HONG KONG — S&P Global Ratings has affirmed its ‘AAA’ long-term and ‘A-1+’ short-term issuer credit ratings on Hong Kong, but said the rating outlook remains negative, mirroring S&P’s long-term rating on China (AA-/Negative/A-1+; cnAAA/cnA-1+).
THE REAL BENEFITS of Artificial Intelligence will come when as much of the trade environment as possible is digitised, says HSBC’s Andrew Speers...
Donald Trump may be an advocate of the “madman school of diplomacy”, but might Kim Jong-eun be using the same strategy . . .
SEOUL – With Kim Jong-eun threatening to launch missiles in the direction of - if not directly at - the U.S. island of Guam in response to Trump’s “Fire and Fury” speech aimed at rattling the DPRK into getting “its act together,” is the world about to witness its first actual bilateral nuclear war (assuming China and India hold off just long enough)?
Is your correspondent finally going to get the message and bail out before this corner of the world blows up along with an uncertain chunk of U.S. real estate?
As both Kim Jong-eun and Donald Trump seemingly careen headlong into a potential no-nuclear-punches-barred confrontation that would undo both of them -- the former physically and the latter politically -- there is some basis for remaining sanguine in the expectation that neither will actually go over the brink and take the other with him.
An assessment of the objectives of each and the risks to both underlies such sangfroid.
IT IS the privatisation of Australia’s critical infrastructure that has led to consideration of national security implications when foreign investors seek to acquire such assets, says David Irvine, Chair of the Foreign Investment Review Board . . .
SYDNEY — David Irvine, the former Head of Australia’s spy agencies, acceded to the Chair of the Federal Government’s Foreign Investment Review Board In the wake of a number of controversial rulings against foreign investors.
Not unexpectedly, the commentariat in the media looked at his appointment as the Government shifting its emphasis to national security.
But this could not be further from the truth, Irvine told an audience attending a CEDA (Committee for Economic Development of Australia) event in Sydney.
Irvine said a lot was said at the time of his appointment suggesting that, given his background, FIRB was shifting its focus to national security to the exclusion of all other considerations.
“Frankly, national security issues only impinge on a very, very small number of advisory notes provided by FIRB to the Treasurer (Scott Morrison),” he said.
Indeed, the composition of the FIRB decision-making process includes people with experience on taxation issues, resource investment, agriculture investment and so on, he added.
In recent times, national security has become an issue in a number of proposed acquisitions – more so than in the past because of privatisation and sale of public assets.
TRADE GROWTH is more promising, but it could be derailed by policy shocks and geopolitical uncertainly, warns the WTO . . .
GENEVA — With the outlook for the world economy likely to be better in coming months, international trade is also expected to rebound, with growth of 2.4 per cent for 2017, according to the World Trade Organisation’s latest forecast.
Leading indicators of real trade growth are up in the early months of 2017.
Container throughput at major ports has recovered from its 2015-16 slump to reach a record high level, with on-year growth of 5.2 per cent in January and February this year, says the Geneva-based global trade club.
A key index of world export orders also climbed to its highest level in several years in February.
Trade growth will reflect high global GDP growth, which is expected to be 2.7 per cent in 2017, inching up to 2.8 per cent next year.
There is increasingly a chorus among leading economists calling for synchronised global growth — something that has been absent for the past decade.
However, trade growth can be derailed by policy shocks and geopolitical uncertainty.
The WTO speaks of a prevailing sense of uncertainty because of unpredictable Government policies on monetary, fiscal and trade. These Government actions could stifle the promising expansion in trade, it says.
THE LAO Government has sold a majority stake in its State forest to the Australia-based New Forests, a leading global institutional investor specialising in timberland, for an undisclosed amount.
New Forests manages committed capital of more than AUD3.6 billion globally from pension and superannuation funds and other institutional investors invested in sustainable forests across Asia Pacific.
In its latest joint venture in Laos, New Forests holds a stake of 85% in what is known as Mekong Timber Plantations, the Government retaining a residual stake of 15% in the plantation estate.
Mekong Timber Plantations will manage 22,000 hectares of leased area, mainly in Bolikhamxay and Khammouane provinces.
THE parlous state of the North Korean economy is hardly conducive to success in any open military confrontation with the United States. Kim Jong-Un’s most valuable bargaining chip would seem to be his country’s human and mineral resources . . .
OUR cover report from Korean correspondent, Peter Sylvestre (page 10), presents a grim picture of potential scenarios as the North Korean nuclear imbroglio rumbles relentlessly on, at times descending to the edge of farce. If only it was not so serious.
