Connect with us

ASIA

China promotes peace and work for economic stability in Afghanistan

Published

on

China has been the main supporter of Afghanistan since decades. Even during the invasion of Afghanistan, China had played a key role in promoting peace and initiated several infrastructure projects to uplift the fragile economic situation of the country. Moreover, a new chapter has been opened in relation between Afghanistan and China as well as between Afghanistan and Pakistan after the regime changed. The ties between the three neighbors seemed unprecedentedly boosted after the victory of the Taliban in August 2021 when the foreign troops accepted defeat and made a hasty withdrawal after 20 years of presence.

China as an important neighbor to Afghanistan and a powerful country in the world has often extended helping hands to Afghanistan and exhibited a strong intention to help improve the country’s security and economy.  To reach that goal, China didn’t freeze its diplomatic mission in Kabul after the collapse of the previous government and at the same time did not recognize the Taliban government officially. The point is that China understands the gravity of the situation and it wants to help the Afghan people at the most difficult time caused by the chaotic and irresponsible drawdown of foreign forces.

Beijing has never stopped supporting Afghanistan with a population of an estimated 35 million, who are going through extreme poverty due to the flop policy of the western countries, especially the US on top of that.

Someone needs to ask the US that what was the outcome of 20 years of presence in Afghanistan and where the billions of dollars had been spent? There is no need to touch on the political arena but in economic aspects, the US must come up to the fore with a clear explanation.  Surely, the US has no reasonable clarification and would never be able to put in plain words what has exactly happened in Afghanistan and why the economy is so bad.

It is worth mentioning that Afghanistan is not a poor country as it has three billion dollars underground resources only and other billions of precious capitals.  Afghanistan is also called the “Heart of Asia” and geo-politically it is located in the most strategic quarter.

Nevertheless, Afghanistan still has a strong country on its side and that is China. Afghanistan needs China and Beijing as a neighbor has been making all out efforts to make Afghanistan stand on its own feet.

China will always stand firmly with Afghan people

China Foreign Minister Qin Gang met with Afghan Foreign Minister Amir Khan Muttaqi in Islamabad, Pakistan, where he said that “China and Afghanistan are traditionally friendly neighbors connected by mountains and rivers.”

He said that both the countries have been supporting, understanding and trusting each other. “No matter how international and regional situations evolve, China will always stand firmly with the Afghan people and support Afghanistan in pursuing a development path that suits its national conditions,” he added.

Qin furthered that “China will, as always, respect Afghanistan’s sovereignty, independence and territorial integrity, deepen China-Afghanistan cooperation in various fields, and help Afghanistan realize self-reliance, peace, stability, development and prosperity at an early date.”

Belt and Road Initiative to Afghanistan

The Afghan Foreign Minister Muttaqi during a meeting with his Chinese counterpart said that Afghanistan attaches great importance to developing relations with China and will never allow any force to use the Afghan territory for anti-China activities.

The Taliban also expressed eagerness to be part of the Belt and Road Initiative (BRI) to Afghanistan, potentially drawing in billions of dollars to fund infrastructure projects in the country.

“Afghanistan hopes to strengthen cooperation with China in such fields as economy, trade, cultural and people-to-people exchanges and infrastructure development within the framework of the Belt and Road Initiative to safeguard the common interests of the two sides and benefit the two peoples,” Muttaqi told Qin Gang.

He added that Afghanistan hopes to live in harmony with China, Pakistan and other neighboring countries and is ready to actively promote Afghanistan-China-Pakistan trilateral cooperation to promote regional stability and prosperity.

During the meeting, Qin Gang emphasized that Afghanistan should earnestly fulfill its commitment to fighting terrorism, resolutely crack down on terrorist forces, including the East Turkistan Islamic Movement, and ensure the safety and security of Chinese personnel and institutions in Afghanistan.

“China will continue to advance the China-Afghanistan-Pakistan trilateral dialogue and cooperation based on the principles of equal consultation, practical cooperation and friendship, mutual benefit and win-win results,” he added.

