Any contagion from US banking crisis?

 

THE collapse of four banks in the United States and Europe has sent fears of systemic risks throughout the global banking system.

Currently, the risk of contagion in Malaysia is low, given the limited direct and indirect exposure of the domestic banking system as well as the swift action taken by United States and Swiss regulators to contain their respective banking crises.

Banks in Malaysia are also generally well-capitalised with healthy liquidity positions, underpinned by a stable and diversified funding base.

Moreover, Bank Negara keeps a close watch on all banks operating locally as compared to the two-tier system in the United States, said RHB Banking Group regional sector head, group wholesale banking David Chong Voon Chee.

The United States has a dual banking system, with national banks regulated on the federal level and state banks regulated by each state.

Still, we should monitor for second and third order effects from these events, where possible cause-and-effects could lead to market volatility, tighter access to credit and ultimately, slower global growth.

In the United States, Californiabased Silicon Valley Bank (SVB) and New York’s Signature Bank, collapsed due to heavy losses on their bond portfolios and a huge run on deposits.

San Diego-based Silvergate Bank, which catered largely to cryptocurrency companies, had voluntarily wound down its operations.

As investors began ditching out anything related to banking risks, Switzerland’s scandal-ridden Credit Suisse also collapsed as its largest shareholder, Saudi National Bank, stopped investing in it.

As a result of the banking crisis in March, 2023, the jump in risk indicators – credit default swaps of major US and European banking names as well as US sovereign credit default swaps – has become worrying.

However, their levels are still far from the highs of the global financial crisis of 2008.

A credit default swap is a financial derivative that allows investors to offset their credit risks with that of another investor.

But volatility outside of rates – in other asset classes like foreign exchange, equities and commodities – remain relatively modest by historical standards, implying that the crisis is not systemic, said United Overseas Bank in a report.

In the case of Malaysian banks, beyond the minimum level of 8% for total capital ratio (TCR), excess capital stands at about Rm196bil, as of January.

Meanwhile, TCR (the ratio of total capital to total risk-weighted assets) at 18.9% in January is way above the prescribed level of 8%.

This means that banks have substantial buffer in their capital levels where they are able to absorb a significant amount of loans impairment and market volatility, said Bank Muamalat chief economist and social finance, Mohamed Afzanisam Abdul Rashid.

Despite external uncertainties, this indicates that borrowing and lending activities can be conducted seamlessly, while households and businesses are able to access credit from the banking sector without hassle.

Nevertheless, every financing application will be subjected to their eligible criteria including repayment history and the level of indebtedness.

Malaysian banks also usually have a relatively smaller portion of assets in investments while interest rate increase is less drastic, and hence, the mark-to-market losses would be comparatively smaller, said Fortress Capital Asset Management Sdn Bhd CEO Thomas Yong.

If a security was bought at a certain price and the market price dropped later, it would result in an unrealised loss, marking the security down to the new market price would lead to mark-to-market losses.

Malaysian banks also have a large portion of household depositors, while business depositors are diversified across different industries.

Hence, the need for a large amount of liquidity to fund withdrawals is less urgent.

While there will be jitters, banks in Malaysia are well-regulated besides having a diversified depositor base, they also have retailers who are more loyal, said Etiqa Insurance and Takaful chief strategy officer Chris Eng.

The funding base of the Malaysian banking system remained strong, with an aggregate liquidity coverage ratio (LCR) and net stable funding ratio of 154% and 118.2% respectively, at the end of 2022.

The LCR seeks to ensure that banks hold sufficient high-quality assets, while the net stable funding ratio calculates the proportion of available over required stable funding.

More than 80% of banks’ high quality liquid assets are in the form of placements with Bank Negara and government bonds, which banks can access and pledge in the interbank market or with Bank Negara for additional liquidity, according to Maybank Investment Bank in a report.

Foreign currency external debt-at-risk was manageable, at Rm80.4bil or 20.3% of total banking system external debt.

Loans under repayment assistance programmes declined to 4.2% of total banking system loans at the end of 2022, from 5.7% at the end of June, 2022.

Loan loss coverage ratio (which indicates how protected a bank is against future losses), including regulatory reserves, remained high at 118.2% at the end of 2022.

Since the Asian Financial Crisis in 1997, Malaysia’s banking industry has gone through a significant consolidation which brought down the number of banks from more than 60 to about 10 banks by early 2020.

Non-performing loans had led to the creation of Danaharta Nasional to address non-performing accounts while banks concentrated on running their businesses.

Risk management oversight was implemented at a robust pace and Malaysian banks were required to run multiple scenarios for the stress testing of their balance sheets.

This resulted in well-capitalised and highly liquid banks as well as sound credit underwriting standards.

Following the recent banking crisis, banks especially those in the United States and Europe, now need to defend and fight for their credit worthiness.

