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Friday, July 23, 2021

US can’t unilaterally define ‘guardrails’ of ties with China

US State Department spokesperson Ned Price said on Wednesday that Deputy Secretary of State Wendy Sherman would seek to show China on her upcoming visit to the country "what responsible and healthy competition can look like." He also noted that the US wanted to ensure there were "guardrails" in the relationship and that competition did not spill over into conflict.

` From our perspective, there's nothing wrong with the literal meaning of these words. China does not want competition to spill over into conflict as well. It would be good for both countries and the world if the two sides could work together to set up "guardrails" to prevent the kind of escalation that is widely feared.

` Yet, experience suggests that Washington often says one thing and does another, using beautiful concepts as their brand of bullying and forcefully reshaping the meaning of those concepts. For example, Washington often talks about "rules," but the world has seen the US consistently commit the most brutal violations of the rules on which the United Nations system is based. The rules they talk about are actually a framework for protecting the interests of the US and its major allies. They are also a behavioral norm to force other countries to maximize those interests.

` If China and the US want to set up "guardrails" between their competition, they must follow the principle of equality and mutual benefit and follow the spirit of the UN Charter. Washington must not unilaterally set boundaries for China's behavior, nor can it advocate its interests to harm China's core interests even more.

` Such "guardrails" would be a unilateral guardrail for the US but a prison circled by a wire fence for China. If Sherman had come to China with such a purpose, the Deputy Secretary's trip would probably have achieved little more than a taste of Tianjin's delicious steamed stuffed bun.

` The "guardrails" between China and the US to prevent conflicts must include the following contents:

` First, the US should stop interfering in China's internal affairs, abandon its obsession with "transforming China" and refrain from narcissism with the outward aggression of American values. It is the fundamental principle for building a security wall between major countries to respect each other and refrain from interfering in each other's internal affairs.

` Second, the US military should not press closer to China's core interests, but should keep the necessary distance. Especially in the Taiwan Straits, the US should not give secessionists in the island of Taiwan a sense of military dependence and encourage them to stir up the tension. That would be very dangerous. In the South China Sea, the US cannot directly intervene in disputes. If it tries to influence the direction of the situation in the South China Sea through military pressure, it will lead to a high risk of conflict.

` Third, the US must not turn its competition with China into an aggressive suppression of China's development. Its attempts to gang up allies to keep China out of the world's major supply chains will eventually lead to a fundamental conflict with China if they go any further. A conflict like that would produce a wide divergence, destabilizing and creating long-term uncertainty in international relations, and ultimately shaping China and the US as life-and-death strategic enemies.

` In general, the US cannot attempt to attack China's system, or divide China, or block its development path. These are the foundations of the "guardrails" between the two countries. If the US breaks these three rules, it is proactively attacking China, not competing with it. And China will fight back no matter the cost.

` So, the US needs to have basic honesty. It should not try to deceive itself. For example, if the authorities on the island of Taiwan under Washington's support or instigation cross the redline of "independence" - the People's Liberation Army will definitely stop it with force. If the US intervenes, a military confrontation between China and the US will take place.

` China has no intention to confront the US, but it is a national principle for China to defend its core interests. The US can't unilaterally define the "guardrails" between the two countries out of its own interests, because they need to be defined by both China and the US to advance the interests of both countries. The US has extensive experience in international relations, and hopefully, Washington will not be confused about the core problem of how to engage in competition, instead of conflict, with Beijing.

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Results of Sherman’s China visit depend on US attitude

 US Deputy Secretary of State Wendy Sherman will visit North China's Tianjin from July 25 to 26, a visit arranged after the US proposal to exchange views on China-US relations, according to the Chinese Foreign Ministry late Wednesday night. Sherman is scheduled to visit Japan, South Korea and Mongolia from July 18 to 25. Meanwhile, US Defense Secretary Lloyd Austin is leaving for his trip to Singapore, Vietnam and the Philippines on Friday.

