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December
Japan's exports pick up on improved autos output, imports hit record
Written by Nur Yasmin
Japan's exports sped up in November, as supply constraints eased slightly for the country's big automakers, although imports hit a record on soaring materials costs, which could hurt household consumption.
The trade data came days after the Bank of Japan's quarterly tankan survey showed an improvement in service-sector sentiment, suggesting robust consumption will support the recovery, although the new Omicron variant and rising costs remain downside risks.
Exports climbed 20.5% in November from a year earlier, government data showed on Thursday, the ninth straight month of increase, slightly missing forecasts for a 21.2% gain but well up on a 9.4% rise in the previous month.
Shipments of cars - Japan's No.1 export item - rose 4.1% from a year earlier, marking the first increase in three months, although auto exports to the United States and China decreased year-on-year.
"The jump in exports in November suggests that most supply chain constraints in the automobile sector had already eased last month," said Tom Learmouth, Japan economist at Capital Economics.
"Exports will remain strong over the coming months as motor vehicle exports recover further and external demand for capital goods continues to rise."
Other than cars, growing shipments of steel, semiconductor equipment and chips contributed the most to the increase, a government official said.
Shipments to China, Japan's biggest trade partner, increased 16.0% year-on-year, the data showed.
Imports rose 43.8% year-on-year in November to 8.32 trillion yen ($72.87 billion), the largest yen amount since comparable data became available in January 1979 and jacked up by a 144.1% rise in fuels such as oil, LNG and coal.
Imports growth accelerated from 26.7% in October and was bigger than economists' forecast of 40.0%.
That brought a trade deficit of 954.8 billion yen, the biggest shortfall since January 2020 and exceeding the median estimate for a 675.0 billion yen deficit.
"While the weak yen has certain benefits such as boosting exporters' competitiveness and inbound tourists' spending, more Japanese manufacturers have shifted production bases offshore and COVID-19 border controls shut out tourists now," said Masato Koike, senior economist at Dai-ichi Life Research Institute.
"Rising costs are weighing on Japan when a weak yen has less impact on increasing sales of goods and services."
The BOJ's latest tankan survey on Monday showed rising raw material costs clouding the corporate and economic outlook. BOJ governor Haruhiko Kuroda said on Wednesday inflation may approach its elusive 2% target.
However, the central bank is unlikely to change its easy monetary policy at its next rate review on Friday.
The world's third-largest economy is expected to post strong growth in October-December after a contraction in the third quarter, as household spending improved on low COVID-19 infections. (Reuters)
December
Top central banks will on Thursday unveil policy moves to steer their economies through rising turbulence from the pandemic and high inflation, with some set to keep money cheap into 2022 even as the U.S. Federal Reserve tightens.
The Fed on Wednesday doubled the pace at which it will cut bond purchases, while forecasts from its policymakers signalled as many as three interest rate increases next year. read more
Which of its peers are ready to follow will become clear in the next 24 hours, with a string of meetings at the Bank of England, European Central Bank, the Bank of Japan and others. read more
Of those three, however, only the BoE is likely to take more than a baby step in trimming the monumental support provided to its economy through the pandemic.
That could set the stage for a choppy 2022, with the Fed determined to end its asset purchases as fast as possible and kick off interest rate rises soon after, and others more hesitant to shift so decisively in that direction.
Earlier on Thursday the Swiss National Bank kept its ultra-loose stance in place with a policy rate locked in at -0.75%. Swiss inflation - while rising - is still seen much lower than elsewhere at just 1% next year, falling to 0.6% in 2023.
"The SNB is maintaining its expansionary monetary policy," it said in a statement. "It is thus ensuring price stability and supporting the Swiss economy in its recovery from the impact of the coronavirus pandemic." read more
Norway's central bank, which had hiked in September on the back of an economic rebound, went ahead with a further rise as expected and said more were likely to follow. read more
Eyes now turn to the BoE, which at 1200 GMT could become the first of the big central banks to raise interest rates. Yet the United Kingdom is also where friction between the fast-spreading Omicron variant and inflation is playing out most vividly.
UK daily coronavirus infections are at their highest since the earliest days of the pandemic, forcing Prime Minister Boris Johnson this week to impose new restrictions.
