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January
China media plays down COVID severity as WHO seeks detail on variants
Written by Nur Yasmin
State media in China played down the severity of a surge of COVID-19 infections ahead of an expected briefing on Tuesday by its scientists to the World Health Organization, which is hoping for a "detailed discussion" on the evolution of the virus.
China's abrupt U-turn on COVID controls on Dec. 7, as well as the accuracy of its case and mortality data, have come under increasing scrutiny at home and abroad.
China's foreign ministry labelled travel entry curbs imposed by some countries as "simply unreasonable", saying they "lacked scientific basis".
"We are willing to improve communication with the world," foreign ministry spokeswoman Mao Ning told reporters in Beijing.
"But ... we are firmly opposed to attempts to manipulate the epidemic prevention and control measures for political purposes, and will take corresponding measures in different situations according to the principle of reciprocity."
China's shift away from a "zero-COVID" policy that had been championed by President Xi Jinping followed protests that had marked the strongest show of public defiance during his decade in power and had coincided with the economy's slowest growth in nearly half a century.
As the virus spreads unchecked, funeral parlours have reported a spike in demand for their services and international health experts predict at least one million deaths in China this year.
China reported three new COVID deaths for Monday, taking its official death toll since the pandemic began to 5,253.
On Tuesday, the People's Daily, the Communist Party's official newspaper, cited Chinese experts as saying the illness caused by the virus was relatively mild for most people.
"Severe and critical illnesses account for 3% to 4% of infected patients currently admitted to designated hospitals in Beijing," Tong Zhaohui, vice president of the Beijing Chaoyang Hospital, told the newspaper.
Kang Yan, head of West China Tianfu Hospital of Sichuan University, said that in the past three weeks, a total of 46 patients had been admitted to intensive care units, or about 1% of symptomatic infections.
The emergencies area at the Zhongshan Hospital in Shanghai was packed with patients on Tuesday, a Reuters witness said.
Some were in beds in the corridor receiving IV treatment while dozens were queuing around them, waiting to see a doctor. It was unclear how many were there with COVID.
WHO MEETING
The World Health Organization has urged Chinese health officials to regularly share specific and real-time information on the outbreak.
The WHO has invited Chinese scientists to present detailed data on viral sequencing at a technical advisory group meeting on Tuesday. It has also asked China to share data on hospitalizations, deaths and vaccinations.
Ahead of the meeting scheduled for Tuesday afternoon Geneva time, a WHO spokesperson said that a "detailed discussion" was expected about circulating variants in China, and globally, with Chinese scientists expected to make a presentation.
But some experts doubted that China would be very forthright.
"I don't think China will be very sincere in disclosing information," said Alfred Wu, associate professor at the Lee Kuan Yew School of Public Policy at National University of Singapore.
"They would rather just keep it to themselves or they would say nothing happened, nothing is new. My own sense is that we could assume that there is nothing new ... but the problem is China’s transparency issue is always there."
The United States, France, and others will require COVID tests on travellers from China, while Belgium said it would test wastewater from planes for new variants.
European Union health officials will meet on Wednesday on a coordinated response.
China will stop requiring inbound travellers to go into quarantine from Jan. 8. But it will still demand a pre-departure test.
'DANGEROUS WEEKS'
As Chinese workers and shoppers fall ill, concerns mount about near-term growth prospects in the world's second-largest economy, causing volatility in global financial markets.
A survey released on Tuesday showed China's factory activity shrank last month.
December shipments from Foxconn's (2317.TW) Zhengzhou iPhone plant, disrupted by worker departures and unrest amid a COVID outbreak, were 90% of the firm's initial plans.
A "bushfire" of infections in China in coming months is likely to hurt its economy this year and drag global growth lower, said the head of the International Monetary Fund, Kristalina Georgieva.
"China is entering the most dangerous weeks of the pandemic," warned Capital Economics analysts.
Mobility data suggested that economic activity was depressed nationwide and would likely remain so until infections subside, they added.
The Ministry of Culture and Tourism said the 52.71 million domestic trips during the New Year holiday generated 26.52 billion yuan ($3.84 billion), up 4% year-on-year but were only about 35% of the last pre-pandemic year in 2019.
