Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Asia House Advisory takes a look at the top developments in Asia this week affecting trade, investment and public policy.
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FRIDAY 26 MARCH 2021
China today sanctioned organisations and individuals in the UK over what it has called ‘lies and disinformation’ about Xinjiang. Nine UK nationals, including five MPs, have been targeted by China. British Prime Minister Boris Johnson responded with a tweet saying that the ‘MPs and other British citizens sanctioned by China today are performing a vital role shining a light on the gross human rights violations being perpetrated against Uyghur Muslims. Freedom to speak out in opposition to abuse is fundamental and I stand firmly with them.’ The developments are widely considered to be in retaliation to recent coordinated sanctions on China by the UK, the US, the EU, and Canada over what they call human rights violations against the Uyghur Muslim minority in Xinjiang. This is the first time in 30 years that the EU has imposed sanctions on China, following mounting pressure to scale back engagement with suppliers and other actors operating in Xinjiang. Beijing has already applied retaliatory sanctions against the EU, in line with what was announced today against the UK. The rising tensions could spill over into global trade, with supply chains and the recent EU-China investment deal potentially at risk.
Tensions between Saudi Arabia and India have escalated over the supply and price of crude oil on the international market. Saudi Arabia, the world’s largest exporter of crude oil, unilaterally curtailed production by one million barrels per day through February and March, in addition to the already existing cuts of seven million barrels implemented by the OECD. Saudi Arabia has attributed the move to the fragility of global oil demand, but the decision has sent crude prices surging beyond anticipated levels, with Benchmark Brent crude prices reaching nearly US$70 per barrel in early March. The blockage of the Suez Canal by a container ship has also increased prices in the last week. Indian Oil Minister Dharmendra Pradhan has urged Saudi Arabia and the OPEC+ to start easing cuts, arguing that high oil prices could impede global economic recovery. Such tensions have exacerbated an already tense geopolitical situation around oil over the last year.
The Saudi Ambassador to the UK, HRH Prince Khalid Bin Bandar Bin Sultan, will brief Asia House Corporate Members on the country’s economic outlook and diversification efforts on Tuesday 25 May. Find out more.
India, one of the world’s biggest vaccine producers, has imposed a de facto ban on COVID-19 vaccine exports, as it looks to prioritise local vaccinations. This comes as the number of COVID-19 cases in India surges amid fears of a ‘second wave’. The Serum Institute of India, which is the world’s largest manufacturer of vaccines and the biggest supplier to the COVAX facility, has said it has been told to halt exports for as long as two-to-three months. Gavi, the UN-backed international vaccine alliance, has warned that this will have a direct impact on the COVAX scheme. The move comes as the EU also holds talks on proposed export curbs in Europe for COVID-19 vaccines.
Chinese President Xi Jinping this week emphasised the need to better regulate ‘platform’ companies – the country’s biggest technology firms – at a meeting of the Communist Party’s committee overseeing economic and financial affairs. This would include efforts to boost fair competition, fight monopolies, and prevent the ‘disorderly expansion of capital.’ This follows increased government and regulatory scrutiny of big tech in China over recent months, with major players such as Alibaba, Tencent, ByteDance, Baidu, and Didi all being punished for anti-monopoly violations and anti-competitive actions. Tencent, ByteDance, Baidu, and Didi were all fined last week by the country’s competition regulator for doing deals without proper government approvals. The government is also considering establishing a joint venture with local technology giants to oversee the data collected from millions of consumers.
The Philippines and China have been at an impasse for nearly a week over the presence of 183 Chinese vessels at Whitsun Reef, in the disputed Spratly region of the South China Sea. Philippines President Rodrigo Duterte has said the Philippines will protect its territory, and that the issue should be resolved under the UN Convention on the Law of the Sea. China’s Ambassador to the Philippines Huang Xilian has described the ships as fishing vessels. The US, Japan, Australia, the UK, and Canada have all issued statements expressing support for the Philippines and for a free and open South China Sea. This week’s developments have raised fresh concerns about China’s activities in the South China Sea, particularly given how many ASEAN countries have territorial claims in the waters.
