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BRICS and the Fiction of “De-Dollarization”

NOVANEWS

Next week in early September 2017, the member states of BRICS, will be meeting in Xiamen, Fujian Province, China.

This article was first published by Global Research in April 2015.

*    *    *

The financial media as well as segments of the alternative media are pointing to a possible weakening of the US dollar as a global trading currency resulting from the BRICS (Brazil, Russia, India, China, South Africa) initiative. 

One of the central arguments in this debate on competing World currencies hinges on the BRICS initiative to create a development bank which, according to analysts, challenges the hegemony of Wall Street and the Washington based Bretton Woods institutions.

The BRICS New Development Bank (NDB) was set up to challenge two major Western-led giants – the World Bank and the International Monetary Fund. NDB’s key role will be to serve as a pool of currency for infrastructure projects within a group of five countries with major emerging national economies – Russia, Brazil, India, China and South Africa. (RT, October 9, 2015, emphasis added)

More recently, emphasis has been placed on the role of China’s new Asia Infrastructure Investment  Bank (AIIB), which, according to media reports, threatens to “transfer global financial control from Wall Street and City of London to the new development banks and funds of Beijing and Shanghai”.

There has been a lot of media hype regarding BRICS.

While the creation of BRICS has significant geopolitical implications, both the AIIB as well as the proposed BRICS Development Bank (NDB) and its Contingency Reserve Arrangement (CRA) are dollar denominated entities. Unless they are coupled with a multi-currency system of trade and credit, they do not threaten dollar hegemony. Quite the opposite, they tend to sustain and extend dollar denominated lending. Moreover, they replicate several features the Bretton Woods framework.

Towards a Multi-Currency Arrangement? 

What is significant, however, from a geopolitical standpoint is  that China and Russia are developing a ruble-yuan swap, negotiated between the Russian Central Bank, and the People’s Bank of China,

The situation of the other three BRICS member states (Brazil, India, South Africa) with regard to the implementation of (real, rand rupiah) currency swaps is markedly different. These three highly indebted countries are in the straightjacket of IMF-World Bank conditionalities. They do not decide on fundamental issues of monetary policy and macro-economic reform without the green light from the Washington based international financial institutions.

Currency swaps between the BRICS central banks was put forth by Russia to:

“facilitate trade financing while completely bypassing the dollar. “At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries.” (Voice of Russia)

While Russia has formally raised the issue of a multi-currency arrangement, the Development Bank’s structure does not currently “officially” acknowledge such a framework:

We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system]” (Governor of the Russian Central Bank, June 2014, Prime news agency)

India, South Africa and Brazil have decided not to go along with a multiple currency arrangement, which would have allowed for the development of bilateral trade and investment activities between BRICs countries, operating outside the realm of dollar denominated credit. In fact they did not have the choice of making this decision in view of the strict loan conditionalities imposed by the IMF.

Heavily indebted under the brunt of their external creditors,  all three countries are faithful pupils of the IMF-World Bank. The central bank of these countries is controlled by Wall Street and the IMF. For them to enter into a “non-dollar” or an “anti-dollar” development banking arrangement with multiple currencies, would have required prior approval of the IMF.

The Contingency Reserve Arrangement

The CRA is defined as a “framework for provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.” (Russia India Report April 7, 2015). In this context, the CRA fund does not constitute a “safety net” for BRICS countries, it accepts the hegemony of the US dollar which is sustained by large scale speculative operations in the currency and commodity markets.

In essence the CRA operates in a similar fashion to an IMF precautionary loan arrangement (e.g. Brazil November 1998) with a view to enabling highly indebted countries to maintain the parity of their exchange rate to the US dollar, by replenishing central bank reserves through borrowed money.

The CRA excludes the policy option of foreign exchange controls by BRICS member states. In the case of India, Brazil and South Africa, this option is largely foreclosed as a result of their agreements with the IMF.

The dollar denominated $100 billion CRA fund is a “silver platter” for Western “institutional speculators” including JP Morgan Chase, Deutsche Bank, HSBC, Goldman Sachs et al, which are involved in short selling operations on the Forex market. Ultimately the CRA fund will finance the speculative onslaught in the currency market.

Neoliberalism firmly entrenched

An arrangement using national currencies instead of the US dollar requires sovereignty in central bank monetary policy. In many regards, India, Brazil and South Africa are (from the monetary standpoint) US proxy states, firmly aligned with IMF-World Bank-WTO economic diktats.

It is worth recalling that since 1991, India’s macroeconomic policy was under under the control of the Bretton Woods institutions, with a former World Bank official, Dr. Manmohan Singh, serving first as Finance Minister and subsequently as Prime Minister.

Moreover, while India is an ally of China and Russia under BRICS, it has entered into a  new defense cooperation deal with the Pentagon which is (unofficially) directed against Russia and China. It is also cooperating with the US in aerospace technology. India constitutes the largest market (after Saudi Arabia) for the sale of US weapons systems. And all these transactions are in US dollars.