Expectations are higher for the big Lunar New Year holiday, late this month, when some experts predict infections will have peaked in many places. (Reuters)
January
South Korea, U.S. in talks over U.S. nuclear planning, tabletop exercise
Written by Nur Yasmin
South Korea and the United States are discussing joint planning and implementation of U.S. nuclear operations to counter North Korea and hope to conduct a tabletop exercise soon, officials from both sides said on Tuesday.
The plan came amid South Korean President Yoon Suk-yeol's push to strengthen American extended deterrence - the U.S. military capability, especially its nuclear forces, to deter attacks on its allies - since taking office in May, in the face of evolving North Korean threats.
In a newspaper interview released on Monday, Yoon said the allies are discussing joint nuclear planning and exercises and that would help clear doubts about the extended deterrence, with its existing concept "falling short of convincing" South Koreans.
"In order to respond to the North Korean nuclear weapons, the two countries are discussing ways to share information on the operation of U.S.-owned nuclear assets, and joint planning and execution of them accordingly," Yoon's press secretary, Kim Eun-hye, said in a statement.
A senior U.S. administration official said both sides are looking at enhanced information sharing, joint contingency planning and an eventual tabletop exercise following a request from their presidents after a meeting in Cambodia in November to explore ways to address North Korea's threats.
But the official noted regular nuclear exercises would be "extremely difficult" because South Korea is not a nuclear power, echoing the comment from U.S. President Joe Biden that the allies were not discussing such activities.
"This is going to be done through a variety of ways, including as President Yoon said, through enhanced information sharing, joint planning and expanding the range of contingencies that we plan for, as well as training, and with the idea eventually leading up to a tabletop exercise," the official told Reuters.
The timing of the planned tabletop exercises has not been finalised, but they would take place "in the not-too-distant future" and cover scenarios including nuclear situations, the official said.
"The idea is to also try and make sure that we're able to fully think through the range of possibilities based on the DPRK capabilities which they've demonstrated, as well as their statements," the official added, using North Korea's official name, the Democratic People's Republic of Korea.
A National Security Council spokesperson said in a statement that the United States is committed to providing extended deterrence, and that the allies are working on "an effective coordinated response to a range of scenarios, including nuclear use by North Korea."
When asked about the tabletop exercises, a spokesman for South Korea's defence ministry said talks were under way but declined to provide details.
The two countries have revived consultations on extended deterrence this year after a years-long hiatus amid North Korea's increasing nuclear and missile capability.
Pyongyang defined South Korea as "undoubted enemy" and vowed to beef up its nuclear arsenal this year, after firing a record number of missiles in 2022 and fuelling tension by sending drones into the South in December.
"The U.S. countermeasures have not kept up with the North's advancing nuclear programmes, and the extended deterrence strategy is almost no different from when their nuclear capability was insignificant and weaker," said Go Myong-hyun, a research fellow at the Asan Institute for Policy Studies in Seoul.
But Kim Dong-yup, a professor at Kyungnam University, said the comment from Biden, who has sole authority to authorise the use of U.S. nuclear weapons, suggests an American reluctance to share nuclear operations, given their sensitivity and security concerns.
"Given growing voices for tactical nuclear weapons, Washington could try to give reassurances and send more nuclear assets when we want, but they're unlikely to fully materialise President Yoon's push for greater extended deterrence," Kim said. (Reuters)
January
Turkmenistan president to visit China on Jan 5-6 - state media
Written by Nur YasminPresident of Turkmenistan Serdar Berdimuhamedow is scheduled to visit China between Jan. 5 and Jan. 6, state media CCTV reported on Tuesday. (Reuters)
January
Japan's 'anti-Russian course' makes treaty talks impossible - TASS
Written by Nur Yasmin
Japan's "anti-Russian course" makes peace treaty talks impossible, Russian Deputy Foreign Minister Andrei Rudenko said in comments published by the state TASS news agency on Tuesday.
Russia and Japan have not formally ended World War Two hostilities because of their standoff over islands, seized by the Soviet Union at the end of the war, just off Japan's northernmost island of Hokkaido.
The islands are known in Russia as the Kurils and in Japan as the Northern Territories.
"It is absolutely obvious that it is impossible to discuss the signing of such a document (a peace treaty) with a state that takes openly unfriendly positions and allows itself direct threats against our country," Rudenko told TASS in an interview.
