CDAC harmony is an idea Western critics can’t understand - Cultural superiority is stupid and disastrous, Chinese President Xi Jinping warns as US tensions persist

https://youtu.be/3sk_vbpHxoY

https://youtu.be/B2st4t5mMxk

https://youtu.be/7oiHusEPTvQ

  https://youtu.be/TkBqZjGI23M

https://youtu.be/hTCjNLdxXvg   https://youtu.be/w8vlcTZxTf8

  https://youtu.be/wSBJiwa_V8Y

The Conference on Dialogue of Asian Civilizations (CDAC) begins Wednesday in Beijing with over 2,000 government officials and representatives from 47 Asian countries and other participating regions in attendance.c

The event is yet another diplomatic effort by China following the 2nd Belt and Road Forum for International Cooperation and the 2019 Beijing International Horticultural Exhibition.

The CDAC marks the first time Asian countries have gathered for cross-cultural exchange, adding to the event's historical groundbreaking significance.

The necessity of the CDAC is highlighted by Western reaction. Some Westerners, trapped in geopolitical thought, view the event as a competition between China and the West.

This way of thinking leads to estrangement and conflict between civilizations, turning dialogue into an increasingly global concern.

At this juncture, whomever stands up and to promote dialogue and exchange among civilizations will create future benefits for the following centuries. It's not an accident the CDAC was born in Asia and initiated by China.

Asia is a vast continent with diverse civilizations and religions. If different entities can achieve inclusiveness, mutual learning, and become closer with one another, it will be a success over the experiment of unilateralism.

With uneven development and as the former victims of the Cold War, Asian countries are concerned with equality and independence, the foundation required for civilizations to achieve peaceful coexistence.

China is the most powerful country in Asia, opposing hegemonism and confrontation while advocating harmonious coexistence and cross-cultural learning. CDAC is part of China's endeavor to realize what that entails, and only time will prove the significance of China's exploration.

As the birthplace of modernization and globalization, the West occupies a natural position in the international political arena. Many Westerners are obsessed with Western style centralism. However, in recent years, they have seen the rapid development of non-Western countries, and Asian countries in particular, which has made them sensitive and narrow-minded.

Western vigilance, mistrust, and hostility toward foreign civilizations only agitate their differences and contradictions, and can ignite bloody conflicts.

Globalization is at an inflection point. At a time when China is trying to bridge the gaps between different civilizations, the US is in search of border wall funding. While China expands and opens up in more areas, the US closes its door to technological, educational, and social and science exchanges.

A rift between Western civilizations and non-Western civilizations is unbearable to today's world. Whether Western civilization can be more inclusive will determine the course of globalization. Any far-sighted, rational-thinking person will be excited with the progress achieved during the CDAC.

Adapting to modern times is the Asian continent's mission and China is willing to work with Asian countries to achieve a harmonious coexistence.

Source link   

Cultural superiority is stupid and disastrous, Chinese President Xi Jinping warns as US tensions persist

Chinese President Xi Jinping warned that one civilisation forcing itself on another would be “stupid” and “disastrous” as he called on nations to respect each other on Wednesday, with Beijing embroiled in rising confrontation with the United States on trade as well as military and cultural matters.

In a speech at the start of the Conference on Dialogue of Asian Civilisations – designed for Beijing to show its soft power – Xi did not mention any nation by name, but said nobody should regard their race as superior.

The speech came two weeks after US State Department director of policy planning Kiron Skinner described strategic competition with China as “a fight with a really different civilisation and a different ideology”. Skinner said it was the first time the US had faced a “great power competitor that is not Caucasian”.

Chinese officials have rejected Skinner’s remarks, and in his speech Xi appeared to expand on the theme, saying cultures were distinctive but no better or worse than each other.

“If someone thinks their own race and civilisation is superior and insists on remoulding or replacing other civilisations, it would be a stupid idea and disastrous act,” Xi said.

“We should hold up equality and respect, abandon pride and prejudice, deepen our knowledge about the differences between our own and other civilisations, and promote harmonious dialogue and coexistence between civilisations.”

He went on to say: “If countries retreat back to secluded islands, human civilisation will die out because of a lack of exchanges.”

Xi stressed that people should step beyond the limits of their own culture to discover the advantages of others, and argued it was the best way to inspire innovation.

“All civilisations must progress with time and keep up with the latest achievement,” he said.

The president suggested that the Belt and Road Initiative, his transcontinental infrastructure strategy, was also a means to promote cooperation between nations.

“The Belt and Road … and other initiatives have expanded the channels for civilisation exchanges,” he said.

Beijing last month held the Belt and Road Forum to showcase its trade and infrastructure projects in countries in Asia to Africa.

The speech reiterated the idea, which  Xi has aired previously, of a community of shared destiny, arguing that Asian countries should open and connect their polices, infrastructures, trade, investment and people.

Asia must maintain peace as the precondition of economic growth, which is the pillar of civilisation, he argued.

Can China do soft power? Poorly organised yet tightly controlled forum raises questions

“All countries should conduct exchanges beyond borders of state, time and civilisations, and work together to protect the peaceful time we have, which is more precious than gold,” Xi said.

“Children and women are suffering from poverty, hunger and diseases in Asia. This has to be changed,” he said, calling on Asian nations to “work together to promote an open, inclusive, balanced and mutually beneficial globalised economy, eradicating poverty”.

Xi proposed deeper cultural exchanges, saying that China would cooperate with more Asian nations to translate their literature and would promote inward and outward tourism.

“This can facilitate the appreciation and understanding of different cultures,” he said.

