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Halting China’s growth cannot be the goal of the West

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Do we want China to fail? This question was asked at a recent seminar I attended for Western policymakers and commentators.

The group was scrolling through a report for the coming year, when a member of our team asked why one of the risks listed for 2023 was a sharp slowdown in Chinese growth. “Isn’t that what we want to happen?” Asked.

It’s a fair question. After all, the US president has said repeatedly that he is willing to go to war with China to defend Taiwan. The European Union describes the country as “My device competitorBritain officially discusses calling China a “threat.” Surely, if you consider a country a threat and a competitor, wouldn’t you want to see its economy grow rapidly?

Or maybe you do. Those who believe that continued Chinese economic success is still in the interest of the West have reasonable arguments to make. First, China is a large part of the global economy. If you want China to go into recession, you are very close to wanting the world to also go into recession. And if China is going to collapse – for example, if it is Real estate sector Melts – the consequences will bounce back through the global financial system.

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Then there is the ethical question. Are you comfortable with the desire of more than 1.4 billion Chinese – many of whom are still poor – to become even poorer? Demand and investment from China is critical to countries in Africa and the Americas. Do you want them to get poorer too?

The fact that such a debate is taking place at all says something about the current confusion in Western capitals. Broadly speaking, two models of world order are locked in a battle in the minds of Western policymakers: an old model based on globalization; and new ones based on great power competition.

The old model stresses economics and what the Chinese call “win-win cooperation.” Its argument is that economic stability and growth are good for all – and they also encourage beneficial habits of international cooperation on critical issues such as climate change.

The new paradigm argues that a richer China has, unfortunately, morphed into a more menacing China. Beijing has poured money into a military buildup and has territorial ambitions that threaten Taiwan, India, Japan, the Philippines and more. This view argues that unless China’s ambitions are changed or curbed, global peace and prosperity will be threatened. Russia’s assault on Ukraine, and the close alliance between China under Xi Jinping and Russia under Vladimir Putin, has reinforced the view that the best lens through which to view the world is now one that focuses on great power competition.

Unfortunately, this is not an argument that can be resolved because both worldviews contain elements of truth. China’s failure could pose a threat to world stability. So is the China that succeeds — as long as it’s run by Xi, or some other nationalist authoritarian.

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The way for Western policymakers to resolve this debate is to ask a different kind of question. Les: Do we want China to succeed or fail? But how do we manage China’s continued rise?

Asking the question in this way avoids basing politics on something outside the control of Western officials. It would be unwise for Americans or Europeans to assume that China is heading for failure, any more than it would be more realistic for China to base its policies on America on the idea that the United States might collapse. It is clear that both China and America are facing a lot of internal issues challenges It can – at worst – confuse them. But it would be foolish for either side to assume that outcome.

Rather than trying to make China poorer or thwart the country’s development, Western policy should focus on the international environment, in which a richer and more powerful China would emerge. The goal should be to shape a world order that makes aggressive policies less attractive to China.

This approach has military, technological, economic and diplomatic components. The United States has been most effective in strengthening its network of security relations with countries such as Japan, India and Australia – which would help deter Chinese militarism. Washington’s efforts to prevent China from becoming the world’s technology standard-setter is gaining momentum — but it will be more difficult to coordinate with allies, who fear for their economic interests.

Economy and trade are the weakest of the United States. China is already the largest trading partner for most countries in the Indo-Pacific region. America’s increasingly protectionist mood, and the inability to sign significant new trade deals in Asia, makes Washington’s counteroffer seem less convincing than ever.

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The battle of ideas is also important. As the Ukraine war made clear, large parts of the world remain deeply suspicious of Western motives—even in opposition to Russia’s apparent war of aggression.

This is why it is so important for the United States and the European Union to be clear – to themselves and others – that their goal is not to prevent China from getting richer. It is to prevent China’s growing wealth from being used to threaten its neighbors or intimidate its trading partners. This policy has the advantage of being defensible and enforceable.

gideon.rachman@ft.com

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Standard Chartered becomes first foreign bank to trade bond futures in China (Reuters).

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© Reuters. FILE PHOTO: The Standard Chartered logo is displayed at its main branch in Hong Kong, China August 1, 2017. REUTERS/Bobby Yip/File Photo

SHANGHAI (Reuters) – Standard Chartered’s China unit said it has become the first foreign bank to trade in Treasury bond futures in the country that works to liberalize capital markets.

The move comes as China ramps up efforts to attract global investors amid months of inflows of foreign money from the $20 trillion bond market.

In a statement on Wednesday, Standard Chartered Bank (China) Limited said it had completed its first Treasury futures transaction in China, with the permission of regulators.

The bank said that treasury bond futures are a key tool for managing interest rate risk, and that China’s opening up of the market will allow foreign investors to better participate in the domestic bond market and promote the internationalization of the yuan.

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“We believe that the depth and breadth of global investor participation in China’s capital market will continue to increase” as more comprehensive risk management tools become available, said Asia Chief Executive Officer Benjamin Hong.

Foreign institutional investors have dumped a net 740 billion yuan ($107.48 billion) worth of Chinese bonds in 10 straight months of outflows, amid geopolitical tensions, concerns about China’s economy and US interest rate premiums on China.

Foreign holdings of yuan-denominated bonds traded on China’s interbank market reached 3.33 trillion yuan at the end of November, less than 3% of the total market volume.

The trading of Standard Chartered bond futures comes nearly three years after China in early 2020 freed up banks and insurance companies to participate in the market for the first time, selecting its five largest banks for an initial pilot scheme.

