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January
Japan PM Says Can't Rule Out Return of Deflation Despite Price Spike
Written by Nur Yasmin
Japanese Prime Minister Fumio Kishida said on Friday that a return to deflation in the world's third-largest economy cannot be ruled out, because domestic demand remains weak.
The comment came hours after data showed Tokyo's consumer inflation, a leading indicator of Japanese price trends, hit a 42-year high in January, keeping the central bank under pressure to phase out its easy monetary policy.
However, Kishida told a session of the upper house of parliament that inflation was being driven by high global raw material prices and a weak yen, not by strong domestic demand.
Asked by an opposition lawmaker if the Japanese economy has fully exited from years of deflation, Kishida said: "the state of non-deflation is going on at the moment, but it has not reached a stage where we can judge that the return (to deflation) is unlikely."
The Bank of Japan (BOJ) surprised financial markets last month with a decision to allow 10-year bond yields to move in a slightly wider range at just above or below zero, prompting speculation it was preparing the ground for a gradual exit from its super-loose policy.
But Kishida described the move as an operational tweak to smooth the impact of monetary easing, which is distorting the country's bond markets. The BOJ did not make further changes at its mid-January meeting.
Policymakers are hoping that wage increases this spring will cushion higher living costs and boost consumer spending.
"The government and the BOJ have agreed to closely cooperate towards economic growth in tandem with structural wage hikes and the sustainable, stable achievement of the inflation target," Kishida said, reiterating his previous remarks.
He also refrained from commenting on whether there would be a revision to a joint government and BOJ statement on economic policy that has mandated policymakers to fight deflation since 2013, saying that a new BOJ governor has not yet been chosen.
Kishida on Sunday said he would nominate the next BOJ leader next month before the incumbent Haruhiko Kuroda's second five-year term expires on April 8. (Reuters)
January
India Expects More Clashes With Chinese Troops in Himalayas - Document
Written by Nur Yasmin
A security assessment by Indian police in the Himalayan region of Ladakh says there could be more clashes between Indian and Chinese troops along their contested frontier there as Beijing ramps up military infrastructure in the region.
At least 24 soldiers were killed when the armies of the Asian giants clashed in Ladakh, in the western Himalayas, in 2020 but tensions eased after military and diplomatic talks. A fresh clash erupted between the two sides in the eastern Himalayas in December but there were no deaths.
The assessment is part of a new, confidential research paper by the Ladakh Police that was submitted at a conference of top police officers held from January 20 to 22 and has been reviewed by Reuters.
The report said the assessment was based on intelligence gathered by local police in the border areas and the pattern of India-China military tensions over the years.
The Indian army did not respond to a request for comment but the assessment assumes significance as it was submitted at a conference attended by Prime Minister Narendra Modi. India's defence and foreign ministries also did not respond to requests for comment.
The Chinese foreign ministry did not respond to a request for comment.
"Given the domestic compulsions ... in China and their economic interests in the region, the PLA would continue to build up its military infrastructure and skirmishes would also get frequent which may or may not follow a pattern,” the paper said, referring to China's People’s Liberation Army.
“If we analyse the pattern of skirmishes and tensions, the intensity has increased since 2013-2014 with an interval of every 2-3 years,” it said.
“With the massive infrastructure build up by PLA on Chinese side both the armies are testing each other’s reaction, strength of artillery and infantry mobilization time”.
The report also said India has been slowly losing ground to China in Ladakh as the border has been pushed inside Indian territory through the creation of buffer zones.
India and China share a 3,500 km (2,100 miles) border that has been disputed since the 1950s. The two sides went to war over it in 1962. (Reuters)
January
Myanmar Army Set To Cement Rule With Tough New Election Rules
Written by Nur Yasmin
Myanmar's ruling junta on Friday announced tough requirements for parties to contest an election this year, including a huge increase in their membership, a move that could sideline the military's opponents and cement its grip on politics.