` This time, the US is taking the initiative in proposing exchange of views on China-US relations. This shows that the Biden administration has made some progress in evaluating its China policy and may begin to implement these policies next.

` Washington is eager to communicate with Beijing because it is increasingly aware of the need to cooperate with China on many issues.

` The US may also want to use Sherman's visit to pressure China on issues such as Xinjiang, the Taiwan Straits, and South China Sea.

` US State Department spokesperson Ned Price said in a briefing on Tuesday that the US will engage with China "when it's in our interests to do so, and we do remain interested in doing so in a practical, substantive and direct manner." During Sherman's talks with her Japanese and South Korean counterparts in Tokyo on Wednesday, the three sides agreed that they oppose "any unilateral attempts to change the status quo" in the East China Sea and the Taiwan Straits.

` This is a typical feature of the US' current China policy. "Our relationship with China will be competitive when it should be, collaborative when it can be, and adversarial when it must be," as US Secretary of State Antony Blinken said in March.

` Despite pressuring China on Xinjiang, the Taiwan Straits and the South China Sea, Washington may also believe it won't affect pragmatic cooperation with Beijing in some other areas.

` However, China will make its principles clear during Sherman's upcoming visit. China focuses on cooperation, controls competition, and avoids confrontation in handling China-US relations.

` During the recent weeks, Washington has intensified its blame on China in terms of the so-called massive cyberattack. It has also issued a blanket warning to US firms about the risks of doing business in Hong Kong, and passed a bill that would ban all goods from or made in Xinjiang unless importers can prove they weren't made with "forced labor." We must show the US that China firmly safeguards its sovereignty, security and development. We firmly oppose the US' interfering in China's internal affairs and harming our national interests. These are all basic principles that China will make clear.

` During Sherman's visit, China and the US may have practical discussions on some specific issues including climate change, Afghanistan, Iran and improving the working environment of diplomatic personnel and institutions in the two countries. China will make a very thorough clarification on its principles, while also leaving some room for China-US cooperation on specific issues.

` Defense Secretary Austin previewed his Southeast Asian trip on Wednesday, saying that he will, "make clear where we stand on some unhelpful and unfounded claims by China in the South China Sea." Clearly, the South China Sea will be a key point of his trip. Vietnam and the Philippines are two countries that Washington wants to rope in the most in terms of the South China Sea issue.

` Together with Sherman's Asia tour, the US aims at showing Asian countries that it will continue attaching importance to the region, and making it clear to China that it will carry on the Indo-Pacific Strategy to pressure China.

` After Chinese top diplomats resolutely refuted the US' rude manners during Alaska talks in March, the two countries almost haven't had any face-to-face senior-level dialogues since. The US Department of State said Sherman's visit is "part of ongoing US efforts to hold candid exchanges" with China in order to "advance US interests and values and to responsibly manage the relationship."

` Nonetheless, the US' attitude won't be different from that during Alaska talks. Strategic competition with China is still the keynote of US' China policy. This won't change. Thus, the US will not stop interference in China's internal affairs, and will continue piling pressure on Xinjiang and other issues.

` The "candid exchanges" are possible if the two sides exchange views frankly. As for "responsibly managing the relationship," it may be hard to do. This will depend on whether Washington plans to properly handle its ties with Beijing. If Washington's China policy is dominated by the use of pressure and rhetoric of competition, then relations between the two countries will only worsen.

` After White House Coordinator for the Indo-Pacific Kurt Campbell said in early July that China and the US can "coexist in peace," Washington is now proactively seeking dialogue with Beijing. But this does not necessarily mean Washington is becoming more rational toward Beijing. For example, Campbell said, "We do not support Taiwan independence," yet the US has sent more military aircraft to the island. Similarly, the US is calling for dialogue while it is still trying to impose more pressure on China.

` On many issues, Washington says one thing and does another, making it unreliable.

