Stability into China-US relations

Since the US government took office, more than a month ago, International public opinion has been believing that Washington-Beijing communication has lost momentum. At the moment many signals show the ambivalence in Washington about China-US relation. On the one hand, the US continue to spread the “China threat” rhetoric. On the other hand, the relevant information just proves the importance of stable Washington-Beijing economic and trade relations to the United States.

The US administration knows that the tariff war would not bring tangible benefit to American consumers. Not to mention of the effect  related to the stock market, as it is no coincidence that since late January S&P 500 index has decreased by 3%. According to data, during the previous trade war launched by the US in 2018, most of Washington’s costs from tariffs on China hit American businesses and concumers.

The importance of maintaining stability between Washington and Beijing is related to the fact that trade war and tariff war have no winners. That’s an undeniable fact, as injecting new vitality into China-US relations would contribute to global stability. 

China's increasing power

(Photo courtesy by Stefano Gazzano)

Since early 2000s China has been increasing its economic power, technological strenght, and national defense capability. Not to mention of Beijing's significant role in global politics. For example, in 2024 China showed its considerable role of being a reliable peacemaker between Saudi Arabia and Iran. 

(Photo courtesy by Stefano Gazzano)

Furthermore, China and India have recently agreed to carry out active interaction at all levels on bilateral and multilateral opportunities, powerfully built strategic communication, and enhance mutual political trust. I am so glad to hear such a great news, as in terms of international politics it means that unipolarism will not exist anymore. It's easy to see that the only country that owns military basis in more than 80 states around the world will be compelled to share its power.

(Photo courtesy by Stefano Gazzano)

The fact that Beijing is now hit by Trump tariffs on steel and aluminium leeds me to think that the US is challenging China using many tactics, including economic restrictions and military encirclement.

Sovereignity and dignity of all countries do not have to be subordinated to the hegemonic countries' investment management companies.

Northeast China

Last week, on June 8, I shared some pictures which a friend of mine had sent from Northeast China.  I was glad to see some friends of our blogging community ( Veronica , Tanza , Anna and Ashok ) enjoyed his photos. Thanks for the appreciation! He had also sent these ones.

With regards to Northeast China, I have just heard that part of the country will start using Russia's Vladivostok port, reducing freight transport. This means that distance will decrease by more than 800 km from industrial base of Northeast China provinces.

The bad news is that the unemployment rate among young Chinese people has been growing since late 2022, reaching 19.6 % in  early April 2023.

I hope you will have a nice new week!  

Pictures sent by a friend of mine

 

A friend of mine sometimes sends me picture which he takes while he's travelling for job. He is involved in Italian wine export, and he mainly goes to East Asia twice a year.

He recently went to Guannang and Lyanyungang (China). Once back home, he sent me some pictures that he had took while he was working in Northeastern China. The last three photos were taken on a cloudy morning in Lyanyungang, a Chinese town located in Northeastern Jangsu province.

The picture above shows a square completely covered with hundreds of scooters. McDonalds' logo with its golden-arches yellow and red is in the middle of the square.  

His pictures remind me the Asia Security Forum, which took place last week. During the meeting China's defence minister, Li Shangfu , said: "It is undeniable that a severe conflict or confrontation between China and the United States will be an unbearable disaster for the world". He also specified that "any attempt to separate Taiwan from China would be met by military response without fearing any adversaries, and regardless of the cost".

Asian powers have bigger population, militaries, and economies ... we see how BRICS members will be able to work together in terms of creating deterrence on the planet. 

Laundering Russian gas

Since Ukraine invasion (and Western sanctions) began early this year, Russia has been gradually reducing gas supply to Europe, first to 40% of total capacity, and then to 20%. Consequently, some EU countries have been looking for alternative sources. And Europe's companies have started to buy gas from Chinese refineries, that are the largest importers of gas from Russia (up to 60%). 

This means that Russians sell liquefied natural gas to China, that has no use for such imported product. That's why China has no choice but to resell Russian gas to Europe. In other words, Europe's countries don't buy Russia's gas directly, but they're buying the same Russian product from elsewhere. The world is filled with so much hypocrisy!

China's military drills

Since Russia's invasion of Ukraine, two Western governments have been pushing for Taiwan to order missiles and smaller arms. In the meanwhile, China is conducting military drills near Taiwan, as it seems Chinese are practicing how to invade the island. 

According to WionNews, in the first week of May 2022 China carried out another round of drills near Taiwan. A large number of Chinese warplanes, warships and conventional missiles surrounded the island.