China’s National People’s Congress Standing Committee to discuss Hong Kong: China’s top legislative body is set to endorse the overhaul of Hong Kong’s political system, after national legislature passed a resolution earlier this month paving the way for a change in Hong Kong’s political system.
Japan and Indonesia to hold two plus two talks: Japan and Indonesia’s foreign and defence ministers will meet on 30 March in Tokyo for talks.
COVID-19: ASIA ROUND UP
INDIA: India will open up COVID-19 vaccinations to those aged 45 and above from 1 April, as the country faces a second wave of infections.
JAPAN: Japan has extended subsidies for domestic travel that does not cross prefectural borders from 1 April. Tokyo has extended its request that bars and restaurants shorten hours until 21 April to prevent a surge in COVID-19 cases.
AUSTRALIA: Australia reported one locally transmitted case of COVID-19, prompting restrictions on hospitals, retirement homes, and disability centres.
INDONESIA: Indonesia received 16 million doses of the Sinovac COVID-19 vaccine, bringing the total number of doses of the vaccine the country has received to 53.3 million.
THAILAND: Thailand’s central bank left its key interest rate unchanged at a record low on Wednesday, and lowered its 2021 economic growth forecast slightly. The cabinet approved financial measures worth US$11.31 billion to support the business sector through COVID-19.
SINGAPORE: Singapore has opened its COVID-19 immunisation drive to those aged 45 and above. 1.1 million doses have so far been administered in Singapore.
VIETNAM: Vietnam has approved the Sputnik V COVID-19 vaccine for use in the country.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
FRIDAY 19 MARCH 2021
The UK has outlined its ‘tilt’ towards Asia in its Integrated Review of Security, Defence, Development, and Foreign Policy, published on 16 March. The review sets out the UK’s vision for the Asia Pacific region, stating that ‘by 2030, we will be deeply engaged in the Indo-Pacific as the European partner with the broadest, most integrated presence in support of mutually-beneficial trade, shared security, and values’. The review notes that the Indo-Pacific will be of increasing geopolitical and economic importance, with China’s rise being central to this geopolitical shift. It also presents a nine-part action plan on the ‘Indo-Pacific tilt’, which includes new trade agreements, engagement with ASEAN, and more focused use of overseas development assistance.
Asia House was briefed on the Integrated Review and its implications for UK policy in Asia by Tom Tugendhat, Chairman of the Foreign Affairs Select Committee, yesterday (18 March). Read more.
The US and China held high-level talks this week, their first since US President Joe Biden took office in January. The meeting brought together US Secretary of State Antony Blinken and US National Security Adviser Jake Sullivan, and China’s top diplomat Yang Jiechi and Chinese Foreign Minister Wang Yi. The meeting began with harsh words exchanged between the two sides, with Blinken accusing China of undermining global stability regarding Hong Kong, Xinjiang, and Taiwan. Yang argued that the US has a ‘cold war mentality’ and that Washington has used its military and financial clout to supress other nations. The meeting has, however, been characterised as an ‘initial discussion’ aimed at presenting both positions and, if tensions improve, a meeting between US President Biden and Chinese President Xi Jinping may take place in April.
Indonesian President Joko Widodo today called for a meeting of ASEAN leaders to discuss the Myanmar crisis, and called for democracy, peace, and stability to be restored. Widodo has said he will soon hold talks with Brunei’s Sultan Hassanal Bolkiah, as chair of ASEAN this year, to discuss holding a high-level meeting on the situation. This comes following the coup in Myanmar on 1 February, which has been met with widespread condemnation from the international community and protests in Myanmar that have resulted in the deaths of more than 100 people.
China has released a new draft law governing the broadcast industry, which includes private online services. This legislation will replace current laws, which were drafted 24 years ago. The new law contains 10 chapters with 80 regulations, covering media convergence and communication. The draft legislation is divided into three key sections – production and distribution, integrated broadcasting, and network coverage – and will apply to both TV and radio broadcasters as well as online video sites, internet TV platforms, and other online broadcasters. The law aims to create a set of unified standards, and bans nine types of content including anything that slanders Chinese traditional culture, and distorts or vilifies revolutionary culture.
