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Xi tackles slow growth as economy 'hits the brakes'
International desk
15 Jul 2024, 23:56
Photo: Getty Images
China's economy stumbled in the second quarter, official data shows, just as the country's top leaders gathered for a key meeting to address its sluggish growth.
It grew 4.7% in the three months to June, falling short of expectations after a stronger start in the first three months of 2024. The government's annual growth target is around 5%.
'China’s economy hit the brakes in the June quarter,' said Heron Lim at Moody's Analytics, adding that analysts are hoping for solutions from the meeting under way in Beijing, also called the Third Plenum.
The world's second-largest economy is facing a prolonged property crisis, steep local government debt, weak consumption and high unemployment.
Past outcomes of the Plenum have changed the course of history in China - in 1978, then leader Deng Xiaoping began opening China's markets to the world, and in 2013 President Xi Jinping hinted at loosening the controversial one-child policy.
And so there are expectations of this year's Plenum, where Mr Xi is presiding over a closed-door gathering of 370-plus high-ranking Chinese Communist Party members.
The rhetoric on state-controlled media has certainly been encouraging.
An editorial in The Global Times said a 'wide range of reform-focused polices' are 'high on the agenda' and would usher in a 'new chapter'. Xinhua referred to 'comprehensive' and 'unprecedented' reforms. The editorial in the People's Daily was headlined on a 'new era of reform and opening up', invoking the very phrase Deng coined in 1978.
Observers, however, are unsure of how much room there is for bold ideas or debate in the Party under Mr Xi's heavily-centralised leadership. Some see the meeting as a mere rubber-stamping exercise for decisions that have already been made.
Economists are also sceptical the meeting will deliver a quick fix.
It has 'little impact on near-term growth,' says Qian Wang, Asia Pacific chief economist at Vanguard, because its focus will be on longer-term and more significant reforms to 'unleash the long-term growth potential'.
Still, analysts will be watching for announcements that signal the Party's economic priorities.
Source: BBC
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How South China Sea tensions threaten global trade
Maritime trade is already under pressure from Houthi attacks on Red Sea shipping. Now rising tensions between China and its neighbors have sparked security concerns over another critical trade route: the South China Sea.
The post-COVID era has been punishing for global trade. Lockdowns and factory closures sparked supply chain delays worldwide and helped fuel decades-high inflation.
The Suez Canal was closed for a week in 2021 after a container ship got stuck. Attacks on shipping by Yemen-based Houthis and Iran over the past 10 months have forced a rerouting of container vessels from the Red Sea via Africa
And now China's military standoffs in the South China Sea could also impact the smooth flow of trade.
How important is the South China Sea for world trade?
Making up part of the western Pacific Ocean, the South China Sea sits between southern China, Taiwan, the Philippines, Indonesia, Vietnam, Thailand, Cambodia and Malaysia.
About a third of global maritime trade passes through the 3.5 million square kilometers (1.4 million square miles) seaway annually, according to the United Nations Conference on Trade and Development (UNCTAD).
Around 40% of petroleum products traded globally are delivered via the sea every year.
In 2016, an estimated $3.6 trillion (€3.29 trillion) worth of goods and commodities traveled the seaway, according to the Washington-based Center for Strategic and International Studies (CSIS). Another estimate put the figure as high as $5.3 trillion.
Researchers at Duke University in North Carolina calculated that total trade through both the South China Sea and the East China Sea — which lies between China, the two Koreas, and Japan — is worth $7.4 trillion per year.
Tens of thousands of cargo vessels move through the South China Sea every year, carrying around 40% of China's, a third of India's, and 20% of Japan's trade with the rest of the world, according to CSIS data.
Out of all of Asia, the three countries' economic security is most closely tied to the smooth running of the waterway. The South China Sea is a vital crossroads for both intra-Asian trade as well as for commerce with the rest of the world, especially Europe, the Middle East, and Africa.
What makes the South China Sea such a controversial issue?
Beijing claims almost all of the South China Sea as its own, angering its neighbors who say China's territorial ambitions cut into their exclusive economic zones. China ignored a 2016 ruling by an international arbitration court in The Hague, Netherlands, that Beijing has no legal or historical basis for its expansive claims under international law.
The Chinese military has staged increasingly aggressive actions in the seaway recently, including clashes with Filipino ships, fueling fears of a full-scale conflict. The United States has repeatedly warned that it is obligated to defend the Philippines if the Filipino military were to be attacked, including in the South China Sea.
