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27 August 2019. By John Ellis.
1. Fears over recession are once again stalking markets, but many investors and analysts are more worried about a deeper, more structural shift: that the world economy is succumbing to a phenomenon dubbed “Japanification.” Japanification, or Japanisation, is the term economists use to describe the country’s nearly 30-year battle against deflation and anaemic growth, characterized by extraordinary but ineffective monetary stimulus propelling bond yields lower even as debt burdens balloon. Analysts have long been concerned that Europe is succumbing to a similar malaise, but were hopeful that the US — with its better demographics, more dynamic economy and stronger post-crisis recovery — would avoid that fate.
2. Beijing has cast doubt on whether trade talks are set to resume, with its foreign ministry contradicting President Trump’s claim that China had sought a return to the negotiating table and state media saying the countries were in touch only at a "technical level." The countries had been due to speak on Tuesday, according to a previous statement from China’s commerce ministry after their last telephone call on August 13. But there has since been no indication of progress on that front and the Chinese foreign ministry said at a regular briefing on Monday that it was “not aware of the phone calls over the weekend.”
3. Emmanuel Macron has offered to broker a meeting between President Trump and his Iranian counterpart Hassan Rouhani in order to replace the faltering Iran nuclear agreement with a more stringent and durable deal. The initiative to end the crisis in the Gulf was revealed by Mr Macron at the end of the G7 summit at a joint press conference with Mr Trump. “My conviction is that an agreement can be reached,” Mr Macron said after speaking to Mr Rouhani by telephone and hearing from him that he would be open to meeting the US president.
4. Top Iranian officials all but ruled out talks with the U.S. a day after President Trump extended his most expansive offer yet to the Islamic Republic. The U.S. must lift sanctions on Iran if it wants to negotiate, President Hassan Rouhani said today. His foreign minister, Javad Zarif, said during a visit to China and Japan that “a meeting between Iran’s president and Trump is unimaginable.” Zarif made a surprise appearance this week on the sidelines of the Group of Seven summit in Biarritz, France.
5. Lebanese and Iraqi politicians denounced Israeli strikes on their territory as a “declaration of war” on Monday as a suspected Israeli aircraft struck another Iran-linked target in Lebanon, marking a new escalation in tensions. The attack on a Palestinian facility in eastern Lebanon’s Bekaa Valley was the fourth in the space of just a little over a day to hit locations tied to Iranian-backed groups in Lebanon, Syria and Iraq. The strike came just hours after a threat by Lebanon’s Iranian-backed Hezbollah movement to down any Israeli drone that overflew the country and appeared designed to send the message that Israel won’t be deterred.
6. The Trump administration is preparing to initiate direct talks with Iran-backed Houthi forces in Yemen in an effort to end the four-year-old war, a conflict that has become a volatile front line in the conflict with Tehran, according to people familiar with the plans. The U.S. is looking to prod Saudi Arabia into taking part in secret talks in Oman with Houthi leaders in an effort to broker a cease-fire in Yemen, according to these people.
7. The Taliban is showing signs of splitting, with thousands of fighters ready to defect to a resurgent Islamic State over peace talks that are being held with the United States. While the insurgents appear confident — suggesting that President Trump’s eagerness to be rid of having to deal with Afghanistan means that an end to the foreign “occupation” is in sight — away from the talks the Taliban are in danger of splintering. Rifts have opened between the leadership and hardline military commanders who are furious at the decision to sit down with American officials.
8. As the U.S. and Afghanistan's Taliban militants head toward a long-awaited peace deal, China and its Belt and Road Initiative are looming larger over the Central Asian country's future. The U.S. and the Taliban "seem to be close to an agreement which, for the first time, could bring a cease-fire after 18 years," said a Western diplomat in Islamabad who spoke to the Nikkei Asian Review on condition of anonymity. But even before the peace talks picked up this year, China had been hosting Taliban representatives in Beijing since 2017, according to two senior Pakistani government officials who also did not wish to be identified. "For China, the big interest in Afghanistan is getting a foothold" to be a part of the nation's "future economic prospects," one official said.
9. The government of Pakistan has announced plans to set up a body to expedite projects under China's Belt and Road Initiative. The move is seen as part of an effort by Pakistan to enlist China's support over Kashmir, a territory split between Pakistan and India over which the two countries have tussled for decades.
10. As global superpowers rush to build a presence and profile across Africa, they are nonetheless playing catch-up to the continent’s biggest and strongest ally in recent years: China. For two decades now, Beijing has prioritized relations with African states, looking at them as a place for trade and not trouble. As the US focused on Africa through a security lens and Europeans increasingly fixated on immigration, China invested in mega infrastructural projects ranging from ports to passenger rails.