While fears of contagion are being allayed for now, caution and constant monitoring will prevail. 

• by Yap Leng Kuen is a former StarBiz editor.

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It's impossible for South Korea to enjoy being monitored: Global Times editorial

Facts repeatedly prove that the US, which believes in the principle of power, is not softer on its allies when it comes to using intelligence as a tool for blackmailing and coercion than it is toward a powerful "opponent."

 

NATO’s expansion stumbles as members calculate costs

 

Europe will certainly not become more secure after this round of NATO expansion

 There is a lack of mutual understanding and compromise in European culture, where countries are focused on maximizing their own security interests without regard for others. The US is certainly glad to see Europe in this state.

 

 

Editor's Note:

NATO, which is constantly looking for imaginary enemies and justifying its existence by inciting confrontation, is holding a summit from Tuesday to Thursday, and it also plans to extend its tentacles to the Asia-Pacific region. Behind its aggressive narrative, contradictions and divisions within NATO have become increasingly prominent. The Russia-Ukraine conflict is not going according to NATO's playbook. This series of articles will provide some clues regarding NATO's predicament. This is the fifth piece.

NATO, the North Atlantic Treaty Organization, was established in 1949, but to this day it remains an important tool for suppressing the opponents of the West. The initiative to unite 12 countries originally belonged to the United States, which became the most powerful world leader after the end of World War II. The US was the foundation of the organization's military power, a source of economic and financial assistance to member countries. It goes without saying that not only the highest command posts belonged to the Americans, but they also defined strategic objectives at all stages of NATO's activities. The main mission of this organization from the very beginning was the unification of military and economic resources under the command of the US to prepare an all-out war against the Soviet Union. The countries of another military bloc, the Warsaw Pact Organization (ATS), led by the USSR, also became enemies. It was created only six years after NATO - in 1955.

NATO played an important role in weakening the USSR and its allies. After the collapse of the Soviet Union and the dissolution of the Warsaw Pact in 1991, the question arose about the feasibility of continuing the existence of NATO. But the US, which really ruled the bloc, set a new task for it - to involve former ATS member countries and post-Soviet republics in its structure. This was considered necessary to expand the zone of America's strict control over Europe as the most important part of the world at that time. NATO was also used to "sweep" the European space during the war against Yugoslavia. NATO and its de facto twin in the field of economics and politics - the European Union - were used in organizing the "color revolution" in Kiev and provoking the current Ukrainian crisis. In these situations, the US uses NATO as a tool for dirty work, saving the US from the loss of "precious American lives" and the risk of retaliatory strikes on the territory of the US.

NATO's successful fulfillment of its tasks in Europe led Washington to think about using the potential and experience of the bloc in another part of the world. Having recently identified China as the most serious threat to the international order, Washington is faced with a lack of resources to contain and suppress the growing Chinese power.

In order to mobilize the existing resources, the Biden administration has developed a concept of Indo-Pacific security, strongly resembling a similar concept for the North Atlantic. The concept has already been reinforced by the creation of the Indo-Pacific Command of the US Armed Forces. Already available resources were activated - military alliances with Japan, South Korea and Australia. The AUKUS military group was created. The activity of the QUAD military-diplomatic group is stimulated. The creation of the Indo-Pacific Economic Framework was recently announced. But even these actions are not enough for Washington.

Therefore, it is urgently necessary to extend the scope of NATO's responsibility to the Indo-Pacific region as well. Obviously, US efforts are aimed at uniting all Asian and European allies, their military, economic and geostrategic resources to create a new tool for the realization of American global ambitions. It can be conditionally called the Indo-Pacific Treaty Organization according to the patterns of NATO.

Of course, the arrival of NATO to the East, especially since the new military bloc of the West, will threaten the security interests of Russia as a Pacific power. But first of all, it will be directed against China. Strengthening the militarization of the region will also contradict the interests of economic stability and security of ASEAN, APEC and other groupings of the region.

Serious obstacles may arise in the way of implementing Biden's chess game. We are not talking about the fluctuations of European satellites in NATO such as "ready for anything" Poland, the "Baltic troika" or the Balkan neoplasms. It is unlikely that we will talk about England with its age-old anti-Chinese traditions and loyalty to Washington at the level of a conditioned reflex. But such large "stakeholders" as Germany, France, Spain and Italy may think hard about the consequences of entering into a military confrontation with China, taking into account their trade and economic interests.

These powers are well aware of the benefits of bilateral trade with China, which amount to tens and hundreds of billions of euros. They are also aware of the intention of the White House to lift trade sanctions against China in an attempt to bring down the threatening increase in inflation. The role of trade and economic "cannon fodder" is unlikely to entice figures claiming some level of independence even within the framework of NATO. In Madrid, the leaders of significant European powers are unlikely to voice their doubts, but then they will try to "put on the brakes" in implementation of Biden's Indo-Pacific plan.

