Focus: China: first mover – what we can learn/deteriorating relationship with US

Short Url
Updated 15 May 2020
Follow

Focus: China: first mover – what we can learn/deteriorating relationship with US

What happened:

First-time jobless claims in the US for the week ending May 8 came in at 3 million, pushing the total up to 36.5 million. The trajectory of increases is falling, but 3 million is a huge number.

Unemployment filters through to consumption, which constitutes 70 percent of GDP. A further reflection of the dire situation in America is that 12 retailers and restaurant chains have filed for bankruptcy or outright liquidation this year.

Oil markets are starting to rebalance with OPEC+ on track to deliver the 9.7 million barrels per day (bpd) of production cuts this month, supported by a further cut of 1.18 million bpd from Saudi Arabia, the UAE and Kuwait.

The International Energy Agency (IEA) boosted its second-quarter global demand outlook by 3.2 million bpd, to 79.3 million. It also reduced its full-year outlook on demand contraction by 700,000 bpd to minus 8.6 million or minus 9 percent. Faster-than-expected supply adjustments and better-than-expected demand forecasts contribute to sentiment. Brent traded at $31.74 per barrel and West Texas Intermediate (WTI), the American benchmark, at $28.10 per barrel midday in Europe. These prices are still more than 50 percent lower compared to January.

Former US Federal Reserve chair, Ben Bernanke, believes that the economy will not truly recover until the coronavirus disease (COVID-19) is defeated. He also said that the current monetary and fiscal packages, which deploy more than $6 billion to households and individuals, will avoid the downturn being as severe as the Great Depression.

Germany’s GDP contracted by 2.2 percent during the first quarter. France had come in at minus 5.8 percent, Spain at minus 5.2 percent, and Italy at minus 4.7 percent.

Paul Hudson, CEO of multinational pharmaceutical company Sanofi, sparked a wider debate on who should have control over the distribution of vaccines and medicines.

He said that the US should get priority over any new COVID-19 vaccine, because research had been funded by the US. French President Emmanuel Macron objected, claiming that he would not allow Sanofi, which is a French firm, to embark on such a course.

Background:

China was the first country hit by the pandemic and also the first to emerge from lockdown.

Manufacturing output for April rose by 3.9 percent, while retail sales contracted by 7.5 percent and fixed-asset investment decreased by 10.3 percent. The urban jobless rate was reported at 6 percent.

These numbers indicate that, even if people are going back to work, they feel hesitant to spend: While the employed worry about low job security, they will tighten their purse strings. The unemployed will not spend at all.

Similar consumer behaviors can be expected in the US and Europe – particularly as furloughed workers fear descending into unemployment.

More cautious people will also want to minimize the potential risk of exposure to the virus by venturing out of the house as little as possible. These fears will only be assuaged once COVID-19 is contained. 

The fixed-asset investment number indicates a pessimistic outlook on growth and a desire by most companies to preserve cash, a trend that can be observed in Europe and the US.

This goes a long way to explaining why the stocks with China exposure have traded sideways on the MSCI for the last couple of months, despite the country being the first to reopen its economy.

New infections in northeastern China and South Korea have resulted in renewed lockdowns, highlighting how difficult it is to control the virus and that similar incidents could happen elsewhere as economies reopen. Renewed lockdowns would lead to a W-shaped recovery – one of the worst-case scenarios.

At the same time US-China relations hit a new low with US President Donald Trump publicly refusing to speak to Chinese President Xi Jinping and threatening to cut off ties with China, a move he claimed could save America $500 billion a year.

The rhetoric from Democratic presidential candidate Joe Biden also grew harsh. Some observers consider US-China relations to have reached the lowest point since the 1970s. Two-thirds of Americans have a negative view of China.

Former US diplomat and director of the Aspen Security Forum, Anja Manuel, told Bloomberg she was in favor of localizing supply chains in key sectors such as defense or healthcare, but that painting with too broad a brush was counterproductive. The focus should shift from emphasis on restrictions to research and development cooperation with allies in key sectors.

