Russia adds yuan as currency reserve

The Central Bank of Russia has included the Chinese yuan in its reserve currency basket, TASS reports. The move is expected to boost the yuan’s presence in the Russian financial market.

As of December 31, 2014, the latest data available, the US dollar was still dominating Russia’s forex basket at 44 percent. The second most-used foreign currency was the euro with 42 percent. The British pound made up 9.5 percent.

According to Vesti.Finance, the Central Bank made the decision in November, but hasn’t bought the yuan yet.

Read more » RT
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Chinese firm takes control of Gwadar Port free-trade zone in Pakistan

Gulf gateway key to plans to ship oil overland to inland provinces

By Summer Zhen

A Chinese firm officially took control of Pakistan’s Gwadar Port free-trade zone on Wednesday, further cementing its role in the Gwader area, a gateway to oil-exporting Gulf countries, and analysts see the deal as a chance for China to change the oil import game.

Under the agreement, state-backed Chinese Overseas Ports will manage the free-trade zone on a 43-year lease. The formal handover signals the Chinese side’s control of all the port’s business affairs.

Gwadar port is a deep sea port that sits next to the Strait of Hormuz, the key oil route in and out of the Persian Gulf and it lies only 120km from the Iranian border.

As part of the China-Pakistan Economic Corridor scheme, China plans to make Gwadar a transportation hub by building a 3,000km railway linking Xinjiang, in western China, with Gwadar.

Read more » South China Morning Post
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Pakistan, China and Naxalites are main threats, says Indian Air Force chief

NEW DELHI: China, Pakistan and Naxalites are a major source of worry for the Indian Air Force (IAF), Air Chief Marshal Arup Raha, India’s Chief of Air Staff, said here on Tuesday.

According to the Indian Express, he listed China’s growing influence in the Indian sub-continent as a major security challenge for New Delhi. Delivering the inaugural address at 12th Subroto Mukerjee Seminar at the Centre for Air Power Studies, ACM Raha said that Chinese growing influence was with a strategic aim in mind, and it was being factored in India’s foreign and defence policies.

“China has increased its economic and military ties with all our neighbours. Rapid infrastructure development is taking place in the TAR (Tibet Autonomous Region). World’s highest airfield at Daocheng Yading, highest railway line from Xiniang, Qinghai province to TAR capital, development of the Gwadar port and Economic corridor through PoK (Indian term for Azad Kashmir) and Pakistan, development of roads in TAR up to Indian border and increasing economic and military ties with Sri Lanka, Bangladesh, Nepal, Bhutan and Myanmar are all strategic moves by China to contain India,” ACM Raha said.

Highlighting Beijing’s other regional moves, he said that “China has been making sustained efforts to make its presence felt in the IOR (Indian Ocean Region), including dispatch of submarines in the name of piracy control, with a strange logic.”

According to the Express, he said: “Incidents of border standoff in the north, issuance of paper visa to the residents of Arunachal Pradesh (AP) and claiming of Aksai Chin and part of AP as part of China have diluted the agreement of five principles, Panchsheel signed way back in 1954.”

Noting that the rise of China, India and Asean has shifted the global economic centre of gravity and hence, the strategic centre of gravity to the Asia Pacific Region, ACM Raha said that India faced a unique challenge — it has the dual task of physical security of the borders and maintaining harmonious relations with its neighbours.

Talking about Pakistan, ACM Raha observed that the “support of the Pakistan Army to the militant organisations and continuous interference in the internal affairs of Jammu and Kashmir will remain a source of friction between the two countries.

“Despite the grim internal situation, Pakistan has managed to strike a balance in its relations with China and USA. It has steadily built up its nuclear and ballistic missile capability with covert assistance from China and North Korea while continuing to receive monetary support and conventional weapons and aircraft from both USA as well as China. Their gamble of ‘Running with Hares and Hunting with Hounds’, while proclaiming itself as a member of GWOT (Global War on Terror) is paying off handsomely due to various geo-political reasons,” he added.