The UAE has reduced official contact with Israel, in protest at attempts by Israeli Prime Minister Benjamin Netanyahu to involve the UAE in his re-election campaign. This marks the first diplomatic crisis between the two countries since relations were normalised through the Abraham Accords in 2020. Since then, the UAE has opened up commercial and strategic ties with Israel, quickly boosting cultural, investment and tourism links. The UAE has cut back formal contact with Israel to a minimum until elections are over. However, this is unlikely to weaken the foundations of the Abraham Accords and the growing economic, political, and social ties between the two countries.
India state elections to begin next week: Five Indian states will go to the polls, including key states of West Bengal, Tamil Nadu, and Kerala. The elections will be a strong indicator of the strength of the country’s two national political parties.
HONG KONG: Hong Kong’s unemployment rate rose to a 17-year high of 7.2 per cent in the December to February period.
INDIA: India has reported a new surge in cases, particularly in Maharashtra state, home to India’s financial hub of Mumbai.
JAPAN: The Bank of Japan added more flexibility to its interest rate target and asset purchase programme during a central bank meeting this week. The government will continue to ask restaurants and bars in the greater Tokyo region to close early, even after the state of emergency is lifted on Sunday.
INDONESIA: After suspending use of the AstraZeneca COVID-19 vaccine temporarily, the Food and Drug Agency has said it has approved use of the vaccine after reviewing reports.
MALAYSIA: The government announced a fresh stimulus round of US$4.86 billion.
PHILIPPINES: The Food and Drug Administration has approved emergency use of the Sputnik V COVID-19 vaccine. The government has also suspended the entry of foreign nationals until 19 April as the number of COVID-19 cases continues to rise.
NEW ZEALAND: The economy contracted 1.0 per cent in the last quarter of 2020, raising concerns of a second recession.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
FRIDAY 12 MARCH 2021
China set a GDP growth target of above six per cent for this year, in line with most analysts’ predictions. The government also cut back fiscal support for the economy, reduced the budget deficit-to-GDP target to 3.2 per cent, and announced a goal of 11 million new jobs this year. The targets were announced during the Two Sessions – China’s most important annual meetings of its two major political bodies – which continued this week. The government also ratified a new election law in Hong Kong, increased lending by big banks to small businesses by more than 30 per cent, and laid out its new five year plan.
China’s parliament this week ratified a controversial law that will make sweeping changes to Hong Kong’s electoral system, including measures to ensure that only ‘patriots’ can rule in the city. In the biggest shake up to Hong Kong’s electoral system since 1997, the law will embed members of the National People’s Congress and the Chinese People’s Political Consultative Conference in the process for selecting Hong Kong’s leader next year, and will introduce a new ‘vetting committee’ to review potential candidates for legislative positions. The law will also authorise China’s standing committee to finalise the details of the electoral reform process. Critics have raised concerns that the new law will further silence opposition voices in the city, following the introduction of the controversial national security law last year, and wider concerns over Hong Kong’s political freedoms.
New Delhi’s High Court said this week that it will hear the first legal challenge to India’s controversial new internet rules, which have drawn criticism over potential curbs to free speech. The Foundation for Independent Journalism has launched a challenge to the laws, arguing that they give the government the power to ‘virtually dictate content.’ The new rules could force social media companies to break into encrypted messages and take down posts that are deemed contentious. The government has described the rules as ‘soft touch oversight’, to make companies more responsible and accountable. The rules will impact all the major social media companies operating in India, including WhatsApp, Facebook, and Twitter. The hearing is likely to kick off a string of other legal challenges.
Foxconn, the Taiwanese electronics manufacturer that builds Apple’s iPhones, has announced it will move the production and assembly of the iPhone 12 from its factories in China to India. This will be the first time the device is made outside of China. Production will be moved to a factory in the Indian state of Tamil Nadu, which already produces older models of the iPhone. Between seven and 10 per cent of Chinese production will be moved to India. The two other companies producing iPhones – Pegatron and Wistron – have either already made decisions to shift production to India or have plans to do so. While traditionally most production has taken place in China, Foxconn and other companies are looking to cut exposure to China due to rising labour costs and ongoing geopolitical tensions with the US.
