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China plans $411bn private treasury bond issuance in 2025

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Chinese authorities have approved a record issuance of 3 trillion yuan ($411 billion) in private treasury bonds for 2025, according to two sources cited by Reuters. The move signals Beijing’s commitment to using fiscal stimulus to address economic stagnation.

This represents a significant increase from the 1 trillion yuan issued this year and coincides with preparations for potential tariff hikes on Chinese imports as Donald Trump is expected to reassume the U.S. presidency in January.

The proceeds will target initiatives such as consumer subsidies, business equipment upgrades, and investments in innovation-driven sectors. According to the sources, who spoke anonymously due to the sensitivity of the issue, the plan underscores China’s proactive approach to offsetting deflationary pressures.

Officials from the State Council Information Office, Ministry of Finance, and National Development and Reform Commission (NDRC) did not immediately comment on the development.

Following the announcement, yields on China’s 10-year and 30-year treasury bonds rose by 1 basis point and 2 basis points, respectively. The planned issuance, the largest on record, demonstrates Beijing’s willingness to expand borrowing to stabilize the world’s second-largest economy.

China generally reserves ultra-long-term corporate bonds for extraordinary circumstances, reflecting the significance of this initiative.

Approximately 1.3 trillion yuan from the new issuance will fund “two major” and “two new” programs: A consumer subsidy program to encourage trade-ins for new vehicles and appliances, subsidies for large-scale business equipment upgrades, and infrastructure projects in critical sectors, including railways, airports, and farmland.

The NDRC reported that 70% of the proceeds from this year’s bond issuance funded major projects, while the remainder supported new schemes.

Another significant portion, exceeding 1 trillion yuan, will drive investments in advanced manufacturing, including electric vehicles, robotics, semiconductors, and green energy. Additionally, funds will recapitalize state-owned banks struggling with shrinking margins, declining profits, and rising non-performing loans.

The issuance will account for 2.4% of China’s 2023 GDP. For comparison, Beijing’s 2007 issuance of 1.55 trillion yuan represented 5.7% of GDP at the time.

The announcement follows the annual Central Economic Work Conference, where President Xi Jinping and senior officials outlined economic plans for 2025. The state media summary emphasized “steady economic growth,” raising the fiscal deficit ratio, and increasing government debt issuance, without detailing figures.

Recent Reuters reports indicate China may raise its budget deficit to a record 4% of GDP and aim for an economic growth target of around 5% next year.

China’s economy faces multiple headwinds, including a protracted property crisis, rising local government debt, and weak consumer demand. Exports, traditionally a growth driver, risk new U.S. tariffs of over 60%, threatening another economic lifeline.

Domestic consumption remains subdued, with households grappling with falling property values and minimal social safety nets. To counter weak demand, Beijing plans to expand its consumer and industrial equipment swap programs to more products and sectors.

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South Korean opposition leader Lee Jae-myung acquitted in election law case

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A court in South Korea on Wednesday overturned a lower court’s decision, ruling that the main opposition party leader is not guilty of violating election law. If this decision is upheld, it will pave the way for him to run in the next presidential election.

Prosecutors can appeal the decision, which could take the case to the Supreme Court, South Korea’s highest judicial body.

Speaking outside the court after the ruling was announced, Lee Jae-myung thanked the court for the decision, which he described as “the right decision.”

The charges against Lee stem from remarks he made in 2021 while competing in his party’s presidential primary, where he allegedly denied knowing one of the key figures in a real estate development scandal. The scandal involved a redevelopment project in Seongnam city, where Lee was mayor. Prosecutors allege Lee lied about his relationship with businessman Kim Moon-ki to conceal his own culpability in the real estate deal.

Immediately after the court’s decision was announced, Kweon Seong-dong, leader of the ruling People Power Party, called the ruling “regrettable” and urged the Supreme Court to quickly decide the case.

Lee, a trained lawyer and experienced politician, lost the 2022 presidential election by the narrowest margin in South Korea’s democratic history to now-impeached President Yoon Suk Yeol.