A first read-out of the Purchasing Managers' Index (PMI) for December on Thursday showed Omicron had already hit British hospitality and travel firms - a day after data showed consumer price inflation at a decade-high read more
"There is now the real risk of inflation becoming entrenched ... but this is balanced against the threat to the economic recovery from the new Omicron variant," said Ellie Henderson, an economist at bank Investec.
CAUTION, MODESTY
Investors and economists are not expecting anything nearly as bold this week from either the BOJ or ECB - the more so after the preliminary PMI for the euro zone also showed business growth slipping in December. read more
The ECB, which has undershot its inflation target for most of the past decade, is expected to be among the last to tighten policy and debate is focused instead on how to structure a more modest dialling-back of overall stimulus.
The ECB's compromise is likely to be clarity on its policy framework in 2022, with details to be filled in as policymakers gain confidence that inflation, now running at more than twice the bank's 2% target level, comes down quickly in 2022.
What appears certain is that bond buys under a 1.85 trillion euro Pandemic Emergency Purchase Programme will be reduced next quarter then wound down at the end of March. A long-running Asset Purchase Programme, however, will be ramped up, offsetting some of this lost stimulus.
In Japan, the consumer-level inflation that is tearing through other parts of the globe remains largely absent. As such, only a marginal reduction in corporate asset purchases is under discussion at Friday's BOJ meeting.
Even if the others are not hard on the Fed's heels, Powell and the Fed appear to have set the agenda for a tumultuous 2022 as central bankers chart their ways to the exits, albeit at dramatically different paces.
"You saw it in his congressional remarks that were more about tightening sooner than it was about worrying about the health of the global economy," said Vincent Reinhart, chief economist for Dreyfuss & Mellon. The Fed and other central banks are "conveying a sense that they are heading for the exits. Modern central banking is much about managing expectations and they do not want to be seen as behind the curve." (Reuters)
December
China, Solomon Islands must be vigilant against interference, senior diplomat says
Written by Nur Yasmin
China and the Solomon Islands must be vigilant against attempts by "a few countries" to interfere in the internal affairs of other nations, Foreign Minister Wang Yi said on Thursday.
Efforts to subvert the achievement of diplomatic ties between China and the Solomon Islands are doomed to fail, Wang, who is also a state councillor, told Solomon Islands Foreign Minister Jeremiah Manele during a telephone call. (Reuters)
December
Taiwan will support Lithuania in face of intimidation from China, envoy says
Written by Nur Yasmin
Taiwan will deepen economic ties with Lithuania in a "cycle of goodwill" as it faces pressure from Beijing, Taiwan's de facto ambassador to the United States said on Wednesday, after Lithuania's diplomatic delegation hastily departed China.
Beijing downgraded ties with Lithuania in November following Taiwan's opening of a representative office in the Baltic state's capital, and diplomatic sources told Reuters that 19 Lithuanian embassy personnel and their dependents had left Beijing on Wednesday in response to "intimidation."
"It is unfortunate that their diplomats are being intimidated," Hsiao Bi-khim, Taiwan's representative in Washington, told Reuters in an interview.
"We will do what we can in terms of deepening our economic chain and technical cooperation with Lithuania," Hsiao said. "The way we see our partnership with Lithuania, it's a virtuous cycle of goodwill and supporting each other."
Lithuanian authorities said the embassy would operate remotely for the time being.
They have complained of efforts by China to punish Lithuania, including pressuring multinational corporations to not work with Lithuanian companies, following Vilnius' decision to enhance engagement with self-ruled Taiwan, which Beijing claims as a province.
Despite not having formal ties with Taiwan, the United States is Taipei's top backer, and President Joe Biden's administration has been seeking to open more space for the democratically governed island as Beijing seeks to isolate it diplomatically.
Asked if Taiwan still wanted the United States to allow it to symbolically upgrade the name of its presence in Washington from an economic and cultural office to a Taiwan representative office, Hsiao said: "It's the hope and dream of many people of Taiwan that we can be called by our normal, proper name, and it's something that we will continue to communicate with our American partners."
Hsiao said the United States and Taiwan had improved the island's arms procurement process in recent years, shifting from less frequent big-ticket purchases to more regular announcements, part of its defense reforms to deter military action by China.