Read more » DAWN
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China, Russia And Pakistan: The World’s New Superpower Axis


The world is coming toward a bipolar world with China, Russia, Pakistan and a number of other authoritarian countries of Central Asia on one side, and the U.S., EU, Japan and their Asian allies on the other side.

And that’s not a peaceful nor a promising future, it’s a rather chaotic future where undecided countries such as India, Brazil, Egypt and others will be squeezed between the two sides.

If you take interest in today’s geopolitics, you probably know that the relations between Russia and Pakistanhave recently seen a significant warning. It is reasonable to say that the two countries – who were Cold War rivals – are getting closer.

Meanwhile, China, who is a traditional ally of Pakistan and has always supported the country against its historical rival India with its military equipment and in the fields of diplomacy, is showing clear signs of forming this new China-Russia-Pakistan triangle, which is likely to lead to the above-described bipolar world.

After the Russian economy had been hit by Western sanctions in the summer of 2014, the Kremlin started to look in the direction of Asia, particularly – Pakistan.

Read more » ValueWalk
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‘Looking East’: A trip to Middle Kingdom


The word China conjures a wide variety of different images. A typical Chinese house with curved and sloping roofs, people with their pants up to their ankles and hats in paddy fields or people with pencil thin tweaked moustaches with round and red cheeks and high hairstyles similar to the Emperors of earlier dynasties, and cities that are overcrowded, funny smells, and exotic spices and foods.

Fortunately or unfortunately, none of these things hold true for China today, at least for the two cities that I visited during my predominantly business trip there.

Despite there being many flights daily to China, our geographical position is interesting.

Though China and Pakistan are neighbours, the presence of the Karakoram, Hindukush and Himalaya mountain ranges has made this region relatively inaccessible and our sense of China, unlike India, is all that is conjured in books, pictures, films and from ancient history.

Read more » DAWN
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Fuel-starved Nepal signs agreement with China for oil, ending India’s monopoly

FILE- In this Sept. 24, 2015 file photo, Nepalese oil tankers and commercial trucks stand stranded near a gate that marks the Nepalese border with India, in Birgunj, Nepal. Fuel-starved Nepal has signed an agreement with China to provide gasoline, diesel and cooking gas, after India restricted its supplies as a result of ongoing political protests in the Himalayan nation, officials said Thursday. (AP Photo/Ram Sarraf, file) – See more at:

By Binaj Gurubacharya / The Associated Press

KATHMANDU, Nepal – Fuel-starved Nepal has signed an agreement with China to import gasoline, diesel and cooking gas, effectively ending a monopoly on supply from India, which has restricted fuel convoys as a result of political protests in the Himalayan nation.

The decision to import Chinese oil amid severe shortages has brought China a step closer to Nepal, which traditionally is more influenced by India in the south. The two Asian giants have been jostling for influence in landlocked Nepal.

Nepal sent a team of officials this week to Beijing, where they signed a memorandum of understanding Wednesday with China National United Oil Corp., said Nepal Oil Corp. official Deepak Baral.

Details on how much fuel Nepal will receive, prices and other arrangements still need to be worked out, Baral said, but he confirmed the supply would be on a regular basis.

It would be the first time for Nepal to import Chinese fuel. It has so far relied exclusively on India for its energy needs.

Indian External Affairs Ministry spokesman Vikas Swarup declined comment on Nepal’s agreement with China.

Read more » Time Colonist
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UK ‘needs Chinese investment’, ambassador says

Liu Xiaoming was speaking on BBC1’s Andrew Marr Show the day before the start of President Xi Jinping’s state visit to the UK.

He said the expected deal to build a new nuclear power plant at Hinkley Point was “in the best interests of Britain and also in the interest of partnership between China and UK”.

“UK people want to have a better life, want to have clean energy,” he said.

President Xi told the Reuters news agency: “The UK has stated that it will be the Western country that is most open to China. This is a visionary and strategic choice that fully meets Britain’s own long-term interest.”

Read more » BBC
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China clinches first overseas bullet train deal with Indonesia

After years of intense lobbying with several countries, including India, in an effort to sell its high-speed rail technology, China has finally bagged its first ever overseas bullet train project signing a USD 5.5 billion deal with Indonesia.

