October 31, 2020

Why is Wall Street leaning towards China in manufacturing row?


​​On a Labor Day press conference at the White House, the US President Donald Trump bragged, once reelected, his administration would bring back manufacturing jobs from China “whether it’s decoupling or putting in massive tariffs” and threatened to prohibit federal contracts from American companies that outsource to Beijing.

But the US firms in the second-largest economy of the world aren’t at all being browbeaten by the president’s arm-twisting and have no ax to grind with his political ambitions that would dramatically raise their production costs and lose the vital competitiveness in a fiercely competitive global market.

A survey by the American Chamber of Commerce in Shanghai recently showed only fewer than 4% of the respondents were considering relocating just a fraction of their production to US, describing that a crushing majority had refused to bog down to Trump’s scathing pressure.

“Covid-19 hit the China economy hard in early 2020 but the recovery was quick,” said chamber president Ker Gibbs. Impugning Trump’s claim to transform the US into the manufacturing super power of world and end reliance on Beijing “once and for all,” Gibbs warned “American companies still see China’s consumer market as a great opportunity.”

The poll findings typified that the US president’s higher tariffs crusade, temptation to set up tax credits and persuade or coerce the American companies for reshoring their manufacturing facilities from China to the United States were hitting the wall.

Pandemic has already wreaked havoc on global consumption and severely affected operations and profitability of nearly all the enterprises, forcing them to lay off their workers with many of those filed bankruptcy. In such a sticky situation, they see a silver lining in Chinese growth and opening up for their survival and make up the losses.

Unconcerned with the agony Americans are going through, Trump is echoing the idea of decoupling from China. His hyperbolic statements to ramp up geopolitical tensions and grab an election win are “the number one concern” for the US business operations managers and American enterprises, being dragged to the edge of an abyss.

Amid a global jolt that pushed the major world economies “several quarters” away from returning to pre-pandemic growth levels – including the US, which shrank by 33% the most since World War II and the UK entered recession in the 11 years with 20.4% GDP plunge – Chinese economy recorded a growth of 3.2% in Q2-2020.

At the end of the second quarter of 2020, China’s current account and goods trade surplus had rebounded to post $119.6 billion and $161.3 billion, highest since 2008 and 1998 respectively. The country’s share of global exports now exceeds 17%, as compared to less than 14% in 2018.

An eye-popping data revealed how Beijing’s early response to disease and first see through the bitter end of the Covid-19 helped it to dash on the path of economic recovery. The White House is feeling threatened by Chinese return to growth, increasing role in the global trade and internationalization of yuan that could end dominance of the US dollar.

The US fear of China’s rise on the international arena as a leading economic power flows from the fact that Beijing is also one of the top world’s importers of goods and services and its drive to internationalize yuan could weaken the longtime sway of the greenback, something the Trump administration has frequently practiced to bullyrag other nations, on the international financial system.

China is now actively pursuing to further open up its capital markets for the foreign investors, which would add momentum for its sustained growth. With the optimization and completion of the Shanghai-Hong Kong and Shanghai-London connect programs, the global investment management corporations, financial service providers and banks are showing keenness to engage in Chinese markets more freely.

All these positive developments caught the attention of iconic financial institutions on Wall Street, which overruled Trump’s irascible policy to divorce Beijing and have started to get nods from China Securities Regulatory Commission (CSRC) to become part of the Chinese capital market revolution.

After the world’s largest asset manager, BlackRock won regulatory approval for a partnership with a state-owned bank in China and its rival Vanguard relocated its Asian headquarters to Shanghai, the trend continued as JPMorgan Chase is also gearing up to boost its stake in Chinese securities joint venture while Citigroup became the first US bank to receive a fund custody license in the country.

Commenting on the participation, Citi’s APAC (Asia Pacific) Head of Securities Services David Russell said “As international fund managers, securities firms, and insurance companies set up in China, we believe they will want a trusted service provider to help them mitigate risks and reduce costs.”

Just in the past year, the foreign fund managers have bought nearly $200 billion of Chinese shares and bonds, which The Economist expressed “Far from short-term greed, Wall Street’s taste for China reflects a long-term bet that finance’s centre of gravity will shift east.”