` The article was compiled by Global Times reporter Li Qingqing based on an interview with Wu Xinbo, director of the Center for American Studies at Fudan University in Shanghai. opinion@globaltimes.com.cn

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Thursday, July 22, 2021

China says ‘no’ to US smears over COVID-19 as 20 million Chinese petition for Fort Detrick probe

 Update Online petition for Fort Detrick probe draws 20m signatures; China urges US to open UNC lab, disclose military games patients...

Online petition for Fort Detrick probe draws 20m signatures; China urges US ... The Chinese Foreign Ministry on Friday urged the US to take four steps on COVID-19 origins tracing if it wants .

 Officials in various countries call for investigating the U.S. Fort Detrick lab in the global #COVID19 origin tracing, opposing the politicization of the tracing. #GLOBALink pic.twitter.com/QAfm5PK3Nh

 

 China says 'no' to US smears over COVID-19 as nearly 10 million from 5 million Chinese...

An open letter demanding that the World Health Organization (WHO) investigate Fort Detrick has garnered nearly 9.5 million signatures  ... 

China says 'no' to US smears over COVID-19; 'WHO's phase-II plan caters to US' lab leak theory'

China says 'no' to those in the US who have used the COVID-19 issue to smear China, as their practice revealed their disregard for common sense and arrogance towards science, the Chinese Foreign Ministry said on Friday, after the White House said the US was disappointed by China rejecting the World Health Organization's (WHO) latest COVID-19 origins study plan.

5 million Chinese sign open letter asking WHO to investigate Fort Detrick, a ‘collective will’ that can’t be ignored

Over 5 million Chinese netizens had signed an open letter as of Wednesday demanding the World Health Organization (WHO) investigate the US' Fort Detrick lab over COVID-19 origins. With the number still increasing, Chinese experts and officials consider it a vivid reflection of the collective will of the Chinese public, signaling the outrage toward some US officials who politicized the epidemic to shift the blame and who owe the world an explanation on US own flaws.

` A group of Chinese netizens drafted the open letter to ask the WHO to investigate the US Army Medical Research Institute of Infectious Diseases (USAMRIID) at Fort Detrick, Maryland, and entrusted the Global Times with posting the letter on its WeChat and Weibo platforms on Saturday to solicit public response. It has gathered more than 5 million signatures as of the press time on Wednesday.

` Investigating Fort Detrick is the call of people all over the world, including the Chinese people and it is a question that the US must answer when it comes to COVID-19 origins and a problem it can never circumvent, Chinese Foreign Ministry said on Wednesday.

` In less than five days, about 5 million Chinese have signed the open letter, Chinese Foreign Ministry spokesperson Zhao Lijian said at Wednesday's media briefing. The rising numbers are a representation of the anger of the Chinese people at the political manipulation by some in the US on COVID-19 origins, he noted.

` To prevent the next outbreak, laboratories studying dangerous viruses and even biological weapons should be put into the focus of the WHO, the letter said.

` The Fort Detrick lab, particularly, stores the most deadly and infectious viruses in the world, including Ebola, smallpox, SARS, MERS and the novel coronavirus. The leak of any of them would cause severe danger to the world, which also aroused the concerns and doubts about whether the SARS?CoV?2 virus that triggered the global pandemic is related to the lab, it said.

` The letter was issued as the WHO on Friday proposed a second phase of studies into the origins of the coronavirus in China, including "audits of laboratories and markets in Wuhan," calling for "transparency" from authorities, shortly after WHO head Tedros Adhanom Ghebreyesus appeared to succumb to the US-led West's multiple layers of political pressure, calling on China to be transparent and open in further COVID-19 origins studies, according to observers.

` Li Haidong, a professor at the Institute of International Relations at China Foreign Affairs University, told the Global Times on Wednesday that so many Chinese people signed the open letter, reflecting the true opinion of ordinary Chinese. "Over the past year, some US politicians have been slandering China on the question of COVID-19 origins, which triggered dissatisfaction among Chinese people. Such public opinion should not be ignored by the international community," Li said.