The U.S. has never officially supported Taiwan independence. And the sentence "Taiwan is part of China" had been written on U.S. State Department's website for decades. The fact that this sentence has been recently removed signals a shift. Consequently, the message is clear: America is ready to back an independent Taiwan. In other words, the U.S. would be ready to supply their weapons to Taiwan.

New arms race in Europe

I've noticed that world's policy-makers are not worried about the new arms race that has been triggered in East Europe. On the contrary, since Russia-Ukraine war began about three months ago the US has sent more the $ 3 billion in military equipments to Ukraine. Not to mention of other countries, such as China and the UK that are also involved in shipping weapons respectively to Russia and Ukraine. 

In addition, other European countries located close to Russian and Ukrainian border, such as Poland, Estonia, and Romania, have also been buying weapons and missiles. With its 37% of global arms export, the U.S. is world's largest weapons exporter. There are no doubts that military-industry complex and contractors are winning this war.

The picture above, which shows the Azovstal steelworks in the devastated Ukrainian city of Mariupol, was published on 6th May, 2020 by the BBC website: 

https://www.bbc.com/news/in-pictures-61348541 

I have got that powerful picture via email from Willie, our blogging friend from Blandford.

$ 92 a barrel ... until now

If the geopolitical clouds of uncertainty, that we have over East Europe, were to materialize, they would certainly have an impact on energy prices. And there are risk and uncertainty due to the fact that incresead cost of energy may affect the whole structure of prices.

Actually, a conflict between Russia and Ukraine would have the potential to drive oil & gas prices much higher. There is a very good chance crude oil would reach $ 100 a barrel. It remains to be seen whether EU countries could handle shortfall in gas if Russia were to halt supplies.

In the meantime, it seems that Russia could be binding its time to launch an invasion to Ukraine until after Beijing Winter Games, as China is an important ally on the Eurasian continent. Russia doesn't risk its good relation with China.   

Origin of Coronavirus

Since late January 2020 we have heard a lot of theories about the origin of the Covid-19 oubreak, which have created mystery and suspicion on this topic. In addition, many hypothesis about the origin of Coronavirus have been used by the Trump Administration against China, by calling it a "Chinese virus".

In February and March 2020 some articles, published in the US, showed that there were many possibilities that the virus started there. Actually, in the US in 2019 there were many unexplained respiratory illnesses in Maryland, that caused pneumonia and didn't respond to antibiotic. According to China's Foreign Ministry, US military officials, who went to China in October 2019, were already infected while they were visiting Wuhan. 

Therefore, some members of the US team at the Wuhan Military Games had become infected by the virus from an accidental outbreak at Fort Detrick, the Army Biological laboratory in Maryland. That's the main reason why speculation over the Covid-19's origin have been also growing with petition demanding that the US government discloses more information on the closure of the Fort Detrick biological laboratory, that may be connected to the outbreak. As a result, the novel coronavirus had been intoduced to China when 300 US military members arrived in Wuhan, in October 2019, and infected the local population.
In this perspective, Stanford Institute's experts have mentioned that some US people may have had Covid-19 a few months earlier than the US health system suspected it could have been spreading. Actually, on April 15, 2020, the US had the largest number of cases with 609,685 people tested positive, compared with Spain and Italy, with respectively 177,633 and 162,488 coronavirus cases. And the fact that numbers in the US are four times bigger than Spain and Italy may mean that the virus has been spreading there silently since long time. 
In addition, an article published by Science Magazine reports that an infection disease expert, at Georgetown University in Washington, said that the first human infection has been confirmed as occurring in November 2019, suggesting that the virus didn't orginate in Wuhan. Someone put the origin of the outbreak in September. Then the virus spread to the Wuhan's seafood market.
There's also another hypothesis about the Biological laboratory in Wuhan, which had been collecting viruses from bats, although there's no evidence at the moment. Actually, after Wuhan "Wet market" had been closed, the health laboratory in Wuhan came under increasing scrutiny. 

With regards to the two biological laboratory, in Wuhan (China) and in Maryland (US), there is nothing "conspirational" about a lab accident, because accidents may happen. As confirmed by many scientists, the claim that the virus was engineered in US, EU, Israel, China, or elsewhere is a fake news, which can't be considered a theory.

How Covid-19 has been spreading in Italy

The first cases, in the most affected country by the coronavirus outside China, were two visitors from the Chinese town of Wuhan, the epicenter of the infection. 