The two countries inked an agreement in Jakarta yesterday to launch a joint venture for a high-speed rail linking the Indonesian capital with Bandung, the capital of West Java “in a breakthrough deal,” state-run Global Times reported.

Speaking at the signing ceremony, Chinese Ambassador Xie Feng said the high-speed rail would be China’s first overseas project entirely using Chinese technology and the largest investment value ever.

“The high-speed railway connecting Jakarta and Bandung has resulted from the agreement of both countries’ leaders upon the need to synergise strategies to attain higher growth,” he said.

The USD 5.5 billion project to build the 150 km high speed rail will be conducted on a business-to-business basis, in which the Indonesian side controls 60 per cent of the joint venture’s stake, while the Chinese partner controls the remaining 40 per cent share.

Read more » The Hindu
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China to build four submarines in Karachi, Pakistan.

ISLAMABAD: China will build in Karachi four of eight submarines that it is selling to Pakistan.

Minister for Defence Production Rana Tanveer Hussain told at the inauguration of the Defence Export Promotion Organisation (DEPO) Display Centre in the federal capital that the deal for acquisition of submarines from China had been finalised and four of them would be built here.

He further said that construction of the submarines would simultaneously begin in Pakistan and China.

China, he said, would transfer the technology to Pakistan for submarine construction.

Read more » DAWN
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US On The Ropes: China To Join Russian Military In Syria While Iraq Strikes Intel Deal With Moscow, Tehran

by Tyler Durden

Last Thursday, we asked if China was set to join Russia and Iran in support of the Assad regime in Syria.

Our interest was piqued when the pro-Assad Al-Masdar (citing an unnamed SAA “senior officer”), said Chinese “personnel and aerial assets” are set to arrive within weeks. To the uninitiated, this may seem to have come out of left field, so to speak. However, anyone who has followed the conflict and who knows a bit about the global balance of power is aware that Beijing has for some time expressed its support for Damascus, most notably by voting with Russia to veto a Security Council resolution that would have seen the conflict in Syria referred to the Hague. Here’s what China had to say at the May 22, 2014 meeting:

 For some time now, the Security Council has maintained unity and coordination on the question of Syria, thanks to efforts by Council members, including China, to accommodate the major concerns of all parties. At a time when seriously diverging views exist among the parties concerning the draft resolution, we believe that the Council should continue holding consultations, rather than forcing a vote on the draft resolution, in order to avoid undermining Council unity or obstructing coordination and cooperation on questions such as Syria and other major serious issues. Regrettably, China’s approach has not been taken on board; China therefore voted against the draft resolution.

In other words, China could see the writing on the wall and it, like Russia, was not pleased with where things seemed to be headed. A little more than a year later and Moscow has effectively called time on the strategy of using Sunni extremist groups to destabilize Assad and given what we know about Beijing’s efforts to project China’s growing military might, it wouldn’t exactly be surprising to see the PLA turn up at Latakia as well.

Sure enough, Russian media now says that according to Russian Senator Igor Morozov, Beijing has decided to join the fight. Here’s Pravda (translated):

According to the Russian Senator Igor Morozov, Beijing has taken decision to take part in combating IS and sent its vessels to the Syrian coast.

Igor Morozov, member of the Russian Federation Committee on International Affairs claimed about the beginning of the military operation by China against the IS terrorists. “It is known, that China has joined our military operation in Syria, the Chinese cruiser has already entered the Mediterranean, aircraft carrier follows it,” Morozov said.

According to him, Iran may soon join the operation carried out by Russia against the IS terrorists, via Hezbollah. Thus, the Russian coalition in the region gains ground, and most reasonable step of the US would be to join it. Although the stance of Moscow and Washington on the ways of settlement of the Syrian conflict differs, nonetheless, low efficiency of the US coalition acts against terrorists is obvious. Islamists have just strengthened their positions.

As Leonid Krutakov told Pravda.Ru in an interview, the most serious conflict is currently taking place namely between China and the US. Moscow may support any party, the expert believes, and that is what will change the world order for many years.

Clearly, one has to consider the source here, but as noted above, if Beijing is indeed set to enter the fray, it would be entirely consistent with China’s position on Syria and also with the PLA’s desire to take a more assertive role in international affairs.