“China’s relentless efforts to expand its opening up, especially the continued opening up of financial markets at a high level, provides huge opportunities for Standard Chartered,” said Jerry Zhang, Vice President of the China Unit.

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In February 2022, Standard Chartered said it would invest $300 million in China-related companies over the next three years and double the related dividend contribution by the end of 2024.

($1 = 6.8847 renminbi)

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Pharmacists in the United Kingdom and the United States are reporting shortages of cold and flu medicines

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Pharmacists in the UK and US are warning of shortages of cold and flu medicines, with an increase in respiratory infections in early winter leaving manufacturers struggling to keep up with demand.

Some pharmacies are finding it difficult to order over-the-counter medicines such as cough syrups and pain relievers, restricting what customers can buy, while some wholesalers are rationing available medicines.

Leila Hanbeck, chief executive of the UK’s Independent Multiplex Pharmacy Association, said shortages – along with other frustrations such as not being able to use their family doctor – mean frontline pharmacists are dealing with a rise in abuse and violence from patients.

She called on the UK government to bring stakeholders together and tackle problems in the supply chain. “We’re running out of essential medicines for colds and flu. Once the demand for something goes up, we fall flat on our faces. Supply can’t meet demand,” she said.

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Those infected are buying medicines to treat symptoms of Covid-19, the flu and other conditions, including Strep-A and RSV, which have seen a resurgence after winters of lockdown. Supply problems come on top of global shortages Antibiotics This led the UK to issue a protocol for a serious shortage of infant formula last month.

Adrian van den Hoeven, general manager of Medicines Europe, which represents generic drug companies, said they expected an increase in demand compared to two years ago, but did not expect it to come before the normal cold and flu season.

He said governments must share more data on infection rates – beyond what’s already been collected on Covid-19 and influenza – so manufacturers can adjust supply chains, which takes several months.

We are not epidemiologists. We don’t know exactly what it will look like: will 2022-2023 be a year away, or will the next five years look like this? ” He said.

In the UK, pharmaceutical industry associations have reported shortages of treatments including Lemsip, Haleon Beechams and Day and Night Nurse.

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Superdrug, one of the UK’s largest pharmacy chains, confirmed that the shortage was a “national problem”, saying there had been a “huge peak in demand for branded and proprietary cold and flu products”. The company said demand for Superdrug-branded remedies was above its highest levels in the acute phase of the pandemic.

Pharmacists reported price increases of antibiotics amid shortages last month. But Paras Shah, chief executive of UK wholesale retailer Sigma, said prices for over-the-counter treatments do not react to market conditions as quickly as prices for prescription medicines.

In the United States, CVS Pharmacies have limited purchases of children’s pain relief products to two per customer since last month. Walgreens has limited the number of online customers to six per transaction to “prevent excessive purchasing behaviour”.

Johnson & Johnson, which makes the pain relievers Tylenol and Motrin, said its production sites are working around the clock to handle “high consumer demand due to a very difficult cold and flu season.”

Consumer health groups said the shortages were caused by a jump in demand, rather than problems securing essential ingredients. Rickitt reported a “significant increase in demand” but said she was doing everything she could to minimize disruption. Haleon said it is increasing its supply capacity but that customers in some areas may face shortages.

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Fed’s hawkish rhetoric fails to lift the dollar; Aussie jumps via Reuters

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© Reuters. FILE PHOTO: One hundred US dollar banknotes are seen in this illustration taken in Seoul on February 7, 2011. REUTERS/Lee Jae-won

Written by Ray Wei

SINGAPORE (Reuters) – The dollar struggled higher on Thursday even though federal policymakers reiterated their commitment last month to fighting inflation, while the dollar rebounded after China eased restrictions on Australian coal imports.

Minutes of the Fed’s December monetary policy meeting released last night showed that while officials agreed the central bank should slow the pace of aggressive rate hikes, they remained focused on curbing inflation, and were concerned about any “misperception” in financial markets. that their commitment was declining.

Minneapolis Federal Reserve Chairman Neel Kashkari also said on Wednesday that he sees the Fed’s target interest rate peaking at 5.4%, higher than current market expectations of just under 5%.

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However, that failed to give a boost to the greenback, which was down 1.4% against the Canadian dollar overnight.

The pound sterling last settled at $1.2062, after rising 0.76% against the dollar in the previous session, while the euro rose 0.19% to $1.0624, after gains of more than 0.5% overnight.

said Ray Attrell, head of foreign exchange strategy at National Australia Bank (OTC: (NAB) ).

Economic data released on Wednesday also revealed that US employment declined less-than-expected in November, although a survey from the Institute for Supply Management (ISM) showed US manufacturing activity contracted again in December.

“With the payroll coming up on Friday, the message is still that the job market is still in very good shape,” Atrell said.

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Against a basket of currencies, it fell 0.14% to 104.06, after falling 0.5% on Wednesday.

The Australian dollar rose 1.7% overnight after news that China’s state plan allowed three central government-backed utilities and its largest steelmaker to resume coal imports from Australia, in the first such move since Beijing imposed an informal ban on coal trade with Canberra in 2020. .

The Australian dollar finally settled at $0.6835, while it rose 0.11% to $0.6298, after rising 0.7% in the previous session.

“The Australian dollar has clearly benefited from the coal story,” said NAB’s Atrell, adding that most other commodity currencies were supported.

The Japanese yen rose 0.5% to 131.97 per dollar on Thursday, reversing a 1.2% decline overnight, as traders bet the Bank of Japan may give up its controversial yield curve grip.

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