GT Illustration: Liu Rui/GT

` US owes the world answers

` In July 2019, the US CDC issued a "cease and desist order" to halt most research at Fort Detrick. Although this mysterious lab reported the reason for the closure as "ongoing infrastructure issues with wastewater decontamination," the explanation was not persuasive enough for many.

` During the same period, the US media reported that a respiratory illness outbreak at a Virginia assisted living facility caused some deaths, and the e-cigarette, or vaping, product use-associated lung injury (EVALI) cases also occurred in Wisconsin, Zhao said, laying out a number of cases that the US should further investigate and give out a clear explanation to the world.

` "How are these incidents related to one and another? When does the US intend to clarify those questions publicly?" Zhao asked. Thirty-two communist and workers' parties around the world signed a petition against the proliferation of biological weapons, asking closure of US military biological laboratories, a Ukraine-based media politnavigator.net reported on Monday.

` The biological weapons can be used by the US military against their opponents, which will lead to catastrophic consequences, according to the article.

` The laboratories created by the US were deployed in various countries including Ukraine, Georgia, Armenia, Azerbaijan, Kazakhstan and Uzbekistan, the article said.

` Yang Zhanqiu, a deputy director of the pathogen biology department at Wuhan University, told the Global Times in a recent interview that the US needs to publish more data and documents related to large-scale of epidemiological investigations including their travel history, relationship with other cases from overseas, and virological analysis is needed to compare the similarity of the viral genome to determine the source of the epidemic in the US.

` "Some current studies show that the prevalent coronavirus in the US has the most inclusive genetic types, and almost all strain types are transmitted in the US so it would be very meaningful for conducting origins studies in the US," Yang said.

` Political maneuver

` The WHO-China joint study report issued on March 30, 2021, reached a clear conclusion and offered suggestions for the next phase of global study into the origins, which concluded that the Wuhan "lab leak" hypothesis is extremely unlikely, and that we should look for possible early cases of the outbreak more widely around the world and further understand the role of cold chains and frozen food.

` A Western scientist who is close to the WHO-China joint team told the Global Times that the reason the WHO chief looks set to change the approach to phase two is because of political pressure regarding the lab leak from a small number of member states, led by the US.

` Under such a highly politicized environment, the White House chief medical adviser Anthony Fauci got into a heated exchange on Tuesday with Senator Rand Paul, after the US official accused Fauci of lying to Congress.

` Paul believed that the National Institutes of Health funded a lab in Wuhan, USA Today reported on Tuesday. The lab has been at center of the conspiracy theory of the G.O.P.

` Fauci also told Paul last year that he was spreading misinformation about the virus, according to the media report.

` The public and the media are trying to get answers to questions the international community has been asking for a while. However, some people in the US have been keeping the public in the dark, according to Chinese officials and experts.

` "I hope the US can answer the following questions," Zhao said at the press conference on Wednesday, as some issues remain unclear.

` As the US National Institutes of Health's All of Us Research Program found evidence of COVID-19 infections in the US as early as December 2019, how does the US respond to that? There were 171 patients who had symptoms of COVID-19 in Florida earlier than reported cases without travel history to China, how does the US respond to that? The mayor of Belleville claimed that he had COVID-19 symptoms back in November 2019, two months earlier than the first-reported cases, how does the US respond to that? the Chinese official asked.

` "Also, according to some reports, the symptoms caused by the vaping lung disease in July 2019 were similar to COVID-19 infections, would the US clarify that? Why does the US keep silent when talking about investigations into Fort Detrick and other overseas biolabs? What is it trying to hide from us?" Zhao added.

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 Investigating Fort Detrick a question the US must answer: Chinese FM on 5m urging WHO to investigate lab

The US Army Medical Research Institute of Infectious Diseases at Fort Detrick 

Photo: AP

The US Army Medical Research Institute of Infectious Diseases at Fort Detrick Photo: AP

 

Investigating Fort Detrick is the call of people all over the world, including the Chinese people, and it is a question that the US must answer when it comes to COVID-19 origins, Chinese Foreign Ministry said on Wednesday after nearly 5 million Chinese signed an open letter demanding the World Health Organization (WHO) to investigate US' Fort Detrick lab.