Similarly, Brazil signed a far-reaching Defense agreement with the US in 2010 under the government of Luis Ignacio da Silva, who in the words of the IMF’s former managing director Heinrich Koeller, “Is  Our Best President”, “… I am enthusiastic [with Lula’s administration]; but it is better to say I am deeply impressed by President Lula, indeed, and in particular because I do think he has the credibility”  (IMF Managing Director Heinrich Koeller, Press conference, 10 April 2003 ).

In Brazil, the Bretton Woods institutions and Wall Street have dominated macro-economic reform since the outset of the government of Luis Ignacio da Silva in 2003. Under Lula, a Wall Street executive was appointed to head the Central Bank, the Banco do Brazil was in the hands of a former CitiGroup executive. While there are divisions within the ruling PT party, neoliberalism prevails. Economic and social in Brazil is in large part dictated by the country’s external creditors including JPMorgan Chase, Bank America and Citigroup.

Central Bank Reserves and The External Debt

India and Brazil (together with Mexico) are among the World’s most indebted developing countries. The foreign exchange reserves are fragile. India’s external debt in 2013 was of the order of more than $427 Billion, that of Brazil was a staggering $482 billion, South Africa’s external debt was of the order of $140 Billion. (World Bank, External Debt Stock, 2013).

External Debt Stock (2013)

Brazil  $482 billion

India   $427 billion

South Africa  $140 billion

All three countries have central banks reserves (including gold and forex holdings) which are lower than their external debt (see table below).

Central Bank Reserves (2013)

Brazil  $359 billion

India:  $298 billion

South Africa $50 billion

The situation of South Africa is particularly precarious with an external debt which is almost three times its central bank reserves.

What this means is that these three BRICS member states are under the brunt of their Western creditors. Their central bank reserves are sustained by borrowed money. Their central bank operations (e.g. with a view to supporting domestic investments and development programs) will require borrowing in US dollars. Their central banks are essentially “currency board” arrangements, their national currencies are dollarized.

The BRICs Development Bank (NDB)

On 15 July 2014, the group of five countries signed an agreement to create the US$100 billion BRICS Development Bank together with a US dollar denominated  ” reserve currency pool” of US$100 billion. These commitments were subsequently revised.

Each of the five-member countries  “is expected to allocate an equal share of the $50 billion startup capital that will be expanded to $100 billion. Russia has agreed to provide $2 billion from the federal budget for the bank over the next seven years.” (RT, March 9, 2015).

In turn, the commitments to the Contingency Reserve Arrangement are as follows;

Brazil, $18 billion

Russia $18 billion

India  $18 billion

China $41 billion

South Africa $5 billion

Total $100 billion

As mentioned earlier, India, Brazil and South Africa, are heavily indebted countries with central bank reserves substantially below the level of their external debt.  Their contribution to the two BRICs financial entities can only be financed:

  • by running down their dollar denominated central bank reserves and/or
  • by financing their contributions to the Development Bank and CRA, by borrowing the money, namely by “running up” their dollar denominated external debt.

In both cases, dollar hegemony prevails. In other words, the Western creditors of these three countries will be required to “contribute” directly or indirectly to  the financing of the dollar denominated contributions of Brazil, India and South Africa to the BRICS development bank (NDB) and the CRA.

In the case of South Africa with Central Bank reserves of the order of 50 billion dollars, the contribution  to the BRICS NDB will inevitably be financed by an increase in the country’s (US dollar denominated) external debt.

Moreover, with regard to India, Brazil and South Africa, their membership in the BRICS Development Bank was no doubt the object of behind closed doors negotiations with the IMF as well as guarantees that they would not depart from the “Washington Consensus” on macro-economic reform.

Under a scheme whereby these countries were to be in be in full control of their Central Bank monetary policy, the contributions to the Development Bank (NDB) would be allocated in national currency rather than US dollars under a multi-currency arrangement. Needless to say under a multi-currency system the contingency CRA fund would not be required.

The geopolitics behind the BRICS initiative are crucial. While the BRICS initiative from the very outset has accepted the dollar system, this does not exclude the introduction, at a later stage of a multiple currency arrangement, which challenges dollar hegemony.

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BRICS: Turning Point to the New World Economic System, China’s Crucial Role

NOVANEWS

Interview to the Peoples Daily

Interview of China’s People’s Daily with renowned author and former foreign minister of Yugoslavia Zivadin Jovanović

As the host of this summit, what new elements can China bring to the BRICS?

ZJ: First of all, it is natural that China, one of the founders and the host country of the BRICS Summit will reaffirm remarkable achievements of BRICS cooperation and development, in the democratization of the world trade, development and financial institutions and in bringing the world economy out of recession. At the same time, China is expected to offer the best ways how to deal with new challenges in the field of global trade, investments, and rapid changes in economic structure and technology. Speaking of “new elements”, those in my opinion, may be – further expansion of the BRICS membership in line with real roles and potentials of emerging economies; timely contemplating challenges of the new industrial revolution bringing enormous development potentials but also unprecedented changes in economic, social and working force structures; reinforcing struggle for principle based international trade and investment cooperation, against autarchy, protectionism, economic, financial or any other form of confrontation.

2. What kind of role has BRICS played in the global governance? Has the role of the BRICS in the world changed in the past few years? What role should the BRICS play in the future?