Opinion: US-China trade war is really a clash of civilisations

Stating that China received 140 million overseas tourists last year while 160 million Chinese made visits abroad, Xi said tourism could promote economic growth and friendship in Asia.

China would increase exchanges involving young people and think tanks, he added.

Source link   

Xi warns of disaster if one civilisation imposes will
on another

https://www.scmp.com/news/china/diplomacy/article/3010287/cultural-superiority-stupid-and-disastrous-chinese-president

• Beyond the China-US trade war: what next for the world’s two giants?
• China economy growth slows sharply in April, even before higher US trade tariffs take effect
• Ctrip CEO says trade war is putting Chinese tourists off US, with many opting for ‘more welcoming’ nations
• This ‘may be the start of the long haul’ in crossing the US-China trade divide

Related posts:

 

Dialogue of civilizations can iron out cultural creases

lustration: Liu Rui/GT The Conference on Dialogue of Asian Civilizations will be held from May 15 to 22 in Beijing, and Chinese Presi..

US hits China with higher tariffs, raising stakes in trade talks

Punitive duties on US$200bil in goods raises stakes in trade talks .  https://youtu.be/82NLXvMtn64 Chinese Vice Premier Liu He arrive...

China hits back at US tariffs

https://youtu.be/J1PJikKXp84 https://youtu.be/UMBt-_73mts https://youtu.be/579PbrByy_U https://youtu.be/2lg3LQUhCRs br /> ...

CDAC harmony is an idea Western critics can’t understand - Cultural superiority is stupid and disastrous, Chinese President Xi Jinping warns as US tensions persist

https://youtu.be/3sk_vbpHxoY

https://youtu.be/B2st4t5mMxk

https://youtu.be/7oiHusEPTvQ

  https://youtu.be/TkBqZjGI23M

https://youtu.be/hTCjNLdxXvg   https://youtu.be/w8vlcTZxTf8

  https://youtu.be/wSBJiwa_V8Y

The Conference on Dialogue of Asian Civilizations (CDAC) begins Wednesday in Beijing with over 2,000 government officials and representatives from 47 Asian countries and other participating regions in attendance.c

The event is yet another diplomatic effort by China following the 2nd Belt and Road Forum for International Cooperation and the 2019 Beijing International Horticultural Exhibition.

The CDAC marks the first time Asian countries have gathered for cross-cultural exchange, adding to the event's historical groundbreaking significance.

The necessity of the CDAC is highlighted by Western reaction. Some Westerners, trapped in geopolitical thought, view the event as a competition between China and the West.

This way of thinking leads to estrangement and conflict between civilizations, turning dialogue into an increasingly global concern.

At this juncture, whomever stands up and to promote dialogue and exchange among civilizations will create future benefits for the following centuries. It's not an accident the CDAC was born in Asia and initiated by China.

Asia is a vast continent with diverse civilizations and religions. If different entities can achieve inclusiveness, mutual learning, and become closer with one another, it will be a success over the experiment of unilateralism.

With uneven development and as the former victims of the Cold War, Asian countries are concerned with equality and independence, the foundation required for civilizations to achieve peaceful coexistence.

China is the most powerful country in Asia, opposing hegemonism and confrontation while advocating harmonious coexistence and cross-cultural learning. CDAC is part of China's endeavor to realize what that entails, and only time will prove the significance of China's exploration.

As the birthplace of modernization and globalization, the West occupies a natural position in the international political arena. Many Westerners are obsessed with Western style centralism. However, in recent years, they have seen the rapid development of non-Western countries, and Asian countries in particular, which has made them sensitive and narrow-minded.

Western vigilance, mistrust, and hostility toward foreign civilizations only agitate their differences and contradictions, and can ignite bloody conflicts.

Globalization is at an inflection point. At a time when China is trying to bridge the gaps between different civilizations, the US is in search of border wall funding. While China expands and opens up in more areas, the US closes its door to technological, educational, and social and science exchanges.

A rift between Western civilizations and non-Western civilizations is unbearable to today's world. Whether Western civilization can be more inclusive will determine the course of globalization. Any far-sighted, rational-thinking person will be excited with the progress achieved during the CDAC.

Adapting to modern times is the Asian continent's mission and China is willing to work with Asian countries to achieve a harmonious coexistence.

Source link   

Cultural superiority is stupid and disastrous, Chinese President Xi Jinping warns as US tensions persist

Chinese President Xi Jinping warned that one civilisation forcing itself on another would be “stupid” and “disastrous” as he called on nations to respect each other on Wednesday, with Beijing embroiled in rising confrontation with the United States on trade as well as military and cultural matters.

In a speech at the start of the Conference on Dialogue of Asian Civilisations – designed for Beijing to show its soft power – Xi did not mention any nation by name, but said nobody should regard their race as superior.

The speech came two weeks after US State Department director of policy planning Kiron Skinner described strategic competition with China as “a fight with a really different civilisation and a different ideology”. Skinner said it was the first time the US had faced a “great power competitor that is not Caucasian”.

Chinese officials have rejected Skinner’s remarks, and in his speech Xi appeared to expand on the theme, saying cultures were distinctive but no better or worse than each other.

“If someone thinks their own race and civilisation is superior and insists on remoulding or replacing other civilisations, it would be a stupid idea and disastrous act,” Xi said.

“We should hold up equality and respect, abandon pride and prejudice, deepen our knowledge about the differences between our own and other civilisations, and promote harmonious dialogue and coexistence between civilisations.”

He went on to say: “If countries retreat back to secluded islands, human civilisation will die out because of a lack of exchanges.”

