proximity to Taiwan to the north, Manila is simultaneously enhancing interoperability with as well as welcoming expanded military assistance from key allies including the US and Japan.
During last year’s Kamandag drills, the Philippines hosted the first-ever quadrilateral Philippine-US-Japan-South Korea exercises. Back then, a whopping 2,550 US Marines personnel joined 630 Filipino counterparts from all branches of the Armed Forces of the Philippines.
The two mutual defense treaty allies were joined by personnel from the Japanese Self-Defense Forces (JSDF) and the Republic of Korea Armed Forces (ROKAF), which joined in disaster response drills and a host of exercises aimed at enhancing quadrilateral interoperability.
As for the UK, it stepped up its defense cooperation with Manila following its first-ever participation as an observer nation along with Japan and Australia in this year’s Philippine-US Balikatan (Shoulder-to-Shoulder) exercises, which featured as many as 17,000 troops.
Like Kamandag, many of the Balikatan drills left little to the imagination, with allied nations drilling potential conflict scenarios with an adversary like China.
This year’s Kamandag exercises were launched after the US Marine Corps wrapped up Resolute Dragon 23 exercises with the Japan Ground Self-Defense Force, which saw the two sides enhancing relationships between the command posts of America’s III Marine Expeditionary Force (MEF) and Japan’s Western Army branch of the JSDF.
As many as 8,300 troops took part in those exercises featuring 5,000 service members of Japan’s SDF and 3,300 US service members. The Resolute Dragon joint drills were held across 19 facilities stretching from Hokkaido in the north and throughout Kyushu Island and the Ryukyu Arc in southwest Japan.
This year’s Kamandag exercises aimed to instill confidence and unity in the participants and send a message to China amid multiple increasingly violent encounters with the Philippines this year in the South China Sea.
“Together, we send a powerful message to the world, especially to those who may seek to disrupt the peace: that our partnership is unbreakable, our resolve unyielding, and our commitment to defending our nations is always unwavering,” General Arturo Rojas, commandant of the Philippine Marines, said in an opening ceremony speech at the Naval Station Jose Francisco in Taguig City.
For his part, General Jimmy Larida, the director of the Exercise Directorate for the Philippine Navy, underscored how the exercises are crucial to enhancing his country’s coast defense, special operations and emergency response capacities, including to potential chemical, biological, radiological and nuclear weapon attacks.
“Although most of our events will be subject matter exchanges, we believe that these activities are very important as we continue to optimize our systems and procedures in warfighting,” said Larida.
“We are situated in a very dynamic operating environment with vast and porous borders and we believe that engaging in exercises with our partners will help us achieve our goals not only for a safer and more secure Philippines but for the Southeast Asian region as a whole,” he added, underscoring the Philippines’ pivotal geography.
The Filipino general shied from connecting the massive wargames with allied nations with the Philippines’ rising tensions with China in the South China Sea. But it’s increasingly clear that the Philippines’ strategic posture has everything to do with constraining and pushing back on the Asian superpower’s ambitions.
Both the US and Japan are expanding their military cooperation with and presence in the Philippines as part of a broader emerging trilateral Japan-Philippine-US alliance (JAPHUS), which will be vital to Pentagon-led “integrated deterrence” vis-a-vis China.
Japanese Prime Minister Fumio Kishida visited Manila earlier this month to launch the country’s first-ever Overseas Security Assistance (OSA) initiative.
Enhancing the Philippines’ maritime security capabilities has been a cornerstone of Tokyo’s revitalized foreign policy in the past decade. The two countries are also exploring a Reciprocal Access Agreement (RAA) pact that allows for expanded joint drills and military exchanges – the first of its kind in Southeast Asia.
Meanwhile, the US made big headway in its efforts to expand its military footprint in the region after finalizing construction activities at the Philippines’ Basa Air Base in the northwestern Philippine province of Pampanga under the two sides’ Enhanced Defense Cooperation Agreement (EDCA).
The vital facility has been upgraded to accommodate larger aircrafts and will “ensure safer conditions” for US-Filipino training exercises, the two mutual defense treaty allies said. Command and control infrastructure, fuel storage and aircraft parking facilities and the base’s 2,800-meter runway were also improved at the military facility.
The US has allocated US$66 million to the Basa Air Base out of an initial $82 million earmarked for all EDCA-related projects, making it the largest investment by the US Pentagon under the defense pact to date.
US troops are now in a position to operate more effectively and store more military hardware at the strategic facility, which is situated close to the disputed Scarborough Shoal now occupied by China in the South China Sea.
Follow Richard Javad Heydarian on X, formerly Twitter, at @Richeydarian
The polite way to characterize Joe Biden’s meeting with Xi Jinping is that it cleared a rather low expectations bar but failed to achieve any new heights for the globe’s most important relationship.