ZJ: BRICS, especially China, has played crucial role in reforming global economic governance toward building up new just economic world order free of domination, exclusiveness and exploitation. BRICS is the symbol of the New Economic Order based on sovereign equality, inclusiveness, shared benefits and responsibilities, win win cooperation. Establishment of the New (BRICS) Development Bank, of Asia Infrastructure Investment Bank, Belt and Road Fund and a number of other new specialized economic, financial and monetary institutions established by BRICS, or by China as a leading member has already changed the world economy governance. This process of paramount importance is not finished. New challenges, obstacles and even open resistance to the democratization of the world economic relations do call for vigor new initiatives of BRICS and emerging economies, in general.

3. How do you assess the performance of the BRICS in the past few years? What kind of characteristics does BRICS have?

ZJ: Establishment and the role of BRICS is of historic importance for the present and for the future of the world economic relations and development. BRICS represent a turning point from the world system of domination to the world sovereign equality and equal chances for all. From the system of deepening economic and social gaps to the system of equitable distribution of wealth and human well-being centered strategies. From sewing interventionism and destabilization aimed at controlling the earth’s wealth to solidifying peace, development and sovereign control of natural wealth of every country. BRICS establishment ushered irreversible process of ending the era of domination of few the richest and opening new era of equal opportunities and inclusive sustainable development for all. BRICS is led by conviction that only equitable and sustainable development serves the interest of peace, stability and well being of mankind. What make BRICS strong, trustworthy and with bright future are its openness, equality and distinctive efficiency. New (BRICS) Development Bank, for instance, brings its decisions on credit demands solely on economic merits, free of any political conditionality.

4. China has played a leading role in the process of cooperation of BRICS. What should China do to lead the BRICS to a better future?

ZJ: Reinforcing win win cooperation which is symbol of China’s global approach to international economic cooperation, continued adherence to the principle of sovereign equality and harmonizing bilateral and multilateral approaches to the development strategy and other challenges will be the best way to lead BRICS to even better future. While remaining open for equitable cooperation with developed parts of the world, the development strategies of BRICS countries should be designed to facilitate economic exchange among themselves and among emerging economies, in general.

5. China has been the second largest economy in the world. What kind of positive influence has China made to the reform of world economic and financial system?

ZJ: China commands great potentials not only for own modern socioeconomic and cultural development but also for the growth of the global world economy. The fact that China has risen to the post of second largest economy of the world with real possibility to take the lead as the first one in not distant future, is proof by itself of unprecedented potentials and clear vision of the future of equal chances for all. Chinese strategy of reforms and opening led not only to the fastest GDP growth in the world but also to strengthening of science, innovation and green development technologies. By introducing the concept of win win cooperation and later Global multidimensional Belt and Road Initiative China in fact presented new pattern of international cooperation based on long term common objectives, not on shortsighted calculations and temporary gains. All this made China worldwide distinct, highly desirable partner in both – practical cooperation and in building New World Order.

China has gained strong international support in pursuing win win cooperation especially from developing countries. This naturally led to China’s very positive influence in promoting reforms of the world economic and financial institutions opening the door that the interest and voices of less developed parts of the world be better understood and respected. Coordination of efforts within BRICS, SCO and other integrations made China’s influence in G20, WTO, IMF and UN institutions much more visible and efficient. No doubt that China’s influence to further reform the world economic and financial systems will grow from strength to strength. China’s membership to WTO and entering of renminbi into the IMF basket of international currencies (SDR) make China’s influence stronger and stronger. Finally, the institutions which China, BRICS, or SCO have already established, such as New Development Bank, AIIB, BRI Fund and others, are pillars of the emerging new global financial and economic systems.

6. BRICS voices the interest of developing countries. How should both developed countries and developing countries enhance cooperate to boost world economic growth?

ZJ: First of all, by pursuing open, unhindered trade, investment and transfer of new technologies. Developing countries should be supported particularly in strengthening their inter-connectivity through expansion and modernization of infrastructure. To be in harmony with sustainable peace economic cooperation should be free of shortsighted geopolitical calculations characteristic of the cold war and unipolar periods. There is no way of returning back to the system of domination.

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‘Economic War with China Is Everything,’ North Korea a ‘Sideshow’: White House Chief Strategist

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Calling tensions with North Korea a “sideshow,” the White House Chief Strategist said that China and the U.S. are in an “economic war,” and that China is winning.

 

The United States is currently engaged in an “economic war” with China to maintain its position as the world’s top hegemon, and appears to be losing it, White House Strategist and former editor of the right-wing publication Breitbart News, Steve Bannon said in an unexpected interview published Wednesday.

“We’re at economic war with China. It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and its gonna be them if we go down this path,” Bannon said to author and professor Robert Kuttner.

“The economic war with China is everything. And we have have to be maniacally focused on that. If we continue to lose it, we’re five years away, I think, ten years at the most, of hitting an inflection point from which we’ll never be able to recover,” he continued.

Bannon indicated that the current tensions and threats surrounding the Democratic People’s Republic of Korea (DPRK), also known as North Korea, are just a “sideshow” for the battle for global hegemony with China. He said he is pressuring within the Trump administration to use the tensions in Korea as a way to impose economic pressure on China.