Myanmar's top generals led a coup in February 2021 after five years of tense power-sharing under a quasi-civilian political system that was created by the military, which led to a decade of unprecedented reform.
The country has been in chaos since the putsch, with a resistance movement fighting the military on multiple fronts after a bloody crackdown on opponents that saw Western sanctions re-imposed.
The military has pledged to hold an election in August this year. An announcement in Friday's state media said parties intending to compete nationally must have at least 100,000 members, up from 1,000 previously, and commit to running in the election in the next 60 days or be de-registered as a party.
The rules favour the Union Solidarity and Development Party, a military proxy stacked with former generals, which was trounced by Aung San Suu Kyi's National League for Democracy (NLD) party in 2015 and 2020 elections.
The NLD was decimated by the coup, with thousands of its members arrested or jailed, including Suu Kyi, and many more in hiding.
Richard Horsey, senior adviser to the International Crisis Group, who was based in Myanmar for 15 years, said the rules aimed to restore a political system the military can control.
"Parties are going to be either too scared, offended at the sham that the election is, or it will just be too expensive for them to mount a nationwide campaign in that kind of environment. Who would fund a political party right now?" he said.
"This whole exercise is something to perpetuate military rule. It's a piece of theatre. It doesn't have to work, because they've decided what the outcome will be."
The junta says it is committed to democracy and seized power because of unaddressed violations in a 2020 election won in a landslide by the ruling NLD.
The NLD in November described the election as "phoney" and said it would not acknowledge it. The election has also been dismissed as a sham by Western governments. (Reuters)
January
Thailand's Ruling Party Picks Veteran Kingmaker Prawit as PM Candidate
Written by Nur Yasmin
Thailand's ruling pro-military Palang Pracharat party has chosen political veteran and former army chief Prawit Wongsuwon as its prime minister candidate, a senior official said on Friday, as parties gear up for an election that must be held by May.
Prawit, an adept political dealmaker in Thailand's conservative establishment and current deputy prime minister, will likely go against the Pheu Thai Party's Paetongtarn Shinawatra, the daughter of self-exiled former premier, Thaksin Shinawatra, who has declared her readiness for the top job.
"He is the centre of the party ... our members, parliamentarians all see him as talented and most suitable," Palang Pracharat's deputy leader Paiboon Nititawan said after a party meeting.
Prawit, 77, could also face off with incumbent prime minister and protege Prayuth Chan-ocha, 68, who has joined the United Thai Nation Party and has hinted at a bid to extend his rule, which started with a coup he led eight years ago.
Both are former army chiefs who often refer to each other as brothers, hailing from the elite Queen's Guard unit. Both were involved in coups against governments controlled by the Shinawatra family.
Prawit could not immediately be reached for comment on Friday but when asked last week if he was ready to be premier, he said: "Just vote for me."
In a Facebook post on Wednesday Prawit said "politicians must be able to work with all parties, compromise to reduce conflict and adhere to the public interest."
Despite sharing a conservative electoral base, some observers say the two generals running for different parties could be strategic and advantageous in ensuring they stay in power.
"There is a strong likelihood that they will work together during and after the vote," said Ben Kiatkwankul, partner at government affairs advisory, Maverick Consulting Group.
A "divide and conquer" strategy might work, he added, with Prawit's party able to win votes in areas where Prayuth may not be popular. (Reuters)
January
Philippines Defiant, Says Won't Cooperate with ICC Investigation
Written by Nur Yasmin
The International Criminal Court's decision to allow a probe into the Philippines' drugs war to resume is an "irritant", the country's justice secretary said on Friday, maintaining the ICC has no jurisdiction over the country's affairs.
Jesus Crispin Remulla said the ICC should not impose on the Philippines, which is no longer a signatory to the international tribunal.
"They are insulting us," Remulla told a media briefing after the ICC granted its prosecutor's request to reopen an investigation into the killings during former President Rodrigo Duterte's 'war on drugs' and other suspected rights abuses.
