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China’s central bank cuts benchmark rate, announces new stimulus measures

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China has announced a series of stimulus measures, including a cut in its benchmark interest rate, as it grapples with a slowdown in the world’s second-largest economy.

In a public briefing on Tuesday, the People’s Bank of China also announced more support for the struggling property sector, as well as a state fund to revive the stock market and help with share buybacks.

While economists were sceptical that China could meet its full-year growth target of 5%, Bank of China Governor Pan Gongsheng said the measures were aimed at ‘supporting the steady growth of China’s economy’ and ‘promoting a moderate price recovery’.

China’s blue-chip CSI 300 index, which tracks shares traded in Shanghai and Shenzhen, rose 3.8 per cent on Tuesday after the announcement. Hong Kong’s Hang Seng index rose 3.9 per cent, led by mainland Chinese companies listed in the region.

Pan said the central bank’s main policy rate, the short-term seven-day reverse repurchase rate, would be cut to 1.5 per cent from 1.7 per cent.

“The central bank will also cut the reserve requirement ratio, the amount of reserves lenders must hold, by 0.5 percentage points, signalling a possible further cut of 0.25 to 0.5 percentage points this year. The RRR cut will provide Rmb1 trillion ($142 billion) of liquidity to the banking system”, he said.

“The rare simultaneous cut in policy rates and the RRR, the relative size of the cuts, and the unusual guidance on further policy easing all point to policymakers’ growing concern about headwinds to growth,” Goldman Sachs analysts said in a note to clients. “In our view, this signals a new round of policy easing to support the real economy,” he said.

“However, further demand easing – especially fiscal easing – is likely to be needed to improve China’s growth outlook,” they added.

China’s economic growth has slowed in recent months as a prolonged downturn in the property sector has weakened consumer sentiment and reduced spending.

Economists have cut growth forecasts below the government’s official target of 5 per cent by 2024 as deflationary forces persist and producer prices have fallen since last year.

Policymakers have turned to exports in the hope that the housing crisis will bottom out, but strong shipments of electric vehicles, batteries and other goods have failed to fully offset the weak domestic economy.

“China’s economy is recovering, and the monetary policy our bank has introduced this time will help support the real economy, stimulate spending and investment, while providing a stable floor for the exchange rate,” Pan said.

Pan was joined by Li Yunze, director of the National Financial Regulatory Administration, the new financial sector watchdog, and Wu Qing, chairman of the China Securities Regulatory Commission, the market regulator.

The government will boost stock market liquidity by allowing brokers, insurance companies and funds to use central bank facilities to buy shares, officials said. The People’s Bank of China will also provide credit facilities for shareholders to buy back shares.

“A new stimulus is definitely positive,” said Liu Chang, macro economist at BNP Paribas Asset Management.

But with economic momentum weak heading into the fourth quarter, he said the authorities would have to ‘move very quickly to implement additional measures in the coming weeks if they want to achieve the 5 per cent target’.

In this context, we think there is still a worrying lack of urgency behind their words on stimulus,” Liu said.

Among other measures, the bank reduced mortgage down payments for second homes from 25 per cent to 15 per cent. Second homes had previously been subject to stricter conditions to curb property speculation, a focus of President Xi Jinping.

The central bank also said it would improve conditions for its destocking programme, under which it is providing Rmb300 billion to local state-owned enterprises to help them buy unsold inventory from property developers.

Economists say reducing China’s unsold housing stock is crucial to restoring confidence in the economy and boosting domestic consumption.

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US cries to China as Washington begins airstrikes in Iran

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While the Middle East is going through one of its most tense periods, the world has been shocked by the news of a direct attack by the United States on Iran’s nuclear facilities. Washington has announced that Iran’s nuclear facilities no longer exist. At the same time, Tehran has warned in a strong tone that it will respond to this aggression.

This action was immediately met with widespread regional and international reactions. The United Nations, the European Union, global powers such as Russia and China, and America’s traditional allies in the West each took their own stance.