Yoon, Lee’s fierce rival, is awaiting a Constitutional Court ruling on his impeachment over charges of leading an insurrection in December. Lawmakers voted to impeach Yoon following his attempt to declare martial law in early December, which he claimed was necessary to protect South Korea from opposition “anti-state forces.” The measure was quickly rejected in the National Assembly, but the attempt triggered a political crisis that continues months later.

The Constitutional Court completed hearings on Yoon’s case late last month and is expected to deliver its verdict within days, although no official date has been announced. If the court finds Yoon not guilty, he will be immediately reinstated. If found guilty, an early election will be held within 60 days.

Data released last week by polling firm Gallup Korea showed Lee as the leading choice among potential candidates for the next presidential election. Lee, with a support rate of 36%, was far ahead of the number 2 likely candidate, conservative Labor Minister Kim Moon-soo.

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Beijing’s energy rules threaten Nvidia H20 chip sales in China

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Beijing has introduced energy efficiency rules for the use of advanced chips that, if strictly enforced, would prevent Chinese companies from buying Nvidia’s best-selling processors in the country.

According to documents reviewed and analyzed by the Financial Times, China’s top economic planner, the National Development and Reform Commission (NDRC), is advising Chinese groups to use chips meeting strict requirements in new data centers and expansions of existing facilities.

The documents indicate that Nvidia’s H20 chip—less powerful than its top-tier graphics processing units but tailored for Washington’s export controls—currently fails to meet the commission’s new rules.

Two people familiar with the matter told the Financial Times that the Chinese regulator has quietly discouraged the country’s tech giants, including Alibaba, ByteDance, and Tencent, from purchasing H20 chips for several months.

They added that the rules are not strictly enforced and have not yet impacted sales of H20 chips in China, which continue to experience strong demand.

However, stricter enforcement by the commission could threaten Nvidia’s $17 billion annual business in the country.

As China accelerates data center construction, the US chipmaker risks losing orders to domestic rivals like Huawei, whose offerings better align with Beijing’s green agenda.

Nvidia is attempting to arrange a meeting between its senior executives and commission chair Zheng Shanjie in the coming months to ease tensions, according to a person familiar with the plans.

These restrictions, introduced by the NDRC last year but not previously reported, emerge amid rising US-China trade tensions as both nations compete to develop advanced artificial intelligence.

Beijing is encouraging local companies to reduce their dependence on products from foreign groups like Nvidia, whose graphics processing units are crucial for developing AI models.

Because these restrictions apply only to data centers under construction, some companies are attempting to circumvent them by replacing older chips in existing facilities with H20s, according to people familiar with the matter.

One source noted that non-compliance could trigger on-site inspections and subsequent fines, an outcome most Chinese companies are keen to avoid.

To address this challenge, Nvidia has prepared adjustments for its H20 chips to meet NDRC requirements. However, these technical changes would likely reduce the chip’s efficiency and harm its competitiveness in the Chinese market.

The commission’s stance sends a tense signal regarding Beijing’s position towards US chip giant Nvidia amidst the high-stakes technological competition between Washington and Beijing.

The H20 chip, Nvidia’s flagship product in China, was approved for sale after the US tightened export controls in October 2023.

Tech giants from Alibaba to Tencent aggressively increased H20 chip orders this year following the launch of DeepSeek’s efficient reasoning model, which spurred an AI boom in the country, according to a person familiar with the matter.

This surge in orders coincided with expectations of further restrictions on Nvidia’s chip sales to China. Bloomberg reported in January that Washington was exploring additional restrictions potentially covering the H20 chip.

Meanwhile, China’s State Administration for Market Regulation reportedly launched an antitrust investigation in December, probing whether Nvidia withheld chip sales from Chinese customers even before the US export ban took effect in late 2022.

According to Nvidia’s fiscal year 2025 annual report, China represents Nvidia’s fourth-largest market, generating $17.1 billion in revenue and accounting for 13% of its total sales.