` In less than five days, nearly 5 million Chinese have signed the open letter, Chinese Foreign Ministry spokesperson Zhao Lijian said at Wednesday's media briefing. Zhao added that the rising numbers are a representation of anger of the Chinese people at the political manipulation by the US on COVID-19 origins.

` Zhao said the US should be transparent, take measures to thoroughly investigate the source of its own pandemic and the failure of its response to it. Those who failed should be held accountable, Fort Detrick and more than 200 American overseas biological labs must be investigated.

` A group of Chinese netizens drafted an open letter to ask the WHO to investigate the US Army Medical Research Institute of Infectious Diseases (USAMRIID) at Fort Detrick, Maryland. They entrusted the Global Times with posting the letter on its WeChat and Weibo platforms on Saturday to solicit public response.

` They said in the letter that to prevent the next epidemic, the WHO should pay special attention to labs that are conducting studies on dangerous viruses or even biochemical weapons. The open letter particularly noted the Fort Detrick lab, which stores the most deadly and infectious viruses in the world, including Ebola, smallpox, SARS, MERS and the novel coronavirus. The leak of any of them would cause severe danger to the world.

` The US has been hyping up the "sick researchers of Wuhan Institute of Virology" conspiracy since May, which was reported by the Wall Street Journal. The story cited US intelligence report claiming three researchers from China's Wuhan Institute of Virology became sick enough in November 2019 that they sought hospital care.

` In response, Zhao urged the US to present evidence.

` "Who are these 'three sick researchers,' what are their names, what diseases were they infected with? If their coronavirus tests were positive, please present the report," Zhao said.

` "I want to tell everyone that the US cannot present any evidence, because it's lying. It is stigmatizing and demonizing China using the COVID-19 origins issue," Zhao said.

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Wednesday, July 21, 2021

Call for investors to protect natural capital


NATURAL resources are the single most important input to the global economy. Whether it is raw materials, water, flood protection, biodiversity or pollination, nature provides most of the capital businesses need for the production of goods and services.

` Schroders argues we all have a role to play in protecting these resources so that humans can continue to benefit from it for generations to come.

` The asset management company describes natural capital as elements of nature that provide important benefits called “ecosystem services”. These include CO2 sequestration or removal, protection from soil erosion and flood risk, habitats for wildlife, pollination and spaces for recreation and wellbeing.

` “Nature provides critical societal benefits to individuals and communities around the world.

` “The combination of soils, species, communities, habitats and landscapes which provide these ecosystems services are often called ‘assets’,” it explains.

` Meanwhile, machinery, vehicles, buildings and other manufactured items are termed “produced capital”, while human capital refers to the knowledge, judgement and experience that we as humans contribute.

` “All three sources of capital work together and form the basis of economic activity,” Schroders says.

` It notes natural capital can be split into renewable and non-renewable categories. Oil, gas and minerals, for instance, are non-renewables.

` It says there’s a critical threshold with these assets: if we deplete its stocks past the tipping point, the capital is no longer renewable. It is therefore crucial to maintain, enhance and protect these resources so that they are available to future generations.

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Tuesday, July 20, 2021

Webinar: The rise of ‘Govcoins’ and what’s next for crypto

The global financial landscape, especially in Asia, is being redrawn amid digitalisation of the financial sector, propelled by both the regulators and fintech innovators

ONCE viewed with suspicion, digital currencies have gained wider acceptance since the Covid-19 pandemic started.

` The recognition has sparked not only various investment opportunities but also technological innovations and developments, including by governments around the world eager to capitalise on the digital currency potential.

` One is China, where its central bank People’s Bank of China has just launched pilot projects on digital currency and is working with the Bank of Thailand and Hong Kong Monetary Authority on the initiative.