Yet the ways in which US President Biden and Chinese leader Xi left the summit in California’s Santa Cruz mountains, their first in a year, offers more insights than what the men discussed – or didn’t broach – in private.
Biden went to the microphones to spin his first meeting with the Chinese leader in a year as “constructive and productive” and “blunt.” Xi went to work — attending a high-stakes dinner with top CEOs who’ve recently grown skittish on investing in China.
The symbolism is clear enough. With one year to go before a bruising 2024 US election, dismal approval ratings and Moody’s Investors Services threatening a downgrade, global investors figure Biden has little left to offer Sino-US dynamics.
Besides, with geopolitical fires burning from Ukraine to Israel and Republicans at home trying to impeach him and jail his son, Hunter, few think Biden will have the bandwidth to pile on more China trade sanctions.
Indeed Biden doubling down in San Francisco on his earlier description of Xi as a “dictator” spoke to how hemmed in his options are by election-related atmospherics.
Only time will tell if the Xi-Biden meeting will “mark at least a near-term bottom in the structural decline of the US-China relationship,” observes Bill Bishop, a long-time China-watcher and author of the Sinocism newsletter.
The fact the meeting took place at all suggests a calmer period ahead for bilateral investment and trade relations. It also signaled a renewed willingness to attempt to move past the myriad fissures of the last 12 months.
Yet both sides are having to eat some disappointment. China must accept that the technology transfers from the US vital to taking the economy upmarket aren’t happening anytime soon.
Biden must accept that the 14-member Indo-Pacific Economic Framework that the US hoped would be a counterweight to China is stuck in first gear, at best. The IPEF’s gathering in San Francisco this week wrapped up with little more than a hollow communique.
For Xi, the CEO gathering was far more vital than the Biden meeting. For Wall Street and Silicon Valley, seeing the leaders of the world’s two biggest economies make nice, even just for the cameras, puts China Inc’s prospects in a different light. Just the headline that Xi and Biden restored military-to-military communications will comfort Western decision-makers.
Yet for Team Xi, the hard part has only just begun. Beijing’s policy blunders these last three years have taken a heavy toll, driving giant waves of capital out of Chinese assets. From draconian Covid-19 lockdowns to tech crackdowns to the re-emergence of state-owned enterprises as the economy’s main growth drivers, Xi’s street cred as a bold reformer is in tatters.
The charm offensive at Wednesday’s CEO dinner was an ideal chance to turn the tide. Attendees included bigwigs like Apple’s Tim Cook, BlackRock’s Larry Fink, Blackstone’s Steve Schwarzman, Broadcom’s Hock Tan, Pfizer’s Albert Bourla, Qualcomm’s Cristiano Amon, Visa’s Ryan McInerney and myriad other uber executives.
It was Xi’s moment to reassure chieftains that growth is stabilizing, Beijing is repairing the property sector, the clampdown on internet platforms is over, local government debt levels are being addressed, efforts are intensifying to champion private sector growth and Sino-US trade ties are getting back on track.
“China recorded a loss of US$11.8 billion in foreign investment in the third quarter and wants to stop the outflow,” says Dominic Chiu, analyst at Eurasia Group.
Chiu adds that for Xi the dinner with US corporate executives was a chance “to reassure stakeholders that China remains open for business.”
Odds are, Chiu says, Xi made “modest gestures on issues of concern to the US Chambers” but “it’s unlikely that anything fundamental will emerge regarding China’s views on data security or state industrial policy.”
Even more important, though, is that Xi’s inner circle “walks the walk” once back in Beijing. “Talking the talk” in San Francisco is a great start. But lowering the geopolitical temperature requires follow-through in Communist Party circles, just as any reset requires a recalibration of Biden’s policies in Washington.
But for Xi, the stakes are more immediate as Wall Street debates whether his economy is “uninvestable.” The good news is that Xi and Premier Li Qiang have been working behind the scenes to stabilize a cratering property market.
In the short run, this includes additional fiscal and monetary stimulus. In the longer run, it involves creating mechanisms to help developers get weak assets off balance sheets and reduce default risks.
“China’s property crisis remains a key risk for the economy as a whole, feeding through to consumer demand and investment while pressuring local government financing vehicles and increasing asset risks within trust products,” says Justin Patrie, analyst at Fitch Ratings.
“Policy support has increased since the summer, though there remains a high degree of uncertainty as to whether it will be sufficient to begin a recovery in the property sector,” he said.
The problem for Xi is that it’s been 12 months since his government unveiled a 16-point plan to fix the property market – and with little success so far in terms of implementation or results. (The 16-point playbook preceded Li’s arrival as premier in March.)