Experts agree China, while opening up and liberalizing its exchange rate regime, is quickly learning to manufacture high-tech and high-value goods to end its reliance on western nations. They are of the view that for the US, it is almost impossible to make low-value goods, which North America buys from Beijing and fret a few whether Washington would exploit Covid-19 to kill the globalization.

First hurt by Trump’s trade war, then screwed from his pitiful coronavirus handling and now gripped with the president’s decoupling – the US manufacturing and investment birds seem to have zero expectations from the federal government. So, they are downplaying the administration’s loony China policy and leaning toward Beijing to protect their commercial interests. 

*This is one of my opinion pieces (unedited) that first appeared in "Global Village Space":
https://www.globalvillagespace.com/why-is-wall-street-leaning-towards-china-in-manufacturing-row/


China-US Rivalry leading to new Cold War


An about parity in the "comprehensive power” of China and the United States in Asia, as revealed by the Sydney-based Lowy Institute in its newly released “Asia Power Index,” is a whistleblower warning about the dawn of a new clash between Beijing and Washington with later urging the regional countries to make “difficult but necessary choices.”

Notwithstanding the US still topped the ranking scoring 81.6 points, the think tank analyzed that its standing has waned in all but one of the index measures registering the largest fall “in relative power of any Indo-Pacific country” in 2020. China, with 76.1 points, stood its ground and narrowed America’s prior 10-point lead by a half.

Index says this closing power disparity suggests that Washington, “far from being the undisputed unipolar power, can more correctly be described as the first among equals in a bipolar Indo-Pacific.” It singled out the Trump administration’s unilateral inclinations to pronounce the US underachievement in Asia.

China’s major strongholds are economic capability, future resources, economic relationships and diplomatic influence. It gives an insight about Chinese economic recovery and diplomacy is outperforming American gains vis-à-vis military capability, defense networks, resilience and cultural influence.

Washington has long counted on military bases, troop deployment and diplomatic influence to retain its image of a peerless global power. China thinks that the US is rehearsing the same technique against it to set off a new cold war by taking other countries on-board.

For any kind of cold war to succeed, US would need to blockade China on economic and diplomatic fronts and engage its “strategic rival” in a military gridlock through regional and global alliances like it did to smash the Soviet Union into bits.

Even though Washington’s campaign against Beijing has been shouldered by some international states and leaders, its conviction to isolate China internationally is being eclipsed by the lilies of near-perfect Chinese economic and diplomatic arrangements.

An AP report in December 2019 on the fading US global influence said in the first three years of Trump’s presidency, once close American partners – France, Egypt, Pakistan, Afghanistan, Mexico, Turkey, Germany and others – had quietly broken away from Washington. It could frankly be dubbed a pushback to the US president’s ham-fisted policies.

While the Trump administration proactively pursues its “America First” foreign policy ahead of the presidential election, the global trend to divorce the US-centric international order for a more balanced approach has accelerated in 2020 with many in France, Germany and others giving equal importance to their relationship with China.

Trump’s crassly assertive attitude, vexatious trade war, grievously hardline on defense-burden sharing, ruthless demolition of the international treaties and the baleful “with us or against us” policy have inadvertently pushed US allies into the Chinese orbit.

His everlasting insulting and offending comments toward the US partners stroked a double whammy to American key national security and foreign policy objectives. On one side, he cramped the bilateral diplomatic and economic relationship and on the other, his retry attempts added an impetus to China’s rise.

President’s ram-sheet of the Covid-19 and compelling attitude as a means to strong-arm American allies has altogether played a stingy role in bringing disgrace to the country. Amid widespread destruction by insidious disease triggering a furor to US coronavirus response internationally, he got a very little confidence from global publics on his handling of world affairs, including from Australia, Japan and South Korea.

However, it doesn’t mean the US is out of game or has conceded an edge to China in Asia. Washington’s solid lead over Beijing in the key areas such as military capability and defense networks suggests if it gets the economy back on track quickly, the US has a great chance to cement its position across Asia by improving economic relations and expanding diplomatic influence.