At an emergency meeting of the United Nations, Secretary-General Antonio Guterres described the move as a dangerous turn in an already crisis-ridden region. A wave of criticism has also emerged within the United States, with some describing the attack as successful.

At the same time, a number of lawmakers from both the Republican and Democratic parties consider Trump’s action to be without congressional authorization and unconstitutional.

Some reactions:

Russian envoy: US attack carried out without any provocation from Iran.

US Representative: The Iranian regime should not have nuclear weapons.

Iran’s ambassador to the Security Council: America once again sacrificed its security for Benjamin Netanyahu.

Israeli Ambassador to the Security Council: America changed the course of history by attacking Iran.

Rafael Grossi, the head of the International Atomic Energy Agency: Military attacks should not be carried out on nuclear facilities, saying he is ready to immediately travel to all countries regarding this case.

UK UN envoy: Military action alone cannot address concerns about Iran’s nuclear program, saying his country was not involved in Iran attack, referred to concerns about Iran’s nuclear program and said that military action alone cannot permanently address concerns about Iran’s nuclear program. He called on Iran to exercise restraint and urged the parties involved to return to the negotiating table.

France: Now is the time to end the attacks and return to negotiations.

But now why US cries to China for help to reopen Strait of Hormuz

Soon after a US airstrike in three locations, Iran closes the Strait of Hormuz, one of the world’s most important shipping routes. Now this move puts the US in trouble and US Secretary of State Marco Rubio has called on China to prevent Iran from closing the Strait of Hormuz.

However, it seems that the US is too late and according to Iran’s state-run Press TV, the decision was made by Iran’s Supreme National Security Council.

The US understands that any disruption on the supply of oil would have profound consequences for the economy and wants to play an emotional card with China to convince Iran to reopen the route as Beijing is also one of the largest buyers of Iranian oil.

It is reported that 20 percent of the world’s oil passes through the Strait of Hormuz, and major oil and gas producing countries in the Middle East use this route to export energy.

Meanwhile, US President Donald Trump has said that regime change is inevitable if the Islamic Republic cannot “make Iran great again.” His statement came following US military strikes on Iranian military facilities.

Iran: Game is not over even assuming the complete destruction of the nuclear sites

Ali Shamkhani, advisor to Ayatollah Ali Khamenei, the religious leader of Iran, has said in response to the US attacks that even assuming the complete destruction of the nuclear sites, the “game is not over”.

“Even assuming the complete destruction of the sites, the game is not over; because the enriched materials, indigenous knowledge, and political will remain intact,” he said.

He noted that “now the political and operational initiative with the right to self-defense is in the hands of the side that knows how to play smart and avoids blind shooting.”

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Japan diverges from G7, urging restraint in Israel-Iran conflict

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Japanese Prime Minister Shigeru Ishiba has affirmed Tokyo’s position of calling for “maximum restraint” from both Israel and Iran, despite a G7 statement earlier this week that supported Israel’s “right to self-defense.”

During a meeting of ruling and opposition party leaders on Thursday, Ishiba stated, “What the foreign minister said is the stance of the Japanese government. The G7 is the G7,” as reported by Tomoko Tamura, head of the Japanese Communist Party.

Japan, a close US ally in Asia, has long maintained friendly relations with Iran and has historically adopted a neutral approach to Middle East diplomacy, distinguishing itself from the pro-Israel stance of US administrations. Tokyo relies on the Middle East for the overwhelming majority of its crude oil imports.

G7 leaders convened in Kananaskis, Canada, and issued a statement backing Israel’s attacks on Iran. The statement affirmed Israel’s right to self-defense and condemned Iran as the “main source of regional instability and terrorism.” On June 13, when Israel’s attacks on Iran began, Japanese Foreign Minister Takeshi Iwaya declared: “The use of military force while diplomatic efforts are ongoing… is completely unacceptable and a source of deep regret. The Japanese government strongly condemns these actions.”

Iwaya added, “Japan is gravely concerned about the continuation of retaliatory attacks and strongly condemns any actions that could further escalate the situation.”

He continued, “Japan urges all parties to exercise maximum restraint and strongly calls for a de-escalation of tensions.”