Nvidia stated, “Our products deliver leading energy efficiency and value in every market we serve,” adding, “As technology rapidly advances, export control policy should be adjusted to allow US firms to offer the most energy-efficient products possible while also enabling the Administration to achieve its national security goals.”

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Yoon’s impeachment delay: Legal rigour or political deadlock?

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In South Korea, anticipation continues to build each week regarding the impeachment trial of Yoon Suk Yeol. Key factors contributing to the delay in finalizing the case include the intricate political and legal landscape, the Constitutional Court’s meticulous decision-making process, and profound societal polarization.

Following his declaration of short-lived martial law on December 3, 2024, Yoon was suspended from office by the National Assembly on December 14, 2024. He was subsequently detained at his residence before being imprisoned on January 15, 2025. This incident, widely viewed as a grave threat to South Korea’s democratic institutions, triggered the initiation of impeachment proceedings. However, the process requires a final ruling from the Constitutional Court, which has yet to be delivered.

A primary reason for the delay is the Constitutional Court’s comprehensive review. The court is meticulously assessing the ‘sedition’ accusations against Yoon concerning his martial law declaration and determining whether he violated his constitutional duties. The court has a 180-day window to render its decision, a period utilized for gathering evidence, hearing witness testimony, and conducting detailed analyses of legal arguments. Yoon’s defense contends that the martial law declaration was a legitimate measure to ‘combat anti-state elements’ and was not intended to establish full military rule. Conversely, the opposition and numerous legal experts assert that this action violated the constitution and constitutes sedition. The court is adopting a cautious approach, prioritizing thoroughness over speed in resolving these conflicting claims.

A second factor relates to the court’s current composition. Typically comprising nine judges, the Constitutional Court is currently operating with eight members. A ruling requires the concurrence of at least six judges. This composition potentially complicates consensus-building and could prolong the deliberation process. Furthermore, Yoon’s case is poised to set a significant precedent, being the first instance in South Korean history where a head of state faces both impeachment and sedition charges simultaneously. This unique situation compels the court to proceed with heightened caution.

Societal polarization is also influencing the proceedings. Significant tension exists between Yoon’s supporters and opponents, with both factions attempting to influence the court through public demonstrations. For instance, Yoon’s supporters demand his release, while his opponents advocate for his prompt removal from office. This societal pressure potentially complicates the court’s ability to maintain impartiality and could contribute to delays in the judgment.

Whether Yoon Suk Yeol committed a constitutional offence remains a central question before South Korea’s Constitutional Court. This question lacks a definitive legal and political answer as the court has not yet rendered its final judgment. However, examining the National Assembly’s indictment, which initiated the impeachment, and the available information regarding Yoon’s actions can help clarify the matter.

Yoon’s actions and the allegation of constitutional offence

On December 3, 2024, Yoon Suk Yeol declared martial law, citing the need to combat North Korean-backed ‘anti-state elements’. This declaration was unanimously rescinded by the National Assembly within hours, prompting Yoon to retract his order. According to the South Korean Constitution (Article 77), martial law may only be declared during war, armed conflict, or similar national emergencies threatening national security, and it remains subject to National Assembly oversight. Yoon’s declaration was widely deemed unconstitutional because it lacked concrete evidence of war or an immediate threat justifying such an extreme measure.

Furthermore, the deployment of military troops to the National Assembly building during the brief martial law period, along with attempts to curtail media and political activities, are viewed as violations of fundamental constitutional rights, such as freedom of expression and the legislature’s power. Article 7 of the Constitution underscores that public officials are accountable to the populace and must not abuse their authority. The opposition contends that Yoon’s actions amount to ‘rebellion’ (Article 87) or an attempt to ‘suspend the constitution,’ both considered grave constitutional offences.