“We’re going to run the tables on these guys [China]. We’ve come to the conclusion that they’re in an economic war and they’re crushing us,” he said.

Although Trump has repeatedly engaged in beligerant rhetoric toward the DPRK, saying that the U.S.’s arsenal is “locked and loaded” and that the North Korean people will face “fire and fury,” Bannon directly rejected the potential for a military confrontation on the peninsula.

“There’s no military solution [to the DPRK’s nuclear threats], forget it. Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us,” Bannon said.

The DPRK has continued its program to develop ballistic missiles and nuclear weapons in spite of pressure and threats demanding that they halt the efforts. They claim that the weapons act as a deterrent to a potential U.S. invasion or regime change attempt.

Bannon went on to explain how he was acting withing the Trump administration to push anti-China economic policies, such as the recently announced Section 301 complaint from the 1974 Trade Act targeting China’s alleged “unfair” trade practices. His struggle is within the administration also, where he said he fights “every day” against the “apparatus” to pressure those within the administration to follow his line and sideline those who don’t.

China has been pushing for a “double freeze” plan, which would involve the U.S. halting its military exercises on the Korean Peninsula, which is a key demand of the DPRK, in exchange for Pyongyang stopping its missile tests. On Tuesday, U.S. Department of State spokesperson Heather Nauertscoffed at the idea that such a deal would take place. Bannon however, indicated he might consider such a deal, but that such prospects were remote.

Trump is currently embroiled in criticism domestically and internationally for placing the blame for violence on “both sides” of the recent neo-Nazi and white-nationalist rally that took place in Charlottesville, Virginia, that resulted in a death and numerous injuries when a white-nationalist drove a car into a group of counter-protesters.

Bannon however, dismissed white nationalists as “a collection of clowns.”

“Ethno-nationalism – it’s losers. It’s a fringe element. I think the media plays it up too much,” he said.

While he rejected “ethno-nationalism” in the interview, he made clear that he was embracing economic nationalism, as embodied in his anti-China crusades. “If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats,” he said. “I want them to talk about racism every day.”

As a former editor of the far-right wing publication Breitbart News, Bannon is considered to be a major figure within the U.S. far-right, and a major ideological force within the Trump administration as the White House Chief Strategist.

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What’s Behind N Korea Summoning Envoys to UN, Russia, China

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A North Korean woman is reflected in a rain puddle as she walks past the country's national flag along the Kim Il Sung Square on Sunday, July 21, 2013, downtown Pyongyang, North Korea

© AP Photo/ Wong Maye-E

The meeting of key North Korean ambassadors in Pyongyang could help temporarily defuse the increased tensions on the Korean Peninsula, according to political analyst Dmitry Mosyakov.

Earlier, media reported that North Korea has summoned several key ambassadors to Pyongyang for a meeting in the wake of the ongoing tensions over the North Korean nuclear and missile program and a new round of UN sanctions.

“North Korea seems to be hosting what appears to be a meeting of foreign diplomatic missions’ chiefs after calling its ambassadors to major countries back to Pyongyang,” Yonhap news agency reported, citing a source in the North Korean government.

According to the report, the source said that North Korean Ambassador to the United Nations Ja Song-nam, Ambassador to China Ji Jae-ryong and Ambassador to Russia Kim Hyong-jun would take part in the meeting; however, it was still unclear who else would participate in the upcoming gathering.Dmitry Mosyakov, a senior analyst at the Institute for Oriental Studies of the Russian Academy of Sciences, suggested that the move would help defuse the ongoing tensions, at least for a while.

“I think this may be the best option possible in the current situation. Possibly, they will discuss a new, maybe less hardline, approach,” Mosyakov told Sputnik.

According to the expert, summoning ambassadors is usually an emergency measure.

Navy vessels are moored in port at the U.S. Naval Base Guam at Apra Harbor, Guam March 5, 2016
© REUTERS/ MAJOR JEFF LANDIS,USMC (RET.)/NAVAL BASE GUAM/HANDOUT/FILE PHOTO

“This practice is applied in such emergency situations as that we’re witnessing now. Almost every country in the world represented by the UN Security Council wants Pyongyang to reign in its nuclear and missile program,” Mosyakov said.

He added, “Those ambassadors are very important in terms of notifying the international community of Pyongyang’s policy. It is clear that the move is directly related to the current crisis.”

The expert pointed out that it is difficult to speculate on the agenda of the ambassadors’ meeting, but expressed hope that a compromise will be reached.

Tensions on the Korean Peninsula have recently intensified due to North Korea’s multiple nuclear tests and ballistic missile launches conducted in violation of UN Security Council resolutions. Last month, Pyongyang conducted two tests of intercontinental ballistic missiles.

The US and North Korea have exchanged a series of warmongering statements during the past week. Russian Foreign Minister Sergei Lavrov said Friday that Russia opposes North Korea’s possession of nuclear weapons, adding that the risk of the Washington-Pyongyang conflict turning into a war is “very high.”Russia has repeatedly voiced concern over the escalation on the Korean peninsula. During Chinese President Xi Jinping’s visit to Moscow earlier this summer, the Russian and Chinese foreign ministries issued a joint statement proposing ways to de-escalate the situation. Moscow and Beijing called on Pyongyang to stop nuclear tests and urged Washington and Seoul to refrain from conducting joint drills.