China, at the center of Asia's rise as a leading global power, won’t stand idly by or just watch the proceedings and let the things spin out of control. Beijing will be privy to the falling trajectory of its standing in the region – which with South Korea and Japan already seeing US as the world's economic power could weaken its position in Australia and India after it severed ties with both the regional powers. It, if not circumvent, would delay engaging in a direct conflict with either of them and try to improve ties through its fortes, economic relationships and diplomatic influence.

The US is acting exactly in the opposite direction and looking to exploit the regional tensions. In his five-day trip to Asia, the Secretary of State Mike Pompeo seeks to partner India to “thwart (China) threats, challenge its infrastructure projects in Sri Lanka and Maldives and discuss “Chinese activities” in the South China Sea with Indonesia.

Support from Asian countries will be a defining moment for conversion of China-US rivalry into a cold war. In a lead-up to this looming great power competition, Beijing has deployed BRI and renascent economic recovery to inveigle regional nations while the White House is living off its technological superiority, military wherewithal and defense cooperation to outcompete or “trump” the new American adversary.

*This is one of my opinion pieces (unedited) that first appeared in "New Straits Times":

October 26, 2020

Why Afghan peace must be spared from partisan politics?


The White House and Pentagon are at loggerheads on the critical issue of American troop withdrawal from Afghanistan after Donald Trump on October 7 pitched shockwaves in the Department of Defense and State Department by announcing to bring back troops home before Christmas and spreading fears of endangering the ongoing intra-Afghan dialogue in Qatar.

His national security adviser Robert O’Brien on Friday said that Trump was just expressing a hope and echoed the troop levels would be reduced to 2,500 in the early part of the next year albeit chairman of the Joint Chiefs of Staff General Mark Milley had warned him not to “speculate.”

While cranky O’Brien claimed to be speaking for Trump and Milley too touted his conversation with the president on the poser, the tensions between the US federal government and establishment are being reflected in Afghanistan.

After the US military carried out airstrikes against Taliban in Helmand last week, the spokesperson of US forces in Afghanistan Colonel Sonny Legget on Sunday defended the bombing in wake of its support for Afghan security forces. He also denied militants’ accusation the aerial bombardment violated the Doha agreement.

Since signing of the deal between Taliban and the US in February, violence in Afghanistan has been on the rise and should be a source of great concern for international community, regional stakeholders and peace brokers.

Notwithstanding, armed militia had pledged to take action against Islamic State and its affiliates and not to allow Afghan soil for launching terrorist activities against other countries, it refused to put a stop to its attacks on Afghan military. They however gave their assent to discuss a “permanent and comprehensive ceasefire” in the intra-Afghan dialogue.

But there are no signs of stopping the carnage of common Afghans as an unclaimed suicide car assault on Sunday killed 15 civilians and wounded nearly 150 others. The callous attack outside a provincial headquarters in central Afghanistan urges both sides to exercise responsibility and build a climate of trust to prevent a collapse in peace negotiations.

Taliban needs to understand their high stakes in the country and the nitty-gritty that despite controlling a large expanse of Afghanistan, they do not represent a significant proportion of the population, which backs the Afghan national government.

Engagement, not aggression, is the ultimate solution to the sweltering Afghan dispute. It therefore would be a smart decision if the insurgent group could make a commitment on violence reduction and contribute towards a meaningful and successful peace discussion for bringing peace and stability in Afghanistan.

Conversely, the Trump administration must keep the peace and security of Afghanistan away from the US presidential election and avoid making empty promises about force withdrawal. The Pentagon too shouldn’t display its gripes with the US federal government through mounting strikes in Afghanistan.

Showing their serious reservations about the possibility of all 5,000 troop withdrawal and dismantling of the US military headquarters in Afghanistan by the end of the year, experts suggested that Trump had changed tactics to shift the news cycle away from coronavirus and Pentagon would likely decline executing any such executive order before November 3.

Escalation to seek leverage by Washington (or the combatants) could result in catastrophic consequences for Afghan people and the country as it would further dampen the trust of ordinary civilians in the peace process and push Afghanistan into a convoluted and irrepressible unrest and pandemonium.