Vietnam filed a claim last month with the United Nations for an extended continental shelf beyond the current 200 nautical miles (370 kilometers) in the seaway. The Philippines made a similar move in June.
China also regards Taiwan, which split with the mainland at the end of a civil war 75 years ago, as a renegade province with which it must eventually be reunified. Concerns that Beijing may use military force to bring the democratic island under its control have further raised tensions in the South China Sea.
Why is the South China Sea contested?
The South China Sea is estimated to hold about 5.38 trillion cubic meters (190 trillion cubic feet) of proven and probable natural gas and 11 billion barrels of oil reserves, according to the US Energy Information Administration.
The disputed waters also contain large deposits of rare-earth minerals crucial to China’s technological ambitions, including electric vehicle batteries and advanced electronics.
Some estimates suggest the Pacific Ocean contains a thousand times more rare-earth minerals than the currently known land reserves, more than half of which are controlled by China and are needed for the transition to cleaner energy.
Could the China and Middle East tensions converge?
Since late last year, global trade has been hurt by attacks by Iran-backed Houthi rebels in the Red Sea off Yemen. The Houthis ordered drone and missile strikes on commercial shipping in response to Israel's offensive against Hamas militants in Gaza.
The big shipping firms have diverted their vessels from the Red Sea route, which includes the Suez Canal. Instead, cargo ships traverse the Cape of Good Hope in southern Africa, adding around 10 days to the average journey from Asia to Europe. The move has spiked shipping costs due to higher insurance and diesel prices, which caused delays at container ports in Europe and Asia.
As the Israel-Hamas war threatens to spill over into the wider Middle East region, with Iran reported to be planning a direct attack on Israel any day, there are fears that Tehran could close another major chokepoint for trade, the Strait of Hormuz. The narrow waterway sits at the mouth of the Persian/Arabian Gulf and handles almost a third of the world's oil trade.
Iran has regularly targeted commercial vessels in the strait in recent years, and the West would consider any further attacks a major escalation. If shipping firms choose to avoid Hormuz, maritime trade could face additional delays and even higher costs.
If tensions between China and its neighbors deteriorate further, it could open a third front in the global shipping crisis. Maritime firms may look to avoid sections of the South China Sea. Subsequent hold-ups and price hikes could cause shortages of goods and commodities and cut vital revenue to key Asian ports, including those in Singapore, Malaysia, and Taiwan.
Where is the biggest chokepoint in the South China Sea?
While the main current tensions are between China, the Philippines, and Taiwan, the real threat to trade in the South China Sea could come in the Malacca Strait, which lies further south between Malaysia, Indonesia, and Singapore.
Last year, 23.7 million barrels of oil and petroleum products were moved through the strait per day, according to the US Energy Information Administration (EIA). The figure was 13% higher than through the Strait of Hormuz.
The Malacca Strait is just 64 kilometers wide at its narrowest point and is already vulnerable to congestion and collisions. Over the years, the waterway has seen many incidents of robbery and piracy.
Some geopolitical and military experts have predicted that if China were to invade Taiwan, for example, the US and its allies could blockade the Malacca Strait, limiting Chinese access to oil as well as exports from Asia's largest economy.
Report: Biden approved China-focused nuclear strategic plan
According to the New York Times, the roadmap highlights the United States' wariness of the growing threat of Russia, North Korea, and in particular China.
US President Joe Biden gave the green light for a top-secret strategic nuclear plan in March of this year that, for the first time, reshapes Washington's strategy to focus on China's expansion of its nuclear arsenal, The New York Times (NYT) reported on Tuesday.
The plan also reportedly seeks to prepare the US for possible coordinated nuclear challenges from China, Russia, and North Korea.
The NYT said Washington had never announced that Biden had approved the new proposal, entitled the "Nuclear Employment Guidance," but an unclassified notification to Congress of the revision is expected to be sent before Biden departs the White House in January 2025.
How did officials respond?
The US-based Arms Control Association, however, said it understood Washington's nuclear weapons strategy and posture remained the same as described in the Biden administration's 2022 Nuclear Posture Review, and there had been no reorientation away from Russia and toward China.
Asked about what the US daily had reported, White House spokesperson Sean Savett said: "This administration, like the four administrations before it, issued a Nuclear Posture Review and Nuclear Weapons Employment Planning Guidance."
"While the specific text of the Guidance is classified, its existence is in no way secret. The Guidance issued earlier this year is not a response to any single entity, country, nor threat."