Mosyakov noted that the Russian-Chinese proposal has the potential to pave the way for some kind of a compromise.

Related:

S Korea, US Going to Continue Putting Pressure on N Korea Amid Missile Threats
China Imposes Ban on Imports From North Korea, Yields to Trump’s Calls
No Sign of N Korea’s Preparations for SLBM Launch Test – S Korea
North Korea Summons Ambassadors to UN, China, Russia for Meeting in Pyongyang

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Trump’s Possible China Trade Crackdown: ‘This is Not Time to Sour Relations’

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President Donald Trump gestures as he and Chinese President Xi Jinping walk together after their meetings at Mar-a-Lago in Palm Beach, Fla

© AP Photo/ Alex Brandon

The US president is considering an investigation into China’s alleged intellectual property theft. Radio Sputnik discussed the issue with Hong Kong-based investment and banking specialist Andrew Leung.

According to Leung, the main reason behind the US-Chinese dispute is the fact that China wants access to technologies, made by the companies Beijing has invested into.

“The accusation is that the Chinese state makes it a mandatory requirement to share technology with the invested technology firms from foreign countries. Of course if we share them, that means that intellectual property rights are transferred to Chinese competitors. And indeed that can be held to be a violation of WTO [World Trade Organization] rules,” Leung said.

US President Donald Trump may announce a probe into China’s alleged intellectual property theft on Monday after repeatedly accusing Beijing of “unfair” trade practices, Politico reported.

A government official confirmed to Politico that Trump was going to instruct US Trade Representative Robert Lighthizer to open the investigation under Section 301 of the 1974 US Trade Act.

“I guess there was a time when the relations [between China and the US] were good in the beginning. But then Washington was perceiving that China was not doing their part in pressurizing North Korea,” the expert noted.Recently, US President Donald Trump stepped up criticism of China amid Pyongyang’s numerous ballistic missile launches. Trump said last month that he was “very disappointed in China” over its failure to put pressure on North Korea to halt its nuclear and missile tests.

“I think that the biggest worry for President Trump is this North Korean thing,” Leung stated. The current situation shows that it is “not the time to sour relations” between the two countries, the expert added.

At the same time, Leung believes that a trade war between the two countries is unlikely, as it would negatively affect both economies.

According to Politico, trade sanctions on China were not expected immediately after the investigation announcement, but could lead to a hike in tariffs on Chinese goods, a move that is likely to breach the World Trade Organization’s rules.

Related:

After Pyongyang’s Missile Launch, Trump Signals He May Give Up on China’s Xi
Trump Criticizes China Over Increasing Trade With N Korea After New Missile Test

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China’s Economy Shows Strong Resilience

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China’s better-than-expected economic performance in the first half of this year was applauded by overseas organizations who believe that China will continue to be a stabilizer of the global economy. Analysts pointed out that China’s satisfactory answer sheet on the economy is closely related to its strong resilience.

In the first half of the year, China posted a forecast-beating GDP increase of 6.9 percent, higher than the global average.

Global expectations on China’s economic performance are high. The International Monetary Fund (IMF) raised China’s 2017 growth forecast to 6.7 percent, its third increase this year. Bloomberg projected China’s GDP in the third and fourth quarters at 6.6 and 6.7 percent respectively, both projections 0.1 percent higher than its previous forecasts.

The Standard Chartered Bank revised China’s growth this year from 6.6 percent up to 6.8 percent, saying China will achieve an accelerated annual growth for the first time since 2010.

The more resilient economy results from an optimized structure bolstered by further expansion of the consumer market and the services sector. According to a report by the Boston Consulting Group (BCG), China’s consumer market is growing by 10 percent a year on average, faster than in any other country.

In the first half year, final consumption expenditures contributed 63.4 percent and the services industry contributed 59.1 percent to economic growth. The continuation of consumption’s fundamental role and the service industry’s role as a main engine of growth is vital to China’s economic resilience.

Bob Carr, director of the Australia-China Relations Institute, thinks consumption is relatively sticky and stable. Final consumption, as the largest contributor to GDP growth, has further stabilized China’s economic growth, he said.

China has a burgeoning middle class and it is estimated an additional 850 million people will join in the middle class by 2030, Carr said. By then, China’s spending will reach $14.3 trillion, accounting for 22 percent of the global total, higher than that of the US at 7 percent, he continued.

The emergence of new impetus produces economic resilience as well. The implementation of the strategy of innovation-driven development since the beginning of this year has fostered new technologies, new industries and new forms of business. The rise of new impetus represented by strategic new industries and sharing economy has become new growth drivers.

European think tank Bruegel holds that China is now speeding up to surpass many developed countries in terms of scientific innovation.

According to a recent study by Bruegel, China has already spent more on research and development, as a percentage of GDP, than the European Union, and it now produces as many scientific publications as the US and more PhDs in natural sciences and engineering.