Xi stressed that people should step beyond the limits of their own culture to discover the advantages of others, and argued it was the best way to inspire innovation.

“All civilisations must progress with time and keep up with the latest achievement,” he said.

The president suggested that the Belt and Road Initiative, his transcontinental infrastructure strategy, was also a means to promote cooperation between nations.

“The Belt and Road … and other initiatives have expanded the channels for civilisation exchanges,” he said.

Beijing last month held the Belt and Road Forum to showcase its trade and infrastructure projects in countries in Asia to Africa.

The speech reiterated the idea, which  Xi has aired previously, of a community of shared destiny, arguing that Asian countries should open and connect their polices, infrastructures, trade, investment and people.

Asia must maintain peace as the precondition of economic growth, which is the pillar of civilisation, he argued.

Can China do soft power? Poorly organised yet tightly controlled forum raises questions

“All countries should conduct exchanges beyond borders of state, time and civilisations, and work together to protect the peaceful time we have, which is more precious than gold,” Xi said.

“Children and women are suffering from poverty, hunger and diseases in Asia. This has to be changed,” he said, calling on Asian nations to “work together to promote an open, inclusive, balanced and mutually beneficial globalised economy, eradicating poverty”.

Xi proposed deeper cultural exchanges, saying that China would cooperate with more Asian nations to translate their literature and would promote inward and outward tourism.

“This can facilitate the appreciation and understanding of different cultures,” he said.

Opinion: US-China trade war is really a clash of civilisations

Stating that China received 140 million overseas tourists last year while 160 million Chinese made visits abroad, Xi said tourism could promote economic growth and friendship in Asia.

China would increase exchanges involving young people and think tanks, he added.

Source link   

Xi warns of disaster if one civilisation imposes will
on another

https://www.scmp.com/news/china/diplomacy/article/3010287/cultural-superiority-stupid-and-disastrous-chinese-president

• Beyond the China-US trade war: what next for the world’s two giants?
• China economy growth slows sharply in April, even before higher US trade tariffs take effect
• Ctrip CEO says trade war is putting Chinese tourists off US, with many opting for ‘more welcoming’ nations
• This ‘may be the start of the long haul’ in crossing the US-China trade divide

Related posts:

 

Dialogue of civilizations can iron out cultural creases

lustration: Liu Rui/GT The Conference on Dialogue of Asian Civilizations will be held from May 15 to 22 in Beijing, and Chinese Presi..

US hits China with higher tariffs, raising stakes in trade talks

Punitive duties on US$200bil in goods raises stakes in trade talks .  https://youtu.be/82NLXvMtn64 Chinese Vice Premier Liu He arrive...

China hits back at US tariffs

https://youtu.be/J1PJikKXp84 https://youtu.be/UMBt-_73mts https://youtu.be/579PbrByy_U https://youtu.be/2lg3LQUhCRs br /> ...

Dialogue of civilizations can iron out cultural creases

lustration: Liu Rui/GT

The Conference on Dialogue of Asian Civilizations will be held from May 15 to 22 in Beijing, and Chinese President Xi Jinping will attend the event and deliver a keynote speech, officials said at a press conference on Thursday. #AsianCivilizations #XiJinping

https://youtu.be/DheuG_oEFaM

The Conference on Dialogue of Asian Civilizations will kick off in Beijing soon. It is China's attempt to promote understanding among different civilizations, inclusive development, and to respond to the theory of the Clash of Civilizations with the philosophy of building a community with a shared future for mankind.

During the just-concluded second Belt and Road Forum for International Cooperation, China defined the future of the Belt and Road Initiative (BRI) as a route that brings together different civilizations. It reflects China's ample confidence in the initiative to enhance civilizational exchanges, mutual understanding and civilized coexistence. Through BRI, countries can understand, respect, and trust one another.

Differences do exist between China and the US - the two most influential powers in the world - in terms of civilizations. Some in the US are even prejudiced about China's culture and disagree with the country's development path and value system.

China has always advocated mutual learning between civilizations. The country needs to strengthen its power of discourse and show Chinese civilization's unique charm to the US, the West, and the entire international community. The dialogue between Chinese and American civilizations, an important part of the dialogue of global civilizations, is of great significance in building a community with a shared future for mankind.

Over the years, China and the US have already explored quite a lot in this regard. At the Mar-a-Lago summit between Chinese and US leaders in 2017, the two sides agreed to establish high-level dialogue mechanisms, including social and people-to-people contact. In addition, Chinese and US scholars organized the Sino-American Dialogue on Core Values as early as in 2011. The Foreign Affairs magazine published an article titled "China vs. America: Managing the Next Clash of Civilizations" in 2017.

Surprisingly, recent reports by the Washington Examiner and Voice of America indicate that the US State Department is developing strategies in response to the "clash" with Chinese civilization.

The Clash of Civilizations is a theory proposed in 1993 by Samuel Huntington, a well-known US political scholar who teaches at Harvard University. He argued that the clash of civilizations, instead of ideological and economic clashes, will be the primary source of conflict in the post-Cold War world. He conjectured that the core of international politics will be the interaction between Western and non-Western civilizations.

Huntington predicted that the clash of civilizations would be especially manifested in Western-Islamic conflicts after the Cold War. It is puzzling that US officials are now turning to China.

The Clash of Civilizations theory targeting China seems to be gaining traction among anti-China forces in the US. The National Security Strategy issued by the White House in late 2017 labeled China as a strategic competitor. The US adverse policies toward China have created obstacles in the path of smooth China-US relations.