Another important reason for avoiding the dubious honor of becoming a member of the anti-Chinese coalition may be Washington's inconsistency. Just two years ago, then US president Donald Trump reproached NATO member countries for the insufficiency of military efforts, the desire to "ride for free" and even promised to dissolve the military bloc. What will happen after the next presidential election? Will Trump come back? Won't those business and political circles that oppose the dispersion of the waning power of their power, for the concentration of resources on solving domestic economic and humanitarian problems, win?

Europeans are already suffering losses from following Biden's anti-China course. The ratification of the China-Europe Comprehensive Investment Agreement has been disrupted. Taking into account the hostile policy of Poland and the Baltic countries, Chinese logistics companies are reviewing the routes of goods delivery to Europe via the Silk Road. Beijing is studying the experience of "crippling sanctions" against Russia. After all, Washington has threatened to impose similar sanctions not only in case of the aggravation of the situation around the Taiwan island, but even if China refuses to participate in sanctions against Russia.

The US' convulsive attempts to return itself to the role of world hegemon are unlikely to succeed. But they can cause considerable harm to mutually beneficial relations between countries, which will be difficult to compensate quickly.

The author is head of the "Russian Dream-Chinese Dream" analytic center of the Izborsk Club. opinion@globaltimes.com.cn 

  Source link

 

 

Asia-Pacific countries should not stand under 'dangerous wall' of NATO: Global Times editorial

The sewage of the Cold War cannot be allowed to flow into the Pacific Ocean.

 

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THE GLOCALISATION OF HUMANITY

  https://youtu.be/oS5QqS9C_xw

 

Few Westerners see the irony of a supposedly closed China celebrating the 100th anniversary of the founding of the Chinese Communist Party (CCP), when communism was born but essentially rejected in the West. What was it about Marx that resonated with Chinese civilisation that prided itself with its own ancient and enduring philosophy? (PIC: Chinese President Xi Jinping waves as he attends a gala in connection with the anniversary - AP)

 "Globalisation is interpreted as universalisation of American or European values and standards. But the fact remains that these standards and rules were imposed historically by conquest, colonisation and force".

China Does Not Recognize The Rule-Based International Order imposed historically by Conquest, Colonisation and Force !

 https://youtu.be/_ThU1vvW0A4

China has never interfered in the internal affairs of other countries and never obstructed their development. It will never accept any country interfering in China's internal affairs and obstructing its development. Today's China has long been different from the China of 100 years ago. No one and no force should underestimate the Chinese people's firm will and strong ability to defend national sovereignty, security, and development interests.

WHY is Marxism thriving in China and not in Marx’s place of birth? Why is Buddhism more practiced in East Asia than in India? Why has Islam more followers outside Saudi Arabia?

Ideas and religion spread through globalisation, but it was really their localisation that created more believers and followers.

What succeeded was not globalisation, but glocalisation, the internalisation of universal ideas and beliefs by the many, and not just the few.

Few Westerners see the irony of a supposedly closed China celebrating the 100th anniversary of the founding of the Chinese Communist Party (CCP), when communism was born but essentially rejected in the West.

What was it about Marx that resonated with Chinese civilisation that prided itself with its own ancient and enduring philosophy?

London School of Economics Emeritus Professor Megnai Desai, writing on “Marx’s Revenge”, made the shrewd observation that the Chinese Revolution in the 20th century was very different from the French and American Revolutions in the 18th century.

The French Revolution was a domestic rebellion against the monarchy and the landed gentry, whilst the American Revolution was rebellion against British foreign domination

Both created republics and preached equality, liberty and freedom, but both went on to create empires, one by conquering lands from the native Indians and Mexico, and the other through Napoleon’s rampage in Europe.

The Chinese Revolution was different because it was simultaneously a struggle against foreign invasion (Japanese and earlier Eight Nations Alliance) as well as the Nationalist government that favoured the capitalist and landed classes.

The CCP won because it represented the rural peasantry, rather than adopting the Comintern strategy of starting the revolution from the cities. In short, the CCP localised universal Communism with Chinese characteristics. It was practical rather than ideological.

By the time of the fall of the Qing Dynasty in 1911, Chinese thinkers struggled with what would replace the old order.

The country fell into warlordism. The Nationalist Party under Sun Yat-sen struggled to balance the conservative wing that represented the landlords and capitalists, and the left wing influenced by Communism and socialism.

Chinese revolutionaries followed closely the Russian Revolution in 1917, because it was then the most recent model of social transformation. The Chinese elite understood that the rebuilding of China from the collapse of the old order was a monumental task. The country was backward and the uneducated masses were unprepared for modernity, vulnerable to foreign conquest.

Even though they felt the burden of history, they also understood that there was no parallel in history on the scale of Chinese transformation.