The above does not bode well for a speedy conclusion of phase one in the US-China trade agreement.

Where we go from here:

China’s National People’s Congress will meet next week and announcements on further stimulus measures are expected.

The latest round of Brexit negotiations end on Friday with no resolution of key issues in sight. The danger of a no-deal Brexit inches ever closer, as the deadline of reaching an agreement by June is enshrined in UK law.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.
Twitter: @MeyerResources


Fierce fighting in northern Gaza as aid starts to roll off US-built pier

Updated 5 min 15 sec ago
Follow

Fierce fighting in northern Gaza as aid starts to roll off US-built pier

  • Residents said Israeli bulldozers were demolishing homes and shops in Jabalia in the path of the advance
  • In the south, Palestinian militants put up a fierce resistance, attacking tanks massing around Rafah
  • Hamas says US floating aid pier is no substitute for end of Israeli siege of Gaza

CAIRO: Israeli forces battled Hamas fighters in the narrow alleyways of Jabalia in northern Gaza on Friday in some of the fiercest engagements since they returned to the area a week ago, while in the south militants attacked tanks massing around Rafah.

Residents said Israeli armor had thrust as far as the market at the heart of Jabalia, the largest of Gaza’s eight historic refugee camps, and that bulldozers were demolishing homes and shops in the path of the advance.
“Tanks and planes are wiping out residential districts and markets, shops, restaurants, everything. It is all happening before the one-eyed world,” Ayman Rajab, a resident of western Jabalia, said via a chat app.
Israel had said its forces cleared Jabalia months earlier in the Gaza war, triggered by the deadly Hamas-led attacks on southern Israel on Oct. 7, but said last week it was returning to prevent Islamist militants re-grouping there.
In southern Gaza bordering Egypt, thick smoke rose over Rafah, where an escalating Israeli assault has sent hundreds of thousands of people fleeing from what was one of the few remaining places of refuge.
“People are terrified and they’re trying to get away,” Jens Laerke, UN humanitarian office spokesperson, said in Geneva, adding that most were following orders to move north toward the coast but that there were no safe routes or destinations.
As the fighting raged, the US military said trucks started moving aid ashore from a temporary pier, the first to reach the besieged enclave by sea in weeks.
The World Food Programme, which expects food, water, shelter and medical supplies to arrive through the floating dock, said the aid was transported to its warehouses in Deir Al Balah in central Gaza and told partners it was ready for distribution.

Ships are seen near a temporary floating pier built to receive humanitarian aid in the Gaza Strip in Gaza Beach on May 18, 2024. (Israel Defense Forces/Handout via REUTERS)

The United Nations earlier reiterated that truck convoys by land — disrupted this month by the assault on Rafah — were still the most efficient way of getting aid in.
“To stave off the horrors of famine, we must use the fastest and most obvious route to reach the people of Gaza – and for that, we need access by land now,” deputy UN spokesperson Farhan Haq said.
US aid was arriving in Cyprus for delivery to Gaza via the new pier, Washington said.
Hamas demanded an end to Israel’s siege and accused Washington of complicity with an Israeli policy of “starvation and blockade.”
The White House said US national security adviser Jake Sullivan would visit Israel on Sunday and stress the need for a targeted offensive against Hamas militants rather than a full-scale assault on Rafah.
A group of US medical workers left the Gaza Strip after getting stuck at the hospital where they were providing care, the White House said.