If the US Department of State continues to promote policy measures against China based on the Clash of Civilizations, ties will be further hurt, and more specific steps taken. Not only that, the US may also take advantage of this theory and force other countries to follow its lead in containing China.

However, such attempts by adversarial US forces will eventually fall flat.

Their argument of Clash of Civilizations, violating mainstream American values based on pluralism and inclusiveness, has already triggered heated debate inside the US. Some senior US experts studying China have criticized the view for lacking understanding of China.

It will be tough if the US attempts to lead the West to a civilizational battle with China. The damage caused by the "America First" theory has yet to heal. Describing US competition with China as the clash of civilization may once again create contradictions and panic. Dialogue of civilizations is needed rather than a cold war.

By Xi Laiwang Source:Global Times

The author is a senior reporter and an observer of international issues. opinion@globaltimes.com.cn


Related post:

Yes to Belt and Road - Everyone will benefit from BRI

Dialogue of civilizations can iron out cultural creases

lustration: Liu Rui/GT

The Conference on Dialogue of Asian Civilizations will be held from May 15 to 22 in Beijing, and Chinese President Xi Jinping will attend the event and deliver a keynote speech, officials said at a press conference on Thursday. #AsianCivilizations #XiJinping

https://youtu.be/DheuG_oEFaM

The Conference on Dialogue of Asian Civilizations will kick off in Beijing soon. It is China's attempt to promote understanding among different civilizations, inclusive development, and to respond to the theory of the Clash of Civilizations with the philosophy of building a community with a shared future for mankind.

During the just-concluded second Belt and Road Forum for International Cooperation, China defined the future of the Belt and Road Initiative (BRI) as a route that brings together different civilizations. It reflects China's ample confidence in the initiative to enhance civilizational exchanges, mutual understanding and civilized coexistence. Through BRI, countries can understand, respect, and trust one another.

Differences do exist between China and the US - the two most influential powers in the world - in terms of civilizations. Some in the US are even prejudiced about China's culture and disagree with the country's development path and value system.

China has always advocated mutual learning between civilizations. The country needs to strengthen its power of discourse and show Chinese civilization's unique charm to the US, the West, and the entire international community. The dialogue between Chinese and American civilizations, an important part of the dialogue of global civilizations, is of great significance in building a community with a shared future for mankind.

Over the years, China and the US have already explored quite a lot in this regard. At the Mar-a-Lago summit between Chinese and US leaders in 2017, the two sides agreed to establish high-level dialogue mechanisms, including social and people-to-people contact. In addition, Chinese and US scholars organized the Sino-American Dialogue on Core Values as early as in 2011. The Foreign Affairs magazine published an article titled "China vs. America: Managing the Next Clash of Civilizations" in 2017.

Surprisingly, recent reports by the Washington Examiner and Voice of America indicate that the US State Department is developing strategies in response to the "clash" with Chinese civilization.

The Clash of Civilizations is a theory proposed in 1993 by Samuel Huntington, a well-known US political scholar who teaches at Harvard University. He argued that the clash of civilizations, instead of ideological and economic clashes, will be the primary source of conflict in the post-Cold War world. He conjectured that the core of international politics will be the interaction between Western and non-Western civilizations.

Huntington predicted that the clash of civilizations would be especially manifested in Western-Islamic conflicts after the Cold War. It is puzzling that US officials are now turning to China.

The Clash of Civilizations theory targeting China seems to be gaining traction among anti-China forces in the US. The National Security Strategy issued by the White House in late 2017 labeled China as a strategic competitor. The US adverse policies toward China have created obstacles in the path of smooth China-US relations.

If the US Department of State continues to promote policy measures against China based on the Clash of Civilizations, ties will be further hurt, and more specific steps taken. Not only that, the US may also take advantage of this theory and force other countries to follow its lead in containing China.

However, such attempts by adversarial US forces will eventually fall flat.

Their argument of Clash of Civilizations, violating mainstream American values based on pluralism and inclusiveness, has already triggered heated debate inside the US. Some senior US experts studying China have criticized the view for lacking understanding of China.

It will be tough if the US attempts to lead the West to a civilizational battle with China. The damage caused by the "America First" theory has yet to heal. Describing US competition with China as the clash of civilization may once again create contradictions and panic. Dialogue of civilizations is needed rather than a cold war.

By Xi Laiwang Source:Global Times

The author is a senior reporter and an observer of international issues. opinion@globaltimes.com.cn


Related post:
 

Yes to Belt and Road - Everyone will benefit from BRI

Coming recession in 2020? Possibly earlier

Negative rates: Pedestrians walking past the Bank of Japan (BoJ) headquarters in Tokyo. BoJ’s goal remains at keeping real interest rates as negative as possible, as long as the economy performs. — Bloomberg

IT’S mid-term review time as the US yield curve begins to flatten.

This curve tracks the relationship between interest rates of US government debt obligations. Normally the yield curve is rising, with long-term bonds having yields higher than short-term obligations.

But occasionally the curve inverts, with long bonds yielding less than short Treasury bills – a historical predictor of future recessions and bear markets in stocks. Recently, the curve has become noticeably flatter, with short rates rising and longer yields remaining stagnant. This has led many analysts to think that the yield curve will soon invert.

But that does not mean a recession is imminent. Just returned from an extended visit back to Harvard. Touched base with my mentors and professors at both extremes of the economic spectrum. They are all split on what this flattening really means. In the event it does invert (the gap today being below 0.3%), recession has almost always (over the past 50 years) followed within a year or so. But few see a recession soon on the horizon.