China invests $2b since two years in Afghanistan

China has signed $2 billion contracts on several economic projects since the return of the Taliban to power in August 2021, and these investments are mainly in areas of extraction of mines, services at airports and industrial parks.

A spokesman for the Ministry of Industry and Commerce Abdul Salam Jawad said that there are several Chinese companies that are also active in Afghanistan where 21 of them are only based in Kabul, the capital city. Jawad said that a number of Chinese investors held a meeting with the deputy Minister of Industry and Mines and discussed important aspects on the investment sites.

There is also an expectation that China will include Afghanistan in China-Pakistan Economic Corridor (CPEC) and rename the project to China-Afghanistan-Pakistan Economic Corridor (CAPEC). There is no official confirmation on the news, but apparently China is working to include Afghanistan in all big projects as part of regional connectivity, improve cross-border trading, enhance the economic integration and achieve sustainable development. CPEC is a $60 billion project and China’s foreign minister vowed to work for reconstruction of Afghanistan including its inclusion in BRI which CPEC is part of that.

Three neighbors agree to boost security and economic cooperation

On Saturday, China, Afghanistan and Pakistan agreed to deepen ties and enhance cooperation in counter-terrorism and economic cooperation to boost regional stability.  The foreign ministers of the three sides made the pledge at the 5th China-Afghanistan-Pakistan Foreign Ministers’ Dialogue in Islamabad, where China’s Qin Gang, Afghan’s Muttaqi and Pakistan’s Bilawal Bhutto Zardari seemed happy on the outcome of the meeting as they vowed more cooperation in different fields.

The fifth China-Afghanistan-Pakistan Foreign Ministers’ Dialogue was held in Islamabad, Pakistan.

During the session, Qin said that China has been attaching great importance to the friendship with Afghanistan and Pakistan, and is willing to work with the two sides to implement the “Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative,” share development opportunities, jointly meet security challenges, and promote regional stability and prosperity.

Qin also asked Afghanistan and Pakistan to further strengthen the security measure for Chinese people working in the two countries. He also stressed the importance of anti-terrorism cooperation, saying China firmly opposes any form of terrorism and is ready to step up cooperation in fighting terrorism under regional multilateral frameworks including the coordination and cooperation mechanism among Afghanistan’s neighboring countries.

China also expressed readiness to strengthen development cooperation, share development opportunities and increase cultural and people-to-people exchanges with Afghanistan and Pakistan.

Afghanistan and Pakistan agree on bilateral cooperation

On their parts, Muttaqi and Bilawal agreed that the trilateral cooperation mechanism is of great significance to regional peace and prosperity, and both sided pledged to actively promote the trilateral cooperation, formulate a roadmap for political, security and economic cooperation to safeguard the common interests of the three countries, achieve mutual benefit, and bring benefits to the people of the three countries and other countries in the region.

Afghanistan foreign ministry spokesman Hafiz Zia Ahmad said that Muttaqi and Bilawal held a bilateral meeting in Islamabad, and both sides discussed political-economic, commercial, transit relations and the necessary aspects to provide facilities between the two countries.

He also said that both sides held a detailed discussion on the situation of Afghan refugees in Pakistan, and facilitated easy round trips for traders across the borders.

Relations between Afghanistan and Pakistan have never been easy and both sides accused each other of cross border shelling and terroristic activities. Since the return of the Taliban in 2021, there have been several clashes between the border guards of Afghanistan and Pakistan.

China presses for inclusive government in Afghanistan

China on Saturday pressed for the establishment of the inclusive government in Afghanistan, and called on the Taliban officials to pursue a moderate police force and have friendly relations with all the neighbors.

Speaking to reporters in Islamabad, Qin Gang called on the Taliban leaders to take bold steps in the fight against terrorism and take seriously the security concerns of its neighboring countries.

But the Taliban says they were able to establish an inclusive government and also there is no major threat posed to the neighbors from the soil of Afghanistan.

Taliban deputy spokesman, Bilal Karimi said that no one will be allowed to pose a threat to other countries from Afghanistan. He also said that the infrastructure of the government under the Taliban leadership is inclusive.