The next day Italy became the first country to block all flights to and from China. But the virus was already spreading: a man known as "patient one", with severe flu-like symptoms, was only diagnosed  on the second visit hospital after 36 hours. He had had a dinner party and had gone running a marathon. Northern Italy was sealed off quickly.

Within a few day, exactly on March 11, the lockdown was extended to the entire country. Italian Prime Minister, Giuseppe Conte, ordered all but most essential businesses to close until at least April the 3rd. The entire country, home to over than 60 million people, was, and still is, on lockdown. Italy became first democratic country since the second world war to impose a nationwide lockdown.

Meanwhile, other countries, such as Spain, Germany, and the UK, that would have learnt the lesson from Italian experience, allowed the virus to spread silently until the last week of March 2020.

On the one hand, we saw that some Italian hospitals and care centres for elderly people became the epicenters of transmission. On the other hand, Italy couldn't endorse the same approach as we saw in Japan and Singapore, because there weren't enough coronavirus detection testing kits to meet demand. Consequently, the high rate of asymptomatic cases complicated efforts to stop the spread of the infection, because many hospitals didn't test people who hadn't a fever and flu-like symptoms.

Now, in late March, it is not too late to act in the rest of Europe. Many lives can be saves, as Italy has become the symbol of the challenge facing the Europe's public health system.

ECB announces 750 billion Pandemic Emergence Purchase Programme (PEPP)

There isn’t any good news yet, as death toll are more than 3000 in the most affected country by the coronavirus outbreack outside China. Unfortunately, on  18 and 19 March, Italy reported the biggest daily jump in terms of coronavirus death since the contagion. And while Italians are sending optimistc messages from their windows, nearly 220,000 people have now been confirmed with the coronavirus infection globally.

Most countries around the world have been imposing Italian-style lockdown in bid to contain coronavirus outbreack.

As mentioned by WHO Director General, T.A. Ghebreyesus, this will be the first pandemic in history that could be controlled. Governments around the world have no choice but to ban on any movement and avoid contacts. All bars and shops have been closed, with the exception of grocery stores and pharmacies. From a global perspective, a steady recession is inevitable. Weakened demand caused by coronavirus outbreack has slowed down manifacturing activity. And This has led to weakened demand for oil causing prices to fall sharply.

Meanwhile, European Central Bank announces 750 billion Pandemic Emergence Purchase Programme (PEPP), which may help the process of normalizing as soon as coronavirus outbreack slows.

Thanks to all the people who are working for us in these difficult days. Thanks to doctors, nurses, food workers, delivery drivers, grocery clerks, police officers, firemen and all other people who are fighting for us. And last but not least, staying at home can make a huge contribution to fighting coronavirus outbreak.

Coronavirus outbreak data's reliability

While scientists around the world are scrambling to find a cure for patients with coronavirus outbreak, some experts say Chinese statistics are not reliable. People who are responsible for collecting data don't have the capabilities and don't have previous experience. In addition,  Chinese authorities overreport success and underreport failures. These are the raisons why it is difficult to understand the trend of the epidemic spreading.

Meanwhile, factories in China have closed, as workers have been sent home to contain coronavirus outbreak. And Japan, Singapore and Hong Kong have confirmed most coronavirus cases outside mainland China.

According to President Xi Jinping, the outbreak has highlighted weaknesses in China's response. Highest ranking communist party chief in China's Hubei province has been sacked because of failures to stem outbreak.

Russian-Chinese cooperation

Since the US has begun its trade war on various fronts, including custom duties imposed by Trump's Administration, China and Russia have been trying to strenghten their ties. The leaders of two bigger Eurasian powers say their countries are closer than ever been.

Actually, Russia is considered by Beijing's Government as a source of energy, and Chinese activity in Russia's infrastructures project is on the rise. In addition, the two countries are close allied on many global issues including Syria, North Korea and Iran.    

In this perspective, the Russian-Chinese closer relationship is not just about economic and business cooperation, it is also a reaction tho the attemp by Washington to weaken both China and Russia as geopolitical competitors. From 11 to 17 September 2018 we saw the biggest military exercise between China, Russia and Mongolia througout the Siberian plateau and Russia's Far East.

It seems that new economic centers have emerged and the balance of power has been shifting: since 2001 Russia and China have been leading a security economic and political alliance, the Shangai Cooperation Organization (SCO), which has eight member States and represents 40 % of global population (20 % of global GDP).  