Contents of the indictment

  • Violation of the Constitution: The indictment claims the martial law declaration lacked legal basis and threatened the constitutional order. It alleges Yoon attempted to establish unilateral rule by circumventing parliamentary authority.
  • Sedition Offence: It asserts that Yoon targeted democratic institutions, particularly the National Assembly, using military force, actions fitting the definition of ‘internal rebellion.’ This offence carries severe penalties under the South Korean Penal Code (Article 87).
  • Abuse of Authority: Yoon’s failure to provide concrete evidence justifying martial law based on ‘anti-state elements’ is presented as proof of arbitrary use of power.
  • Attack on Democratic Processes: Actions taken to obstruct parliamentary functions and suppress media freedom are cited as violations of constitutional rights.

Yoon and his legal team argue the martial law declaration was not a constitutional offence but an ‘extraordinary measure’ necessary for protecting national security. Yoon maintains he did not institute full military rule, but merely issued a warning against ‘internal threats’. Furthermore, the swift rescission of martial law is presented as evidence that he lacked intent to suspend the constitution entirely.

Impeachment precedents in South Korean politics

Impeachment trials for heads of state are infrequent but significant milestones in South Korea’s democratic history. Prior to Yoon Suk Yeol’s 2024 impeachment proceedings, two previous attempts offer relevant context: Roh Moo-hyun (2004) and Park Geun-hye (2016-2017). These cases may serve as precedents for Yoon’s situation regarding both procedural aspects and potential outcomes.

The 2004 impeachment attempt against Roh Moo-hyun, a prominent Democratic leader, provides a key precedent.

Roh Moo-hyun faced impeachment after openly expressing support for his Uri Party (Open Party) ahead of the 2004 general elections, drawing criticism from the opposition for violating presidential impartiality. He was accused of violating election laws and abusing his authority. The National Assembly voted 191 to 2 to impeach him. The case then went before the Constitutional Court. The court acknowledged that Roh’s actions constituted constitutional violations but ruled they were not ‘grave’ enough to justify removal from office. Roh enjoyed significant public support at the time, and street protests exerted pressure in his favor. The Constitutional Court ultimately rejected the impeachment in a 6-3 decision, and Roh was reinstated. This ruling established a precedent, demonstrating the high threshold required for a ‘grave constitutional violation’ warranting impeachment. Consequently, Roh’s case remains the sole instance in South Korea where an impeached head of state was returned to office. Compared to Yoon’s situation, Roh’s case involved less severe charges, lacking accusations related to military force deployment or ‘sedition’.

A more recent comparison involves the 2016-2017 impeachment of Park Geun-hye.

Park was impeached by the National Assembly on December 9, 2016, and subsequently removed from office by a Constitutional Court ruling on March 10, 2017. Park faced accusations of allowing her close confidante, Choi Soon-sil, to illicitly interfere in state affairs, sharing confidential documents, accepting bribes, and abusing presidential authority. The scandal centered on allegations that Choi solicited millions of dollars from major corporations and that Park was complicit in this corruption network. The National Assembly approved the impeachment motion by a vote of 234 to 56. The Constitutional Court reviewed the case and found that Park had ‘systematically and continuously’ violated her constitutional duties. While Park’s defense maintained her relationship with Choi was purely personal and did not influence state affairs, the court determined that substantial evidence and witness testimony indicated otherwise. Millions participated in street protests throughout the proceedings. The Constitutional Court unanimously (8-0) upheld Park’s impeachment. Subsequently, Park faced a criminal investigation and was sentenced in 2018 to 24 years in prison for offences including bribery and abuse of power.

While Roh’s impeachment centered on political violations, the cases against Park and Yoon involve arguably more severe charges. However, Yoon’s declaration of martial law, involving the potential use of military force against democratic institutions, is widely perceived as representing an even graver constitutional crisis than Park’s scandal.

In conclusion, the final resolution of Yoon Suk Yeol’s impeachment case remains pending due to intricate legal questions, the Constitutional Court’s deliberate approach, and complex socio-political dynamics. While the Constitutional Court’s judgment is anticipated in the near future, possibly within days or weeks, a precise timeline cannot be predicted. This ongoing uncertainty contributes significantly to the political instability currently facing South Korea.

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