Meanwhile, it now looks as though the very same Russian-Iran “nexus” that’s playing spoiler in Syria is also set to take over the fight against ISIS in Iraq, as Baghdad has now struck a deal to officially share intelligence with Moscow and Tehran. Here’s CNN:

Iraq says it has reached a deal to share intelligence with Russia, Iran and Syria in the fight against ISIS militants.

The announcement on Saturday from the Iraqi military cited “the increasing concern from Russia about thousands of Russian terrorists committing criminal acts within ISIS.”

The news comes amid U.S. concerns about Russia’s recent military buildup in Syria and would appear to confirm American suspicions of some kind of cooperation between Baghdad and Moscow.

We’d be remiss if we failed to note the significance here. The entire narrative is falling apart for the US, as Russia and Iran are now moving to transform the half-hearted Western effort to contain ISIS into a very serious effort to eradicate the group.

Read more » Zero Hedge
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China pledges $2B to help developing countries

Also promises to forgive debt owed by countries in greatest need

By Thomson Reuters

Chinese President Xi Jinping announced on Saturday that Beijing will establish an assistance fund with an initial pledge of $2 billion to help developing countries implement a global sustainable development agenda over the next 15 years.

“China will continue to increase investment in the least developed countries, aiming to increase its total to $12 billion by 2030,” Xi told a sustainable development summit of world leaders at the United Nations.

“China will exempt the debt of the outstanding intergovernmental interest-free loans due by the end of 2015 owed by the relevant least developed countries, landlocked developing countries and small island developing countries,” he added.

The fund would help pay for such things as health care, education and economic development.

News courtesy: CBC
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Nuclear technology – China’s next great export?


For China, the prize on offer in the UK is not the investment in Hinkley Pointor Sizewell B but a controlling stake at Bradwell in Essex. This could be the first Chinese-designed nuclear power plant in the West, a massive breakthrough for China in promoting global exports of its nuclear technology.

So far its customers have been confined to countries like Pakistan, Romania and Argentina with the developed world opting for American, Japanese and French technology.

But the Energy Secretary, Amber Rudd, has said that China will be part of building the next generation of UK nuclear power stations and that having Chinese design up and running in the UK would give other countries confidence on safety.

Read more » BBC
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A high-speed rail from L.A. to Las Vegas? China says it’s partnering with U.S. to build

For decades private developers and entrepreneurs have periodically announced bold plans to run high-speed trains between Las Vegas and Los Angeles.

None have gotten anywhere because they lacked money or suffered other setbacks.

On Thursday, however, one long-discussed proposal appeared to gain some intriguing support.

Officials for XpressWest, which has been unable to secure adequate private investors in the United States or a $5.5-billion federal loan, announced that it had formed a partnership with China Railway International USA, a consortium led by China Railway, the national railroad of the People’s Republic of China.

Details about the joint venture, the proposed project and its financing were unavailable Thursday, except China Railway International stated that it would provide initial capital of $100 million. Project officials say they are confident construction could begin as early as September 2016.

XpressWest, a private company formerly called DesertXpress, has been talking about its high-speed rail project since at least 2007. Plans have called for a 185-mile route that would run adjacent to heavily-traveled Interstate 15 from Las Vegas to Victorville, 85 miles northeast of downtown Los Angeles.

Chinese officials now describe the project as a 230-mile route with an additional stop in Palmdale and eventual service throughout the Los Angeles area using some of the same track that would be used by the publicly backed California high-speed rail project.

Federal railroad records indicate that XpressWest has already secured approvals and permits from a number of federal agencies for the 185-mile route. Additional permits, approvals and environmental analysis would be needed for the 230-mile proposal.

“As China’s first high-speed railway project in the United States, the project will be a landmark in overseas investment for the Chinese railway sector and serve as a model of international cooperation,” Yang Zhongmin, chairman of China Railway International, told the state-run Xinhua News Agency.

Chinese officials disclosed the joint venture during a news conference in Beijing. XpressWest representatives also issued a brief statement on their website, but declined to comment until additional regulatory approvals are obtained.