Ships are seen near a temporary floating pier built to receive humanitarian aid in the Gaza Strip in Gaza Beach on May 18, 2024. (Israel Defense Forces/Handout via REUTERS)

Humanitarian fears
The Israel Defense Forces said troops killed more than 60 militants in Jabalia in recent days and located a weapons warehouse in a “divisional-level offensive.”
A divisional operation would typically involve several brigades of thousands of troops each, making it one of the biggest of the war.
“The 7th Brigade’s fire control center directed dozens of airstrikes, eliminated terrorists and destroyed terrorist infrastructure,” the IDF said.
At least 35,303 Palestinians have now been killed, according to figures from the enclave’s health ministry, while aid agencies have warned repeatedly of widespread hunger and dire shortages of fuel and medical supplies.
Israel says it must capture Rafah to destroy Hamas and ensure the country’s safety. In the Hamas attack on Oct. 7, 1,200 people died in Israel and 253 were taken hostage, according to Israeli tallies. About 128 hostages are still being held in Gaza.
Israel said on Friday that its forces retrieved the bodies of three people killed at the Nova music festival in Israel on Oct. 7 and taken into Gaza.
In response, Hamas said negotiations were the only way for Israel to retrieve hostages alive: “The enemy will not get its prisoners except as lifeless corpses or through an honorable exchange deal for our people and our resistance.”
Talks on a ceasefire have been at an impasse.

’Tragic war’
Israeli tanks and warplanes bombarded parts of Rafah on Friday, while the armed wings of Hamas and Islamic Jihad said they fired anti-tank missiles and mortars at forces massing to the east, southeast and inside the Rafah border crossing with Egypt.
UNRWA, the main UN aid agency for Palestinians, said more than 630,000 people had fled Rafah since the offensive began on May 6.
“They’re moving to areas where there is no water — we’ve got to truck it in — and people aren’t getting enough food,” Sam Rose, director of planning at UNRWA, told Reuters on Friday by telephone from Rafah, where he said it was eerily quiet.
At the International Court of Justice, or World Court, in The Hague, where South Africa has accused Israel of violating the Genocide Convention, Israeli Justice Ministry official Gilad Noam defended the operation.
The South African legal team, which set out its case for fresh emergency measures the previous day, framed the Israeli military operation as part of a genocidal plan aimed at bringing about the destruction of the Palestinian people.


Nancy Pelosi’s husband’s attacker jailed for 30 years

Updated 24 min 50 sec ago
Follow

Nancy Pelosi’s husband’s attacker jailed for 30 years

SAN FRANCISCO: A man who attacked the elderly husband of former US House Speaker Nancy Pelosi with a hammer was sentenced Friday to 30 years in prison.
David DePape was convicted last year of breaking into the couple’s San Francisco home and bludgeoning Paul Pelosi in a horrifying attack captured on police bodycam.
At the time of the October 2022 assault, Democrat Nancy Pelosi was second in line to the presidency and a regular target of outlandish far-right conspiracy theories.
Jurors in his trial last year heard how DePape — a Canadian former nudist activist who supported himself with occasional carpentry work — had initially planned to target Nancy Pelosi, planning to smash her kneecaps if she did not admit to her party’s “lies.”
On arriving at their home armed with rope, gloves and duct tape, DePape instead encountered her then-82-year-old husband, and kept asking, “Where’s Nancy?“
During what DePape told officers was a “pretty amicable” conversation with Paul Pelosi, the husband managed to call for help from law enforcement officers.
Moments later when police arrived DePape hit Pelosi with a hammer before officers rushed at him and took the weapon away.
Pelosi was knocked unconscious and had his skull fractured. He spent almost a week in a hospital, where he underwent surgery.
Nancy Pelosi was not at home the night of the attack.
Prosecutors had asked the federal court in San Francisco to sentence DePape to 40 years in prison.
In the lead up to Friday’s sentencing, Nancy Pelosi had asked the judge to impose a “very long” sentence for an attack that “has had a devastating effect on three generations of our family.”
“Even now, eighteen months after the home invasion and assault, the signs of blood and break-in are impossible to avoid.
“Our home remains a heartbreaking crime scene,” she wrote, according to court documents cited by the San Francisco Chronicle.
On Friday her office said the family was proud of Paul Pelosi “and his tremendous courage in saving his own life on the night of the attack and in testifying in this case.”
DePape had pleaded not guilty to charges that included assault on a family member of a US official, and attempted kidnapping of a US official.
While not denying the attack, his defense rested on contesting federal prosecutors’ claims that he had targeted Nancy Pelosi in her official capacity.
Instead, his lawyers argued that DePape was driven to target a number of prominent liberal figures, due to his exposure to a web of obscure conspiracy theories.
In social media posts, DePape shared QAnon theories and false claims that the last US election was stolen.
The trial heard how DePape did not intend to stop his supposed anti-corruption crusade with Pelosi, and had drawn up a list of other targets including a feminist academic whom he accused of turning US schools into “pedophile molestation factories.”
Other personalities the defendant admitted wanting to attack included California Governor Gavin Newsom, President Joe Biden’s son Hunter, and actor Tom Hanks.
Jurors took less than 10 hours to reject DePape’s explanation of the attack, which took place just a few days before the US midterm elections.
The attack itself became politicized in the weeks after it occurred, with some members of the Republican Party mocking the incident and suggesting lurid and unsubstantiated explanations for why there was a man in Pelosi’s house late at night.
US Attorney General Merrick Garland said Friday that DePape’s sentence should serve as a warning that attacks on political figures and their families were unacceptable.
“In a democracy, people vote, argue, and debate to achieve the policy outcome they desire,” he said.
“But the promise of democracy is that people will not employ violence to affect that outcome.
“The Justice Department will aggressively prosecute those who target public servants and their families with violence.”