As a lead sponsor of the intra-Afghan dialogue, the greater responsibility rests with the US to restore the confidence of millions of Afghan casting doubts on the peace process and emphasizing on the significance of warding off the next war as ending the existing one.

Putting the onus of Afghan cataclysm on all sides, the former Prime Minister of Afghanistan Hamid Karzai said in an interview “Everyone has done (its) part, unfortunately, in bringing suffering to our people and to our country.” “No one can (point) a finger toward someone to say you’ve done it.”

Over the years, local Afghans have gone through an excruciating infighting between pro- and anti-government forces with the US persistent interventions inflating their social and economic challenges. They would desperately wish all the warring parties to forge a consensus on peace and wield efforts to ease off their hardships.

Nonetheless, the peace still requires more “patience and compromise” and needs protection from the “regional spoilers,” something the Prime Minister of Pakistan Imran Khan sought in his article for the Washington Post last month in a whistleblower alert.

Stating a hasty international withdrawal would be unwise, Khan said that the peace “progress could be slow and painstaking” and recalled “a bloodless deadlock on the negotiating table is infinitely better than a bloody stalemate on the battlefield.”

Khan was pointing the finger at India that has equivocally supported the peace process. New Delhi’s backing still remains smoggy with its wariness to directly talk with Taliban regardless of assurance to Abdullah Abdullah, overseeing the Afghan government talks with the armed faction for a power-sharing deal, for “active involvement” in dialogue.

While the US should safeguard hard-earned progress on Afghan peace process from regional firebrands eying to sabotage the historic peace talks – the Trump administration must let off the peace in Afghanistan for crass partisan politics, which could undermine intra-Afghan dialogue and breed new conflicts in the distraught country. 

*This is one of my opinion pieces (unedited) that first appeared in "The Express Tribune": 
https://tribune.com.pk/story/2269880/why-afghan-peace-must-be-spared-from-partisan-politics



October 16, 2020

Aussie PM must set priorities


FOLLOWING the late two-way pervasive punch-ups, Canberra's exports to Beijing that had reached at an all-time high of AU$10.5 billion in June nosedived by almost a quarter in August when Chinese investments in Australia witnessed a sharp decline of more than 47 per cent to AU$2.9 billion last year.

National security is a grave concern for any state, but the Morrison government needs to rebalance the issue with its economic, trade and investment ties with China in such a way that it does not rage Canberra's interests.

Unfortunately, Australian farmers believe their exports are being targeted by China because of the government. Blaming Morrison for the free-falling relations, they are urging the government to nurture" ties with China "whether it be the export of agricultural commodities, minerals, tourism or education."

China is still the single-largest market for Australian iron ore exports, with 83.4 per cent being shipped there. Australia seems to lose this vital advantage as the former steadily diversifies its purchases away from latter to India, Russia, South Africa and Ukraine.

Beijing, which had suspended imports from New Delhi due to a simmering border conflict, is again buying large-scale iron ore to meet its booming steel demand for building infrastructure.

Labor's Joel Fitzgibbon has sought to accept the "reality" that Canberra is "in an economic war" with Beijing and bilateral relations probably have fallen to worst-ever levels. He lambasted the government for engaging in a brawl with one of its biggest trade partner without diversification.

The abysmal figures and sensitivity of the situation suggest that Morrison shouldn't haphazardly stick to the American strategy, which China thinks is tailored to contain its rise.

Canberra may instead adopt a moderate line like Trump did before the coronavirus broke out in the United States.

Historically, Washington D.C. has maintained a very large trade deficit with Beijing, so it has the leverage to sanction Chinese companies and slap tariffs on goods from China.

The US also perceives China a "strategic competitor" which it thinks could end its global leadership by deploying "predatory" trade, investment and lending practices. But Washington can't do it single-handedly, and as a means to defy its rival, it desperately needs the support of allies.

Why should Australia, running a trade surplus with China, risk its economic interests at the behest of the US? The Morrison government should set its own priorities with Beijing, whether it is protection of national sovereignty or trade bonds. Additionally, as Canberra jeopardizes its invaluable economic interests and shows solidarity with Washington, the US is gradually expanding its clout in the country.