"We are not seeing signs of Tokyo moving away from the anti-Russian course and any attempt to rectify the situation."
Russia withdrew from its talks with Japan in March last year, following Japanese sanctions over Russia's invasion of Ukraine. Japan reacted angrily to the talks, calling Moscow's move "unfair" and "completely unacceptable".
Separately, Rudenko also said that Russia supports Beijing's "One China" policy on the issue of Taiwan, reiterating Moscow's explicit backing of China over the fate of the island where the defeated Republic of China government fled in 1949.
"Beijing is well aware that the Russian side invariably supports the People's' Republic of China on the Taiwan issue," Rudenko said. "We proceed from the fact that there is only one China, the PRC government is the only legitimate government representing all of China, and Taiwan is an integral part of it."
China claims democratically governed Taiwan as its own territory and has ramped up military and political pressure against the island over the past two years. Taipei strongly rejects Beijing's sovereignty claims. (Reuters)
January
Taliban seeks economic self-sufficiency and foreign investment for Afghanistan, minister says
Written by Nur Yasmin
The Taliban administration will encourage self-sufficiency and wants international trade and investment, the acting commerce minister said, as Afghanistan faces isolation and suspension of some humanitarian operations over restrictions on women.
"We will start a national self-sufficiency programme, we will encourage all government administrations to use domestic products, we will also try to encourage people through mosques to support our domestic products" Haji Nooruddin Azizi told Reuters. "We will support any item which can help us for self-sufficiency."
Another part of their strategy was to boost trade and foreign investment, he said.
"Those who were importing items to Afghanistan from abroad, they are asking us to provide opportunities for investing in Afghanistan and they want to invest here instead of importing from abroad," he said.
He said that countries including Iran, Russia and China were interested in trade and investment. He said some of the projects under discussion were Chinese industrial parks and thermal power plants, with involvement from Russia and Iran.
Already facing a lack of formal recognition and sanctions hampering the country's banking sector, investors are faced with growing security concerns after attacks on foreign targets in Kabul, claimed by the Islamic State.
An attack on a hotel catering to Chinese businessmen this month, which badly hurt several foreigners, could prompt some to re-think investing, a leading member of the Chinese business community has said.
Azizi said authorities were working to ensure security.
"We do our best for our businessmen to not come to harm. The attack hasn't had any bad impact, (but) if it happened constantly, yes it might have bad impact," he said, referring to the investment environment.
Azizi laid out a plan to develop industry by creating special economic zones on land previously used for U.S. military bases. He said his ministry was presenting the plan to the administration's cabinet and economic commission.
He added that foreign investors were showing interest in Afghanistan's mining sector, which has been valued at more than $1 trillion. He said that an iron mine in western Herat and a lead mine in central Ghor province had seen 40 companies take part in an auction and that the results would be announced soon.
He said that a major contract signed with Russia in September for the supply of gas, oil and wheat would see the delivery of the items to Afghanistan in coming days.
The Taliban-led administration is facing increased isolation over policies in recent days restricting women from access to public life, including attending university.
An order barring female NGO workers has thrown the humanitarian sector, which is providing urgent aid to millions of people, into disarray, with some organisations suspending operations in the middle of the harsh winter.
Azizi did not comment on the new restrictions but said his ministry had allocated 5 acres of land for a permanent exhibition centre and hub for women-led businesses.
"We always support women investors," he said. (Reuters)
January
Biden says U.S. not discussing nuclear exercises with South Korea
Written by Nur Yasmin
The United States is not discussing joint nuclear exercises with South Korea, President Joe Biden said on Monday, contradicting remarks by his South Korean counterpart as tensions flare with North Korea.
South Korean President Yoon Suk-yeol had said that Seoul and Washington are discussing possible joint exercises using U.S. nuclear assets, while North Korean leader Kim Jong Un branded the South its "undoubted enemy".
"No," Biden said when asked by reporters at the White House if he was currently discussing joint nuclear exercises with South Korea. He had just returned from a vacation in the U.S. Virgin Islands, where he was accompanied by his national security adviser, Jake Sullivan.
Yoon's comments, in a newspaper interview published on Monday, followed his call for "war preparation" with an "overwhelming" capability, after a year of a record number of North Korean missile tests and the intrusion of North Korean drones into the South last week.