ASIA

How will Trump’s potential tariffs affect Southeast Asia?

Published

on

Southeast Asia is worried about Donald Trump’s threat of universal tariffs and a new trade war with China. Five of the region’s six largest economies run a trade surplus with the United States.

But experts say the situation may not be so bad. The region, which tries to remain geopolitically neutral, saw an increase in gross trade with both China and the U.S. between 2017 and 2020 during Trump’s first presidency. Vietnam, Indonesia, Malaysia, and Thailand have benefited as companies from China, Japan, South Korea, Taiwan, and the U.S. have expanded their production bases in Southeast Asia to avoid U.S. tariffs.

Experts say exports and economic growth will take a hit in the short term, but the region could benefit from trade diversion and substitution.

What is Trump’s tariff threat?

The goal of Trump’s trade policy is to bring manufacturing jobs back to the U.S. and decouple supply chains from China. Trump and his advisers claim that China’s trade advantage is due to “currency manipulation, intellectual property theft and forced technology transfer”.

During his first term, Trump used executive powers to impose tariffs of up to 25% on $250bn of electronics, machinery and consumer goods imported from China. Beijing retaliated with similar measures on U.S. agricultural, automotive and technology exports.

Now Trump has proposed a 60 per cent tariff on all Chinese goods entering the U.S. and tariffs of up to 20 per cent on imports from everywhere else.

How bad could it be for Southeast Asia?

According to Oxford Economics, about 40 per cent of Cambodia’s exports go to the U.S., making it the largest exporter in Asean as a percentage of total exports, followed by Vietnam with 27.4 per cent and Thailand with 17 per cent. Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce, said the Thai economy could take a 160.5 billion baht ($4.6 billion) hit if Trump fulfils his promises.

Vietnam has the world’s fourth-largest trade surplus with the United States. This imbalance has been growing rapidly as Chinese, Taiwanese and South Korean companies have used Vietnam to avoid Trump-era tariffs. Vietnam’s fortunes could change just as quickly, especially if the U.S. continues to classify Vietnam as a ‘non-market economy’, which requires higher tariffs.

Uncertainty over Trump’s tariffs could cause companies to pause or halt investment plans in Southeast Asia. U.S. companies accounted for about half of Singapore’s $9.5 billion in fixed-asset investment last year, according to the city-state’s Economic Development Board. In his congratulatory letter to Trump, Prime Minister Lawrence Wong was quick to remind him that the United States enjoys a “consistent trade surplus” with Singapore.

Any blow to the Chinese economy will have repercussions for Asean countries that depend on Chinese consumption, export demand and tourism. A reduced appetite for Chinese goods will also affect Southeast Asian suppliers of inputs to Chinese producers. Indonesia, Southeast Asia’s largest economy, will suffer the most because it exports 24.2 per cent of its goods to China, mainly commodities.

Unable to send their goods to the U.S., Chinese exporters may turn to Southeast Asia, where governments have faced complaints from local producers hurt by dumping in metals, textiles, and consumer goods.

What is Southeast Asia’s advantage?

Southeast Asia’s current manufacturing boom started because of the trade war. Over time, analysts expect trade substitution and diversion to outweigh the hit to growth.

“We think a stronger crackdown on China could lead to more supply chain diversion as Chinese companies trade and invest more in Asia,” said Jayden Vantarakis, head of ASEAN research at Macquarie Capital.

“Electric vehicle factories, which some Southeast Asian governments are aggressively pursuing, could provide an economic buffer. Demand for EVs is also growing outside the U.S., so I think there could be a net benefit for Indonesia. Smaller countries that are trying to be carbon neutral, especially as petrol prices get more expensive, will try to take over the supply and buy more electric cars,” said Sumit Agarwal, a professor at the National University of Singapore’s School of Business.

Trump’s promised tariffs could embolden Asean governments to impose anti-dumping duties on Chinese goods, as Thailand did on rolled steel this year. Stricter U.S. rules of origin could also give governments an opportunity to ensure that more high-value parts are produced and assembled locally.