The first half has come and gone. The ongoing transition to more normal conditions continue in the context of a robust US economy; continued progress in the orderly normalisation of US monetary policy; and re-awakened sensitivities to geopolitical and protectionist risks.

There will be higher interest rates, some inflation concerns and trade tariffs coming-on in the context of markets more readily accepting two to three more rate hikes by the Fed in 2018. The prospect of a global trade war makes everyone very cautious.

Once we start down the road of tariff increases and threats of more to come, the dangers of retaliatory miscalculations are real and very scary. Still even an inverted yield curve should not be on top of our worry list under today’s accommodative monetary conditions.

Synchronised pick-up

The world economy benefitted from four drivers of higher growth: the healing process in Europe, re-bound from slowdowns in Brazil, India and Russia; soft landing in China; and pro-growth measures in US.

To persist, Europe needs to do much more. Also, there is hope that recent tariff tensions would eventually lead to fairer and still-free trade which recognises the inter-dependent nature of global supply chains, and show greater willingness to protect intellectual property rights, modernize trade arrangements and reduce non-tariff barriers. Yes, more rate hikes from the Fed are still on the cards. But the same by the European Central Bank (ECB) and Bank of Japan (BOJ) demand trickier manoeuvring.

This is an area that warrants close monitoring since volatility will likely persist. At least for now, fears of Japan-like deflation in US and Europe are effectively gone. But OECD is worried global growth is not yet self-sustaining. It’s strength in 2018 is largely due to monetary and fiscal policy support – and lacking in rising productivity gains and sweeping structural reforms. In Europe, the “clock is ticking”; without reforms, more populist uprisings will appear as the upswing ages and then fades. US inflation is not only returning to the Fed’s 2% target, but also likely to exceed it. In Europe, consumer prices were last still lower than a year ago – below the ECB’s target of just below 2%. Fear of the spectre of deflation has led BOJ to remain cautious about tapering its monetary easing program. Will just have to wait and see.

IMF warns that the world’s US$164 trillion debt pile (at 225% of GDP) is bigger than at the height of the financial crisis a decade ago. One-half was accounted for by US, Japan and China. What’s needed is for US fiscal policy to be recalibrated to bring down the government debt to GDP ratio (80%) and for China to deleverage its US$ 2.6 trillion private debt. There is no sign either is being done which runs the risk of triggering yet another financial crisis.

Growth will falter

Growth in US can slow considerably when the boosts from last year’s tax-cuts in US fades in 2019 and 2020. IMF now warns that US will grow at about one-half the 3% annual pace forecast by the White House over the next 5 years, reflecting the effects of growing massive fiscal deficit and continuing trade imbalance. For US, sluggish productivity remains a key determinant. In 2Q18, GDP picked-up to rise 4.1% (2.2% in 1Q18) the fastest pace in nearly four years, reflecting broad-based momentum.

But worker productivity advanced 1.3% from a year earlier, consistent with the sluggish 1.2% average annual rate in 2007-2017, well below the better than 2% annual average since WWII. Spending by consumers, businesses and government as well as surging exports all appeared solid in 2Q18. The expansion enters its 10th year this month, building on what is already the second longest expansion on record. Faster growth which has helped to drive the unemployment rate to its lowest level in 18 years, fueled quick corporate profit growth.

Median estimates place GDP growth at 2.8% in 2018, 2.4% in 2019 and 1.8% over the long run. But everyone has growth slowing next year because of falling business and consumer sentiment, reflecting trade disputes with China and many US allies, and uncertainty whether rising business investment is sustainable.

The big concern is the economy overheating – already, it is bumping up against capacity constraints as labour markets tighten. Still, the consensus is that the next downturn will not arrive until 2020. Most economists expect 3% inflation over the next year. What worries me most is the deteriorating global political and strategic environment.

Not so much the economic outlook directly. The world is changing too much, too fast.

So much so, the geopolitical situation is getting worse – open warfare between Israel and Iran, the disgraceful state of Palestine, and uncertainties surrounding Donald Trump and Vladimir Putin, and lack of leadership in Europe. Trade barriers are causing much anxiety. It is as though what’s put in place since WWII isn’t worth a damn anymore.

Europe and Japan

Latest indications from the Brookings-FT Index for Global Economic Recovery (Tiger) show global growth has peaked and momentum has started to fade. Indeed, financial markets are already reflecting mounting vulnerabilities. With weak economic data in 1H’18, Europe and Japan have since cooled. In late 2017, eurozone was still growing at 3.5%: Germany at 4%, France 3%, Italy 2% and Spain 3.5%. But activity slackened to only 1.2% in early April; even Germany recorded a sharp dip – down to only 1%, reflecting waning monetary easing effects and supply-side constraints. The outlook is for a strong above trend upswing for the rest of the year. OECD now expects GDP growth in 2018 to be 2.2% (2.6% in 2017) and in 2019, 2.1%.

For eurozone, the window for reforms is closing – ranging from the implementation of dual currencies for its members to putting European Parliament in charge of economic policy, including the euro-budget. Japanese GDP shrank 0.1% in 1Q18 despite a rise in capital investment. Household spending unexpectedly fell. Still, recovery is expected to be driven by a weak yen brought about by monetary stimulus (BoJ has been buying assets at US$740 billion a year to drive down long-term interest rates). But underlying inflation is stuck at 0.5%. BoJ’s goal remains at keeping real interest rates (after inflation) as negative as possible, as long as the economy performs. OECD forecasts growth in Japan to be 1.2% in 2018 (1.7% in 2017); the same in 2019.