11. Japan is encouraging its companies to work with African startups, hoping to raise its profile on a continent often called the global economy's "last frontier" and offer a counterweight to Chinese influence there. The Tokyo International Conference on African Development, a triennial event led by the Japanese government, opens on Wednesday amid two big trends: a shift toward private-sector investment from official development assistance, and advances in digital and financial technology that are bringing consumers without bank accounts and formal addresses within reach of companies.
12. Three years ago, Egypt’s economy was teetering on the abyss, as entrepreneurs scoured the black market for dollars and foreign investors shunned the country. Now it is being hailed as one of the region’s fastest-growing economies, favored by international bond investors seeking high yields in an increasingly uncertain global environment.
13. The Reserve Bank of India has approved the transfer of $24.8 billion in dividends and “surplus capital” to the government in an unprecedented payout that will help Narendra Modi shore up the country’s fragile public finances but intensify concerns over the central bank’s independence. It follows last year’s bitter public confrontation between the prime minister’s administration and Urjit Patel, former RBI governor, whose resistance to what he considered an attempted raid on the RBI coffers by the government ultimately cost him his job.
14. India’s prime minister Narendra Modi’s government delighted yield-hungry global bond markets in July, when it unveiled plans to raise $10 billion with its first foreign currency-denominated sovereign bond — an issue intended to broaden the pool of investors willing to buy Indian paper. But while risky borrowers such as Benin and Uzbekistan pulled off maiden overseas bond issues this year, the prospects for the Indian issue are in doubt, after a flurry of high-profile warnings that the move would expose New Delhi to dangerous foreign currency risk — something it has always avoided until now.
15. In less than a week, millions of people in India will find out whether they remain citizens of the country, with the culmination of a byzantine process that critics say could be the world’s largest exercise in forced statelessness. Over the past four years, a state in northeastern India has subjected its 31 million residents to an exacting citizenship test aimed at identifying immigrants in the country illegally, primarily from neighboring Bangladesh. People had to produce ancestral documents dating back decades and prove links to their parents.
16. The Mekong River, which originates on the Tibetan Plateau and flows nearly 5,000 kilometers through China, Myanmar, Laos, Cambodia, Thailand and Vietnam to the South China Sea, is in danger of drying up. The five downstream countries must act now to defend their collective interests or risk ceding control of the river to China, which controls the headwaters. The downstream countries are experiencing a major drought that threatens fisheries and agricultural production throughout the river basin. Over the past two months, most portions of the Mekong system have recorded historically low water levels.
17. Three-quarters of 18- to 29-year-old residents of Hong Kong self-identify as Hongkongers, not Chinese, twice the share that did so in 2006. The data show that the younger the respondents, the more negative their sentiments towards mainland China. Efforts to strengthen Chinese identity of the young in Hong Kong, such as an attempt in 2012 to introduce “national education” curriculum in primary schools, have been met with opposition. By seeking to tighten its grip on Hong Kong, and limit the freedoms enshrined in the promise of “One Country, Two Systems”, China is fast creating one country with two identities.
18. Italy’s anti-establishment Five Star Movement ramped up the pressure on the center-left Democratic Party insisting it would end talks unless Giuseppe Conte can remain prime minister, increasing the risk of snap elections. After a meeting between the unlikely partners dragged into the early hours Tuesday, Five Star said in a morning statement that the encounter “arrived at nothing.” Five Star said of the Democrats: “They preach discontinuity but they talk to us only about jobs and ministries, we haven’t spoken about issues or the budget.’’
19. The International Monetary Fund’s record loan to Argentina last year was supposed to turn the page on a troubled history. It’s looking more like a case of déjà vu. Less than two decades ago, Argentina crashed out of an IMF program, defaulted on debt and plunged into depression. As Fund officials arrived in Buenos Aires over the weekend to assess the country’s current $56 billion bailout –- and decide whether to keep doling out cash -- some of the same warning signals are flashing.
20. The curse of intermittency for wind and solar power may be conquered sooner than almost anybody thought possible. A beautifully-simple technology from a British start-up has slashed costs to levels that drastically alter the calculus of long-term energy storage. Highview Power is pioneering the use of "cryogenic" liquid air to store electricity for long enough periods to cover the lulls in renewable energy. It appears close to doing so at levelized costs that will undercut competition from fossil fuel plants once scale is reached.
21. Hope has been restored for the rechargeable lithium metal battery – a potential battery powerhouse relegated for decades to the laboratory by its short life expectancy and occasional fiery demise while its rechargeable sibling, the lithium-ion battery, now rakes in more than $30 billion a year. A team of researchers at Stanford University and SLAC National Accelerator Laboratory has invented a coating that overcomes some of the battery’s defects, described in a paper published Aug. 26 in Joule.
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