Bruegel believes China is fully capable of becoming a leader in scientific innovation and pushing forward a multi-polarized global scientific research pattern by 2050.

China’s economic resilience cannot be achieved without sound fundamentals. As the largest developing country and the second-largest economy in the world, China is in the process of new-type industrialization, informatization, urbanization and agricultural modernization.

The country’s solid material foundation, abundant human resources and vast market potential will continue to provide a sound basis and condition for sustained economic growth.

Supply-side structural reform facilitates economic resilience as well. The reform has promoted economic transformation, stimulated vitality, defused risks and boosted confidence.

In the first half of 2017, about 16,000 new businesses were registered every day on average, more than two times before China’s business system reform, strongly driving innovation and entrepreneurship.

In the second quarter, the prosperity index among small and micro enterprises reached 96.5 percent, the highest in the past two years. A 6.9 percent increase in above-scale industrial added value was registered, the best performance since 2015, indicating that policies to support the development of the real economy have begun to yield results and the quality of development has been improved.

Deloitte said in a report that the Chinese government is proactively taking measures to meet the challenges brought by urbanization and aging of population, forging “one-hour economic circles” to strengthen transportation and trade links between rural and urban areas.

The country is also accelerating development of pension and medical services and exploring development opportunities as the population ages rapidly. In addition, it is also devoted to automation and artificial intelligence as a way to pursue the transformation from a labor-intensive goods exporter to a high value manufacturing country.

As the Forbes pointed out, “The China miracle isn’t over –It has entered its second phase.”

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Russia, China call for freeze on both N. Korea launches & South’s drills with US 

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Moscow and Beijing are against any missile launches carried out by North Korea and are at the same time calling on the US to halt military drills in the region, Russian Foreign Minister Sergey Lavrov says.

The statement comes following Lavrov’s meeting with his Chinese counterpart, Wang Yi, in the Philippines capital, Manila on Sunday. The ministers discussed the situation in the Korean Peninsula following the adoption of new sanctions on North Korea by the UN Security Council.

Lavrov said Russia and China have already suggested a roadmap to resolve the Korean crisis.

“Our joint initiative includes support of Russia’s proposal to create a roadmap for gradual restoration of trust and provide conditions for the resumption of the Six-Party talks. We have agreed to promote this concept in practice, including in the UN,” Lavrov said after the meeting with US Secretary of State Rex Tillerson in Manila.

Previously, Wang called the new restrictive measures against Pyongyang “a necessary response” aimed at “blocking North Korea’s nuclear missile development,” as cited by the South China Morning Post. He added that sanctions are not the “ultimate goal” and called for the resumption the so-called six party talks, as the situation on the Korean Peninsula “has come to a very critical juncture.”

“Sanctions are needed but are not the ultimate goal. The purpose is to pull the peninsula nuclear issue back to the negotiating table, and seek a final solution to realize the peninsula’s denuclearization and long-term stability,” Wang said.

Lavrov reiterated the joint Russian-Chinese initiative for “double freezing” which had previously been rejected by the US. The initiative, put forward by the Russian and Chinese foreign ministers on July 4, would freeze “any missile launches and any nuclear tests in North Korea,” as well as “large-scale military exercises by the United States and South Korea,” Lavrov said.

The Russian foreign minister also said that the new resolution seeks to bring the North Korean leadership to the negotiating table – the six-party talks – while the restrictive measures are designed to make Pyongyang curb its missile and nuclear programs in accordance with UN resolutions.

On Saturday night, the UN Security Council unanimously agreed to impose more restrictive measures on Pyongyang, banning exports of coal, iron, lead, and seafood. The move came in response to North Korea’s latest missile launches in July, which it, as well as South Korea and the US, claimed were intercontinental ballistic missile (ICBM) tests.

Posted in China, RussiaComments Off on Russia, China call for freeze on both N. Korea launches & South’s drills with US 

Special Envoy: China Strongly Opposed to Disintegration of Syria

NOVANEWS

[Editor’s note: Now that China has publicly stated it’s firm backing of Iran and it’s strong opposition to any notion of  breaking up Syria, the US and it’s ludicrous ‘Assad must go because he is an evil tyrant who murders his own people with poison gas’ lie is looking ever more isolated and out of touch with both the other world powers and reality itself.

I’m sure Trump will have some inane insults to hurl at China in response, his usual childish and incompetent way of dealing with such matters. However, I very much get the feeling that the days of the Chinese giving two hoots what Trump has to say have passed and Premier Xi Jinping won’t be making any trips to Florida to munch on chocolate cake anytime soon.

Ruining the US-China relationship is one of the very few achievements of the Trump presidency and can be seen as a contributory factor to China’s opposition stance in Middle East issues. Further US meddling in Syria can now only worsen US-China relations, something that has potentially serious ramifications for the entire globe. Ian]

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Special Envoy: China Strongly Opposed to Disintegration of Syria

China’s Special Envoy to Syria Xie Xiaoyan underlined that his country’s strong opposition to plans to disintegrate Syria, stressing the need for all states to fight against terrorist groups.

“China is opposed to any form of the disintegration of Syria and we believe that the country’s integrity should be maintained and different countries should fight against terrorists,” Xie said in a meeting with Iranian Supreme Leader’s top aide for international affairs Ali Akbar Velayati in Tehran on Saturday.