Obviously, the functions of the International Financial Organization and the role of the US Dollar may be changed. The EU has already put in place a new special payment system to help facilitate non-dollar trade with Iran. And with regards to Iran, the two Eurasian superpowers have just expressed concern in strong statements over a military confrontation in the perilous strait of Hormuz. Russia and China disagree with US's practice of extreme and provocative pressure  on Iran. Their ultimate goal is to push the US out of the Asian and Indo-Pacific areas. 

EU is going to be among two or maybe three giants

In the middle of this century the world is going to have two o three giants, such as America, China or India, because they are large population countries, huge economy and huge military power. As argued some years ago by the British former Prime Minister, Tony Blair, these super powers are going to be much bigger and  more powerful than other smaller countries such as Brazil, Indonesia or South Africa. They are large population countries but not nearly as large as China or India. From a geopolitical point of view they are considered medium-sized countries.

In this world, if the medium-sized countries aren't banding togheter, the super powers above mentioned are going to sit on them. So if medium-sized countries were to join togheter, they would have some influence. But separately they are not going to be strong enough. Unfortunately, it's just a fact.

By saying that, we are not diminishing countries which are smaller than China or US. When countries like Germany, Spain or France are banding togheter in the EU, they are with a group of others. Consequently, they become able to operate as strong collective. 

In this contest, each European country is part of the EU, which is the biggest political union in the world. How can we think that Britain or Italy are going to gain by giving up that relationship? Tony Blair defined it as an umbelievable act of self-denial.

In a globalised world economy as above mentioned, how can British and Italian people think to go it alone? As soon as Britain leaves the EU, people in the UK will have no choice but to follow US policy, everywhere. Not to mention of loss of credibility and sovereignity.

Chinese President Xi Jinping visits Italy later this month

Italy's Government is negotiating a preliminary deal to become part of China's "Belt and Road" infrastructure plan. It would be a non-binding initial framework, which will be signed when Chinese President Xi Jinping visits Italy on 22 and 23 March.

With the aim to link China by sea and land with South Asia, Central Asia, Middle East, Africa and Europe, the "Belt and Road"  initiative will boost trade and investments through an infrastructure network on the lines of the old silk road.

Potential threats from China, Russia, and America

With the aim to defend the so called old continent from potential threat from other countries, such as China, Russia and America, the French President recently proposed the idea of an European army .

Actually, Emmanuel Macron  thinks that there is a threat of cyber war from the U.S. to Europe, and he wants EU's answers to this threat. On the one hand, he doesn't think the European states have build an army against the U.S., considering that France is a member of the North Atlantic Alliance (NATO), which is an intergovernmental military alliance between North American and Western  European states. On the other hand, French policy makers are aware  about the cyber war, as Europe has already been attacked by China, Russia, and America. 

In this perspective, France is not scared by any threat from U.S. military aggression against Europe, but it is interested in cyber offences by China, Russia, and America. Moreover, the creation of an European army is not a new idea, as it was proposed by the previous French President some years ago.

According to figures, in 2017 Europe's military spending reached 342 Billion Dollars or 20% of global cost, which reached 1,739 Trillion Dollars in the same year.   

A quarter of all the global arms exported is sold to North Africa and Middle East, where some Gulf States, such as Saudi Arabia,  UAE and Qatar, have been increasing weapon expediture in the past five years. For instance, France and Qatar recently confirmed 14 Billion Dollars fighter jet and weapon deal. Consequently, 70 % of Middle East weapon sales are by France, U.K., and U.S., which are so committed in the defence industry, although seven of the world's top ten defence companies are based in America.

It's very worring that members of the U.N. Security Council, that should bring peace to the world, are also the countries selling military machines to the world: unfortunately, most of the global weapon deals  involve five members of the U.N. Security Council.   

Russia and China's war games.

From 11 to 13 September this year Russia and China conducted joint military live fire exercises in Siberian far East. It was the largest war game by Chinese and Russian troops since the 1991, considering that there were three thousand troops, thirtysix thousand tanks and army vehicles, and a thousand of planes and ships.

Russia and China's leaders say they will increase bilateral relations, as boost to ties were announced at Eastern Economic Forum in Vladivostok this month.

Since last decade the two giants have cooperated on various levels, as Moscow is looking to China as alternative Russian energy customer. In this perspective, in May 2015 the two world powers cooperated at a military level in the Mediterranean sea, where their interests coincide: China is interested in its gateway in Greece to distribute goods across central and eastern Europe, and Russia wants to protect its small naval port on the Syrian coast. Moreover, Russia gave a demonstration of power and influence in the Middle East. 

