The website of the World Expo 2020 scheduled to be held in Dubai for six months on the broad theme of “Connecting minds, creating the future” proudly mentions that it will be the first time the major event will be held in the region defined as Middle East, Africa and South Asia. The sub themes of the Dubai Expo 2020 are opportunity, mobility and sustainability. The concept of World Expo found expression in 1851 at Hyde Park in London which showcased at the global stage, the industrial prowess of Britain. At present the World Expo is based on an international treaty called the BIE. Created by the 1928 Paris Convention, the Bureau International des Expositions (BIE) is the Paris-based intergovernmental organization in charge of overseeing and regulating World Expos. The BIE governed Expos last more than three weeks and are of non-commercial nature. Today, 4 main types of Expos are organized under its auspices: World Expos, Specialized Expos, Horticultural Expos and the Triennale di Milano. India is not a party to this treaty which currently has 170 member states including China, Germany and the USA.
Since 2018, China has been hosting the CIIE also called China International Import Expo with the clear aim of addressing the huge trade imbalances that exist with her trade partners. In his keynote speech at the opening ceremony of the second edition of the CIIE on 5 November 2019, Chinese President Xi Jinping recalled the efforts taken by his government to further open up to the world and in particular for greater global integration of Shanghai and its nearby region. However in a critical assessment, a survey released on 4 November 2019 by the Shanghai Chapter of the European Union Chamber of Commerce in China revealed that while a good proportion of its members that attended the CIIE in 2018 will be returning this year, there is an expectation that the event must produce more tangible outcomes.
In the area of industrial technology, the Hannover Messe occupies the pole position. It is acknowledged as a trend barometer and innovations driver for a globally and digitally integrated industrial sector. The 2020 fair will for the first time feature a dedicated speaking platform for providers of logistics services, in particular the use of artificial intelligence. The other major element will be data security.In recent years defense expos have acquired much importance. UK’s Defense& Security Equipment International (DSEI) connects governments, national armed forces, industry thought leaders and the global defense& security supply chain. DSEI 2021 will have five key domain-focused Zones: Aerospace, Land, Naval, Security & Joint, all showcasing the latest equipment and systems. Sea-Air-Space – USAs largest maritime expo – will, in April next year, bring the U.S. defense industry and key military decision-makers together for high quality interactions. The biennial IMDEX Asia is Asia Pacific’s premier international maritime defense show and the next one will be held in Changi in Singapore in May 2021. The 11th biennial edition of DefExpo India- 2020 is scheduled to be held for the first time in Uttar Pradesh’s capital Lucknow with the main theme of ‘India: The Emerging Defense Manufacturing Hub’ and focus on ‘Digital Transformation of Defense’.
Very few people would miss the opportunity to go to these Expos and trade fairs. Their relevance for enterprises has been demonstrated through increasing participation with each passing year. For instance, earlier this year Huawei used the platform of the Mobile World Congress 2019 in Barcelona to push hard for its narrative on 5G. Closer home in India media reports carried a quote of an unnamed top official from the Department of Telecom to the effect that Huawei’s participation in the October 2019 Indian Mobile Congress is not an indication of Government of India’s consent to the company’s 5G trials or deployments. Governments at multiple levels-national, provincial and even cities have become enthusiastic participants in these fairs and expos. Similarly international institutions have become a staple presence at these events and speak clearly to the transnational resonance of these gatherings. Especially in the context of smart cities and industry 4.0 these types of engagements are future oriented and hence a pertinent enabler for the next stage of globalization.
Awakened Pakistan Now Needs National Mobilization of Entrepreneurialism
No other time in the history of the nation, a single outsider built so much leadership in a real life and death game as did Captain Imran Khan. How he nationally mobilized the citizenry and delivered a clear message of solidarity to force change in a suddenly imposed government already so deeply rooted in institutionalized corruption.