Growing threat of China
Daryl Kimball, executive director of the Arms Control Association, said that the Pentagon believes China may increase the size of its nuclear arsenal from 500 to 1,000 warheads by 2030 while Russia currently has some 4,000 nuclear warheads. "It remains the major driver behind US nuclear strategy," he said.
The United States Department of Defense revealed in its annual report that China's military will continue to grow until 2035 and emphasized that Beijing's strategy considers the "unlimited" partnership with Russia as fundamental to its development as a power.
Taylor Swift says she felt 'fear' over canceled Vienna shows
US pop star Taylor Swift expressed the cancellation of her Vienna show over a suspected suicide attack filled her with "fear" and "guilt."
This is the first time Swift has commented since reports of the suspected attack emerged two weeks ago.
What did the singer say?
"Having our Vienna shows cancelled was devastating. The reason for the cancellations filled me with a new sense of fear, and a tremendous amount of guilt because so many had planned on coming to those shows," the American singer said in a post on Instagram.
"All of my energy had to go toward helping to protect the nearly half a million people I had coming to see the shows in London," she added.
In her post, Swift also praised the efforts of the authorities who thwarted the planned attack.
"I was also so grateful to the authorities because thanks to them, we were grieving concerts and not lives. I was heartened by the love and unity I saw in the fans who banded together," she said.
Swift also clarified why she had remained silent about the cancellation of her show and the suspected attack.
"Let me be very clear: I am not going to speak about something publicly if I think doing so might provoke those who would want to harm the fans who come to my shows," Swift wrote.
What do we know about the now-foiled terror attack?
Swift's shows in Vienna were canceled after authorities warned of a planned terror plot by sympathizers of the Islamic State armed group.
Three suspects have been detained by Austrian police over the alleged attack. The US said that it shared intelligence to assist in the probe.
A 19-year-old Austrian man is the main suspect who had allegedly confessed that he "intended to carry out an attack using explosives and knives," according to Austrian domestic intelligence agency (DSN) head Omar Haijawi-Pirchner.
The Vienna shows were part of the European leg of Swift's "Eras" which is the highest-grossing concert tour in history.
The Eras Tour concluded on Tuesday with five shows at London's Wembley Stadium.
'Bangladesh floods not due to release of water from Tripura dam'
Allaying concerns that the current flood situation in Bangladesh was caused by the release of waters from Tripura's Dumbur dam, India said on Thursday that this was not correct.
The Ministry of External Affairs said the catchment areas of Gumti River have witnessed the heaviest rains of this year and the flood in Bangladesh was 'primarily due to waters from these large catchments'.
According to the Ministry of External Affairs, 'We have seen concerns being expressed in Bangladesh that the current situation of flood in districts on the eastern borders of Bangladesh has been caused by the opening of the Dumbur dam upstream of the Gumti River in Tripura. This is factually not correct.'
'We would like to point out that the catchment areas of Gumti River that flows through India and Bangladesh have witnessed the heaviest rains of this year over the last few days.
The flood in Bangladesh is primarily due to waters from these large catchments downstream of the dam.'
Ministry of External Affairs said again, 'The Dumbur dam is located quite far from the border - over 120 Km upstream of Bangladesh. It is a low height (about 30m) dam that generates power that feeds into a grid from which Bangladesh also draws 40MW power from Tripura.
Along the about 120 Km river course we have three water level observation sites at Amarpur, Sonamura and Sonamura 2.
Heavy rainfall has been continuing since 21 August in the whole of Tripura and adjoining districts of Bangladesh. In the event of heavy inflow, automatic releases have been observed.
Amarpur station is part of a bilateral protocol under which we are transmitting real-time flood data to Bangladesh.
Data showing a rising trend has been supplied to Bangladesh up to 1500 hrs on 21 August 2024. At 1800 hrs, due to flooding, there was power outage leading to problems in communication. Still, we have tried to maintain communication through other means created for urgent transmission of data.
Floods on the common rivers between India and Bangladesh are a shared problem inflicting suffering to people on both sides and requires close cooperation towards resolving them.'
Finally, MEA said, 'As two countries sharing 54 common cross-border rivers, river water cooperation is an important part of our bilateral engagement. We remain committed to resolving issues and mutual concerns in water resources and river water management through bilateral consultations and technical discussions.'
Source: MEA, India
Event Dedicated to Russian Federation's National Flag Day celebration
A festive event dedicated to State Flag Day of the Russian Federation was organized by the Russian House in Bangladesh in cooperation with the Alumni and Friends Association of People’s Friendship University of Russia, headed by the Chairman of the organization, engineer Alamgir Jalil in Ishwardi on August 22, 2024.