"The nuclear weapons belong to the United States, but planning, information sharing, exercises and training should be jointly conducted by South Korea and the United States," Yoon said in the interview with the Chosun Ilbo newspaper.
The newspaper quoted Yoon as saying the joint planning and exercises would be aimed at a more effective implementation of the U.S. "extended deterrence" and that Washington was also "quite positive" about the idea.
The term "extended deterrence" means the ability of the U.S. military, particularly its nuclear forces, to deter attacks on American allies.
The United States has long had an extended deterrence dialogue with Japan to talk about nuclear issues and initiated the same dialogue with South Korea in 2016, said Thomas Countryman, the former acting undersecretary of state for arms control, who chaired the dialogue's first meeting.
"It's not immediately clear what in President Yoon's statement is new and what is a rephrasing of things that are already happening," Countryman said on Monday in a phone interview.
Now board chairman of the Arms Control Association, Countryman said Yoon's comments, directed at the South Korean people, appeared to be in response to what Countryman called North Korea's provocations and rhetoric.
"I do see this as an effort by both President Yoon and the Biden administration to reassure the government and the people of South Korea, that the U.S. commitment remains solid."
Yoon's remarks were published a day after North Korean state media reported that its leader Kim had called for developing new intercontinental ballistic missiles (ICBMs) and an "exponential increase" of the country's nuclear arsenal.
At a meeting of the ruling Workers' Party last week, Kim said South Korea had become the North's "undoubted enemy" and rolled out new military goals, hinting at another year of intensive weapons tests and tension.
Inter-Korean ties have long been testy but have been even more frayed since Yoon took office in May, promising a tougher stance on the North.
On Sunday, North Korea fired a short-range ballistic missile off its east coast, in a rare late-night, New Year's Day weapons test, following three ballistic missiles launched on Saturday.
The North's official KCNA news agency said the projectiles were fired from its super-large multiple rocket launcher system, which Kim said "has South Korea as a whole within the range of strike and is capable of carrying tactical nuclear warheads." (Reuters)
January
Dollar set for biggest one-day gain in three months, equities rally
Written by Nur Yasmin
The dollar headed for its largest one-day rise in over three months on Tuesday, while equities rallied in a macro-packed week that could offer a steer on when, and at what level, U.S. interest rates might peak.
The MSCI All-World index (.MIWD00000PUS) was roughly unchanged, although European stocks, led by hefty gains in anything from financials, to oil and gas stocks, to healthcare, bounced to two-week highs.
Typically, stocks tend to fall when the dollar gains, but that negative correlation between the two softened on Tuesday to its weakest since early September. The dollar index was last up 1% at 104.69.
The euro was the worst-performing currency against the dollar , falling by the most since late September, after German regional inflation data showed consumer price pressures eased sharply in December, thanks in large part to government measures to contain natural gas bills for households and businesses.
Data on U.S. payrolls this week are expected to show the labour market remains tight, while EU consumer prices could show some slowdown in inflation as energy prices ease.
"Energy base effects will bring about a sizeable reduction in inflation in the major economies in 2023, but stickiness in core components, much of this stemming from tight labour markets, will prevent an early dovish policy 'pivot' by central banks," analysts at NatWest Markets wrote in a note.
They expect interest rates to top out at 5% in the United States, 2.25% in the EU and 4.5% in Britain and to stay there for the entire year. Markets, on the other hand, are pricing in rate cuts for late 2023, with fed fund futures implying a range of 4.25 to 4.5% by December.
"The thing that makes me nervous about this year is that we still do not know the full impact of the very significant monetary tightening that's taken place across the advanced world," Berenberg senior economist Kallum Pickering said.
"It takes a good year, or 18 months, for the full effect to kick in," he said.
Central banks have expressed concern about rising wages, even as consumers have struggled to keep up with the soaring cost of living and companies are running out of room to protect their profitability by raising their own prices.
But, Pickering said, the labour market tends to lag the broader economy by some time, meaning that there is a risk that central banks could be raising interest rates by more than the economy can withstand.
"What central banks are inducing is essentially excess cyclicality, which is - they overstimulated in 2021 and triggered an inflationary boom and then overtightened in 2022 and triggered a disinflationary recession. It’s exactly the opposite of what you want central banks to do," he said.