` The global hype in cryptocurrency investment, meanwhile, has come under restraint from the regulators but with the pandemic – a number of Asian companies have embraced the crypto innovation in hope of riding out of the economic slump. Investors especially the Gen Z have jumped on the bandwagon despite the risk and pushed the value of Bitcoin to a new high.

` To help people understand the government-backed digital currencies and the future of cryptocurrencies further, The Star will co-host a webinar entitled “The rise of Govcoins & What’s next for crypto” this Thursday, July 22, 2021, at 10am.

` The webinar is organised jointly with the Asia News Network (ANN), an alliance of 23 national media in 20 Asian countries, and The Investor, which is a tech media start-up of the The Korea Herald. Both The Korea Herald and The Star are members of ANN.

The webinar is organised jointly with the Asia News Network (ANN), an alliance of 23 national media in 20 Asian countries

` The speakers on the first session “The rise of Govcoins” include John Kiff, former senior financial sector expert at the International Monetary Fund; Nelson Chow, chief fintech officer at the Hong Kong Monetary Authority; and Andrew Sheng, one of Malaysia’s and Asia’s top economists, and The Star’s columnist.

` The second session “What’s next for crypto” will feature speakers Kevin Werbach, professor of Legal Studies & Business Ethics at the Wharton School, University of Pennsylvania; Stephane De Baets, president of Elevated Returns Ltd, an investment firm based in the US with Asian focus; Marcus Lim, group CEO, Zipmex Co, a regional cryptocurrency platform; and Pindar Wong, a blockchain specialist and chairman of VeriFi, a financial tech consultancy in Hong Kong. The speakers will discuss the decentralisation of finance, benefits and dangers of cryptocurrency, a shake-up which is taking place to weed out illegal financial transactions and the development of AI and programmable smart money.

Registration is available at https://us02web.zoom.us/webinar/register/4916263173191/WN_LaWquMD2ROaxPkccdsC4Qg

You can also listen live on Clubhouse at https://www.clubhouse.com/event/M8ZWK53b

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Sunday, July 18, 2021

The seismic shift in global finance

 

Why the global financial landscape is undergoing a seismic shift

  • Regulators are struggling to keep up with fintech’s rapid growth and the impact of big data, even as intense geopolitical rivalries mean accidents could easily escalate into crises

 
AUGUST 15, 2021 marks the 50th anniversary of United States President Richard Nixon delinking the US dollar from gold. Instead of a crisis, the ensuing half century marked the pre-eminence of the US financial system to global dominance.

In 2017, US Treasury Secretary Mnuchin commissioned four major studies on the US financial system that reviewed its efficiency, resilience, innovation and regulation. These surveys highlighted the US dominance in all four areas of banking, capital markets, asset management and financial technology.

To quote the reports proclaimed : “The US banking system is the strongest in the world”... “The US capital markets are the largest, deepest, and most vibrant in the world..(that) include the US$29 trillion (RM119 trillion) equity market, the US$14 trillion (RM57.5 trillion) market for US Treasury securities, the US$8.5 trillion (RM35 trillion) corporate bond market, and US$200 trillion (notional amount or RM820 trillion) derivatives market.”

According to the reports,“Nine of the top 10 largest global asset managers are headquartered in the United States.” In the area of financial technology, “US firms accounted for nearly half of the US$117bil (RM480bil) in cumulative global investments from 2010 to 2017.”

Under-pinning the US financial system’s success is of course the US dollar’s dominant currency pricing role. The dollar accounted for 88% in paired foreign exchange currency trading in 2019 and 59% of official foreign exchange holdings in 2020. It is widely used in trade invoicing in manufacturing but less so in services trade. As a major International Monetary Fund study has shown, this pricing role impacts on emerging market economy (EME) exchange rate policies, as their devaluation would have only limited positive impact on their exports, but amplifies their import contraction.

Furthermore, because EME debt is largely denominated in dollars, any dollar appreciation would have an overall contractionary impact on EME liquidity and growth. This is why US interest rate increases are feared not just by the US Treasury, but also almost all EME economies.