Police say they killed 6,200 dealers who resisted arrest during anti-drug operations during Duterte's term. Many thousands more users and peddlers were gunned down during the crackdown, in what authorities said were vigilante killings. Rights groups and some victims accuse the police of systematic cover-ups and executions, which they deny.
The ICC, which had suspended the investigation in November 2021 at Manila's request, said in a statement it was "not satisfied that the Philippines is undertaking relevant investigations that would warrant a deferral of the investigation."
But Remulla said the timing of the ICC's move was "very wrong" since the country is "doing what it takes to fix the system," like improving law enforcement agencies, including the police.
"I do not welcome this move of the ICC and I will not welcome them to the Philippines until they make clear that they will respect us in this regard," Remulla said.
He said the country was open to dialogue with the ICC, and would provide the court with data if asked, but "they cannot come in here and impose themselves on us."
Former police chief Ronaldo dela Rosa, who oversaw Duterte's bloody crackdown, had earlier said he would cooperate with the ICC if the government decided to participate.
Current Philippine President Ferdinand Marcos Jr and the vice president, who is Duterte's daughter, did not comment on the latest ICC decision. He said in August he had no intention of rejoining the ICC after Duterte pulled out of the court in 2019, after accusing it of prejudice.
Human Rights Watch said the ICC investigation was the only credible path to justice for victims and their families.
"As the court's judges agreed, Philippine authorities are not 'undertaking relevant investigations' into these crimes or 'making a real or genuine effort' to carry these investigations out," Human Rights Watch said in a statement. "The ICC offers a path forward to fill the accountability vacuum."
Families of many drug war victims are still seeking justice in long, drawn-out cases.
In a rare conviction, a Philippine court in 2018 sentenced three police officers to up to 40 years in jail for the murder of a 17-year-old high school student. The teenager's death featured in a report by a former ICC prosecutor. (Reuters)
January
China's Xi says ties with Australia moving in "right direction", state media reports
Written by Nur Yasmin
Chinese President Xi Jinping said on Thursday relations with Australia were moving in the right direction in the latest sign of an improvement in ties between the major trading partners.
Xi made his comments in a congratulatory message for Australia Day to Australian Governor-General David Hurley, the Xinhua state-run news agency reported.
Australia and China "have reviewed the past and looked to the future, making active efforts towards the right direction of improving and growing China-Australia ties", Xi said, according to Xinhua.
After some three years of tense relations over a range of issues including trade, signs have emerged recently that their ties are warming.
China put unofficial bans on Australian products from coal to wine in 2020, after Australia called for an inquiry into the origins of COVID-19 and put a 5G network ban on China's telecoms giant Huawei.
Their trade ministers have not met since then but Australian Foreign Minister Penny Wong met her Chinese counterpart, Wang Yi, last month on the first visit to Beijing by an Australian minister since 2019.
Chinese President Xi Jinping met Australian Prime Minister Anthony Albanese on the sidelines of a G20 summit in Indonesia in November signalling the beginning of a thaw.
In January, China granted permission for select companies to resume importing Australian coal.
Last week, Xinhua reported that Chinese Commerce Minister Wang Wentao would meet his Australian counterpart, Don Farrell, via video "in the near future". It gave no date. (Reuters)
January
IMF says BOJ could enhance yield flexibility before price goal met
Written by Nur Yasmin
The Bank of Japan could consider steps to allow bond yields to move more flexibly even before inflation durably hits its 2% target, the International Monetary Fund's Japan mission chief Ranil Salgado told Reuters.
Allowing long-term interest rates to move more flexibly would allow the BOJ to address both upside and downside risks to inflation, and help iron out market distortions caused by its heavy bond buying, Salgado said in an interview on Thursday.
"We don't see this as really changing the (BOJ's) accommodative stance. It's more to balance some of the impact on the real economy against the impact on financial markets," he said.