Leaders of the US, India, Japan, and Australia met today (Friday 12 March), the first-ever meeting between the heads of the state for the four-member Quadrilateral Security Dialogue (QUAD) group. The meeting follows talks between foreign ministers of the four countries last month, in which they agreed to work towards a ‘free and open Indo-Pacific’ region. The meeting covered regional and global issues of shared interest, including a changing global geopolitical situation, resilience in supply chains, maritime security, climate change, and recovery from the COVID-19 pandemic, including vaccine manufacturing. A deal to provide one billion doses of Johnson & Johnson’s COVID-19 vaccine to Southeast Asian nations is a key part of the summit, with the US and Japan expected to finance production of the vaccine in India, and Australia likely to help distribute the doses across the region. As one of the first major foreign engagements for US President Joe Biden, the summit signals the US’s intention for close collaboration with Asian nations.
US foreign policy team to make first Indo-Pacific trip: US Secretary of State Antony Blinken and Defense Secretary Lloyd Austin will travel to Japan and South Korea next week, on their first foreign trip since taking office.
US-China meeting: Chinese State Counsellor Wang Yi and foreign policy advisor Yang Jiechi will meet with US Secretary of State Antony Blinken and National Security Advisor Jake Sullivan on 18 March, marking the first face-to-face meeting between the US and China since the Biden administration came into office.
CHINA: China launched a vaccine passport for cross-border travel, called the International Health Certificate, which is accessible via the WeChat mobile app.
INDIA: Rajasthan state has begun limiting COVID-19 vaccinations to major hospitals, citing a shortage of doses. India vaccinated more than two million people in a 24-hour period this week.
JAPAN: The government will spend US$1.5 billion to support the homegrown development of vaccines and will partner with other Asian nations to create a cross-border network for clinical research and trials. The government has also asked airlines to reduce the number of passengers brought into the country, with foreign airlines allowed a maximum of 100 passengers per flight into Japan. Local drug maker Daiichi Sankyo will begin clinical trials for a COVID-19 vaccine this month. The Tokyo Olympics is expected to go ahead safely from mid-July, but the games will be closed to foreign visitors.
SOUTH KOREA: South Korea will expand vaccinations to people aged 65 or older with AstraZeneca’s vaccine later this month.
AUSTRALIA: The government announced a US$928 million tourism support package aimed at boosting local travel.
INDONESIA: Indonesia approved the AstraZeneca vaccine for emergency use, as more than one million doses of the vaccine arrived in the country through the COVAX initiative.
THAILAND: Thailand reduced mandatory quarantine from 14 to seven days from April for visitors who have been vaccinated against COVID-19, and to 10 days for those who have not.
MALAYSIA: Malaysia has announced it will buy additional doses of the Pfizer-BioNTech vaccine, bringing the total secured to 32 million.
VIETNAM: Vietnam launched its vaccination programme on Monday, with healthcare workers first in line for the vaccine.
NEW ZEALAND: New Zealand will buy additional vaccines from Pfizer-BioNTech to have enough to vaccinate the whole country.
CAMBODIA: Cambodia reported its first death from COVID-19, amid its biggest outbreak of the virus so far.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
FRIDAY 5 MARCH 2021
China’s National People’s Congress is holding its annual meetings this week, with a focus on the post-COVID economy. Premier Li Keqiang announced a growth target of more than six per cent for 2021, after reporting GDP growth of 2.3 per cent last year. The ‘two sessions’ sets economic and political priorities for the year, and the speeches have struck an overall positive tone on China’s economic recovery from the pandemic, while noting areas of weakness such as consumer spending, tough conditions for small businesses, and maintaining stable employment. For 2021, China is aiming for an urban unemployment rate of around 5.5 per cent and is targeting the creation of more than 11 million new urban jobs. On the topic of international trade, Primer Li also said that the country will “promote the growth of mutually beneficial China-US business relations”; to accelerate free trade negotiations with Japan and South Korea; and to actively consider joining the CPTPP.