Warning that certain countries’ interference can exacerbate the crisis, he said such meddling “has led to the reinvigoration of the terrorists in Syria and the spread of their presence to other areas”.

Xie noted that he plans to discuss bilateral, regional, international and Syrian issues with Iranian officials during his trip, and said, “Iran and China enjoy common positions not only on Syria but also on other regional and international issues.”

Iranian President Hassan Rouhani in a meeting with Chinese Vice-President Li Yuanchao in Bangkok in October underlined the need for Beijing to play a more active and significant role in Syria and Yemen.

During the meeting on the sidelines of the 2nd Asia Cooperation Dialogue (ACD) summit, President Rouhani stressed Iran and China’s common views on different regional and international issues, and said, “China can play an important role in restoring peace and stability in the region, specially humanitarian aid to the oppressed regional people, including in Yemen and Syria.”

Earlier this month, Chinese President Xi Jinping said the turmoil in Syria has brought a lot of suffering to its people and grave challenges to regional and world peace.

“China’s position on the Syrian issue has been consistent,” Xi said, adding that “Syria’s sovereignty and territorial integrity should be protected and respected, and its future decided by its own people.”

“A political solution offers the only way out,” the Chinese president underlined.

Posted in China, SyriaComments Off on Special Envoy: China Strongly Opposed to Disintegration of Syria

Multi-polar World Arrives: Russia, China Face Down US Bully

NOVANEWS

By Finian CUNNINGHAM 

The United States’ hegemonic dominance in the world is heading to the exits. The decline in US uni-polar power has been underway for several years, in line with the emergence of a multi-polar world. This week, Russia and China showed important resolve to face down American bully tactics over North Korea. The confrontation suggests a turning point in the transition from American world dominance to a multi-polar one.

US President Donald Trump reiterated the possibility of military attack on North Korea while in Poland this week. This was also while Washington was hectoring China and Russia to join in a tougher response to North Korea over its ballistic missile launch days before – the former two nations themselves having recently been sanctioned anew by the US. Talk about American audacity and double think.

However, the crass arrogance shown by the US seems to have hit a new limit of tolerance in Moscow and Beijing. Both are beginning to demonstrate a loss of patience with the bumptious, insufferable Americans.

Reacting to North Korea’s breakthrough ballistic missile launch, Washington deployed its typical conceit, casually threatening to carry out a «retaliatory» military strike. Trump said he was considering «severe» options over Pyongyang’s «very, very dangerous behavior».

But Russia and China’s stance this time to the Americans had significantly stiffened. Both explicitly warned the US against taking military action against North Korea.

Moreover, Russia and China said that they would oppose Washington imposing further sanctions on the government of Kim Jong-un. The latter has already been subjected to six rounds of US-led sanctions.

In short, the American bully is finding that it is no longer able to dictate its unilateral way.

Addressing an emergency session of the United Nations Security Council, the Russian and Chinese ambassadors rejected the shrill American call for «global action to a global threat». Russian envoy Vladimir Safronkov stood firmly with his Chinese counterpart, saying that threatened American military action was simply not an option, and that a different policy was needed from the failed American one of slapping ever-more sanctions on North Korea.

One can imagine the exasperation felt within Washington of being bluntly told «no» to its invariable, self-anointed belligerence.

The alternative route being proposed by Russia and China was the «radical» one – radical from the American point of view – of diplomacy. It has perhaps taken the Russians and Chinese overdue time to reach this point. But what is remarkably apparent now is that they are asserting themselves against the US with increased confidence. And what they are asserting in this case is an eminently reasonable solution to the Korean crisis. They are calling for a freeze on Pyongyang’s nuclear weapons program in conjunction with the US freezing its constant military exercises on the peninsula, as well as withdrawing its anti-missile THAAD system. The next step is to then hold multilateral negotiations for a comprehensive peaceful settlement, without preconditions.

Such an eminently reasonable approach is anathema to the Americans. Because it negates their unilateral arrogance and self-righteousness to dictate terms.

This is a significant development, one that portends a new determination by Russia and China to confront the American bully head-on. For too long, Washington has gotten away with outrageous aggression, lawlessness, hypocrisy and absurd hubris, not just over Korea but on countless other international issues. On the world stage it behaves like a schoolyard bully, or perhaps more accurately that should be a street thug. Going around beating up other people, usually the weak, as it likes. Then when Washington feels particularly affronted about some perceived slight, it invokes international law and righteousness.

This week, what we saw over the North Korea missile launch and the typical American over-reaction was Russia and China saying to Washington: your days of self-licensing aggression and abusing international law are over; your American uni-polar hegemony is redundant.

Welcome to the multi-polar world forged largely by Russia and China where all nations must abide by international norms and law, principally the paramount pursuit of diplomacy.

Oh the shock to American arrogance to receive such a rude awakening.