The real time unfolding drama series has now entered a new episode in the fight for justice in favor of Imran Khan and his exhausted followers. Now, unless the same opposing forces gather more outside aids so the anaconda of deep silence strangles the nation once again in similar fashions lingering since many decades…the citizens and their Captain are finally ready to prove the world wrong.
Pakistan is an independent nation and now at a major crossroad on a do-or-die mission.
The citizens stood together and never surrendered to special interests and corrupt groups but rather now strive for common good and build their nation under such rules as a shining example for a better future of the nation. Many other nations, in other times, have made similar bold decisions, transforming their countries into shiny examples either peacefully or mostly with blood baths.
In either case, this is a moment for historians to note as the most important awakening of a nation to fight corrupt-crypto-tyrannies and equally to recognize the exemplary non-corrupt outsider leadership Imran Khan as a real game changer. Finally, a proof that old political thinking of treating citizens as herds have reached climax, today, a common crowd is a well-informed crowd. Economic success is not exclusive success it must be a success of common good.
This sudden progress is also a stark warning to many other countries;
The extreme powers of digitization and the whispers of the alpha dreamers, the connected five billion commoners who will change the world are still on deaf ears of the political rotundas. Beware; as other nations slowly awakened under their CorruptoChaos, the new realization of truth in hands of the national populace is far more dangerous than any foreign invasions. Old school is dying, a new borderless mind, and interconnected class of commoners rising across the free world.
Observe the world of politics of the so-called free economies; Political science dressed as if sheep not wolf is nothing but fake Machiavellian ghosts playing corrupt games. Digitization across the world, exposing bureaucracies, by the day, competency now lined up as naked obesity in bubble baths on slippery marble floors, some in need of printed currency, some new diaper change and some seeking nukes.
In the coming months, the absence of a nuclear explosion will prove two things; that the common folks have finally pushed their own leadership as incompetent part of the bubble bath party, if not than after the nuke, the dystopian world will hunt them down.
Winning Cricket World Cup: For example, winning a Cricket World Cup is always about the players, the teams and their skills to win; as no amount of money and no promotion can buy such victory, as it is all about the art of the game, artisans and artisanship. Money can buy politicians and their governments but money can never buy an authentic outsider leader and his honest leadership to make his nation win the real game on the global stage.
Pakistan has unique advantages; gifted with special lands, rich diverse resources, from record breaking mountain peaks to seashores, Pakistan has a unique position; already nurtured with a bright youthful nation, vibrant culture buzzes with small and large enterprises, plus the strategic geographic location with China and CPEC are all hidden competitive advantages. Pakistan is finally under an amazing political leadership of Prime Minister Imran Khan and his PTI Party working hard on a new vision for Pakistan with friendlier dialogue and fair-trading.
In order to keep the momentum, national mobilization of entrepreneurialism on digital platforms with authoritative upskilling and reskilling for speedy uplift the small medium business economic sector will bring the most awaited economic recovery to the nation. Congratulations Imran Khan and citizens of Pakistan, long journey ahead. The rest is easy
The Return of Global Inflation: A Threat to Our Interdependent World?
Soaring commodity price has become a major problem in many countries. When poor people are readjusting their monthly budget to address this price hike, shortage are taking place quite often. Even in Bangladesh, the lines for TCB trucks (subsidized government selling points) are getting bigger and bigger every day. The problem became more severe in past couple of days as Indonesia suddenly imposed ban on Soybean oil resulting in a record Soybean oil price in the history of the country. Within only one year, Soybean oil price has reached to 198 Taka from 135 Taka in Bangladesh. At present the current inflation rate is 6.22% officially while SANEM claimed it to be around 12%.
However, Bangladesh is not an isolated case of soaring commodity price at this moment. It seems inflation has emerged as a global problem affecting most economies. In the era of globalization and interconnectedness, this global inflation is posing a severe threat to our interdependence as it is a product of our reckless decisions, war, pandemic, and superpower rivalries.