The Chinese Left took to Marxian thinking because Marx gave both a historical and political economy perspective on how capitalism would evolve, as well as a philosophical tool in terms of Hegelian dialectics.

Marx used the profound insights of the Prussian philosopher Hegel that transformations come from contradictions of opposites, in which change will not happen in a smooth line, but through revolution or discontinuity.

Marx’s discovery of dialectic materialism – in everything, the contradiction and interaction between opposites lead to the destruction of the old and emergence of the new – was music to the ears of those who sought a path out for the New China.

Furthermore, the fundamental ideas of dialectics were very similar to the Chinese yin-yang philosophy of the I Ching and Dao Dejing. As Lenin put it, “dialectics is the study of the contradiction within the very essence of things. Development is the struggle of opposites.”

Having theory is one thing, but putting these ideas into practice is another. We can only appreciate China’s miraculous transformation from a backward economy to the second largest economy in the world by understanding that this was done through essentially three dictums: “seek truth from facts”, crossing the river by feeling the stones” and “it doesn’t matter whether a cat is black or white, as long as it catches mice.”

In other words, make fact-based decisions, always try or test under uncertainty, and above all, be practical and have an open mind. Change is a process between conflicting contradictions. There is no absolute black and white.

Historian Ray Huang, one of the finest sinologists of his generation and a former Nationalist soldier, wrote in the Preface to his classic “China: A Macro-History”: “Chinese history differs from the history of other peoples and other parts of the world because of an important factor: its vast multitudes.

In the imperial period as well as in the very recent past, practical problems had to be translated into abstract notions in order to be disseminated.

In turn, at the local level the message had once again to be rendered into everyday language.”

It is the reduction of very complicated policies into simple language that the Chinese people had to understand and own that enabled them to buy into the transformation, despite the huge sacrifices at the individual and community levels. The people’s eyes are clearer than those of the elites.

The US-China rivalry has done the world a favour by contrasting very fundamental worldviews. When the West preaches a value and rules-based order, what is meant is that freedom, democracy and individual rights are absolute – essentially a zero-sum “my way or no way.” Globalisation is interpreted as universalisation of American or European values and standards. But the fact remains that these standards and rules were imposed historically by conquest, colonisation and force.

When China, Russia, India or any other country deviates or disagrees with that, then they must be contained, confronted or sanctioned. Localisation or being different is almost seen as deviant rather than a celebration of diversity.

Civilisations reach their highest levels through tolerance and openness. When they become inward-looking, fundamentalist and mono-thinking, fragility and decay sets in.

The world is simultaneously becoming more global in inter-connectivity, even as regionalisation, fragmentation and localisation speeds up.

Glocalisation, the simultaneous contradiction between global and local, is to be welcomed, rather than feared.

The future will always be open, uncertain and contradictory. Such diversity is the nature of humanity.

Andrew Sheng comments on global affairs from an Asian perspective. The views expressed here are his own

Source link

 

Footage of a brutal gang attack on Asian students |Daily Mail ...

 https://www.dailymail.co.uk/news/article-9751931/Footage-brutal-gang-attack-Asian-students.html

 

• 
  

+4

The much larger group attacks the three Asian students outside an Inala shopping centre (pictured) as one girl is pulled to the ground by her hair

 

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THE GLOCALISATION OF HUMANITY

 

https://youtu.be/oS5QqS9C_xw

Few Westerners see the irony of a supposedly closed China celebrating the 100th anniversary of the founding of the Chinese Communist Party (CCP), when communism was born but essentially rejected in the West. What was it about Marx that resonated with Chinese civilisation that prided itself with its own ancient and enduring philosophy? (PIC: Chinese President Xi Jinping waves as he attends a gala in connection with the anniversary - AP)

 "Globalisation is interpreted as universalisation of American or European values and standards. But the fact remains that these standards and rules were imposed historically by conquest, colonisation and force".

WHY is Marxism thriving in China and not in Marx’s place of birth? Why is Buddhism more practiced in East Asia than in India? Why has Islam more followers outside Saudi Arabia?

Ideas and religion spread through globalisation, but it was really their localisation that created more believers and followers.

What succeeded was not globalisation, but glocalisation, the internalisation of universal ideas and beliefs by the many, and not just the few.

Few Westerners see the irony of a supposedly closed China celebrating the 100th anniversary of the founding of the Chinese Communist Party (CCP), when communism was born but essentially rejected in the West.

What was it about Marx that resonated with Chinese civilisation that prided itself with its own ancient and enduring philosophy?

London School of Economics Emeritus Professor Megnai Desai, writing on “Marx’s Revenge”, made the shrewd observation that the Chinese Revolution in the 20th century was very different from the French and American Revolutions in the 18th century.

The French Revolution was a domestic rebellion against the monarchy and the landed gentry, whilst the American Revolution was rebellion against British foreign domination

Both created republics and preached equality, liberty and freedom, but both went on to create empires, one by conquering lands from the native Indians and Mexico, and the other through Napoleon’s rampage in Europe.