Burkina loyalists rally after gunfire near presidency

Updated 54 min 11 sec ago
Follow

Burkina loyalists rally after gunfire near presidency

  • Burkina Faso news agency AIB reported that an individual had tried to attack a guard at the palace but there were no injuries or damage
  • Junta leader Traore seized power in a coup on September 30, 2022, deposing a military regime that earlier ousted the elected president Roch Marc Christian Kabore

OUAGADOUGOU, Burkina Faso: Hundreds of demonstrators rallied in Burkina Faso’s capital Friday in support of the country’s military rulers after gunfire was reported near the presidency, AFP reporters said.
Demonstrators gathered at a roundabout in central Ouagadougou, vowing to protect the rule of President Ibrahim Traore.
Earlier in the afternoon, “there were shots fired near the presidential palace,” said one demonstrator, Moussa Sawadogo.
“We do not know what is going on but we are there to stop anything from happening.”
Burkina Faso news agency AIB reported that an individual had tried to attack a guard at the palace but there were no injuries or damage.
Security forces closed off access to the area around the palace, AFP reporters saw.
The landlocked West African nation has been run by a military regime since mutinying soldiers deposed elected president Roch Marc Christian Kabore in 2022.
Junta leader Traore then seized power in another coup on September 30, 2022.
He established a transitional government and legislative assembly for 21 months, a period set to expire on July 1.
National consultations on the next steps in the transition to civilian rule are scheduled for May 25 to 26.
Since 2015, Burkina’s forces have been struggling to combat jihadist insurgencies that have killed thousands of people and forced around two million from their homes — violence that the army’s leaders used to justify their coups.


Zelensky rejects Olympic truce call, saying it could help Russia

Updated 18 May 2024
Follow

Zelensky rejects Olympic truce call, saying it could help Russia

  • Zelensky said he had spoken to French President Emmanuel Macron who made the appeal told him Russian President Putin cannot be trusted
  • Putin earlier on Friday also suggested that Moscow would not support the idea of a truce during the games in Paris this summer

KYIV: Ukrainian President Volodymyr Zelensky in an interview with AFP on Friday rejected a French call for an Olympic truce this summer, saying it could just help Russia move its troops and equipment.