Last year, the Australian government announced the establishment of a new and innovative National Foundation for Australia-China Relations, which was due to be operationalized this year to strengthen understanding and engagement between the two countries.

The proposed bridge to tone down differences was recently plagued by a scandal when two of its board members were found to have received financial backing from the US government while another one was linked with Falun Gong, a quasi-religious movement seeking to end the communist rule in China.

Reports that the US is now exporting its bizarre conspiracy theories to Australia and New Zealand are worrisome developments. They should not only cast into doubt Washington's role as a trusted partner, but should also urge Canberra to question the tactics employed by the US to influence the Australian politicians and people.

Kiwi administration cannot afford a slip up on a security threat from any side, friend or foe, and should preempt and prevent any country's intervention into the Australian institutions, society and political spectrum on equal footing.

In parallel, the Morison government shouldn't shirk its fundamental responsibility to protect the economy and livelihoods of Australian people and businesses by merely erecting the national security barriers. It has to activate all the diplomatic channels to find at least a stopgap for a peaceful coexistence with China.

*This is one of my opinion pieces (unedited) that first appeared in "New Straits Times":
https://www.nst.com.my/opinion/columnists/2020/10/632389/aussie-pm-must-set-priorities


October 12, 2020

Trump ‘duplimacy’ and US global leadership


Despite politically-motivated Donald Trump’s grandiloquence to whitewash his low-yield success against the coronavirus pandemic by shifting the responsibility on other countries, Americans including both from Democrat and Republican camps are wary to support his notion and blame their government for the severe health crisis.

A latest survey by The University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research found that an overwhelming majority of 56% Americans has put the onus of deteriorating situation in the country on the Trump administration.

Commenting on the poll, Austin Wright of the Harris School of Public Policy said “It reflected a general lack of confidence” of Americans on the federal government, a phenomenon that earlier plagued the US and its leadership approval in global publics and is now threatening to strew throughout the US.

The poll’s findings, with 79% Democrats and 37% Republicans thought the US government has a great deal of responsibility in handling the fatal respiratory infection, is an outright bipartisan rebuke to the president's contention and could bore a hole in his electoral campaign entering into a final showdown.

In September, a Pew Research Center’s 13-nation survey noted that the worldwide view of the US under Trump had ebbed to a new all-time low under, a rare moment when the global nations, long modeled their strategies on the US policies, refused to draw inspiration from the White House and developed their own health response to counter the insidious disease.

People from Europe, East Asia and Pacific – including those from the US major allies such as Australia, Japan, South Korea and the UK – not only radically dropped their favorable perception about the US but they also shelved the confidence in Trump substantially up to as low as 9%.

Latest survey results and the Center’s outshot that the majorities or pluralities in the major countries see Beijing as the world’s leading economic power or China is the most common choice as a global economic leader – leaves Trump naked in the wind who, if reelected, would need to revive the trust of his allies and reinvigorate his efforts to decouple them from China.

Trump’s "Duplimacy" a fast-changing, duplicitous political track being excitably practiced by the president to bring all international states beneath his clout in a standardized-though-vitriolic way and a strong conviction that the White House tenancy gives him an organic right to dominate the world by pursuing his political rhetoric and economic ostracism – could be singled out as the key factor behind the US and his crumbling global acceptance.

Over the last four years, his knavish tricks have pushed the US allies and partners further away and by the time he would realize the domestic and global changing mood and clean up his acts, his idealistic policies could have hit an irreversible damage to the tumbling US credibility.

Since the Covid-19 outbreak in the country, the American president hasn’t taken the deadly virus seriously. Trump didn’t consider it a grave risk now either and albeit catching the infection, he is still downplaying the highly contagious illness by equating it with the seasonal flu.

Trump’s paradoxical attitude, downplay the illness for reopening the economy and launch “the most aggressive mobilization since the Second World War” in chorus – all with the exclusive object to satisfy his insatiable passion for the White House – would nonplus his voters and could prevent them to back the Republican nominee.