The mix is raw politics, the potential social and economic impact on neighbouring countries far-reaching.
In human terms, a bottom line of probably half-a-million people dead in Seoul on the first day of any military conflict, and widespread economic devastation in the immediate region. And even today, difficult times for North Korea’s own people.
There is clearly an unrelenting determination by Pyongyang’s Kim dynasty to perfect a nuclear deterrent – in its mind, the only viable option for survival.
Kim Jong-eun has wrong-footed both former U.S. President Obama and Chinese President Xi, but, after the recent bombings in Syria and Afghanistan, must be pondering the way forward with Donald Trump.
The U.S. military has spent more than 60 years peering into North Korea across the no-man’s land of Panmunjom, more closely observing from satellite and drone. Kim must realise that the U.S. knows exactly the scope of the threat he presents.
Trump has now offered to talk to Kim (a necessary first step, as Xi sees it). It is an invitation Kim has yet to accept, apparently fearing a loss of face if Trump changes his mind and does not front.
Xi, meanwhile, has not helped himself by sanctioning South Korean business in a failed bid to prevent installation of the US THAAD missile defence system on South Korean soil.
THAAD is up-and-running, even as South Korea’s chaebols look to their options for more trade and investment opportunities outside China’s orbit.
Beijing’s strategy in recent years has been to increase the reliance of the South Korean economy on China, while simultaneously squeezing the prices Taiwan could achieve for export products it manufactures in direct competition with South Korea.
At the APEC meeting it hosted in Beijing in 2014, China announced a free trade agreement which gave South Korea an immediate tariff advantage over Taiwan on exports to China. No matter that the FTA was not to be fully implemented for 20 years (something not announced at the time).
Taiwan and Korea compete directly on 80 per cent of their export products, mainly advanced electronics.
The China-Korea FTA was a calalyst in prompting Taiwan’s current Government to adopt a South-South policy — to divert trade, investment and economic dependence away from China. Will South Korea now follow suit?
For China, the geopolitical options in Northeast Asia have seemed to fade with every new missile test into either the Yellow Sea or the Sea of Japan.
A preferred option for China from a military and security standpoint has traditionally been to embrace North Korea as a client State. The implied political risk that such a move would enrage Japan to the point of re-arming clearly proved too great.
WITH the United States and North Korea continuing to face off over Pyongyang’s nuclear ambitions, pledges by South Korea’s incoming President, Moon Jae-in, to bring about reconciliation by embracing a new Sunshine Policy and kick-starting the abandoned Kaesong Industrial Complex are being viewed askance – in fact, they seem already to have been disregarded by Kim Jong-Un.
North Korea has a single-minded determination to acquire ICBM capability, including the ability to strike the United States on home soil.
China’s words and actions in the imbroglio suggest frustration, while 12 current U.S. military scenarios generally assume a loss of half a million people within a day in the event of a North Korean attack on Seoul.
As the U.S. activates its THAAD missile system, neighbouring countries — including Japan, Taiwan, Russia and even the Philippines — watch with a mix of fear and trepidation . . .
The election of left-of-centre Moon Jae-in to the Korean Presidency on May 9 would elsewhere augur hopes of reconciliation — or at least a modus vivendi along the lines of détente and realpolitik.
Not on the Korean Peninsula, however.
Despite the professed intention of the new President to return to the Sunshine Policy that shone (or sunburned, depending on one’s view) across the Peninsula during the halcyon days of South Korean Presidents Kim Dae-jung and Roh Moo-hyun (1998-2008), North Korea remains defiant.
It maintains an unwavering determination, despite a number of launch failures, to acquire an intercontinental ballistic missile (ICBM) capable of striking the United States at home.
AUSTRALIAN providers of professional services – in finance, legal, accounting, civil engineering, construction and consultancy —can offer enormous experience and knowledge in the early steps required to secure major infrastructure projects associated with China’s One Belt, One Road initiative . . .
Charles Ng, Acting Director-General of InvestHK, believes Australia’s understanding of building infrastructure projects in developing countries, not to mention pioneering projects in isolated parts of Australia, is a resource that should not be under-estimated.
“You have expertise in creating the investment proposition for cross-border infrastructure,” he says, “as well as the ability to create the platforms that will drive and protect these platforms.
Hong Kong is positioning to play a key role as a financing hub for OBOR projects, in part through an Infrastructure Financing Facilitation Office (IFFO).