"What has happened in the last few years is that the U.S. reviews our needs on a case-by-case basis. So, there is no intention to kind of group everything into a political calendar or convenient time," Hsiao said.
She said this was not intended to be less offensive to Beijing, which demands Washington end its weapons sales to Taiwan, but to more quickly respond to the island's needs.
"Given the changing threat picture, whereas in previous decades we would focus on peacetime patrols or capabilities, I think what we are focusing now are those specific capabilities that would deter an actual invasion," Hsiao said.
Despite stepped up support for Taiwan from Washington, a video feed of a Taiwanese minister, Audrey Tang, was cut at Biden's democracy summit last week after a map in her presentation showed Taiwan in a different color to China -- which could be seen as being at odds with Washington's "one-China" policy.
The administration called it a technical glitch not related to policy, though sources told Reuters that U.S. officials had made the move in reaction to the presentation.
Hsiao reiterated that the U.S. government had told Taiwan it was a "technical mistake," adding that it had worked with the U.S. government after the incident to upload Tang's full presentation to the summit website. (Reuters)
December
Private sector overtakes state as North Korea's top economic actor under Kim -S.Korea
Written by Nur Yasmin
The private sector has overtaken state-led agents to become North Korea's biggest economic actor over the past decade, a sign of booming markets allowed by leader Kim Jong Un, South Korea's Unification Ministry said on Thursday.
The ministry, which handles North Korea affairs, released a report on political, economic and social changes during Kim's 10-year rule, based on data from South Korean and U.N. agencies as well as interviews with defectors.
While the isolated country suffered from coronavirus lockdowns and sanctions over its weapons programmes, private activity has grown from about 28% a decade ago to make up nearly 38% of the economy, the ministry said in the report.
Government-led programmes, meanwhile, have shrunk to make up 29% of the economy from 37%, and around 9% was from entities that work in both state and private sectors, up from 7%.
The number of merchants has also soared some fourfold to hit an all-time high at about 1,368 in 2018, from 338 in 2011, before sharply dropping amid economic hardships and the pandemic.
"As marketisation continues, the proportion of private economy is on a long-term upward trend," the ministry said. "People's activities are shaping into a dual way, state and private economy."
North Korea does not answer questions from foreign reporters and its government and state media rarely give insights into economic conditions.
Kim became leader in late 2011, upon the death of his father, Kim Jong Il.
The new leader's approval of markets previously abhorred by his father had helped improved livelihoods for many North Koreans, with its gross domestic product (GDP) rising 3.9% in 2016 - the fastest in 17 years.
But initial progress was overshadowed by sanctions imposed over nuclear and long-range missile tests, a ministry official said, even as Kim vowed to build a self-reliant economy after declaring completion of "state nuclear force" in 2017.
"After all, in order to achieve sustainable economic growth and substantively boost people's livelihoods, they need to shift policy toward denuclearisation and economic cooperation," the official said.
As the pandemic and natural disasters compounded the squeeze, North Korea's GDP suffered its biggest contraction in 23 years in 2020, while crop production hit its lowest level under Kim, at 4.4 million. North Korea's trade with top ally China has plunged more than 90% from its 2014 peak.
This month, Kim warned of a "very giant struggle" next year, and called in October for focusing on improving people's lives despite "grim" economic conditions.
North Korea has not confirmed any COVID-19 infections but shut its borders and tightly restricted public transport and inter-state movement. (Reuters)
December
Most reported U.S. Omicron cases have hit the fully vaccinated -CDC
Written by Nur Yasmin
Most of the 43 COVID-19 cases caused by the Omicron variant identified in the United States so far were in people who were fully vaccinated, and a third of them had received a booster dose, according to a U.S. report published on Friday.
The U.S. Centers for Disease Control and Prevention (CDC) said that of the 43 cases attributed to Omicron variant, 34 people had been fully vaccinated. Fourteen of them had also received a booster, although five of those cases occurred less than 14 days after the additional shot before full protection kicks in.
While the numbers are very small, they add to growing concerns that current COVID-19 vaccines may offer less protection against the highly transmissible new variant.
The Omicron variant of the coronavirus has been found through testing in about 22 states so far after first being identified in southern Africa and Hong Kong in late November.