US President Joe Biden this week laid out his vision for the US’s role in the world, particularly amid the challenge of “an increasingly assertive China”. The President released a 24-page interim national security guidance document, which mentions China more than 20 times, lays out the global landscape, and explains foreign policy priorities. The report states that US military presence will be most robust in the Indo-Pacific and Europe, and describes China as the ‘only competitor potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to a stable and open international system.’ The guidance also lists India, New Zealand, Singapore, Vietnam, and other ASEAN nations as priorities to deepen partnerships with.
ASEAN foreign ministers held virtual talks early this week to discuss the Myanmar crisis, in which the nine foreign ministers held talks with the Myanmar military junta’s newly appointed foreign minister. The meeting produced a statement issued by Brunei, the current ASEAN chair, which expressed concern about the situation in Myanmar, and called on all parties to “refrain from instigating further violence.” Four ASEAN member states – Singapore, Malaysia, the Philippines, and Indonesia – issued strongly-worded statements against the situation during and after the meeting. The Myanmar military took control of the country on 1 February following unsubstantiated claims of election fraud in general elections held in November 2020. The coup has sparked nationwide protests and international condemnation.
Indonesian President Joko Widodo has ordered a review of the electronic information and transaction (ITE) law, aimed at cleaning up Indonesia’s digital space. Critics have said the law is being used to attack freedom of expression, and that some clauses are ambiguous and prone to misuse, especially in areas such as libel, hate speech, and online distribution of some materials. The ITE law was invoked 119 times last year in cases involving freedom of speech violations. A team has been created to study potential revisions of the law over the next two months. The communications ministry last week also announced the formation of a Net Ethics Committee to spearhead an internet literacy drive.
Alibaba and its fintech affiliate Ant Group are reassessing strategy in the light of new financial regulations and increased regulatory scrutiny. Alibaba has halved its investments in start-ups in the four months since Ant Group was forced to postpone its stock market listing in November, compared to a year ago. It is unclear how Ant Group will move forward given new regulations that could fundamentally impact the company’s business model. Under the new regulations, banks will be required to manage risks for joint lending with internet platforms, such as Ant, and are strictly banned from outsourcing the function. The new regulations are aimed at strengthening banks’ risk management, according to regulators, but are clearly targeted at platforms like Ant’s principal revenue sources. The overall environment for financial services and digital companies in China has changed in recent months, with increased regulatory scrutiny from Beijing.
Trade data from China: China is expected to report on trade figures for February next week; and the Philippines will report the same for January.
CHINA: China is accelerating its COVID-19 inoculation drive, with expectations to vaccinate 560 million people by the end of June.
INDIA: India vaccinated more than a million people in a single day for the first time since starting its COVID-19 inoculation drive on 16 January.
JAPAN: The Tokyo Metropolitan government will set a threshold for lifting the current state of emergency, which could include keeping daily cases below 140. Japan has extended its state of emergency in Tokyo and three neighbouring prefectures until 21 March.
AUSTRALIA: Australia has asked the European Commission to review a decision by Italy to block a shipment of AstraZeneca’s COVID-19 vaccine. This comes after Italy, with European Commission support, barred the export of 250,000 doses due to AstraZeneca failing to meet its contractual commitments with the European Union. Australia’s GDP grew 3.1 per cent in Q4 of last year. The government will look for support from its defence forces in its COVID-19 immunisation drive.
MALAYSIA: Malaysia granted conditional approval for the use of the AstraZeneca and Sinovac COVID-19 vaccines.
THAILAND: Prime Minister Prayut Chan-o-cha has commissioned a study about issuing COVID-19 vaccination certificates for international travellers.
PHILIPPINES: The Philippines received more than 480,000 doses of the AstraZeneca COVID-19 vaccine from the COVAX facility.
VIETNAM: The country will launch its COVID-19 vaccination campaign on Monday, after receiving 117,000 doses of the AstraZeneca vaccine last month.
SAUDI ARABIA: Saudi Arabia will require COVID-19 vaccinations for those seeking to participate in the Hajj pilgrimage to Mecca.
These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.