The Chinese Revolution was different because it was simultaneously a struggle against foreign invasion (Japanese and earlier Eight Nations Alliance) as well as the Nationalist government that favoured the capitalist and landed classes.

The CCP won because it represented the rural peasantry, rather than adopting the Comintern strategy of starting the revolution from the cities. In short, the CCP localised universal Communism with Chinese characteristics. It was practical rather than ideological.

By the time of the fall of the Qing Dynasty in 1911, Chinese thinkers struggled with what would replace the old order.

The country fell into warlordism. The Nationalist Party under Sun Yat-sen struggled to balance the conservative wing that represented the landlords and capitalists, and the left wing influenced by Communism and socialism.

Chinese revolutionaries followed closely the Russian Revolution in 1917, because it was then the most recent model of social transformation. The Chinese elite understood that the rebuilding of China from the collapse of the old order was a monumental task. The country was backward and the uneducated masses were unprepared for modernity, vulnerable to foreign conquest.

Even though they felt the burden of history, they also understood that there was no parallel in history on the scale of Chinese transformation.

The Chinese Left took to Marxian thinking because Marx gave both a historical and political economy perspective on how capitalism would evolve, as well as a philosophical tool in terms of Hegelian dialectics.

Marx used the profound insights of the Prussian philosopher Hegel that transformations come from contradictions of opposites, in which change will not happen in a smooth line, but through revolution or discontinuity.

Marx’s discovery of dialectic materialism – in everything, the contradiction and interaction between opposites lead to the destruction of the old and emergence of the new – was music to the ears of those who sought a path out for the New China.

Furthermore, the fundamental ideas of dialectics were very similar to the Chinese yin-yang philosophy of the I Ching and Dao Dejing. As Lenin put it, “dialectics is the study of the contradiction within the very essence of things. Development is the struggle of opposites.”

Having theory is one thing, but putting these ideas into practice is another. We can only appreciate China’s miraculous transformation from a backward economy to the second largest economy in the world by understanding that this was done through essentially three dictums: “seek truth from facts”, crossing the river by feeling the stones” and “it doesn’t matter whether a cat is black or white, as long as it catches mice.”

In other words, make fact-based decisions, always try or test under uncertainty, and above all, be practical and have an open mind. Change is a process between conflicting contradictions. There is no absolute black and white.

Historian Ray Huang, one of the finest sinologists of his generation and a former Nationalist soldier, wrote in the Preface to his classic “China: A Macro-History”: “Chinese history differs from the history of other peoples and other parts of the world because of an important factor: its vast multitudes.

In the imperial period as well as in the very recent past, practical problems had to be translated into abstract notions in order to be disseminated.

In turn, at the local level the message had once again to be rendered into everyday language.”

It is the reduction of very complicated policies into simple language that the Chinese people had to understand and own that enabled them to buy into the transformation, despite the huge sacrifices at the individual and community levels. The people’s eyes are clearer than those of the elites.

The US-China rivalry has done the world a favour by contrasting very fundamental worldviews. When the West preaches a value and rules-based order, what is meant is that freedom, democracy and individual rights are absolute – essentially a zero-sum “my way or no way.” Globalisation is interpreted as universalisation of American or European values and standards. But the fact remains that these standards and rules were imposed historically by conquest, colonisation and force.

When China, Russia, India or any other country deviates or disagrees with that, then they must be contained, confronted or sanctioned. Localisation or being different is almost seen as deviant rather than a celebration of diversity.

Civilisations reach their highest levels through tolerance and openness. When they become inward-looking, fundamentalist and mono-thinking, fragility and decay sets in.

The world is simultaneously becoming more global in inter-connectivity, even as regionalisation, fragmentation and localisation speeds up.

Glocalisation, the simultaneous contradiction between global and local, is to be welcomed, rather than feared.

The future will always be open, uncertain and contradictory. Such diversity is the nature of humanity.

Andrew Sheng comments on global affairs from an Asian perspective. The views expressed here are his own

Source link

 

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Decoding an awakening giant, the China's secret recipe of success for an economic miracle

World main countries 2021 Q1 GDP Growth Infographic: Wu Tiantong/GT Xi Jinping: Chinese people will never allow foreign bullying, oppres..

 

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https://youtu.be/j7Ubz8CYXhE Ambassador Chen Xu, permanent representative of China to the United Nations office in Geneva and other inter...

 

 

From Mars to the moon, Chinese Kylin computer operating system

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Why Europe gravitates away from US to Eastern power center: Martin Jacques

 

What will happen to Europe? Will it continue with a broadly pro-American orientation, or will it pursue an increasingly independent position?

Either way, the consequences will be far-reaching. At the heart of the West lie the US and Europe. If Europe seeks a more autonomous role, then the West will be seriously weakened.