China and BRICS

Many emerging markets (EMs) are still enjoying momentum from 2017, but there is growing concern about rising debt and vulnerabilities to capital flight as interest rates in US rise. For those recently emerged from recession, viz. Russia, Brazil and South Africa, their urge to return to strong levels of activity remains sluggish.

China and India have fewer concerns for their immediate outlook. Still, they need to reform their economies to help raise living standards to catch up. The main challenges will be to execute particular reforms – not just to the financial system but also to SOEs and local governments, including getting rid of corruption.

China’s GDP rose 6.7% in 2Q’18, the slowest pace since 2016. Retail sales held up rather well as did exports. Still, measures to curb rampant borrowing are biting – investments in infrastructure and manufacturing by SOEs and local governments have since slackened. These efforts, in the midst of headwinds from abroad (especially protectionist tariffs), have led to downgrades in growth for the rest of the year. IMF now forecasts GDP growth in China to average 6.5% in 2018 (6.8% in 2017) and about the same in 2019.

Recent depreciation of China’s currency, the yuan, exposes crucial vulnerabilities within the world’s second-largest economy as it faces escalating trade tensions with the US. The currency posted its biggest ever monthly fall against US$ in June (3.4%) and has since lost more ground. This slide marks a departure for the currency often regarded as an anchor of stability for Asia and other EMs.

As Beijing assesses the options, it finds itself between a rock and a hard place because (i) People’s Bank of China (PBoC) intervention means selling its US dollar stash of reserves – which stood at US$3.11 trillion in June; (ii) it could instead raise domestic interest rates, thereby making the currency more attractive which might help to shore up the yuan. But it also risks weakening an already slowing Chinese economy just as the trans-Pacific trade war starts to bite; and (iii) it could impose stricter controls on China’s capital account which will likely spook overseas funds that have rushed into China’s domestic bond and equity markets this year at an unprecedented rate.

However, to internationalise the yuan, China has to keep fund flows relatively unencumbered. The PBoC has sensibly pledged to keep the RMB “generally stable.” In July, China implemented a mix of tax cuts and greater infrastructure spending citing growing uncertainties, as it ramps up efforts to stimulate demand to counteract a weakening economy.

As for India, I wrote extensively on what’s happening there (my July 2018 column: “India: Chugging Along but Needs More Firepower” refers).

What then are we to do

As I see it, China and China-India centred Asia is now the heart of the world economy. Their steady growth has been a source of stability in an otherwise unsteady world.

Of late, developments in China received more scrutiny than usual because of the context: Chinese stock market has since fallen into bear territory, and a growing trade dispute with the world’s largest economy, US. Despite China’s astonishingly sustained expansion, the economy is widely considered vulnerable because growth in output has been underwritten by an even faster increase in debt.

The nation’s gross debt – both public and private – is now estimated at over 250% of GDP. The worry is not just the volume of debt but its quality. China’s domestic policies encourage high savings.

Those savings, held in banks, have been funneled to companies, especially SOEs. The credit quality of the loans is hard to assess but is likely to be uneven. China has since begun to slowly tighten the credit taps, with even tighter rules on shadow banking and more scrutiny for both local government financing and public-private investment projects.

At the same time, a sharp increase in the number of defaults by corporate issuers has revived anxieties about Chinese debt. In my view, it is the tighter credit conditions and defaults, rather than worries about a trade war, that best explain the recent 22% decline in the Shanghai Composite index from its January highs.

Tightening credit policy is also a compelling explanation for the weak macro-economics. Credit growth fell, and growth in fixed investment followed. This appears to be having some effect on consumer sentiment as well.

No doubt, Trump’s tariffs on US$50bil of Chinese imports (and threatens US$200bil more) will have a direct (but unlikely to be catastrophic) impact on growth. But China is now an investment-led rather than an export-led economy.

Still, it is the knock-on effects that are most feared. If the escalation of hostilities leads to a reduction in foreign direct investment in China, the long-term impact could be significant. True, China may be facing a delicate moment economically.

But given China’s deepening role in the world economy, any pain that the US manages to inflict on it would be quickly shared with the US and the broader world – at a moment when Europe’s economy is slowing, and many EMs looking unstable.

On the whole, China’s economy will remain strong and resilient. Whatever happens, I think this won’t change the Chinese situation much.


By Lin See-yan - what are we to do?

Former banker Tan Sri Lin See-Yan is the author of The Global Economy in Turbulent Times (Wiley, 2015) and Turbulence in Trying Times (Pearson, 2017). Feedback is most welcome.


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Coming recession in 2020? Possibly earlier

Negative rates: Pedestrians walking past the Bank of Japan (BoJ) headquarters in Tokyo. BoJ’s goal remains at keeping real interest rates as negative as possible, as long as the economy performs. — Bloomberg

IT’S mid-term review time as the US yield curve begins to flatten.

This curve tracks the relationship between interest rates of US government debt obligations. Normally the yield curve is rising, with long-term bonds having yields higher than short-term obligations.

But occasionally the curve inverts, with long bonds yielding less than short Treasury bills – a historical predictor of future recessions and bear markets in stocks. Recently, the curve has become noticeably flatter, with short rates rising and longer yields remaining stagnant. This has led many analysts to think that the yield curve will soon invert.

But that does not mean a recession is imminent. Just returned from an extended visit back to Harvard. Touched base with my mentors and professors at both extremes of the economic spectrum. They are all split on what this flattening really means. In the event it does invert (the gap today being below 0.3%), recession has almost always (over the past 50 years) followed within a year or so. But few see a recession soon on the horizon.