The plan includes: offering property loans for developers with sound corporate governance; allowing local governments to set “reasonable” down-payment thresholds and mortgage rate floors in a city-specific approach to improve demand; offering fundraising options to construction companies; allowing extensions on borrowings; supporting bond issuance by quality developers; and encouraging trust companies to provide developers funding support for mergers and acquisitions, rental properties and retirement homes.
Other steps involve offering special loans for property project completions; supporting acquisitions of property projects by stronger developers from weaker rivals; devising market-based approaches including bankruptcy and debt restructuring; creating more credible credit scoring systems; increasing fundraising for acquisitions; and diversifying fundraising for rental properties by growing the market for real estate investment trusts (REITs).
In July 2023, Li, then four months into the job, pledged to “adjust and optimize” policies to ensure the healthy and stable development of the property market, urging local governments to roll out measures to stabilize things.
The bottom line, notes analyst Rosealea Yao at Gavekal Dragonomics, is that Xi and Li “have not yet abandoned the aim to reduce the economy’s reliance on property over the long term.”
As such, Beijing has been reluctant to reopen the stimulus spigot as aggressively as in the past. The mechanics of this balancing act are playing out in real-time.
The next step, Yao reckons, “is likely to be a rollback of other housing-purchase restrictions in first-tier cities.” All told, she notes, “recent policy easing is likely to be enough to stabilize property sales at a low level and put transactions on course to decline.”
Yet, Yao adds, “it’s now fairly clear that the government’s bottom lines for property policy have shifted relative to the highly restrictive stance of recent years.”
There are still things the government is unwilling or reluctant to do because it is still committed to the goal of reducing the economy’s reliance on property over the medium and long term.
The current aim of policymakers, Yao notes, is probably to simply stabilize housing sales, which have steadily deteriorated since April and are dragging on economic growth. If transactions continue to weaken, officials are likely to deploy ever more aggressive steps to put a floor under the market.
This problem is not going away, a challenge highlighted by China slipping back into deflation in October. Core inflation, which excludes volatile fresh food and energy, dropped 0.6% last month year on year.
Such data add to “evidence of renewed economic weakness,” Capital Economics analysts wrioe in a note to clients. HSBC economist Erin Xin adds that the price trend “reflects uncertainty around the solidity of China’s recovery.”
It’s complicated, considering mainland retail sales recovered to 7.6% year-on-year in October, says economist Carlos Casanova at Union Bancaire Privée.
Yet news this week that Chinese home prices in October plunged the most in eight years can’t be ignored. They point to a worsening property slump that could negatively affect both inflation and retail sales.
The National Bureau of Statistics reports that new-home prices, excluding state-subsidized housing, in 70 cities fell 0.38% month on month. That was the biggest drop since early 2015.
“Property remains the biggest drag amid the rising credit risk among developers,” says Larry Hu, economist at Macquarie Group Ltd.
Such data also suggests that recent stimulus measures aimed at major cities around the nation over the last three months haven’t put a floor under a vital sector dragging on Beijing’s economic recovery hopes. Amid such uncertainty, there’s great value for Xi in putting the US relations on a firmer ground to reduce the risk of additional trade sanctions.
Some observers argue that concerns in senior Politburo ranks in Beijing are prodding Xi to do his part to ease tensions. Along with the weakest economy in 30 years, Xi is fending off “the impression among at least part of the Chinese elites that the most important diplomatic relation for China… is being mismanaged,” says Alicia Garcia Herrero, an economist at Natixis CIB.
Just about the only thing on which Biden’s Democrats and Republicans loyal to former president Donald Trump agree on is being tough on China. Xi may thus be hoping to equalize the Sino-US trade issue ahead of November 2024.
As economist Diana Choyleva at Enodo Economics adds: “Earlier in the year Xi was effectively blanking the US, convinced that any talks would gain nothing and only benefit the US.”
However, Choyleva notes, “It appears that a combination of an under-performing economy, the impact of US technology restrictions — which have undoubtedly slowed China’s technological progress, even if they have not been as successful as the administration had wished — and growing diplomatic isolation has persuaded him of the need for a tactical pause.’’
Biden may be eyeing his own tactical pause. Slowing growth, the US national debt topping US$33 trillion and the specter of losing Washington’s last AAA credit rating mean the US needs all the foreign investment it can get. And with $860 billion worth of US Treasury securities, Beijing isn’t without leverage points versus Washington.
While hardly a game-changer, events in San Francisco may offer both Biden and Xi face-saving ways to tamp down global headwinds and signal their economies are back in business. That’s particularly true of Xi’s team, which just made a timely sales pitch to the biggest of the globe’s big money.
Follow William Pesek on X, formerly Twitter, at @WilliamPesek