Complex Interdependence (CI) is a concept of International Relations and International Political Economy. Simply, it is the complex web of economic dependence and relations among the states and institutions which creates a global economy. The concept was first introduced by Robert Keohane and Joseph Nye in the 1970s. The concept became more relevant in later decades when liberalism became the norm and transnational economy flourished through global value chain and global supply chain. Today, we are living in a world where societies and economies are interconnected beyond the borders.
However, though CI promised peace, it also brought weaknesses. Butterfly or ripple effects are becoming stronger than ever. One small change in the international market is affecting others directly or indirectly.
Return of Global Inflation
Inflation has become a global problem for sometimes now. Most countries are already bearing with this problem. Latest data around the world suggest that inflation rate is 8.5% in the USA, 7% in the UK, and 7.8% in the Eurozone in this year. Apart from country specific rates, the global rate is also growing drastically since last year. The current global inflation rate is 9.2% which has been doubled since the last year according to ILO’s statistics. As a result of growing inflation, commodity price has soared all over the world. Almost all commodity prices have soared to a highest level since 2008. By March 2022, global price of raw materials increased at the rate of 16%.The price of important raw materials such as Iron, Steel and Lithium increased by 243%, 250% and 98% than 2021. Since the Ukraine crisis, the oil price has also skyrocketed to more than $100 per barrel. The prediction for near future is also not rosy. The World Bank forecast is suggesting that energy price will soar over 50% in the coming days resulting in the largest commodity shock since the 1970.
However, the situation further worsened as edible oil price soared again due to Indonesia’s ban on export. Indonesia alone supplies 55% of world’s total palm oil while Malaysia is the second largest supplier with 30% stake. As Indonesia suddenly imposed ban on oil export, it has created a concern over global food price. The production of Soybean is also another issue to consider. Latin America is one of the largest producers of Soybean. But this year, the region failed to meet the expected production. As a result, Soybean oil price in Latin America has already reached to $1900 per metric ton by the last week of April- an all-time high in the history. As a consequence, Argentina halted export registration two months earlier, in March 2022.
However, this is not the first time; the price of Soybean is soaring. Since the trade war between the USA and China, the price of Soybean is increasing due to disruption in supply chain as the USA is the largest exporter of Soybean oil and China is the largest importer of it.
As a result of growing inflation, purchasing power of the common people around the world is decreasing. Longer lines in Dhaka’s TCB selling points are the evidences of this claim. Increasing living cost is also impacting saving rates around the world. By April 2022, savings rate in Eurozone dropped to 13.3%- a record low; the rate was 25% in the first quarter of 2020. Moreover, the latest Indian ban on wheat export will also pose new challenge to the livelihood of the common people. It is worthy of mentioning that India is the second largest wheat exporter.
Why it is happening?
The main reason behind this global inflation and commodity crisis is the disruption of supply chain caused by trade war, pandemic and ongoing Ukraine crisis. Though, the inflation has become visible after the pandemic and has been bolstered by the Ukraine crisis, the root of the problem dates back to the trade war between the USA and China in 2018. The trade war disrupted easy flow of goods around the world, creating a spike in price of necessary commodities. Later, lockdowns and restrictions disrupted supply chain for a long time. The stimulus packages and costly pandemic governance have further bolstered the challenges for governments around the world.
And lastly, the ongoing Ukraine war has ‘fanned’ the flames of global inflation. Both Ukraine and Russia are largest suppliers of many essential commodities. The war and sanctions has disrupted the production and supply of these commodities for uncertain times. The countries are suppliers of 12% of world’s total calories. They are also the major exporter of Sunflower oil, Wheat, and Maize. Russia is also one of the major energy suppliers to the world. As sanctions have cut its supply, shortage has also taken place in the market. As a result, in ripple effect coupling with shortage, the war is adversely affecting the international food market.
Why it is threat?