The end of the Cold War marked a major moment in US-Europe relations. Europe was no longer dependent on the US for its defense and ever since, slowly but remorselessly, a growing distance has opened up between them. This was accelerated by two key events ̶ the US invasion of Iraq, opposed by most Europeans, and the Donald Trump phenomenon, which most Europeans found beyond the pale.

President Joe Biden wants to mend the fences and return to something closer to the pre-Trump relationship. He may have some success because, unlike Trump, Biden will seek to befriend rather than castigate Europe. But there will be no simple return to the pre-Trump era: too much has happened, too much has changed.

A recent opinion poll by the European Council on Foreign Relations across 11 European countries reveals what can only be described as a sea-change in European attitudes in the post-Trump era. Six in 10 Europeans believe that the US political system is broken and that China will become a stronger power than the US in the next10 years. A majority now want their country to remain neutral in any conflict between the US and China.

A majority of Germans believe that, after voting for Trump in 2016, Americans can no longer be trusted; across Europe likewise more people agreed than disagreed with this statement. The survey grouped the respondents into four categories. The smallest, 9 percent of the total, believed that the EU was broken and the US would bounce back. A second group, around 20 percent of the total, believed that both the US and the EU would continue to thrive. A third group, 29 percent of the total, thought that both the US and the EU were broken and declining. A fourth group, 35 percent of the total, believed that the EU was healthy, but the US was broken. The latter two groups, almost two-thirds of the total, expected that the US would soon be displaced by China.

There has clearly been a profound shift in European attitudes consequent upon the decline of the West since the 2008 financial crisis, the Trump presidency and the rise of China. These, we must remind ourselves, are very recent developments which have happened with remarkable speed. Far from reinforcing the Atlantic alliance and the relationship with the US, their main impact on Europeans has been to weaken those bonds, elicit a growing acknowledgement that the world has changed profoundly and foster a belief that Europe needs to be more independent. Of course, these trends are still young and fluid. Many conflicting forces are at work with attitudes ebbing and flowing both within and between countries. Criticism of China has grown apace in the recent period in Europe, as it has in the US. But there is one fundamental difference. While the US is bent on defending its global primacy, Europe long ago abandoned any such pretensions, thereby greatly reducing the sources of friction and animosity between it and China in comparison with the US.

The survey reveals that by far the dominant trend is toward a more independent-minded Europe, a growing skepticism about the US and a sign of recognition that China will soon become the dominant power in the world. The European leader who most symbolizes this outlook, and has pioneered this way of thinking, is German Chancellor Angela Merkel. The recently agreed EU-China Comprehensive Agreement on Investment, very much in Merkel's image, is a powerful demonstration of the EU's willingness to pursue its own independent relationship with China rather than following the Americans.

The trend toward a growing distance between Europe and the US will be slow, tortuous, conflict-riddled, and painful. Europe has looked westward across the Atlantic ever since Christopher Columbus. It was European settlers who colonized Northeast America and subsequently established the US. The latter was a European creation which over time was to outperform its ancestral continent. If Europe colonized much of the world, the post-1945 world order was a Western creation, with the US the dominant partner and Europe very much a junior partner. In sum, an enormous historical, intellectual, political and cultural hinterland binds the US and Europe together. But we are now in new territory. American decline means that it has increasingly less to offer Europe.

The gravitational pull of China, and Asia more generally, is drawing Europe eastward. Nothing illustrates this phenomenon better than the China-proposed Belt and Road Initiative. Slowly but surely, bit by bit, Europe is becoming more and more involved ̶ first the countries of Central and Eastern Europe, then Portugal, Greece and Italy, and others over time will in all likelihood follow. What drew Europe westward is now drawing it eastward: the centre of gravity of the global economy, once in the west, is now in the east.

The author was until recently a Senior Fellow at the Department of Politics and International Studies at Cambridge University. He is a Visiting Professor at the Institute of Modern International Relations at Tsinghua University and a Senior Fellow at the China Institute, Fudan University. Follow him on twitter @martjacques. opinion@globaltimes.com.cn

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Europe goes its own way on China

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EVER since Joe Biden won the US presidency, the rhetoric from Europe’s leaders has been filled with anticipation of a new transatlantic dawn. With Donald Trump out of the White House, Europe signalled that it would again link arms with America, bound by common ideals and a firm resolve to “save the world from its bad angels”. 

“The United States is back. And Europe stands ready,” European Commission President Ursula von der Leyen had declared on Biden’s inauguration day. 

But given the opportunity in recent weeks to show the Biden administration it was serious about geostrategic collaboration, Europe opted instead to “show Washington the finger”, said Politico.

According to the political journal, a consensus has emerged among transatlantic strategic thinkers in recent years that the West faces two major threats to its security: old nemesis Russia and China, the global power the US sees as the much greater challenge over the long term. 