In an interview with AFP on Friday, Zelensky said he had spoken to French President Emmanuel Macron who made the appeal and told him: “Let’s be honest... Emmanuel, I don’t believe it.”
“Who can guarantee that Russia will not use this time to bring its forces to our territory?” Zelensky said, adding: “First of all, we don’t trust Putin.”
“We are against any truce that plays into the hands of the enemy,” he said.
“If it’s a truce, an Olympic truce for the duration of the Olympics, a land truce, they will have an advantage,” he said, explaining that there was “a risk that they will bring heavy equipment to our territory and no one will be able to stop them.”
Russian President Vladimir Putin earlier on Friday also suggested that Moscow would not support the idea of a truce during the games in Paris this summer.
Asked during a visit to China whether he backed Macron’s idea, Putin said: “I think these Olympic principles, including the ‘Olympic truce’ are very right.”
But he added: “Today’s international sporting officials are themselves disobeying the principles of the Olympic charter.”
He accused sports bodies of “not allowing our athletes to perform at the games with our banner, flag and our national music, our anthem.”
“They are committing violations against us and demand fulfilment from us. Dear friends: we won’t get far that way. No one has ever come to an agreement that way,” Putin said.
Macron had restated on Friday his idea of “an Olympic truce so that Russia ceases its current operations” in Ukraine.
Macron also thanked Chinese President Xi Jinping last week for backing the idea of a truce in all conflicts, including Ukraine, during the Paris Olympics.

Only 25 percent of needed air defense
Zelensky also said his country needed over a hundred aircraft to counter Russian air power and said Ukraine only had a quarter of the air defenses it needs.
His country has faced a surge of devastating attacks as the war stretches into its third year, leading Kyiv to double down on pleas to strengthen its depleted air defenses.
“Today we have about 25 percent of what we need to defend Ukraine. I’m talking about air defense,” Zelensky said.
Russia currently holds an advantage in the air, which limits Ukraine’s ability to protect cities and hold the front line.
To combat sustained aerial and ground assaults, Ukrainian officials have called for more support.
“So that Russia does not have air superiority, our fleet should have 120 to 130 modern aircraft... to defend the sky against three hundred (Russian) aircraft,” Zelensky said.
He also said the fighter jets were needed “to have parity” with Russia.
His comments came just weeks after the US Congress finally approved a $61-billion financial aid package for Ukraine following months of political wrangling.
Zelensky called for some of the assistance to be delivered.
“Can we have three (billion) to get two (Patriot) systems in Kharkiv region, and no bombs will fall on the heads of the military,” he said.


WHO says no medical supplies received in Gaza for 10 days

Updated 18 May 2024
Follow

WHO says no medical supplies received in Gaza for 10 days

GENEVA: The World Health Organization said Friday that it has received no medical supplies in the Gaza Strip for 10 days as Israel pursues a new offensive against Hamas.
Israel’s closure of the Rafah crossing into Gaza has caused “a difficult situation,” WHO spokesman Tarik Jasarevic said. “The last medical supplies that we got in Gaza was before May 6.”
Israeli troops entered the city of Rafah on May 7 to extend their offensive against Hamas over the militant group’s attacks seven months earlier. They closed the Rafah crossing into Egypt that is crucial for humanitarian supplies.
With UN agencies warning of a growing risk of famine in Gaza, the Kerem Shalom and Erez crossings from Israel are also virtually shut down.
Jasarevic said the biggest concern was over fuel needed to keep clinics and hospitals running. Gaza’s health facilities need up to 1.8 million liters of fuel a month to keep operating.
The spokesman said only 159,000 liters had entered Rafah since the border closure. “This is clearly not sufficient,” he added, highlighting how only 13 out of 36 hospitals across the Palestinian territory were now “partially” operating.
“Hospitals still functioning are running out of fuel, and that puts so many lives at danger,” said Jasarevic. “Current military operations in Rafah are putting countless lives at risk.”
The Hamas attack on October 7 resulted in the death of more than 1,170 people in Israel, most of them civilians, according to an AFP tally based on official Israeli figures. Out of 252 people taken hostage, 128 are still held inside Gaza, but the army says 38 have died.
More than 35,300 people, mostly civilians, have been killed in the Palestinian territory since the war broke out, according to data provided by the health ministry of Hamas-run Gaza.