Among the Omicron cases, 25 were in people aged 18 to 39 and 14 had traveled internationally. Six people had previously been infected with the coronavirus.
Most of them only had mild symptoms such as coughing, congestion, and fatigue, the report said, and one person was hospitalized for two days. Other symptoms reported less frequently including nausea or vomiting, shortness of breath or difficulty breathing, diarrhea and loss of taste or smell.
The CDC said that while many of the first reported Omicron cases appear to be mild, a lag exists between infection and more severe outcomes. Symptoms would also be expected to be milder in vaccinated persons and those with previous SARS-CoV-2 infection.
The first known U.S. Omicron case was identified on Dec 1 in a fully vaccinated person who had traveled to South Africa. The CDC said that the earliest date of symptom onset was Nov. 15 in a person with a history of international travel.
The Delta variant still accounts for more than 99% of all U.S. cases. But reports from South Africa show that the Omicron variant is very transmissible.
Even if most cases are mild, a highly transmissible variant could result in enough infections to overwhelm health systems, the CDC cautioned.
Laboratory studies released this week suggest that the Omicron variant will blunt the protective power of two doses of Pfizer (PFE.N) and BioNTech's COVID-19 vaccine, although a third dose may restore that protection.
The U.S. has authorized COVID-19 vaccine boosterdoses for all Americans age 16 and older. (Reuters)
December
U.S. House approves proposed State Dept anti-Islamophobia office
Written by Nur Yasmin
The U.S. House of Representatives voted on Tuesday to approve a Democratic proposal for a U.S. State Department office to address anti-Muslim bias, after a Republican congresswoman used an Islamophobic slur against a Democratic colleague.
The House backed the bill in a party-line vote of 219-212.
The bill, authored by Representative Ilhan Omar, would create a special envoy for monitoring and combating Islamophobia and include state-sponsored anti-Muslim violence in the department's annual human rights reports.
"We are in the midst of a staggering rise of anti-Muslim violence and discrimination around the world," Omar said on the House floor. "Islamophobia is global in scope and we must lead the global effort to address it."
The House vote comes a few weeks after video emerged showing first-term Republican lawmaker Lauren Boebert calling Omar, a Muslim second-term congresswoman who was born in Somalia, a member of a "jihad squad."
That comment led to calls by Democrats for a vote to strip Boebert of her committee assignments, as well as criticism by fellow Republican Representative Nancy Mace.
Republicans have decried the bill, calling it rushed and partisan.
Debate on the bill stalled for about an hour after Republican congressman Scott Perry accused Omar of being anti-Semitic and affiliated with terrorist organizations. The House chair ruled Perry's words on the House floor impugned Omar's reputation and were inappropriate.
Aides for Senate Democratic leader Chuck Schumer did not respond to requests for comment about the bill. Its fate in that chamber is unclear. (Reuters)
December
Germany says Russia will face 'massive consequences' if it invades Ukraine
Written by Nur Yasmin
New German Foreign Minister Annalena Baerbock said on Tuesday Russia would face "massive consequences" if it invades Ukraine, after a phone call with her Russian counterpart in which she said Kyiv's territory integrity must not be violated.
Baerbock called for "open and honest" dialogue with Russia over the Ukraine crisis during her exchange with Russian Foreign Minister Sergei Lavrov, the German Foreign Ministry said.
The phone call was the first publicly announced contact between Berlin and Moscow since Chancellor Olaf Scholz's coalition government took office last week.
"We want honest and open dialogue," Baerbock's ministry wrote on Twitter after the call. "The territorial integrity of Ukraine must not be violated."
In a subsequent joint press conference in Stockholm where she met her Swedish and Norwegian counterparts, Baerbock said: "Any form of intervention in the sovereignty of Ukraine would have massive consequences for the Russian regime - of an economic and diplomatic nature."
The German Foreign Ministry also called for progress to be made in the so-called Normandy talks on resolving the Ukraine crisis and said visa-free travel for young Russians had also come up in the call, aswell as cooperation on hydrogen.
Statements by each side did not mention the planned Nord Stream 2 pipeline, which would carry Russian natural gas to Germany and bypass Ukraine, but has not been certified due to regulatory hurdles.