As White House press secretary Jen Psaki said: “Beijing is now challenging our security, prosperity and values in significant ways that require a new US approach.”

But Europe appears to have its own ideas, as seen in how the regional bloc has continued to pursue its own course on China in the face of American reservations. 

In late December, for example, the European Union agreed to a landmark investment pact with China, ignoring objections from across the Atlantic and requests from the Biden camp to hold off until the new administration was in office. 

Then at the the Davos World Economic Forum last week, German Chancellor Angela Merkel rejected calls for Europe to pick sides between the US and China, in a nod to the plea made by Chinese President Xi Jinping a day earlier.

While Biden is looking to group together democracies to contain China, Merkel was pointedly wary about the formation of factions.

“I would very much wish to avoid the building of blocs,” said Merkel. “I don’t think it would do justice to many societies if we were to say this is the United States and over there is China and we are grouping around either the one or the other. This is not my understanding of how things ought to be.”

 

Referring to Xi’s speech at the same forum, Merkel said: “The Chinese president spoke yesterday, and he and I agree on that. We see a need for multilateralism.”

Merkel is far from alone in Europe in not wanting to join a more robust US approach toward Beijing. Paris and Rome broadly share Merkel’s position. 

On Thursday, French President Emmanuel Macron echoed Merkel’s statement that the EU shouldn’t gang up on China with the US, even if it stands closer to Washington by virtue of shared values.

“A situation to join all together against China, this is a scenario of the highest possible conflictuality. This one, for me, is counterproductive,” Macron said during a discussion broadcast by Washington-based think tank the Atlantic Council.

This kind of common front against China risks pushing Beijing to lower its cooperation on issues like combating climate change, added the French president.

Macron was the first European leader to make it a point to engage with China as a European bloc by including Merkel and then-EU Commission President Jean-Claude Juncker during a bilateral visit by Chinese President Xi Jinping to France in March 2019.

Macron and European partners didn’t share the Trump administration’s outwardly aggressive stance on China, instead theorising that it was at once a “partner, competitor and systemic rival.”

And now it looks like they do not want to go back to the “old normal” either, where US led in the us-versus-them global politics.

Whether Europe’s decision to effectively de-couple from the US foreign policy agenda before Biden’s administration has really even begun is born out of a desire to achieve the dream of “strategic autonomy,” concern that Donald Trump could return in four years, or some combination thereof may not matter in the end. 

As the strategic rivalry between the US and China comes into focus, Europe is adamant to stay on the sidelines and remain neutral. – Agencies

 

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Covid-19 reaches the West

https://youtu.be/F_Jq7ItdHtA

Tourists wearing protective masks walks by the Duomo in central Milan on February 27,2020 amid fears over the spread of the novel Coronavirus. - The number of COVID-19 infections in Italy, the hardest hit country in Europe, hits the 400 mark late on February 26, with 12 deaths. (Photo by Miguel MEDINA/ AFP)

But keep cool, negative volatility will likely be followed by positive volatility

The coronavirus (Covid-19) outbreak has officially reached Western shores.

Since last week, the virus has spread to Europe, Brazil and the Middle East.

New cases have emerged across Europe.

There have been more than 81,000 people infected with nearly 3,000 deaths so far.

Just the previous Wednesday on Feb 19, stocks in the US were complacently at record highs, never mind that Asian markets were roiling and taking huge hits, thanks to the coronavirus that first took roots in Wuhan, China.

Asia has been battling this disease since January. Markets have been volatile but have since recovered as the number of infections have reduced and governments have been diligent at handling the disease.

It is like the domino effect, with the same reactions, panic and emotions that happened throughout Asia now migrating to the West.

It is almost deja-vu, seeing the fear and market reaction, no doubt the impact to the Dow and S&P 500 has a significantly larger impact.

The Covid-19’s largest impact is the fear it has transmitted with rapid speed.

In the US, stocks fell for a sixth straight day on Thursday, with the S&P 500 price index falling 4.4% and bringing this pullback officially into correction territory. On a six-day basis, the Dow Jones was down 13.4% at 25,766.64.

This plummet followed California governor Gavin Newsom’s revealing on Thursday that the state was monitoring 8,400 people for potential Covid-19 infections.

Adding to the bleak outlook, Goldman Sachs slashed its profit outlook and warned the outbreak could cost Donald Trump his reelection in November.

The MSCI all-country global index has dropped more than 7% over this six-day period. Considering stocks were at record highs the previous Wednesday, this is very harsh and painful.

Why, Tesla was all the hype earlier in February. It was US$901 on Feb 21, and new higher target prices were being touted by analysts, nevermind that the stock still didn’t have a price to earnings ratio.

In the last five days, Tesla’s share price had tumbled more than US$200 or 32.7% as of Thursday to close at US$679.

Don’t panic

For the average investor, panic has likely set in.