The announcements of cooperation come just days before Chinese President Xi Jinping’s state visit to the United States.

Read more » Los Angeles Times
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Shanghai Cooperation Countries may be able to use Pakistani ports

SCO states may be able to use Pakistani ports

ISLAMABAD: Member countries of the Shanghai Cooperation Organisation — China, Kazakhstan, Kyrgyz­stan, Russia, Tajikistan and Uzbekistan — may be able to use Pakistani ports to get access to trade routes through the Arabian Sea once China-Pakistan Eco­no­mic Corridor (CPEC) is completed and becomes operational.

Speaking at the Economic and Trade Ministers meeting of Shanghai Cooperation Organisation (SCO) in Xian, the capital of China’s Shaanxi province on Wed­nesday, Commerce Minister Khurram Dastagir Khan said that Pakistan’s trade strategy focuses on developing linkages with our neighbours, leveraging our geographical location and capitalising on regional connectivity initiatives.

Pakistan has an observer status at the SCO and is scheduled to become full member state in January 2016 which will provide new impetus to Pakistan’s relations with member states.

Read more » DAWN
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UK to partner in CPEC, provide $121.6 million grant

By Shahbaz Rana

ISLAMABAD: In a significant development, the United Kingdom has become a partner in China-Pakistan Economic Corridor and agreed to provide $121.6 million in grant to fund construction of Burhan-Havelian Expressway, which falls on the northern route of the corridor.

The Asian Development Bank (ADB) and the Department for International Development (DFID) of the United Kingdom will co-finance the $327 million cost of the 59km-long Hassanabdal-Havelian Expressway (E-35) project, according to a handout issued by the Manila-based lending agency on Tuesday.

UK’s $121.6 million grant will lessen Pakistan’s debt obligations by the same amount. The country had entered into a loan agreement with ADB, which will now be picked up by UK taxpayers to the extent of the grant amount.

Read: India bid to halt Pakistan projects fails

It is for the first time that the UK will fund any infrastructure sector project in Pakistan, as so far its focus remained on social sectors. It is also the first time that the UK is partnering with the Manila-based lending agency in a project located in Pakistan.

Read more » The Express Tribune
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China’s Billion-Dollar Gateway To The Subcontinent: Pakistan May Be Opening A Door It Cannot Close

By Mahwish Chowdhary

Despite decades of mismanagement and a feeble socioeconomic infrastructure, one thing Pakistan benefits from is a strategic location—and China is taking notice.

More than 70% of China’s trade and energy imports travel through the Indian Ocean and the pirate-swarmed Strait of Malacca, both patrolled by the United States and Indian navies. But this possible chokepoint is a security issue for China, particularly in terms of oil (40% of its general consumption passes through the strait). Any sort of conflict could cut off the country’s energy supply, and ships would need to travel an extra 500 miles to avoid the strait, currently the fastest route from the Indian Ocean to the Pacific. China, aware of this vulnerability, is looking to Pakistan to provide a shorter and safer alternative.

The China-Pakistan Economic Corridor (CPEC), first proposed in 2013, is a massive project of rail links, special economic zones, dry ports and other infrastructure projects across Pakistan allowing for direct access to the Indian Ocean. It would connect Gwadar to Kashgar, a major trading hub in China, and abbreviate the current route to the Persian Gulf by more than 10,000 kilometers. Instead of 45 days, it would take China a mere 10 days to get its imports—all while avoiding any potentially contested channels near Taiwan, Vietnam, the Philippines, Indonesia and India, and eventually lowering shipping costs.

The CPEC would also provide China with an entry point to the Arabian Gulf, thus widening its geopolitical influence and possibly its military presence in the region. (Some Indian intellectuals suspect the Gwadar port will serve as a Chinese naval facility.) And it only comes at a cost of about $40 billion.