The first half has come and gone. The ongoing transition to more normal conditions continue in the context of a robust US economy; continued progress in the orderly normalisation of US monetary policy; and re-awakened sensitivities to geopolitical and protectionist risks.

There will be higher interest rates, some inflation concerns and trade tariffs coming-on in the context of markets more readily accepting two to three more rate hikes by the Fed in 2018. The prospect of a global trade war makes everyone very cautious.

Once we start down the road of tariff increases and threats of more to come, the dangers of retaliatory miscalculations are real and very scary. Still even an inverted yield curve should not be on top of our worry list under today’s accommodative monetary conditions.

Synchronised pick-up

The world economy benefitted from four drivers of higher growth: the healing process in Europe, re-bound from slowdowns in Brazil, India and Russia; soft landing in China; and pro-growth measures in US.

To persist, Europe needs to do much more. Also, there is hope that recent tariff tensions would eventually lead to fairer and still-free trade which recognises the inter-dependent nature of global supply chains, and show greater willingness to protect intellectual property rights, modernize trade arrangements and reduce non-tariff barriers. Yes, more rate hikes from the Fed are still on the cards. But the same by the European Central Bank (ECB) and Bank of Japan (BOJ) demand trickier manoeuvring.

This is an area that warrants close monitoring since volatility will likely persist. At least for now, fears of Japan-like deflation in US and Europe are effectively gone. But OECD is worried global growth is not yet self-sustaining. It’s strength in 2018 is largely due to monetary and fiscal policy support – and lacking in rising productivity gains and sweeping structural reforms. In Europe, the “clock is ticking”; without reforms, more populist uprisings will appear as the upswing ages and then fades. US inflation is not only returning to the Fed’s 2% target, but also likely to exceed it. In Europe, consumer prices were last still lower than a year ago – below the ECB’s target of just below 2%. Fear of the spectre of deflation has led BOJ to remain cautious about tapering its monetary easing program. Will just have to wait and see.

IMF warns that the world’s US$164 trillion debt pile (at 225% of GDP) is bigger than at the height of the financial crisis a decade ago. One-half was accounted for by US, Japan and China. What’s needed is for US fiscal policy to be recalibrated to bring down the government debt to GDP ratio (80%) and for China to deleverage its US$ 2.6 trillion private debt. There is no sign either is being done which runs the risk of triggering yet another financial crisis.

Growth will falter

Growth in US can slow considerably when the boosts from last year’s tax-cuts in US fades in 2019 and 2020. IMF now warns that US will grow at about one-half the 3% annual pace forecast by the White House over the next 5 years, reflecting the effects of growing massive fiscal deficit and continuing trade imbalance. For US, sluggish productivity remains a key determinant. In 2Q18, GDP picked-up to rise 4.1% (2.2% in 1Q18) the fastest pace in nearly four years, reflecting broad-based momentum.

But worker productivity advanced 1.3% from a year earlier, consistent with the sluggish 1.2% average annual rate in 2007-2017, well below the better than 2% annual average since WWII. Spending by consumers, businesses and government as well as surging exports all appeared solid in 2Q18. The expansion enters its 10th year this month, building on what is already the second longest expansion on record. Faster growth which has helped to drive the unemployment rate to its lowest level in 18 years, fueled quick corporate profit growth.

Median estimates place GDP growth at 2.8% in 2018, 2.4% in 2019 and 1.8% over the long run. But everyone has growth slowing next year because of falling business and consumer sentiment, reflecting trade disputes with China and many US allies, and uncertainty whether rising business investment is sustainable.

The big concern is the economy overheating – already, it is bumping up against capacity constraints as labour markets tighten. Still, the consensus is that the next downturn will not arrive until 2020. Most economists expect 3% inflation over the next year. What worries me most is the deteriorating global political and strategic environment.

Not so much the economic outlook directly. The world is changing too much, too fast.

So much so, the geopolitical situation is getting worse – open warfare between Israel and Iran, the disgraceful state of Palestine, and uncertainties surrounding Donald Trump and Vladimir Putin, and lack of leadership in Europe. Trade barriers are causing much anxiety. It is as though what’s put in place since WWII isn’t worth a damn anymore.

Europe and Japan

Latest indications from the Brookings-FT Index for Global Economic Recovery (Tiger) show global growth has peaked and momentum has started to fade. Indeed, financial markets are already reflecting mounting vulnerabilities. With weak economic data in 1H’18, Europe and Japan have since cooled. In late 2017, eurozone was still growing at 3.5%: Germany at 4%, France 3%, Italy 2% and Spain 3.5%. But activity slackened to only 1.2% in early April; even Germany recorded a sharp dip – down to only 1%, reflecting waning monetary easing effects and supply-side constraints. The outlook is for a strong above trend upswing for the rest of the year. OECD now expects GDP growth in 2018 to be 2.2% (2.6% in 2017) and in 2019, 2.1%.

For eurozone, the window for reforms is closing – ranging from the implementation of dual currencies for its members to putting European Parliament in charge of economic policy, including the euro-budget. Japanese GDP shrank 0.1% in 1Q18 despite a rise in capital investment. Household spending unexpectedly fell. Still, recovery is expected to be driven by a weak yen brought about by monetary stimulus (BoJ has been buying assets at US$740 billion a year to drive down long-term interest rates). But underlying inflation is stuck at 0.5%. BoJ’s goal remains at keeping real interest rates (after inflation) as negative as possible, as long as the economy performs. OECD forecasts growth in Japan to be 1.2% in 2018 (1.7% in 2017); the same in 2019.