Whose confidence level would not be shaken with a 12% decline in the S&P 500 in six trading days?

Now talk of a 20% decline is starting to emerge.

Meanwhile the 10-year US treasury yield dropped below 1.3%, remaining in record-low territory.

The downward spiral in oil also continued with WTI crude toppling 2.71% to trade at US$47.41 per barrel on Thursday. Brent oil hovered at the US$51.42 level. So just barely two months into 2020, it is Covid-19 which has been responsible for crushing markets and dismantling profits across the globe.

Many have already slashed market forecasts for the year.

In the past two market stories featured on StarBizweek, readers would know that Fisher MarketMinder thinks that fears over the virus’ market impact are overdone. It thinks that this is part of a longer-running pattern prevalent throughout this bull market.

“The stock market will do what it does – rise and fall.

“If you’ve got a plan based on your risk tolerance and investment horizon, don’t let fear make you swerve in the wrong direction and lose traction.

“Panic is never a good investment strategy, ” says Fisher MarketMinder.

It adds that Covid-19 is grabbing attention because it is new and somewhat novel, but that doesn’t mean its economic effects far outweigh more familiar diseases.

The Center for Disease Control and Prevention estimates that there were 34,200 deaths in the United States from influenza during the 2018-2019 flu season.

For infections of Covid-19 outside of China, the mortality appears very low.

Furthermore, the people who are dying tend to be the old and immuno-suppressed or otherwise sick.

“Supply chain disruptions as officials work to contain the outbreak probably dent growth temporarily, but markets are efficient and likely pricing in these expectations as companies issue statements.

“Short-term volatility could linger, but patience should pay off, in our view, ” it adds.

As legendary investor Ben Graham once said, stocks are a voting machine in the short term and a weighing machine in the long term.

“Sentiment wins in the short term, but fundamentals matter most over more meaningful stretches.

“The ‘why’ and ‘how much’ behind sentiment swings strike us far less important.

“The emotional swing itself is what matters.

“Market fundamentals likely didn’t change on a dime seven days ago, ” says Fisher MarketMinder.

Thursday’s drop simply put US stocks back at mid-October levels.

Furthermore, the world hasn’t fundamentally changed.

While there is no way to know when this drop will end or how much further it will fall, no drop is permanent.

“Whether the rebound starts in days or weeks, whether it is fast or slow, if you have held on thus far, we think you ought to reap the good that comes with the bad.

“Corrections hurt your long-term returns only if you don’t participate in the rebounds that follow them.

“Selling may feel good at a time like this. But when you remove emotion from the equation, all it does is transform a market decline into an actual portfolio loss, ” says Fisher MarketMinder.

Another investor who is cheering is one of the smartest investors in the world, Warren Buffett, chairman and CEO of Berkshire Hathaway.

He says the stock market rout we’re witnessing today is “good for us.”

“We’re a net buyer of stocks over time, ” he says on CNBC.

“Most people are savers, they should want the market to go down.

“They should want to buy at a lower price.”

Buffett’s comments came as Dow futures were down by about 800 points or 3% on Monday as stocks around the world plunged as the Covid-19 outbreak escalated.

Regarding the coronavirus specifically, Buffett made clear that he is “not a specialist.” And he warns that “a very significant percentage of our businesses one way are affected.”

However, he reiterates that investors should be more focused on the long term, not the short term.

“If you’re buying a business, and that’s what stocks are... you’re gonna own it for 10 or 20 years, ” he says.

“The real question is has the 10-year or 20-year outlook for American businesses changed in the last 24 hours or 48 hours?” the legendary investor asks.

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Chinese varsities hold seven top spots in world ranking

Beijing: Universities from the Chinese mainland have secured seven of the top 10 positions in the Times Higher Education’s Emerging Economies University Rankings 2020 for the third straight year.

Tsinghua University maintained its position at the top in the listing of institutions from emerging economies.

Peking University was in second place for the second year running.

Zhejiang University and the University of Science and Technology of China remain in third and fourth place, while Shanghai Jiao Tong University climbed from eighth to sixth. Fudan University was listed in seventh place, while Nanjing University was ninth.

Other institutions in the top 10 include Moscow State University (fifth), National Taiwan University (eighth), and The University of Cape Town (10th).

Phil Baty, chief knowledge officer at Times Higher Education, said: “China’s success in our Emerging Economies University Rankings reflects its rapid rise on the world higher education stage. With the Double First Class Initiative driving improvements across participant universities, we expect it to continue to establish itself as a major global player in providing world-class higher education over the coming years.”

The Double First-Class Initiative refers to fostering “world-class universities” and “world-class discipline”. — China Daily/ANN

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Meet Mainland China's Top 10 Universities 2019

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New ranking — get to know the top 10 universities in Mainland China for 2019! Get the full results: http://bit.ly/MainlandChina19Y #QSWUR


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