This has been set up by the Hong Kong Monetary Authority, which acts as Hong Kong’s central bank.
Ng says InvestHK is working closely with the IFFO to attract parties able to offer expertise in developing sound financial and legal frameworks for private sector infrastructure projects, frameworks that give comfort to investors that they can anticipate realistic financial returns over long pay-back periods.
Hong Kong, he says, also has the ability to build bridges to leverage funding for OBOR through the Hong Kong-Shanghai Connect and Hong Kong-Shenzhen Connect of the Hong Kong Stock Exchange.
IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.
“We are talking infrastructure — energy and power stations, seaports, airports, roads, railways, bridges — and as countries start developing these kinds of things they will need lawyers, accountants, different kinds of professional service providers, to help them put it all together,” Ng told ATI Magazine.
WASHINGTON — Donald Trump has issued a “Buy American and Hire American” Executive Order with a particular focus on as steel, iron, aluminum and cement.
The Administration has given all Federal Government agencies that have procurement programmes until September to report to Secretary of Commerce, Ross Wilbur, on how they will implement the Order.
However, “existing rights or obligations under international agreements” will not be affected by the latest Order, which was issued on April 18.
President Trump told workers at Snap-On Tools in Kenosha, Wisconsin, that “everyone in my Administration will be expected to enforce every last Buy American provision on behalf of the American worker, and we are going to investigate every single trade deal that undermines these provisions”.
The President also said that “for the first time ever, we are going to crack down on foreign bidders that used dumped steel and other subsidised goods to take contracts from American manufacturers”.
Trump’s latest Executive Order reinforces his previous Orders addressing infrastructure, trade enforcement, and trade deficits.
THE Jakarta election is a precursor to how race and religion may play a role in Indonesia’s upcoming 2019 Presidential campaign . . .
THE defeat of Basuki Tjajaja Purnama (Ahok) as Governor of Jakarta could have wider implications for Indonesia — beyond the politics of the capital itself.
Victory went to former Education Minister, Anies Baswedan, and his running mate, businessman Sandiaga Uno, on their pro-Islamic platform.
Ahok’s loss could affect the sometimes tenuous hold of President Joko Widodo (Jokowi) on the country’s Presidency, because it will embolden his opponents in coming months.
More immediately, ethnic Chinese in Indonesia are alarmed by the anti-Chinese sentiment whipped up during the campaign by pro-Islamic politicians.
Ahok’s defeat reveals a deep fissure in Indonesian politics, according to Charlotte Setijad, Visiting Fellow in the Indonesia Studies Programme at the ISEAS-Yusof Ishak Institute in Singapore.
Writing in the latest issue of Perspective, published by ISEAS, Setijadi says it cannot be denied that the political and societal commotion surrounding the Jakarta election has revealed the deep rifts that exist in society, as well as the shifting ground of Islamist politics in Indonesia.
“These have important implications for national politics and the 2019 Presidential election,” she wrote (before the result of the election was known).
“Not having Ahok as an ally at the leadership of the capital city would weaken the President’s hold on power. This is particularly true in the context of the struggle for dominance between elite players Jokowi-Megawati, Prabowo Subianto and SBY.
CHINA HAS a track record of making rapid change. Within a decade or two, the world’s most populous country has become its biggest market for passenger cars, its biggest e-commerce market, its biggest exporter -- and its biggest source of carbon emissions.
So it should come as no surprise that China has now assumed a leadership position in green-investment.
China is ploughing billions into clean energy, promoting the use of electric vehicles, investing in low-emissions infrastructure for its fast-growing cities, and widening the options for green financing.
Efforts to decarbonise and green China’s economy permeate the very fabric of its economic endeavours: while they aim to tackle pollution and climate change, they also dovetail with Beijing’s goal of taking the economy up the value chain, boosting home-grown high-tech industries and the high-end jobs that come with them, and paving the way for more sustainable, balanced and ecologically-aware economic expansion.
THE Trump Administration will be taking a hard line in the negotiation and monitoring of agreements with both its trading partners and the World Trade Organisation . . .
IN what is known as the China-Australia Year of Tourism, plans are in hand to bring 1.4 million Chinese tourists to Australia, with 750,000 Australians to visit China . . .
Vietnam Airlines has launched direct flights from Sydney to Hanoi, with direct connections to Europe, along with its new Premium Economy class . . .
BEIJING — In what is seen as a “first” in China, the Nanjing Intermediate People’s Court has handed down a decision recognising and enforcing a civil judgment made by the Singapore High Court, based on the principle of reciprocity.