Liberal ideas came with the promises of better life, dignity, and rights. It also developed interconnected and interdependent economy for everyone promising affordability, availability, prosperity, and peace. But after 30 years, it seems this interconnectedness is heavily reliant on superpower’s behaviors while others are powerless. Superpowers’ reckless policies and rivalries are affecting all other countries.
As a result, this global inflation will create adverse notion about liberal thoughts. It will also create mistrust about the existing system and will compel states to pursue inward policies. The growing ‘export ban’ from various major exporters are evidence of pursuing inward policies. Most importantly, the inflation is putting extra burden of common citizens of the world who are struggling to maintain minimum standard of their life. As the inflation is boosting hunger, poverty, and inequality, it will push de-globalization and anti-globalization debate only. Therefore, it will pose a serious threat to interconnectedness.
Solving this global inflation will require time. Several forecasts suggest that the situation is likely to worsen in coming days with a commodity shock on the way. The only way to solve it is through cooperation between state, business, and related actors. Superpowers and hegemon must acknowledge their responsibilities and avoid reckless decisions that affect the others. In domestic aspect, vigilance against cartel businesses, breaking the monopolies, tax cuts, inclusive development, and strengthening institutions are required. And last but not least, in the age of interdependence, conflict is a costly thing to afford; so diplomacy should take precedence over brute force.
Complexities and Contradictions Facing China’s Regulation of Monetary Policy
On April 13, China’s State Council Executive Meeting proposed a specific policy aimed at facilitating further easing of the monetary policy. This involves encouraging major banks of the country with higher provision levels to lower their provision rates in an orderly manner, timely use of reserve requirement ratio cut (RRR cut) and other monetary policy tools, as well as driving the banks to strengthen their credit capacities. The orientation of this policy implies that the country’s monetary policy will continue to enlarge the credit scale in totality, based on individual banks’ situations. On the fundamental of stabilizing the monetary policy, the central bank had implemented RRR cut on numerous occasions, maintaining a condition of moderately loose fluidity. Nevertheless, frequent implementation of the policy of comprehensive RRR cut has resulted in not only the monetary transmission problem of “monetary easing” and “wide credit”, but also the increasingly awkward situations of bearing the base currency delivery function. Meanwhile, the function of RRR cut is reduced to more of preventing the tightening of monetary policy, with increasingly weakened outcome in promoting easing. The proposed policy for major banks to lower provision rates, which the State Council put forward concurrently with the proposed RRR cut, is faced with even more complex situations.
As regards the next stage in implementing the aggregate tool of monetary policy, researchers at ANBOUND are of the view that, in using this tool to achieve precise control, it is imperative to overcome many contradictions, with full cognizance of the complexity of the process.
From the perspective of risk prevention, there are constant disputes as to the feasibility of lowering big banks’ provision coverage. As its preventive measure against financial risks, the financial supervision and regulator dpartment has mandated that banks carry out credit assets provision. As a means of evaluating the sufficiency of commercial banks’ preparedness against loan loss, at present, the banking regulatory body has a set of indices for credit provision rate and provision coverage. The basic standards for the former and the latter are 1.5% – 2.5% and 120%- 150% respectively. As highlighted by Mr. Sun Tianqi, head of the Financial Stability Board of the PBoC, the level of credit provision of commercial banks in China are clearly above international level. The credit coverage of state-owned commercial banks is 225.33% and that of joint-stock banks is 208.41%. In terms of overall credit coverage, it is 245.7% in the case of American G-SIBS, and 67.6% in the case of European G-SIBS. There are differing views which claim that commercial banks in China require improved risk resistance, as these banks are less proficient in risk management, besides having a relatively high level of non-performing assets.
