While tense trade negotiations between the US and Mexico over the price and quota for U. S. imports of Mexican sugar continue (a happy ending appears unlikely, especially after a Mexican sugar company on Friday called on the government to take action against American fructose producers and protect the local industry from US deals), a new protectionist measure involving sugar half way around the globe was unveiled on Monday when China – the world’s biggest importer of the sweet substance – said it will impose significant penalties on sugar imports following lobbying by domestic mills. According to the ruling first described by Reuters, up to a third of China’s annual sugar imports will be impacted by an extra tariff for the next three years on shipments that the government said had “seriously damaged” the domestic industry. The details: China currently allows just over 1.9 million tonnes of imports at a tariff of 15% as part of its commitment to the World Trade Organization. All imports above this amount are slapped with a 50% levy. After Monday’s ruling, the total sugar duty will nearly double, with Beijing imposing an additional 45% tax to these imports in the current fiscal year taking the total to 95%. This will fall to 90% next year and 85% a year later, China’s Commerce Ministry said in a statement. The ruling exempted 190 smaller countries and regions from the new duty, including smaller producers such as the Philippines, Pakistan and Myanmar.
This post was published at Zero Hedge on May 22, 2017.
With Moon Jae-In’s victory in South Korea, the period of tension on the Korean Peninsula is likely to end. With the rise to power of the new president, South Korea can expect a sharp decline in hostilities with North Korea as well as a resumption of dialogue with China. An expected and highly anticipated victory was confirmed in South Korea on May 9, with candidate Moon winning South Korea’s presidential race over his rivals Hong Joon-pyo (Liberty Korea Party) and Ahn Cheol-soo (People’s Party). After the resignation and arrest of former President Park Geun-hye over an immense corruption scandal, public opinion turned away from her party in favour of the main opposition representative, a center-left lawyer specializing in humanitarian issues. Moon spent several years in the opposition party advocating for greater cooperation in the region and dialogue with Pyongyang as well as with Beijing, representing quite a contrast to Guen-Hye’s pro-Americanism. Along the lines of Duterte in the Philippines, Moon intends to resume dialogue with all partners in order not to limit his options in the international arena. Such an approach reflects the essence of the multipolar world order: cooperation and dialogue with all partners in order to achieve a win-win outcome. Looking at the situation in the region, the victory of a politician who seems to have every intention of negotiating an agreement rather than supporting military escalation seems to provide for a hopeful future for China and her neighbors. The level of cooperation and trade between South Korea and China is fundamental to the economy of both countries, so a return to the negotiating table over the issues surrounding the deployment of THAAD are a hopeful sign that the business communities of China and South Korea value deeply.
This post was published at Zero Hedge on May 15, 2017.
When former Chinese Politburo member Zhou Yongkang was arrested in 2014 on corruption charges, the scale of his ill-gotten gains was astounding, totalling some $16 billion. When sums that large are involved, most of the assets have to be invested in financial instruments and real estate. But the list of physical currency found in his homes is revealing: 152.7 million Chinese yuan (valued at the time at $24.5 million), 662,000…10,000…55,000 Swiss francs — and US$275 million. The former head of China’s internal security services and one of the 10 most powerful men in China apparently preferred to keep his “petty cash” mainly in U.S. dollars. He’s not alone. China lost around $1 trillion to capital flight in 2015, before clamping down hard at the beginning of 2016. Much of this money leaves China via fake invoicing in Hong Kong, where the local currency is pegged to the U.S. dollar. Illicit outflows are also facilitated by casinos in the Philippines, South Korea, and on remote Pacific islands, all of which operate primarily in dollars. Predictions of the dollar’s demise and eventual replacement by the Chinese yuan, are a staple of global economic punditry, but they have little basis in reality. Of course China has become an important component of the global economy, accounting for more than 15 percent of global gross domestic product. But when Chinese people themselves prefer to hold dollars, there is little chance that the Chinese yuan will ever replace the U.S. dollar as the world’s key currency.