China and BRICS

Many emerging markets (EMs) are still enjoying momentum from 2017, but there is growing concern about rising debt and vulnerabilities to capital flight as interest rates in US rise. For those recently emerged from recession, viz. Russia, Brazil and South Africa, their urge to return to strong levels of activity remains sluggish.

China and India have fewer concerns for their immediate outlook. Still, they need to reform their economies to help raise living standards to catch up. The main challenges will be to execute particular reforms – not just to the financial system but also to SOEs and local governments, including getting rid of corruption.

China’s GDP rose 6.7% in 2Q’18, the slowest pace since 2016. Retail sales held up rather well as did exports. Still, measures to curb rampant borrowing are biting – investments in infrastructure and manufacturing by SOEs and local governments have since slackened. These efforts, in the midst of headwinds from abroad (especially protectionist tariffs), have led to downgrades in growth for the rest of the year. IMF now forecasts GDP growth in China to average 6.5% in 2018 (6.8% in 2017) and about the same in 2019.

Recent depreciation of China’s currency, the yuan, exposes crucial vulnerabilities within the world’s second-largest economy as it faces escalating trade tensions with the US. The currency posted its biggest ever monthly fall against US$ in June (3.4%) and has since lost more ground. This slide marks a departure for the currency often regarded as an anchor of stability for Asia and other EMs.

As Beijing assesses the options, it finds itself between a rock and a hard place because (i) People’s Bank of China (PBoC) intervention means selling its US dollar stash of reserves – which stood at US$3.11 trillion in June; (ii) it could instead raise domestic interest rates, thereby making the currency more attractive which might help to shore up the yuan. But it also risks weakening an already slowing Chinese economy just as the trans-Pacific trade war starts to bite; and (iii) it could impose stricter controls on China’s capital account which will likely spook overseas funds that have rushed into China’s domestic bond and equity markets this year at an unprecedented rate.

However, to internationalise the yuan, China has to keep fund flows relatively unencumbered. The PBoC has sensibly pledged to keep the RMB “generally stable.” In July, China implemented a mix of tax cuts and greater infrastructure spending citing growing uncertainties, as it ramps up efforts to stimulate demand to counteract a weakening economy.

As for India, I wrote extensively on what’s happening there (my July 2018 column: “India: Chugging Along but Needs More Firepower” refers).

What then are we to do

As I see it, China and China-India centred Asia is now the heart of the world economy. Their steady growth has been a source of stability in an otherwise unsteady world.

Of late, developments in China received more scrutiny than usual because of the context: Chinese stock market has since fallen into bear territory, and a growing trade dispute with the world’s largest economy, US. Despite China’s astonishingly sustained expansion, the economy is widely considered vulnerable because growth in output has been underwritten by an even faster increase in debt.

The nation’s gross debt – both public and private – is now estimated at over 250% of GDP. The worry is not just the volume of debt but its quality. China’s domestic policies encourage high savings.

Those savings, held in banks, have been funneled to companies, especially SOEs. The credit quality of the loans is hard to assess but is likely to be uneven. China has since begun to slowly tighten the credit taps, with even tighter rules on shadow banking and more scrutiny for both local government financing and public-private investment projects.

At the same time, a sharp increase in the number of defaults by corporate issuers has revived anxieties about Chinese debt. In my view, it is the tighter credit conditions and defaults, rather than worries about a trade war, that best explain the recent 22% decline in the Shanghai Composite index from its January highs.

Tightening credit policy is also a compelling explanation for the weak macro-economics. Credit growth fell, and growth in fixed investment followed. This appears to be having some effect on consumer sentiment as well.

No doubt, Trump’s tariffs on US$50bil of Chinese imports (and threatens US$200bil more) will have a direct (but unlikely to be catastrophic) impact on growth. But China is now an investment-led rather than an export-led economy.

Still, it is the knock-on effects that are most feared. If the escalation of hostilities leads to a reduction in foreign direct investment in China, the long-term impact could be significant. True, China may be facing a delicate moment economically.

But given China’s deepening role in the world economy, any pain that the US manages to inflict on it would be quickly shared with the US and the broader world – at a moment when Europe’s economy is slowing, and many EMs looking unstable.

On the whole, China’s economy will remain strong and resilient. Whatever happens, I think this won’t change the Chinese situation much.


By Lin See-yan - what are we to do?

Former banker Tan Sri Lin See-Yan is the author of The Global Economy in Turbulent Times (Wiley, 2015) and Turbulence in Trying Times (Pearson, 2017). Feedback is most welcome.


 Related news:

Specter of America's Growing Fiscal Deficit and Debt Load Looms

Related posts:

Recalling Bank Negara’s massive forex losses in 1990s

 

Global economic order under threat

 

Bizarre world of new debt, low, even negative interest rates a threat to global stability

 

 

Bitcoin: Utter pipedream

 

 What is Blockchain Technology, its uses and applications?

 

https://youtu.be/E_kCCgsldjU

Global economic order under threat

 

Coming global economic crash, threat of WWIII, petitioned 2030 Agenda for a One World Global Government under a New World Order. http://jimdukeperspective.com/1526-globalagend/

Related: 

Why is Bitcoin price going down again? - Global Coin Report

The Bitcoin Price Is Tanking -- Here's Why - Forbes

 

The Bitcoin Price Is Down 50% This Year Alone -- Here's Why - Forbes

 

Bitcoin's Bad Year Keeps Getting Worse. Down 70% From High | Fortune

 

Bitcoin 'On a One-way Street Going Down' Says Futures Trader ...

 

 PressReader - The Star : Rethinking Social progress in the 21st century