US-China trade war will not show a winner

Since May 2018 every social, economic, and political institution, at global level, has been under threat as a consequence of the US biggest protectionist approach. America has imposed $ 34 Billion worth of tariffs on steel and aluminium, and China has responded with its own tariffs on some US goods, including soybeans, chemicals, cars, and medical equipments. That's why there is uncertainty in the US stock market, as investors are moving to haven assets such as bond and gold.

Last week some UE politicians talked about a trade war and potential collapse of the world trade system. Actually the protectionist approach to the US economy will not be related to economic benefits. Americans may protect some jobs, but they will lose for more jobs in the medium term. 

In the long run the US will lose jobs, will lose investments, and will lose its economic power, because over the last three decades America has benefited from trade from East Asia. As above mentioned, on the one hand, China is also taking action and will soon establish commensurate measures, considering that US policies have been used to achieve protectionist goals. On the other hand, China president, Xi Jinping, recently said his country will continue to import EU goods and foreign investments.

It seems that this trade war between the US and China will not show a winner.  

Cryptocurrencies' free fall

Since the start of 2018 Bitcoin has lost more than 60% of its value, and other cryptocurrencies have done almost the same during last the five weeks. Meanwhile, some Governments in East Asia, such as China and South Korea, have introduced tougher regulation, and India's policy makers want to ban all use of  cryptocurrencies. With regard to the latter announcement, Bitcoin fell by 12.7 % on Friday, 2nd February. 

We mainly know that Bitcoins is a particular implementation of the blockchain technology, the world's leading software for digital assets, which allows market participants to keep track of digital currency transactions without central record keeping. Each computer connected to the network is considered a node that gets a copy of the blockchain, which is downloaded automatically. Consequently, Blockchain's participants can transfer funds and setting trades without the need for a central authority. The network of nodes validates the user's status and the transaction using known algorithms, and combine the latter with other transactions to create a new block of data, which will be added to the existing blockchain.The major innovation is that the technology allows market participants to transfer assets through the internet without the need  for a centralized third party.
Within the context above mentioned, some experts are talking about similarities between cryptocurrencies and other coins. This is not correct, because when we are speaking about the Euro, the Yen or the Dollar, we are referring them to strong economies, efficient taxation systems and central banks, which allow them to create a particolar value. On the contrary, with regards to Bitcoin and other cryptocurrencies we have no idea who bake them, and who is behind the their value.

As mentioned by Matin Baccardax, from TheStreet.com, when we own a share of a public company, which is freely traded on a stock exchange, just we have a piece of paper which gives us a small portion of the profit going forward. Neverthless  when we own Bitcoin we don't have anything in terms of dividends or profit. Bitcoin's value only increases when more people participate, and when fewer people  participate the value decreases. This is a structure which create a great deal of risk.

More pipelines, and no carbon tax

This year China's annual GDP has dropped below 7% for the first time since the 2008 financial crisis. As it is known, China is still playing the most important  role in determining the health of our global economy, and it's slowing demand, especially when it comes from some commodities such as oil and gas, may affect developing economies which supply their resources to China. As a result, some experts think that the world should prepare for a great deal of volatility in emerging countries: Brazil, Indonesia, Chile, and South Africa to name a few.  

Nevertheless, although the consensus is now that the U.S. is still the world top economy, many countries believe China has already replaced  U.S. as the global superpower. indeed, President Trump declared, in his victory speech last week, that he will root his efforts to make America's economy great again. He also expect:

• American oil and gas production to surge;
• there will be no chance of a federal carbon tax;
• President Obama's Clean Power Plan is likely history;
• the U.S. will not ratify the Paris climate accord, and will not regulate its internal carbon dioxide emissions.

In addition, President Trump said that tax cut and pro-business policies will result in million of new jobs.  Unfortunately, tax cuts from the late 1970s to the early 2000s have always been focused on the reduction of income taxes at the top of the income scale: on rates paid not by ordinary working people but by the extremely rich. On the contrary, a progressive tax on high incomes and capital gains would favor business enterprises, rather than the individuals who control them, and would increase employment. As argued by J.K Galbraith, "resources are needed, and  could be used, for larger pressing purposes that meet greater needs".  I think that a tax cut policy wouldn't create new jobs. It would increase the flow of income to the pocket's of the 10 percent very rich people.