The lawlessness of American «exceptionalism» is a theme that Russian President Vladimir Putin has been constantly hammering over the past decade. But it seems now that Russia and China are strong enough politically, economically and militarily to begin asserting and acting on the conviction that the days of American arrogance and lawlessness are indeed over. It is no coincidence that the firm Russian-Chinese opposition to American aggression over North Korea came at the same time that Putin was hosting his counterpart President Xi Jinping in Moscow, where both leaders hailed an even deeper Sino-Russian strategic alliance.

Moscow and Beijing censured North Korea over its 11th missile launch so far this year. They said it violated UN sanctions imposed on Pyongyang since it first exploded a nuclear warhead in 2006. Still, they sought to put a proper perspective on the event, rather than reflexively demonizing North Korea as the Americans never cease to do.

The intercontinental ballistic missile (ICBM) launched this week by North Korea was not armed with a warhead but Pyongyang said it now has the capability to do so and to strike anywhere on the globe. The trajectory of the ICBM indicates that North Korea could now hit the US state of Alaska. That heralds a major breakthrough in North Korea’s military capability. Earlier this year, President Trump claimed that North Korea would never be allowed to reach that point. Well, it just did this week.

Nevertheless, Russia and China realize that the Korean crisis is a complex issue, not the simplistic narrative put out by Washington about a «rogue regime» threatening world peace. Moscow and Beijing are well aware that Washington is very much part of the problem, with its relentless military exercises and provocative threats to North Korea’s sovereignty.

Russia and China understand that the only reasonable solution is not reckless escalation, but a negotiated engagement by all sides, including North Korea, South Korea, the US, Japan, China and Russia. Past multilateral negotiations have come unstuck largely because of Washington’s high-handed imperious attitude. Winding down conflict on the Korean Peninsula necessitates the winding down of military forces by all sides, and a primary responsibility for that lies with the US, the external protagonist in the region.

As the Russia-China strategic alliance grows ever stronger heralding a «post-West» world order, as Russian foreign minister Sergey Lavrov put it, one which was dominated by American capitalism, the US petrodollar and its military machine, it seems unmistakable that both Russia and China have reached a practical limit of tolerance to Washington’s lawless arrogance.

In recent weeks, Washington has slapped more sanctions on both Russia and China, conducted provocative military incursions into their territorial domains, and continued to disparage them with media distortions. Washington possesses thousands of ICBMs, test-fires them all the time, and installs missile systems around Russian and Chinese territory. Washington has waged or covertly sponsored criminal wars across the Middle East over the past two decades, resulting in millions of innocent deaths and spawning of terror groups.

North Korea has attacked no-one, has an arsenal of perhaps 10 nuclear weapons and conducts its missile tests far from any of its neighbor’s territory.

Yet the lawless, mass-murdering Americans – the only nation to have actually dropped nuclear weapons on civilian populations – have the audacity to declare North Korea a threat to world peace and insist on the «right» to preemptively attack Pyongyang. And if Russia and China do not acquiesce to this American demand then Washington threatens to increase more sanctions on them.

The American bully is patently beyond itself from its own megalomanic despotism. But the big, crucial difference now is that Russia and China are moving to finally put this bully in its place. The multi-polar world has arrived. And the only «radical» thing that Russia and China are insisting on is that the US behaves like everyone else and abides by international law. That basic requirement is an indication of how lawless the Americans are.

Addressing bused-in supporters in Poland’s Warsaw Square this week, Trump declared with bravado that «the West [that is, the US] will never back down».

Well, we’ll see about that. As noted, the multi-polar world has arrived and America is being compelled to back down by an ascendant Russia and China who also happen to have world opinion on their side.

Posted in USA, China, RussiaComments Off on Multi-polar World Arrives: Russia, China Face Down US Bully

US rejects Russo-Chinese proposal to suspend drills in South Korea

NOVANEWS
Image result for North Korea US CARTOON

The US rejects a proposal by Russia and China to suspend joint drills with South Korea in exchange for North Korea freezing its nuclear weapons programs, the State Department said, adding that Washington does not see the activities as equivalent.

US drills with South Korea are not the same as North Korea’s missile and nuclear tests, State Department spokeswoman Heather Nauert told reporters Thursday.

“These are all things that have taken place since the 1950s. So that wouldn’t change,” Nauert said, describing the drills as lawful and longstanding.

“We do these kinds of exercises and have relationships like this all over the globe. If China and Russia decide to come out against that, that is not going to change our position,” she added.

Moscow and Beijing have called on Washington and Seoul to freeze large-scale military exercises in an attempt to calm tensions on the Korean peninsula after Pyongyang test-fired a missile it said could reach the US mainland.

The US diplomatic offensive to pressure and isolate North Korea is still in its early stages, according to the State Department spokeswoman.

“We continue to believe that China can do a whole lot more to try to bring additional pressure to North Korea,” Nauert said, adding that China has “unique leverage” with Pyongyang because of the “strong trade relationship” between two countries.

One of the measures the US has proposed to other countries is to drastically scale back the number of North Korean guest-workers, Nauert said.

She also referenced last week’s decision by the US Treasury Department to sanction a Chinese bank that did business with Pyongyang, although she declined to say whether more such sanctions were in the works.

Posted in USA, China, North Korea, RussiaComments Off on US rejects Russo-Chinese proposal to suspend drills in South Korea

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