An explosion hit a market in Davao city in Southern Philippines, at least 10 people were reportedly killed and 60 were injured. Police suspected an improvised explosive device, but there is no official confirmation of the cause. This explosion follows President Duterte’s aggressive crackdown on corruption and drugs in his nation and a thwarted assassination attempt. As GMANetwork reports, President Rodrigo Duterte is not going to change his travel schedule despite the Philippine National Police thwarting an assassination attempt against him. “No, no, no, absolutely no. I live the way I want it. I work the way I must,” Duterte said during a press conference in Davao del Norte on Friday, dismissing the idea of cutting-back on his trips outside his principal workplace over security concerns. Nevertheless, the president understood that the strain his travels put on the Presidential Security Group (PSG).
This post was published at Zero Hedge on Sep 2, 2016.
Donald Trump is erratic. We all know that. It is insulting to assert, in the words of Britain’s new Foreign Secretary, the erratic Boris Johnson, that he is frankly unfit to hold the office of President of the United States, but he’s certainly unpredictable and says some things that are, to put it mildly, intriguing. The fact remains that he could be next president of the United States, which makes it important to look at what he might do if that comes about, especially in the light of America’s military catastrophes so far this century. Obama followed his predecessors in expanding America’s iron fist as self-appointed global policeman. He vastly increased the US military presence around the world and intensified the Pentagon’s aggressive confrontations with China and Russia. In China’s case this was effected by sending US Naval E-P3 electronic surveillance aircraft on missions close to the mainland, deploying EA-18G Growler electronic attack aircraft to Clark Air Base in the Philippines, ordering B-52 nuclear bombers to overfly the South China Sea where the US Navy also carried out extended manoeuvres by massive strike groups of nuclear-armed aircraft carriers and guided missile cruisers. All this in a region where the US has not the slightest territorial interest or claim. China’s Sea is 12,000 kilometres, 7,000 miles, from the American mainland, yet Washington considers it the sacred right and duty of the United States to act as a global gendarme and give orders to China about its posture in its own back yard, where there has not been one instance of interference with commercial shipping passing through that region.
If the 1997 Asian financial crisis was a heart attack for emerging markets, the current situation is akin to chronic cardiovascular disease, according to Macquarie analysts led by Viktor Shvets and Chetan Seth. In 1997, speculative attacks against the Thai baht forced the country to float and devalue its currency in a move that was swiftly followed by the Philippines, Malaysia, Singapore, and Indonesia. Then came a massive decline in Hong Kong’s stock market that led to losses in markets around the globe. While parallels exist between 1997 and the current emerging market selloff (notably in the form of a stronger dollar, which makes it more expensive for emerging-market countries to finance their debts, plus lower commodity prices and slowing trade), the Macquarie analysts reckon the current situation might actually be worse.
This time last year, it looked like Goldman Sachs Group Inc.’s selection of emerging market up-and-comers was ready to fill the void left by shrinking investment returns in Brazil, Russia, India and China. Share prices in these ‘Next 11′ countries – places like the Philippines, Turkey and Mexico – were trading at all-timehighs as foreign investors flooded their markets with cash. Inflows into Goldman Sachs’s U. S.-domiciledNext 11 equity fund sent assets under management to twice the level of the firm’sBRICs counterpart. Now, though, the Next 11 countries are looking even worse for investors than the larger markets they were supposed to supplant. MSCI Inc.’s Next 11 equitygauge has tumbled 19 percent this year, versus a 14 percent slump for the BRIC index. Foreign capital is rushing out, with the Goldman Sachs fund shrinking by almost half as losses deepened to 11 percent since its inception four years ago. The turnaround shows how young populations and a rising middle class – characteristics that first lured Goldman Sachs to the Next 11 economies a decade ago – have failed to safeguardstock-market returns in a world facing higher U. S. interest rates, tumbling commodity prices and a Chinese economic slowdown. ForJohn-Paul Smith, one of the few strategists to accurately predict the losses in emerging markets, it also illustrates the dangers of grouping so many disparate countries into a single investment theme. Money managers ‘are increasingly moving away from acronym-based investment,’ said Smith, the former Deutsche Bank AG strategist who founded Ecstrat, a London-based research firm, last year. ‘Within emerging markets, it is difficult to think of a market that has a combination of attractive valuations and constructive policy developments.’