How will Southeast Asian currencies and markets be affected?

Trump’s tariffs could reduce pressure on Southeast Asian central banks to ease monetary policy further.

“Essentially, Trump’s victory is inflationary for the world because of his planned tariffs, so the global monetary normalization or easing cycle will probably not be as sharp as previously thought, including in the Philippines,” said Miguel Chanco, chief emerging Asia economist at UK-based Pantheon Macroeconomics.

Speaking to Nikkei Asia, Chanco said Southeast Asian currencies will not strengthen as much as previously expected, partly because markets are re-pricing the pace of easing by the U.S. Federal Reserve and thus the dollar will continue to strengthen.

Among Southeast Asia’s six major economies, the Thai baht and Malaysian ringgit have been the worst-performing currencies since Trump’s victory, losing 3.2 per cent and 2.9 per cent respectively against the U.S. dollar through Wednesday.

Thai brokerage InnovestX recommended stocks that would benefit from a strong dollar and weak baht. These include companies with significant export earnings, such as CP Foods and Delta Electronics, or tourism-related companies such as Airports of Thailand, property developers and hoteliers.

Governments are already taking steps to reduce their over-dependence on the U.S. or China by deepening ties with other countries and regions and emphasizing their neutrality.

Southeast Asian economies in particular are also expected to focus on building resilience by strengthening intra-ASEAN trade.

Continue Reading

ASIA

Japan’s exports rise despite global risks, boosted by China

Published

on

Japan’s exports rose more than expected in October, driven by strong demand from China and other parts of Asia, despite growing uncertainties in global markets.

Exports increased by 3.1% year-on-year, led by significant growth in shipments of chip-making equipment, particularly to China, according to the Finance Ministry’s report on Wednesday. This marked a rebound following the first drop in 10 months in September. October’s figures exceeded economists’ forecasts of a 1% rise and were also bolstered by increased shipments of medical products to the United States.

Meanwhile, imports edged up by 0.4%, defying expectations of a 1.9% decline. As a result, the trade deficit widened to 461.2 billion yen ($2.98 billion), compared to 294.1 billion yen in the previous month.

This stronger-than-expected export performance has raised optimism about Japan’s economic recovery. Although the country’s gross domestic product (GDP) expanded for the second consecutive quarter through September, the pace of growth has been tempered by the drag from net exports.

“Today’s data raises hopes that external demand will revive in the October-December quarter,” said Hiroshi Miyazaki, Senior Research Fellow at the Itochu Research Institute. “The Chinese government’s stimulus measures have stabilized its economy and reversed the prior decline.”

Exports to China rose by 1.5% last month, rebounding from a 7.3% drop in September, with semiconductor manufacturing equipment exports surging by nearly a third. These gains align with signs that China’s stimulus policies are beginning to yield results, driving growth in certain sectors and boosting consumer spending.

Notably, Japanese exports grew despite the yen’s strengthening against the dollar, averaging 145.87 yen per dollar in October—2% stronger than the previous year, according to ministry data.

The export rebound occurs against a backdrop of heightened concerns about global trade policies. Business leaders are bracing for the potential return of Donald Trump to the White House, with fears that his proposed tariffs—60% on imports from China and 20% on other nations—could disrupt international commerce.

Some regions are already experiencing a slowdown. Shipments to the United States and Europe declined by 6.2% and 11.3%, respectively, in October.

The Bank of Japan (BoJ) is closely monitoring these developments. BoJ Governor Kazuo Ueda noted on Monday that while the Federal Reserve’s prospects for a soft landing have improved, risks tied to the U.S. economy and their impact on global markets require careful consideration.

The most pressing concern for Japan’s trade outlook is the impact of potential U.S. tariffs. Historical data from the U.S.-China trade war (2018-2019) suggests that a 1% increase in export prices, including tariffs, led to a 0.35 percentage-point reduction in profit margins for Chinese exporters, according to research from Stanford University’s Centre for Chinese Economics and Institutions. A similar scenario could hurt Japanese firms’ profitability, counteracting gains from the yen’s depreciation.