As polls after polls continue to decipher that his nonsensical policies are ripping off the longtime US kudos on the international stage – the prevalence of excruciating trend within the States could upend his life’s ambition to seek another four-year license from American public and encroach on the remains of US global headship as an undeclared King of the world.

*This is one of my opinion pieces (unedited) that first appeared in "The Express Tribune": 
https://tribune.com.pk/story/2267951/trump-duplimacy-and-us-global-leadership


October 10, 2020

International tourism is in deep crisis


Tourism has been one of the major economic sectors that have been worst-affected by the fury of coronavirus pandemic as months of lockdowns, border closures, travelling restrictions, quarantine measures and fears of Covid-19 resurgence continue to push the leisure industry to the edge of an abyss.

While airliners remain caged in the hangars with their wing-feathers clipped and once-lively and packed tourist spots draw the scenes of deserted hotels, the washed-out holidaying business has bankrupted quite a few international carriers and pose serious threats to the existence of several others.

It is not just the aviation giants or the other businesses that feel the heat of the Covid-19 from a scorching distance, the survival of many global economies and millions of people is also deeply tied with the tourism, whom the disease is showing no mercy to, and keeps on to make their expectations of revival more and more distant.

Lending a prognosis over the compound challenges being encountered by the tourism sector, IMF’s 2020 External Sector Report warned countries such as Costa Rica, Greece, Morocco, Portugal and Thailand could be among the hardest-hit nations with losses in tourism proceeds exceeding 3% of GDP.

The Fund’s assessments were based on the UN World Trade Organization (UNWTO) May 7 report – which projected lost export revenues to reach up to $1.2 trillion in 2020, putting at least 100 million direct tourism jobs at risk – and predicted a sharp decline in tourism receipts of 70% if the sector is gradually opened in September.

UNCTAD says this loss in export revenues of tourism – a sector that accounts for 7% of global trade or $1.7 trillion and supports one in 10 jobs globally – could raise the global economic losses to $3.3 trillion or 4.2% of the world GDP in 2020 if the shutdown of international tourism industry prevails for a most pessimistic period of one year.

International tourism is the world’s third-largest export category with about $1.6 trillion, behind chemicals and fuel that each amounted for more $1.9 trillion in 2017, and the sector added $100 billion to its revenues in 2018, $5 billion a day in exports. Every year, more than 80 million travellers travel to the US, Spain and France, allowing these countries to earn $214 billion, $74 billion and $67 billion respectively.

Alas, the signs of the recovery of international tourism are not good. With all the world economies are “several quarters” away from returning to pre-pandemic growth levels – including the US shrank by 33%, the most since World War II and the UK entered recession in the 11 years with 20.4 percent GDP plunge – it is very disquieting that the industry would witness a comeback any time soon.

Casting doubts on the much-lauded “V-shaped recovery,” the Fitch Ratings despite moderately upward revision of the global economic outlook expected unemployment to significantly rise in Eurozone, top recipient of tourism revenues, with jobs subsidies are scaled back and labor-intensive sectors including tourism continue to struggle.

As the UNWTO World Tourism Barometer estimated that the near-complete lockdown, imposed in response to the pandemic, led to a 98% fall in international tourists in May when compared to 2019 –the world cannot be complacent about the tourism and there is a pressing need to assist the tourism enterprises such as airlines and hotel, tourism-reliant economies and millions of workers and their families.

This is hence very important for all the countries to cooperate with each other and take extraordinary steps to protect this critical source of income that is risking the global growth and livelihoods of 100 million people tied with the tourism industry and help them to through the bitter end of the outbreak.

UNCTAD five-point policy pathway for a sustainable revival of globe-trotting activities – including mitigate socio-economic impacts on livelihoods; boost competitiveness and build reliance; advance innovation and digital transformation of tourism; foster sustainability and green growth; and coordination and partnerships to restart and transform sector towards achieving SDGs – should be rigorously implemented or else the insurmountable obstacles would stroke a grievous harm to the international tourism.

*This is one of my opinion pieces (unedited) that first appeared in "The Express Tribune": 


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