Exclusive: Chinese Economists Coin Humorous Moniker 'Mongolian Doctor' for Liu He, Citing his Anesthetic-Free Surgical Approach to Policy Implementation
Singapore, Indonesia outlook downgraded on weak China: JCER; China warns of France travel risks after protesters attack tourists; French fashion tycoon’s visit shows importance of China’s huge luxury
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Exclusive: Chinese Economists Coin Humorous Moniker 'Mongolian Doctor' for Liu He, Citing his Anesthetic-Free Surgical Approach to Policy Implementation
Although the Central Government acknowledged a high macroeconomic leverage ratio in 2015 and decided to initiate "deleveraging" — reducing this ratio, the substantive action of "deleveraging" commenced in the summer of 2017. Over the following year and more, the focus of "deleveraging" was the clean-up of the shadow banking system.
Readers should note, as defined earlier, the macroeconomic leverage ratio refers to the ratio of debt to GDP. The Chinese government's campaign-style "deleveraging" aimed to rapidly reduce debt in the short term, neglecting the contractionary impact on the economy during this fast debt reduction process. This would lead to a decrease in GDP as well, hence, both the numerator and the denominator of the leverage ratio might decrease concurrently, rendering the ratio itself relatively unchanged.
China's banking system, largely catering to state-owned enterprises, creates considerable challenges for numerous small and medium-sized private enterprises to secure bank loans. Consequently, they are forced to rely on private finance and the shadow banking system. The "deleveraging" that started in the summer of 2017, focused on cleaning up the shadow banking system, had a significant impact on the macro-economy, especially on numerous small and medium-sized private enterprises facing credit constraints. This is due to the fact that during the debt reduction process, capacity and employment supported by debt were also declining, leading some businesses to directly go bankrupt. At the root of this tough process was the Chinese government's intent to achieve "deleveraging" as quickly as possible by simply reducing debt (the numerator). The Vice Premier in charge of financial affairs at the time, Liu He, who led this movement, was also humorously referred to as the "Mongolian Doctor" by Chinese economists because he "performed surgery without using anesthesia."
In retrospect, while this movement did not manage to lower China's macroeconomic leverage ratio, it temporarily curtailed its rapid ascent, effectively stabilizing it.
Singapore, Indonesia outlook downgraded on weak China: JCER
Nikkei Asia
Economists have downgraded growth forecasts for Singapore and Indonesia due to the global slowdown and China's weaker-than-expected recovery, according to a survey by the Japan Center for Economic Research and Nikkei. The survey showed that this year's economic growth rate for the five ASEAN countries was revised down to 4.2% from 4.4% in the March survey, with Singapore and Indonesia dragging down the regional figures. China's economic slowdown and US-China tensions were cited as the main risks to the region. The growth projections for the Philippines and Thailand were upgraded slightly, while Malaysia's remained unchanged.
China warns of France travel risks after protesters attack tourists
South China Morning Post
Beijing has issued a safety alert for travellers in France after a coach full of Chinese tourists was attacked by protesters in Marseille. The unrest, along with long queues for visas for European countries, could deter Chinese tourists who have recently resumed world travel after strict Covid-19 measures. The Chinese consulate in Marseille responded to the attack and helped the passengers return to China. The Chinese embassy in France has advised Chinese nationals to avoid areas with protests and violent conflicts and to take precautions while travelling.
French fashion tycoon’s visit shows importance of China’s huge luxury market
South China Morning Post
The CEOs of several luxury brands have been making high-profile visits to mainland China since travel restrictions were lifted. Bernard Arnault, CEO of LVMH, recently visited Beijing, Chengdu, Shanghai, and Hong Kong. Other executives who have made trips to China include Francois Henri Pinault, CEO of Kering, Elon Musk of Tesla, and Jamie Dimon of JPMorgan Chase. Luxury spending in China is set to outstrip that of the US and western Europe for the next four years, with Chinese consumers expected to spend $444.7bn on luxury goods this year, rising to $632.5bn by 2027.
China complains to France after Chinese tourists hurt in riots
Reuters
China's Consulate General in Marseille has complained to France after a bus carrying Chinese tourists had its windows smashed during recent riots in the city. The consulate has called for France to ensure the safety of Chinese citizens and their property. The Chinese tourists have since left France, and the consulate has advised Chinese citizens in France or heading to France to be more cautious in light of the riots.