“We are not yet at a stage where Trump’s tariff policy is clearly impacting export volumes or exporters’ behavior,” Miyazaki told The Japan Times. “However, there remains significant uncertainty, and we must continue to monitor the policy stance of the next Trump administration,” he added.

Continue Reading

ASIA

IMF reviews Pakistan’s $7bn bailout

Published

on

An International Monetary Fund (IMF) team conducted an unscheduled visit to Pakistan last week to assess the country’s progress on the terms of its $7 billion bailout package. The surprise visit, coming less than two months after the loan’s approval, has raised questions about the future of the bailout program. IMF staff are expected to present their findings to the Washington-based executive board for review.

What prompted the IMF’s unexpected visit to Pakistan?

Several officials, speaking to Nikkei Asia on condition of anonymity, highlighted key factors prompting the visit. These included a $685 million shortfall in the government’s tax collection target for the first quarter of the current fiscal year and a $2.5 billion deficit in the external financing required under the bailout terms. Compounding these issues was the failed sale of Pakistan International Airlines (PIA), a key component of the IMF-recommended privatisation drive.

While routine IMF program review visits are standard, the timing of this visit—just seven weeks after board approval—has raised concerns. “This suggests significant difficulties in implementing the program,” said Naafey Sardar, an economics professor at St. Olaf College in the United States, speaking to Nikkei Asia.

Ikram ul Haq, a lawyer specializing in economic and tax policy, added, “The reality is that the government’s promises to the IMF have not been fulfilled.”

What were the key issues discussed?

The IMF raised the issue of the tax gap and urged action to ensure that Pakistan meets its annual tax collection target of $46 billion.

Islamabad was also asked to engage with Saudi Arabia and China, the largest investor, to bridge the external financing gap. Promised energy sector reforms and the repayment of billions of dollars of debt owed to mostly Chinese-backed power plants in Pakistan were also discussed.

Another issue was for the IMF to press provincial governments for more funds, such as the Benazir Income Support Programme, which provides a $2.1 billion annual cash transfer for poverty alleviation, currently paid for by the central government.

How does agricultural income tax fit into this picture?

As part of the loan agreement, Pakistan’s provinces missed an end-October deadline to harmonize their agricultural income tax laws with the federal income tax.

The IMF had previously said that Pakistan’s loan agreement would be in jeopardy if agricultural income remained largely untaxed. During the meetings, provincial government officials told the IMF that they would face significant difficulties in implementing a higher tax.

Economist Aqdas Afzal said such a move would face significant opposition from big landowners, who are disproportionately represented in the federal and provincial assemblies.

“Given the weak mandate of the current government, a higher agricultural income tax is unlikely as it could trigger major social and political unrest,” he added.

What assurances has the government given to the IMF?

Pakistan has assured the IMF that it will increase the provincial agricultural income tax rate by up to 45 percent. It has also pledged to meet annual tax collection targets and to continue reforms in the energy sector and state-owned enterprises.

“This is an ongoing dialogue process and there have been discussions [with the IMF] on energy and SOE reforms, the privatization agenda and public finance,” Pakistan’s Finance and Revenue Minister Muhammad Aurangzeb told local media.

Haq, a tax expert, said the government’s primary focus would be on meeting the six-month revenue collection target set by Pakistan’s Federal Board of Revenue, a government agency that regulates and collects taxes.

What are the challenges ahead for Pakistan’s loan agreement?

Meeting tough tax targets and implementing structural reforms are major hurdles for the government to overcome.

The IMF has previously cancelled other loan programmes when conditions were not met. Payments to Pakistan could be suspended or stopped altogether, which would be a serious blow to a country struggling with a sputtering economy.

The IMF is pressing for cuts in government spending.

“Structural reforms are being resisted by vested interests, making efforts to meet IMF conditions even more difficult,” Haq said.

Continue Reading

MOST READ

Turkey