In terms of the objectives of financial risk prevention policy, the economic downturn coupled with the impacts of COVID-19 pandemic in the past few years have seen a relatively large number of banks independently increase their provision accrual strength, with consequent increase in provision coverage. There was an increase in the six major banks’ individual provision coverage in 2021, whereby each bank registered provision coverage of more than 150% by the end of the financial year. Of the six banks, the Postal Savings Bank of China and the Bank of Communications posted the highest and the lowest provision coverage of 418.61% and 166.50% respectively. In the case of the latter bank, there was a 22.63 percentage point increase compared to 2020 year-end. The Industrial and Commercial Bank of China posted a provision balance exceeding RMB 600 billion, and the first-time return to a provision coverage beyond 200% in 7 years – at 205.84%, which is an increase of 25.16 percentage point compared to 2020 year-end. With a provision balance of RMB 700 billion, the Agricultural Bank of China saw its provision coverage increase by 33.53 percentage point from that of 2020 year-end to 299.73%. Just as the big banks, a relatively large number of small- and medium-sized banks posted high provision coverage. According to data, as of end of the financial year 2021, the provision coverage of each of the following banks exceeded 400%: Changshu Rural Commercial Bank; Bank of Ningbo; China Merchants Bank; Zhangjiagang Rural Commercial Bank; and Bank of Suzhou. Banks that posted provision coverage exceeding 300% are Xiamen Bank; Rural Commercial Bank; Jiangyin Rural Commercial Bank; and Bank of Jiangsu. Some scholars opined, from conservatively macro and supervisory perspectives, that banks should capitalize on the existing situation that is beneficial to profit-making, to do more in terms of provision and supplementary capital, in preparation for any future financial risks. From the perspective of individual banks’ development and operations, by planning ahead during economic downturn, banks will be able to establish and boost public confidence in them.
There are varied opinions concerning banks’ move to increase provision level. Many in the market view this measure taken by the big and medium-sized banks as an instrument for “hidden profits” under the current circumstances. In recent years, with the policy requires commercial banks to expand credits as a form of support for the economy, many major and medium-sized banks have witnessed enlargement of their asset size and profits. This situation of banks providing overly high level of provision has attracted criticisms and skepticism, where the banking industry is seen as profiteering and negatively impacting economic development. This line of opinion perhaps constitutes part of the background to the introduction of the policy concerned.
There are two sides to the implication of banks’ lowering of provision level. On the one hand, such measure allows for expansion of leverage size and credit. On the other hand, there is the possibility for risk resistance to decline. For the overall financial market, encouraging banks to voluntarily lower the provision rate is helpful for accomplishing the effects of indirect PPP cut. In the short term, this leads to expansion of credit scale and enhanced capital efficiency within the liquidity environment. In the long term, however, the measure poses underlying concerns, especially when the economic environment is not conducive, and if the quality of the new credit assets is not well-controlled. The scenario is one where there would be cumulative non-performing assets, increased banking risks and inherent threats to long-term financial stability. As compared to the effects of PPP cut, expanding credit scale through the promotion of self-adjustment on the part of banking institutions implies an imperative: that banks and financial institutions alike must explore their potential, for enhancement in their efficiency, asset structure, and management. The desirable outcomes are not easily achievable in the short term. Under such circumstances, lowering the provision rate requires individual banks to confront their specific conditions and be allowed room to adopt measures that are in line with their respective situations. This indicates that it is not feasible to adopt a unified, mandatory provision-reduction measure. The future implication is twofold. First: big and medium-sized commercial banks are anticipated to operate based on their individual benefits and operational needs while maintaining room for negotiation with the central bank. Second: the effects of the existing introductory policy will be greatly reduced.
Under the untoward conditions of the economic and credit environments, banks effectively lack initiatives to expand credits. Whether it is PPP cut or lowering provision rate, it is necessary for banks to overcome the contradiction between credit crunch and monetary easing. As for realization of the “individually-based” monetary policy, there remains the need for banks to consider the complexities involved in the implementation process. There is also the need to integrate and coordinate between the structural and aggregate policies, as a systemic, loose means of supporting the economy.
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