"It also makes it easier to begin the transition towards an eventual raising of the short-term rate," Salgado said, adding that steps to enhance flexibility in bond yields could come before the BOJ's 2% price target is durably met.
But a hike in short-term rates is unlikely in the near-term and can be considered only when there is clear evidence that wages will keep rising and help the BOJ achieve its inflation target in a sustainable manner, he said.
"First, you need to be confident that there's strong evidence the 2% target will be durably achieved. That's the key pre-condition" for a short-term rate hike, Salgado said.
"Really, the key is what will happen to wages," he said on how quickly the BOJ can phase out its massive stimulus.
While wages for non-regular workers are starting to rise, the momentum for higher pay has yet to spill over to regular workers under life-time employment, Salgado added.
Under yield curve control (YCC), the BOJ sets a -0.1% target for short-term rates and that for the 10-year bond yield around zero as part of efforts to sustainably meet its price target.
With inflation hitting a 41-year high of 4% and putting upward pressure on bond yields, the BOJ widened the allowance band around the 10-year yield target in December.
In January, it beefed up a market operation tool to defend the newly set 0.5% cap on the 10-year bond yield, a move aimed at extending the lifespan of YCC. (Reuters)
January
Rights group says several Chinese 'white paper' protestors still in detention
Written by Nur Yasmin
Several demonstrators who were apprehended for publicly protesting China's then-ongoing zero-COVID policy remain in detention, face charges or have not been heard from, Human Rights Watch said in a report on Thursday.
In late November, protests broke out in numerous cities across China calling for an end to the country's nearly three years of strict enforcement of the zero-COVID policy. Many demonstrators held up blank sheets of white paper, which became a symbol of their discontent.
Some protestors also shouted slogans calling for the ouster of President Xi Jinping or the ruling Communist Party.
The protests, unprecedented in Xi's decade in power, which has seen an increasingly heavy crackdown on dissent, petered out within days amid a heavy police presence. Numerous individuals were apprehended and subsequently released, protesters, lawyers and academics told Reuters at the time, adding that they were concerned that some could face consequences later.
Human Rights Watch researchers cited four protestors in Beijing - editor Cao Zhixin, accountant Li Yuanjing, teacher Zhai Dengrui, and journalist Li Siqi - as having been formally arrested for "picking quarrels and provoking trouble", which can carry a sentence of up to five years.
In Shanghai, the whereabouts of two protestors who demonstrated on Wulumuqi Road, Li Yi and Chen Jialin, are unknown, Human Rights Watch said.
The group called on authorities to release all of the individuals immediately.
Reuters could not independently verify the status of the individuals named in the report.
Calls by Reuters to China's Ministry of Public Security for a comment were not answered.
Human Rights Watch said "a few" protestors were released on bail.
"More protestors are believed to have been detained or forcibly disappeared, though their cases are not publicly known, given the Chinese authorities' practice of threatening detainees' families to keep silent," it said.
In early December, soon after the protests, China abruptly dropped most of its zero-COVID curbs, and the coronavirus has spread rapidly across the country. (Reuters)
January
More than 160 Afghans die in bitterly cold weather
Written by Nur Yasmin
More than 160 people have died from the cold in Afghanistan this month in the worst winter in more than a decade, authorities said on Thursday, as residents described being unable to afford fuel to heat homes in temperatures well below freezing.
"162 people have died due to cold weather since January 10 until now," said Shafiullah Rahimi, a spokesperson for the Minister of Disaster Management. About 84 of the deaths had taken place in the last week.
The coldest winter in 15 years, which has seen temperatures dip as low as -34 degrees Celsius (-29.2 degrees Fahrenheit), has hit Afghanistan in the middle of a severe economic crisis.
Many aid groups have partially suspended operations in recent weeks due to a Taliban administration ruling that most female NGO workers could not work, leaving agencies unable to operate many programmes in the conservative country.