This isn’t the only investment China has planned in Pakistan. In fact, the money going to the country is double what Pakistan has received in foreign direct investment since 2008, and larger than any shape of assistance from the U.S. The list below (including CPEC) is just a snapshot of upcoming projects, likely funded by the Bank of China, the Export-Import Bank of China and the proposed Asian Infrastructure Development Bank:

  • $3.7 billion for a Karachi-Lahore-Peshawar rail line
  • $2.8 billion for developing four coal-fired stations with a capacity of 1,980 megawatts in Thar (Sindh)
  • $2.2 billion for two coal-mining blocks in Thar (Sindh)
  • $2 billion to build a natural gas pipeline between Gwadar and Nawabshah, then connecting to Iran
  • $2 billion to develop coal-fired generation plants at Port Qasim Karachi
  • $1.6 billion for a hydropower project in Karot
  • $1.2 billion for a solar power park in Bahawalpur
  • $930 million to link the Karakoram highway to Islamabad and Havelien
  • $260 million for a 100 megawatt wind farm in Jhimpir
  • $230 million to build the Gwadar International Airport

It is all part of China’s quest for influence throughout the continent via aid and investment. After decades of shying away from aggressive foreign policy moves, China now wants to play a much bigger regional role and is pushing plans for interconnected infrastructure networks to better link its economy with rest of Asia, the Middle East, Africa and Europe. Think of it as the new Silk Road.

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China launches Yaogan-27 remote sensing satellite

By Xinhua

A Long March-4C rocket carrying the Yaogan-27 remote sensing satellite blasts off from the launch pad at the Taiyuan Satellite Launch Center in Taiyuan, capital of north China’s Shanxi Province, Aug. 27, 2015. The satellite will mainly be used for experiments, land surveys, crop yield estimates and disaster prevention. (Xinhua/Yan Yan)

TAIYUAN, Aug. 27 (Xinhua) — China’s Yaogan-27 remote sensing satellite was sent into space on Thursday at 10:31 a.m. Beijing Time, from Taiyuan launch site in Shanxi Province, north China.

The satellite will mainly be used for experiments, land surveys, crop yield estimates and disaster prevention.

Yaogan-27 was carried by a Long March-4C rocket, the 207th mission for the Long March rocket family.

China launched the first “Yaogan” series satellite, Yaogan-1, in 2006.

News courtesy: People’s Daily
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China finally wins Thailand railway project

By Kong Defang (People’s Daily Online)

After many ups and downs, China has finally won the railway cooperation project with Thailand. Zhu Xijun, general manager of the Southeast Asia Company of China Railway Construction Corporation (CRCC), said on Aug. 26 that after six rounds of negotiation,both sides plans to sign the inter-governmental framework agreement on the China-Thailand Railway project in early September, and the commencement ceremony of the project is expected to be held in the end of October, Xinhua reported.

This year marks the 40th anniversary of China-Thailand diplomatic ties and the first yearof implementation of the “One Belt and One Road”initiative proposed by China. The China-Thailand Railway, which has a historical significance, has attracted tremendous attention.

According to Zhu Xijun, the project, which will be completed in 3 years, will bring actual benefits to the socioeconomic development of Thailand. After the railway puts into use,people will enjoy a much more convenient and cheaper transportation between China and Thailand. The price of a railway passenger ticket between Kunming and Bangkok will be about 3600 Thai Baht or 700 yuan, which is about a half or a third of an airline ticket, and the railway freight cost is only one ninth of the air freight.

The railway is estimated to add 2 million more Chinese tourists to Thailand every year andwill provide further convenience to its agricultural product export. With this railway,Thailand will be a new transportation hub of ASEAN countries.

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Pakistan-China railway to extend Beijing’s influence, says scholar

China should give its full effort to develop the China-Pakistan railway to extend China’s economic and political influence in the region and even to Africa, China’s state-owned Reference News cites an expert as saying.

China pledged US$4 billion to upgrade Pakistan’s rail network during President Xi Jinping’s visit to the country last week. A railway project that connects Kashgar in northwestern China’s Xinjiang region to the Pakistan port of Gwadar is also underway and is expected to play a major role in the economic corridor that the two nations have agreed to establish.

Gao Bai, a professor of sociology at Duke University in the United States and director of the National Research Center on Strategic Development of High-Speed Rail at Southwest Jiaotong University in Chengdu, has been a keen advocate of the China-Pakistan railway. In a 2013 article, Gao suggested that the railway could be a pillar for the expansion of China’s influence over land and could fundamentally impact the economic and political development of the region.