In his opening speech the director of the Russian House in Dhaka Mr. P. Dvoychenkov said that on August 22, 1991, the tricolor Russian flag was officially raised over the White House in Moscow for the first time, replacing the red banner with a hammer and sickle as the national symbol.
By the Presidential Decree No. 1335 of August 20, 1994, 22 August became a national holiday—State Flag Day of the Russian Federation. The tricolor represents freedom, independence, and the continuity of Russia's heritage through generations.
He also reminded the audience that following Bangladesh’s independence, friendly relations with the Soviet Union were established on January 25, 1972. The Soviet Cultural Center, now the Russian House in Bangladesh was founded in 1974 to strengthen these ties. Since then, Bangladesh and Russia have maintained deep bilateral relations.
After the introductory remarks by the organizers and local officials, the participants watched a documentary biographical film titled "Peter I: The Last Tsar and the First Emperor," directed by Andrei Kravchuk.
The event featured a drawing competition of the Russian state flag, a quiz on the history and geography of Russia, and a concert program with performances of Russian songs. The active participants in the competitions were awarded gifts and commemorative souvenirs. School students expressed interest in pursuing higher education in Russia and participating in similar large-scale joint events.
Over 1,000 students from 40 public schools in the region participated in the celebration. Each participant received a tricolor flag of Russia, symbolizing the festivity.
Ukraine updates: Biden announces new military aid for Kyiv
US President Joe Biden spoke with Ukrainian President Volodymyr Zelenskyy and announced a new military aid package ahead of Ukraine's Independence Day on Saturday.
Biden speaks with Zelenskyy, announces new military aid for Ukraine
US President Joe Biden spoke to Ukrainian President Volodymyr Zelenskyy on Friday, announcing a new military aid package ahead of Ukraine's Independence Day on Saturday.
US Defense Secretary Lloyd Austin, who also spoke with his Ukrainian counterpart Rustem Umerov on Friday, said on social media the package was worth $125 million (€112 million).
In the call with Zelenskyy, Biden reaffirmed Washington's support, which the White House called "unwavering", for Ukraine in its war with Russia.
The aid package includes air-defense missiles, counter-drone equipment, anti-armor missiles and ammunition, the White House said in its statement.
According to the US State Department, Washington has provided more than $55 billion in military assistance to Kyiv since Russia launched its full-scale invasion in February 2022.
Ambassador Yao Wen Calls on Dr Yunus, Chief Advisor of Bangladesh
Yao Wen, Ambassador of China to Bangladesh, welcomed the formation of the Interim Government, congratulated Professor Muhammad Yunus on his assumption as Chief Adviser, and stressed the support for the Interim Government to build a poverty-free and democratic, prosperous Bangladesh.
He made this call on Sunday (August 25), 2024.
Ambassador Yao said that China strictly follows the principle of non-interference in other countries’ internal affairs, respecting the development path independently chosen by the Bangladesh people, and expects that Bangladesh would realize unity, stability, development and prosperity at an early date. No matter what changes have taken place in the domestic situation of Bangladesh, China’s commitment to develop China-Bangladesh relations remains unchanged.
Ambassador Yao said that China and Bangladesh are traditional friendly neighbors and comprehensive strategic cooperative partners. The bilateral relationship sets up a model of mutual respect, cooperation for win-win results for developing countries. China firmly supports Bangladesh in safeguarding its national sovereignty, independence, and territorial integrity, maintaining national unity and stability, and playing a more significant role in international and regional affairs.
Ambassador Yao stated that both China and Bangladesh are at a crucial stage of development and revitalization, with enormous potential for cooperation. China stands ready to share its experience in reform and development with Bangladesh, implement the agreements and consensus reached by the two sides, and push forward pragmatic cooperationin various sectors.
China is about to import fresh mangoes from Bangladesh, expedite the negotiation for a Free Trade Agreement, optimize the China-Bangladesh Investment Agreement, encourage local currency settlement in bilateral trade and support Chinese enterprises in investing in Bangladesh. China is committed to work with Bangladesh to organize and carry out activities for the 'China-Bangladesh Year of People-to-People Exchanges' in 2025.
China will also maintain visits and exchanges at all levels and in various sectors, elevating the Comprehensive Strategic Cooperative Partnership to a new height.
Ambassador Yao reiterated that China is determined to encourage and engage with the relevant parties in Myanmar for a cease fire, so as to create amicable conditions for the early repatriation of displaced people from Rakhine State of Myanmar.