Several factors combined to create the recent seismic shift in the global financial landscape. 

First, financial technology has eroded the dominant share of the banking system. The Financial Stability Board (FSB) 2020 report on non-bank financial institutions (NBFI) revealed that as of end-2019, they accounted for 49.5% of global financial assets of $404 trillion, compared with 38.5% for the banks. Indeed, total NBFI lending now exceed bank lending, partly because of tighter bank regulations and higher bank capital and liquidity costs.

` Second, financial technology has enabled new arrivals in the financial sector comprising not new fintech startups, but also Big Tech platforms that are using Big Data, Artificial Intelligence, apps and their dominance of cloud computing to provide more convenient, speedy and customer-oriented finance for individuals and businesses. This month, a major BIS study on the implications of fintech and digitisation on financial market structure showed how Big Tech has muscled into traditional banking services, especially in payment services, lending and even asset management.

Taking the growth of NBFIs and Big Tech together, the traditional bank regulators and supervisors find that they regulate less and less of the financial system, but central banks are responsible for overall financial stability. Regulating the complex financial eco-system is like trying to tie down a huge elephant by a bunch of specialists each trapped in their own silos. And politically, no one wants to give a super-regulator power to rule them all.

Third, the financial landscape entered new minefields because of intense geopolitical rivalry. If global supply chains are going to be decoupled by different standards, and we arrive at a Splinternet of different technology standards, how should finance respond? As the US applies pressure on Chinese companies and individuals through new sanctions and legislation, financial institutions and companies struggle to deal with shifting goal posts and game changes. 

 

A woman and a child walk past the People’s Bank of China building in Beijing on March 4. China’s central bank, like others around the world, is grappling with how to regulate the fintech industry. Photo: Bloomberg

The Ant Finance and Didi events are more a reflection of regulatory concerns whether large domestic Big Data platforms should be subject to foreign legislation with national security implications. Will India, for example, continue to allow foreign Big Tech to own all their client data?

Fourth, the regulatory trend towards “open financial data” in which banks would open up their client databases to allow new players to access customer accounts and data will provide new products and services. But this means also severe concerns on client privacy and data security. No country has yet figured out how to manage competition fairly in the fintech world when five firms (Amazon, Microsoft, Google, IBM, Oracle) dominate 70% of cloud-related infrastructure services.

Fifth, blockchain technology, cyber-currencies and central bank digital currencies are now increasingly coming on-stream, making possible payments and transactions that rely less on official currencies and also outside the purview of regulation. In short, the official regulators are responsible for system stability, but may not have access to what is really going on in blockchain space. That is an accident waiting to happen.


 
https://youtu.be/oukokqq1s_o

In addition to more than 600,000 COVID-19 deaths, growth in the US is based on a strong stimulus package of excessive money-printing. China's growth is more solid: Editor-in-Chief Hu Xijin

All these suggest that the global financial system has grown faster, more complex and entangled than any single nation to manage on its own. If the largest financial systems are caught in increasingly acrimonious geopolitical rivalry, what are the risks of financial accidents that can easily escalate to financial crises? In the 2008 global financial crisis, the G20 stood together to execute a whole range of responses. This time round, there is no unity as the US continues to apply financial sanctions against her enemies and rivals, amounting to 4,283 cases as of January 2021, of which 246 and eight respectively were against Chinese and Hong Kong entities.

The bubble in fintech valuation that has fueled rising stock markets and investments in technology is fundamentally driven by central bank loose monetary policy. Central bank assets have grown faster on an average of 8.4% per annum between 2013-2018, than banks (3.8%) or NBFIs (5.9%) to reach 7.5% of global financial assets. Does this mean that financial markets can assume that central banks will continue to underwrite their prosperity?

As inflation rears its head, central banks will have to reverse their loose monetary stance, thus putting the global financial system under stress. The global financial system has structural and regulatory cracks, but they can only be fixed by having some political understanding amongst the big players. Without this, expect a messy outcome.

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

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