In a snowy field in the west of the Afghan capital, children rummaged through rubbish looking for plastic to burn to help their families, unable to afford wood or coal.
Nearby, 30-year-old shopkeeper Ashour Ali lives with his family in a concrete basement, where his five children shiver from cold.
"This year, the weather is extremely cold and we couldn't buy coal for ourselves," he said, adding the small amount he makes from his shop was no longer enough for fuel.
"The children wake up from the cold and cry at night until the morning. They are all sick. So far, we have not received any help and we do not have enough bread to eat most of the time."
During a visit to Kabul this week, U.N. aid chief Martin Griffiths said the world body was seeking exemptions to the ban on most female aid workers that was coming at one of the most vulnerable times for many Afghans.
"The Afghan winter … as everybody in Afghanistan knows is the big messenger of doom for so many families in Afghanistan as we go through these many years of humanitarian need … we see some of the consequences in loss of life," Griffiths told Reuters. (Reuters)
January
China's open borders and push to stoke economy may revive dealmaking, advisers say
Written by Nur Yasmin
China's reopened borders and renewed focus on boosting the sagging economy have brightened the deals outlook, with bankers starting to field interest for mergers, acquisitions and fundraising involving the world's second-largest economy.
The prospect of a revival in deals comes as Chinese policymakers try to restore private-sector confidence and growth, which has been ravaged by the COVID-19 pandemic and a sweeping regulatory crackdown.
Although consumer, retail and travel-related firms are expected to bounce back after an almost three-year lockdown, advisers say sectors linked to strengthening China's economic prospects will be at the centre of dealmaking this year.
"We see strategic sectors, hardcore industrial technology, automation, semiconductor-related to be a focus for outbound activity," said Mark Webster, partner and head of Singapore at BDA Partners, an Asia-focused investment banking adviser.
"Healthcare opportunities are proving of interest, both domestically and outbound, including in Southeast Asia," he added. "Geographically, Indonesia in particular is attracting a lot of attention."
Australia has also already emerged on China's radar amid hopes of a diplomatic thaw between the two countries. In one such deal, Tianqi Lithium (002466.SZ) and IGO's (IGO.AX) joint venture are bidding for lithium miner Essential Metals.
Outbound M&A involving companies in China halved last year to the lowest point since 2006, Refinitiv data showed, which pulled total Chinese company-led dealmaking to its lowest point in nine years.
Chinese companies' capital markets deals slipped 44% in the same period, according to Refinitiv data. That slump crimped the fees earned by Wall Street banks and forced some of them to cut jobs, mainly those linked to Chinese deals, in the past few months.
"We have had a lot more requests for proposals from companies in the past two to three weeks," said Li He, a capital markets partner at law firm Davis Polk who travelled to Beijing to meet clients the day after China's border reopened on Jan. 8.
"That is not just because of travel but people think that a reopening is good for the economy, good for capital markets and good for deal execution," He said.
The reopening coincided with a thaw in regulatory scrutiny that had seen overseas Chinese IPOs grind to a halt in the past 18 months amid proposed rule changes, and the tech sector struggle with a range of new regulations.
Until the border reopened, travel from Hong Kong into mainland China had been tightly restricted for about three years - a sharp change for advisers for whom weekly trips to China had been common.
Opened borders could lead to a pick up in deals involving private equity funds later in 2023 as firms head to China to find buyers for their assets, according to Bagrin Angelov, head of China cross-border M&A at Chinese investment bank CICC.
Chinese private equity activity was worth $24.1 billion in 2022, down from $57.8 billion a year before, Pitchbook data showed.
"Six months or one year before the deal, private equity firms would already start meeting potential buyers to try to warm up the interest and try to understand who could be interested," Beijing-based Angelov said.
"For them certainty is very important, and they really need to meet buyers very early on," he continued. "Because of opening up, we expect an uptick in overseas disposal of private equity to Chinese buyers." (Reuters)