With eye on China, Japan to deepen ties with NATO at key leaders’ summit
Japan Times
Japanese Prime Minister Fumio Kishida will attend the NATO leaders’ summit in Vilnius, Lithuania, next week, where he will be seeking closer cooperation with NATO to expand Japan's security engagement. Kishida is expected to emphasise the importance of Japan-NATO cooperation in securing the Indo-Pacific, with an emphasis on regional security threats posed by China and North Korea. Japan is also expected to enter into a new partnership agreement with NATO, known as the Individually Tailored Partnership Program (ITPP). The ITPPs will provide opportunities for NATO partners to develop interoperability with NATO militaries and a platform for engaging and sharing information on security issues. The Asia-Pacific Four, which includes South Korea, Australia, and New Zealand, are also expected to enter into deeper partnerships with NATO. Japan sees closer cooperation with NATO as a way to strengthen deterrence, forge closer strategic ties and interoperability, and build bridges between US alliances in the trans-Atlantic and Indo-Pacific regions. An Asia-Pacific NATO office in Tokyo is also being considered.
How a US court case sheds light on China’s Operation Fox Hunt
South China Morning Post
A US federal court in Brooklyn has convicted two Chinese nationals and a private investigator of stalking a family in New Jersey on behalf of the Chinese government as part of its "Operation Fox Hunt" campaign. The campaign is a decade old but it has only now come to light in the US court. The defendants were accused of spying on Xu Jin, a former Chinese official wanted in China on suspicion of bribery and abuse of power. The defendants were hired by the Chinese government to spy on Xu and his relatives, leaving threatening messages and harassing his family members in order to intimidate him into returning to China. The defendants were convicted of acting as agents of a foreign government, stalking, harassment, and conspiring to act as an illegal foreign agent. China claims the US court's decision is "slanders and smears".
Russia’s Farcical Mutiny Is Deadly Serious for China and Iran
Bloomberg
The recent mutiny led by Yevgeny Prigozhin in Russia has revealed the erosion of President Vladimir Putin's domestic power base. This mutiny, which saw Prigozhin briefly seize control of the city of Rostov and send armed forces towards Moscow, demonstrated the divisions among Putin's military leaders and the lack of fear among ordinary Russians towards the Kremlin. This article argues that the crisis in Russia highlights the internal problems faced by authoritarian regimes, including China and Iran. Furthermore, it suggests that democracies may also be vulnerable to internal crises, such as the attempted coup in the US and the illiberal democracies of India and Hungary. The author suggests that the world is currently experiencing a period similar to the 17th century, with power shifting away from the state and back to private corporate entities. The rise of the internet and the dominance of big tech companies, as well as the emergence of private military actors, are reminiscent of the role of the printing press and private trading companies in the 17th century. The article concludes that the world is closer to the "Death of Wallenstein" than to the "Birth of Westphalia," suggesting that a new Westphalian moment, characterized by strengthened state sovereignty and control over violence, may be some time away.
Former Trump national security adviser concerned over Japan app market expansion
Japan Times
Former U.S. National Security Adviser Robert O'Brien has expressed concern over Japan's plan to require major app store operators such as Apple and Google to allow users to download apps from outside their selling platforms. O'Brien stated that the Chinese Communist Party (CCP) would take advantage of any new law allowing apps from unvetted third-party sources, posing risks to privacy and national security. He warned that even a partially open door would provide an opening for the CCP and other bad actors to exploit. O'Brien called on Japanese authorities to put the legislation on hold and focus on protecting against potential national security threats from China. He highlighted China's 2017 law that obligates private companies to cooperate with its intelligence officials, suggesting that all sorts of information could be taken from smartphones and other devices. O'Brien emphasized the need for the U.S. and Japan to work together in protecting liberty and democracy in the Indo-Pacific region.
Lithium Scarcity Pushes Carmakers Into the Mining Business
NY Times
Western carmakers are striking deals with lithium mining companies to secure supplies as competition for the metal intensifies. Established mining companies do not have enough lithium to supply the industry as electric vehicle sales rise. Battery raw materials must be mined and processed in North America or trade allies to benefit from US subsidies. But intense competition for lithium has helped inflate lithium prices to unsustainable levels. Automakers need to acquire the metal directly and have it sent to battery factories. The car firms are taking no chances, fearing that if they go even a few years without sufficient lithium, their companies will never catch up. In places where EV sales have grown the fastest, established automakers have lost significant ground.
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