Investors will get their first insight into central bank thinking later this week when the Federal Reserve releases the minutes from its December policy meeting.
The minutes will likely show many members saw risks that interest rates would need to go higher for longer, but investors are conscious of how much they've risen already.
On the markets, European shares rose thanks to gains in classic defensive sectors, such as healthcare and food and beverages. Drugmakers Novo Nordisk (NOVOb.CO), Astrazeneca (AZN.L) and Roche (ROG.S) were among the biggest positive weights on the STOXX 600 (.STOXX), along with Nestle (NESN.S)
The STOXX, which lost 13% in 2022, rose 1.1%. The FTSE 100 (.FTSE), the only major European index not to trade on Monday, rose 1.3%.
U.S. stock index futures gained between 0.4-0.5% , , pointing to an upbeat start at the opening bell.
Markets have for a while priced in an eventual U.S. easing, but they were badly wrong-footed by the Bank of Japan's shock upward shift in its ceiling for bond yields.
The BOJ is now considering raising its inflation forecasts in January to show price growth close to its 2% target in fiscal 2023 and 2024, according to the Nikkei.
Such a move at its next policy meeting on Jan. 17-18 would only add to speculation of an end to ultra-loose policy, which has essentially acted as a floor for bond yields globally.
The policy shift has boosted the yen across the board, with the dollar losing 5% in December and the euro 2.3%.
The yen took a breather on Tuesday, easing 0.3% against the dollar to 130.96. The dollar earlier touched a six-month low of 129.52 yen . Against the dollar, the euro fell 1.1% to $1.05395, having dropped by as much as 1.4% earlier in the day.
"A theme we’ve often noticed is the euro's negative seasonality in January, down around 1.3% since 1980 on average in January, with a 64% hit ratio. If history is any guide, it’s a rough month for euro longs," Nomura strategist Jordan Rochester said.
Oil succumbed to the strength of the dollar, and reversed course, falling as concern about demand in China, the world's second largest economy, added to the downward momentum.
A batch of surveys have shownChina's factory activity shrank at the sharpest pace in nearly three years as COVID infections swept through production lines.
"China is entering the most dangerous weeks of the pandemic," warned analysts at Capital Economics.
Brent crude lost 0.9% to trade around $85.15 a barrel, having hit a session high of $87.00 earlier on. (reuters)
January
Britain opens nuclear fuel fund with aim to cut reliance on Russia
Written by Nur Yasmin
Britain said on Monday its 75-million-pound ($90.5 million) fund aimed at helping boost domestic production of nuclear fuel for power plants and cutting reliance on Russian uranium supplies was now open for applications.
The fund, announced in July, will award grants to businesses involved in uranium conversion, a key stage in the process of creating nuclear fuel from the metal. It will remain open for applications from Monday until Feb. 20.
Russia currently owns around 20% of global uranium conversion capacity.
"Record high global gas prices, caused by Putin's illegal invasion of Ukraine, have highlighted the need for more home-grown renewable energy, but also UK generated nuclear power – building more plants, and developing domestic fuel capability," Minister for Energy and Climate Graham Stuart said.
Up to 13 million pounds from the fund has already been awarded to the Springfields nuclear fuel manufacturing site in northwest England, the government said.
Energy supply has become a key focus since its invasion of Ukraine drove costs sharply higher. Planned additions to nuclear electricity generation capacity will reduce Britain's reliance on natural gas, which fuelled around 45% of generation in 2021.
Britain in November said it would become a 50% shareholder in the Sizewell C nuclear project by providing 700 million pounds in funding to the plant, which is planned for southeast England. (Reuters)
January
EU to discuss coordinated response to China COVID situation on Wed
Written by Nur Yasmin
European Union government health officials will hold talks on Wednesday on a coordinated response to the surge in COVID-19 infections in China, the Swedish EU presidency said on Monday, after December talks concluded with no decisions on the matter.
At a similar meeting on Dec. 29, held online among over 100 representatives from EU governments, EU health agencies and the World Health Organisation, Italy urged the rest of the EU to follow its lead and test travellers from China for COVID, with Beijing poised to lift travel restrictions on Jan. 8.