Poland and the United States have demanded a halt to the pipeline should Russia invade Ukraine. The new German government has not made a public commitment to block it.
Ukraine accuses Russia of massing around 100,000 troops in preparation for a possible invasion, raising fears that a simmering conflict in Ukraine's eastern Donbass region could erupt into open war between the neighbours.
Russia denies planning any attack but accuses Ukraine and the United States of destabilising behaviour, and has sought security guarantees against NATO's eastward expansion.
Lavrov repeated that demand in his exchange with Baerbock, the Russian Foreign Ministry said in a statement. (reuters)
December
Blinken says U.S. to look at more Myanmar measures, plans ASEAN summit
Written by Nur Yasmin
U.S. Secretary of State Antony Blinken said on Wednesday the United States was looking at what additional steps to take against Myanmar's junta and said Southeast Asian leaders had been invited to hold talks at a summit with President Joe Biden.
He made the comments during a trip to Malaysia, where Foreign Minister Saifuddin Abdullah said the summit invitation would be discussed when counterparts from the Association of Southeast Asian Nations meet on Jan. 19.
"We very much look forward to having a special summit with ASEAN next year," said Blinken, who described the 10-member bloc as "essential to the architecture of the Indo-Pacific region".
Myanmar has been in turmoil since the military overthrew a civilian government led by Nobel laureate Aung San Suu Kyi on Feb. 1, prompting protests and pockets of armed resistance met with violent suppression.
ASEAN has been leading diplomatic efforts to resolve the crisis but some of the bloc's members have expressed frustration about slow progress, leading to Myanmar's military leader being excluded from a recent meeting of the bloc.
"It's important in the weeks and months ahead to look at what additional steps and measures we can take individually and collectively to pressure the regime, to put the country back on a democratic trajectory," Blinken said.
The United States and other Western countries have imposed sanctions on Myanmar's leadership, the military and businesses, and last week brought in new measures. read more
Blinken said the United States continued to "look actively" at whether actions taken in Myanmar might constitute genocide.
More than 730,000 minority Rohingya Muslims fled Myanmar's Rakhine state in August 2017 after a military crackdown that refugees said included mass killings and rape.
Blinken's predecessor, Mike Pompeo, was urged by U.S. officials to formally declare that campaign as genocide, but opted not to, despite years of investigation and analysis, according to a Reuters investigation earlier this year.
Since the coup, the Assistance Association for Political Prisoners (AAPP), a monitoring group cited by the United Nations, says more than 10,900 civilians have been detained and over 1,300 killed by security forces.
The military says the AAPP is biased and uses exaggerated data, and that hundreds of soldiers have also been killed.
As well as discussing the crisis in Myanmar, Blinken said the proposed summit with ASEAN was also expected to cover issues such as the recovery from the COVID-19 pandemic, climate change, investment and infrastructure, he said.
Blinken is on the second leg of a trip through Southeast Asia and on Tuesday in Jakarta he touted a U.S. strategy to deepen its Asian treaty alliances, offering to boost defence and intelligence work with partners in an Indo-Pacific region increasingly concerned over China's "aggressive actions". (Reuters)
December
Lithuanian diplomats leave China as relations sour over Taiwan
Written by Nur Yasmin
Lithuania's diplomatic delegation to China left the country on Wednesday, diplomatic sources said, amid worsening relations over Taiwan which opened a de facto embassy in Vilnius last month.
Lithuania said in a statement it had summoned its top diplomat back from China for "consultations" and that the embassy would operate remotely for the time being.
A diplomatic source told Reuters that all 19 Lithuanian embassy personnel and their dependents had left Beijing en route to Paris.
One diplomatic source familiar with the situation said there were "safety concerns" about the Lithuanian diplomats, and described their leaving as a response to "intimidation".
China's foreign ministry did not immediately respond to a request for comment.
China downgraded diplomatic ties with Lithuania last month, days after the opening of Taiwan's representative office in Vilnius. read more
China earlier told Lithuania that its representation in Beijing was downgraded from an embassy to a charge d'affaires' office, Minister of Foreign Affairs Gabrielius Landsbergis told Reuters.
China views self-ruled and democratically governed Taiwan as its territory and has stepped up pressure on countries to downgrade or sever their relations with the island. (Reuters)