During the meeting of party leaders, Tomoko Tamura, head of the Japanese Communist Party, highlighted the apparent contradiction between Iwaya’s statements and the joint G7 communiqué, suggesting the government was applying a “double standard.”

Prime Minister Ishiba responded, “What the foreign minister said is the stance of the Japanese government. The G7 is the G7.”

Meanwhile, the foreign minister announced at a press conference on Friday that a total of 87 Japanese nationals and their family members had been evacuated by land from Iran and Israel. Sixty-six individuals were evacuated from Iran to neighboring Azerbaijan, and 21 were evacuated from Israel to Jordan.

Following additional requests from Japanese citizens, a second land evacuation from Iran is scheduled for Saturday. Currently, there are approximately 220 Japanese nationals in Iran and about 1,000 in Israel.

In preparation for potential air evacuations, the government plans to dispatch two Air Self-Defense Force military transport aircraft to Djibouti in East Africa to have them on standby. With airports in Iran and Israel closed, Iwaya noted that the aircraft could be used if, for example, the airports reopen and conditions permit an airlift.

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Iran-Israel war: Why US discusses regional conflict with Pakistan

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US President Donald Trump and Pakistan’s Army Chief General Asim Munir held a special and important meeting during a time when tensions are rising in the Asian region. The meeting was held on Trump’s invitation and was not open to the media. However, both sides have released official statements afterward, which states that the main topics were discussed

The meeting focused on the ongoing conflict between Iran and Israel, Pakistan–India relations, especially the Kashmir issue, the situation in Afghanistan and future US–Pakistan cooperation.

Pakistan has recently improved its strategic position in the region. It has shown strong ties with China and is the only South Asian country openly supporting Iran in its conflict with Israel. Meanwhile, Pakistan remains an important player in Afghanistan.

Why the Pakistani Army Chief was invited to the US?

Although Pakistan has an elected civilian government, important decisions—especially related to foreign affairs and security—are often handled by the military. That’s why General Asim Munir was invited to meet Trump instead of the Prime Minister, General Munir’s influence has grown recently. After tensions with India, he was given the title of Field Marshal. His meeting with Trump is seen as a sign of his importance in both Pakistani and international politics.

According to the Pakistan Army’s media wing (ISPR): General Munir thanked President Trump for helping to ease recent tensions between Pakistan and India. Trump praised Pakistan’s role in fighting terrorism. Both agreed to work together in the future, especially in: Trade, Technology Minerals and energy Artificial intelligence Crypto currency and regional peace efforts as well.

President Trump also appreciated General Munir’s leadership during difficult times. Munir invited Trump to visit Pakistan, and Trump reportedly accepted the offer in principle.

Why US former peace envoy to Afghanistan, Khalilzad is not trusting Pakistan’s army chief

Former U.S. diplomat Zalmay Khalilzad criticized the meeting. He said General Munir cannot be trusted and reminded the U.S. that Pakistan has supported groups that harmed American soldiers in the past. According to Khalilzad, General Munir may be trying to get U.S. support for his interests in Afghanistan, which he believes could be risky for America.

Though no official list of US demands was made public, reports suggest a meeting was held in Saudi Arabia earlier, where American officials spoke with top Pakistani leaders. During that meeting, the U.S. reportedly made four key requests:  Pakistan should help the U.S. in counterterrorism operations when needed. Pakistan should slowly reduce its relations with China. Pakistan should recognize Israel after Saudi Arabia does. If the U.S. attacks Iran, Pakistan should support the U.S. instead of staying neutral.

These demands are similar to earlier U.S.–Pakistan arrangements during the Cold War and the War on Terror.

What could be expected in the future?

This meeting could mark the beginning of a new phase in US–Pakistan relations. In the past, Pakistan helped the U.S. during the Soviet-Afghan War and after 9/11. Now, with tensions involving Iran, India, and Afghanistan—and China expanding its role—the U.S. may again be looking to Pakistan as a key partner in the region.

Time will tell whether this leads to a long-term partnership or just another temporary agreement based on short-term goals.

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