But others in the 27-nation EU said they saw no need to do so despite China's decision to loosen its pandemic restrictions amid a wave of new infections.
"There is a scheduled Integrated Political Crisis Response meeting on Wednesday, January 4, for an update of the COVID-19 situation in China and to discuss possible EU measures to be taken in a coordinated way," a spokeswoman for the Swedish presidency of the EU said.
The European Health Commissioner Stella Kyriakides said in a letter to EU governments on Dec. 29 they should consider immediately scaling up genomic sequencing of COVID-19 infections and monitoring of waste water, including at airports, to detect any new variants, given the surge in infections in China.
Kyriakides said the bloc should be "very vigilant" as reliable epidemiological and testing data for China were scarce, advising EU health ministers to assess their current practices on genomic sequencing of the coronavirus "as an immediate step".
The European Centre for Disease Prevention and Control said last week it did not currently recommend measures on travellers from China.
It said the variants circulating in China were already in the European Union, that EU citizens had relatively high vaccination levels and the potential for imported infections was low compared to daily infections in the EU, with healthcare systems currently coping. (Reuters)
January
Global economy faces tougher year in 2023, IMF's Georgieva warns
Written by Nur Yasmin
For much of the global economy, 2023 is going to be a tough year as the main engines of global growth - the United States, Europe and China - all experience weakening activity, the head of the International Monetary Fund said on Sunday.
The new year is going to be "tougher than the year we leave behind," IMF Managing Director Kristalina Georgieva said on the CBS Sunday morning news program "Face the Nation."
"Why? Because the three big economies - the U.S., EU and China - are all slowing down simultaneously," she said.
In October, the IMF cut its outlook for global economic growth in 2023, reflecting the continuing drag from the war in Ukraine as well as inflation pressures and the high interest rates engineered by central banks like the U.S. Federal Reserve aimed at bringing those price pressures to heel.
Since then, China has scrapped its zero-COVID policy and embarked on a chaotic reopening of its economy, though consumers there remain wary as coronavirus cases surge. In his first public comments since the change in policy, President Xi Jinping on Saturday called in a New Year's address for more effort and unity as China enters a "new phase."
"For the first time in 40 years, China's growth in 2022 is likely to be at or below global growth," Georgieva said.
Moreover, a "bushfire" of expected COVID infections there in the months ahead are likely to further hit its economy this year and drag on both regional and global growth, said Georgieva, who traveled to China on IMF business late last month.
"I was in China last week, in a bubble in a city where there is zero COVID," she said. "But that is not going to last once people start traveling."
"For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative," she said.
In October's forecast, the IMF pegged Chinese gross domestic product growth last year at 3.2% - on par with the fund's global outlook for 2022. At that time, it also saw annual growth in China accelerating in 2023 to 4.4% while global activity slowed further.
Her comments, however, suggest another cut to both the China and global growth outlooks may be in the offing later this month when the IMF typically unveils updated forecasts during the World Economic Forum in Davos, Switzerland.
U.S. ECONOMY 'MOST RESILIENT'
Meanwhile, Georgieva said, the U.S. economy is standing apart and may avoid the outright contraction that is likely to afflict as much as a third of the world's economies.
The "U.S. is most resilient," she said, and it "may avoid recession. We see the labor market remaining quite strong."
But that fact on its own presents a risk because it may hamper the progress the Fed needs to make in bringing U.S. inflation back to its targeted level from the highest levels in four decades touched last year. Inflation showed signs of having passed its peak as 2022 ended, but by the Fed's preferred measure, it remains nearly three times its 2% target.
"This is ... a mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down," Georgieva said.
Last year, in the most aggressive policy tightening since the early 1980s, the Fed lifted its benchmark policy rate from near zero in March to the current range of 4.25% to 4.50%, and Fed officials last month projected it will breach the 5% mark in 2023, a level not seen since 2007.
Indeed, the U.S. job market will be a central focus for Fed officials who would like to see demand for labor slacken to help undercut price pressures. The first week of the new year brings a raft of key data on the employment front, including Friday's monthly nonfarm payrolls report, which is expected to show the U.S. economy minted another 200,000 jobs in December and the jobless rate remained at 3.7% - near the lowest since the 1960s. (Reuters)