Gwadar Port, constructed by a Chinese firm, is now operated by a state-run Chinese company under contract for 40 years. The port sits on the western end of the Balochistan coast on the opposite end of the Gulf of Oman which is an important route for oil tankers from the Persian Gulf. It is also an important point that handles goods flowing out from western China and Central Asia to the Middle East, Europe and Africa.

The Gwadar-Kashgar railway is thus strategically significant as a shortcut for China to the Indian Ocean, said Gao, who believes that its construction may lead to the establishment of the Kashgar-Andijon railway via Kyrgyzstan and further facilitate the connection between Central Asian countries and India and the Indian Ocean.

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Global shares nosedive on China woes

FTSE 100 and European markets rattled by losses in China

Stock markets in London, Paris and Frankfurt have fallen sharply as fears of a Chinese economic slowdown continue to haunt investors.

London’s FTSE 100 index was down by 4% in early afternoon trade, with major markets in France and Germany down by 4.6% and 4.4% respectively.

Shares in Asia were hit overnight, with the Shanghai Composite in China closing down 8.5%, its worst close since 2007.

Global investors worry about growth in the world’s second largest economy.

China’s central bank devalued the country’s currency, the yuan, two weeks ago, raising fresh concerns that a slowdown in the country’s economy was worse than originally feared.

Currencies and commodities are also falling sharply, because those markets rely heavily on strong demand from China.

Read more » BBC
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Long-thwarted project gets go-ahead as Islamabad anticipates lifting of sanctions on Iran


ISLAMABAD—China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan’s acute energy shortage, under a deal to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials said.

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Asian shares continue global downward trend

Asian stocks saw sharp falls on Friday as mounting concerns over China’s slowing economy continued to affect global markets.

It follows big falls in US and European markets on Thursday, with the Dow Jones dropping more than 2%.

China’s Shanghai Composite index closed down 4.27% at 3,507.74 points.

Data released on Friday morning showed Chinese factory activity falling to its lowest level in more than six years.

The private Caixin/Markit manufacturing purchasing managers’ index (PMI) dropped to 47.1 from 47.8 in July. A figure below 50 shows contraction in the sector and one above means growth.

As domestic and export demand dwindle, Friday’s data is likely to add to global worries that the Chinese economy is set for a continued slowdown.

In Hong Kong, the Hang Seng index followed the mainland’s trend and was 1.53% lower at 22,409.62 points.

Global market woes

Asia’s largest stock market, Japan’s Nikkei 225 index, dropped sharply, finishing 2.98% down at 19,435.83 points.

Read more » BBC
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Russia, China and Pakistan: An Emerging New ‘alliance’?

Russia, China and Pakistan: An Emerging New Axis?

Regional realities are shifting fast, with some significant ramifications for India.

By Joy Mitra

In geopolitics, strategic realities can change with surprising speed, and even before countries realize it decisive shifts occur that shape the future for the years to come. That seems to be the case with traditional Cold War rivals Russia and Pakistan, which have of late seen a gradual warming of ties. Traditionally an ally of India and hitherto supportive of India’s stance on Kashmir, Russia has shown clear signs of cozying up to Pakistan.

Having earlier lifted its self-imposed arms embargo on Pakistan, in November 2014 Russia signed a landmark“military cooperation” agreement with Pakistan, which spoke about “exchanging information on politico-military issues, strengthening collaboration in the defense and counter-terrorism sectors, sharing similar views on developments in Afghanistan and doing business with each other.” There have been reports that Pakistan may purchase Mi-35 combat helicopters apart from directly importing the Klimov RD-93 engines from Russiarather than via China for its JF-17 multi-role fighters. This could also mean a significant role for Russian equipment and spares in future development of the fighter. In addition, Russian state-owned firm Rostekh Corporation is planning to build a 680 mile gas pipeline in Pakistan in 2017 at an estimated cost of $2.5 billion.

The mutual overtures between Russia and Pakistan are part of a greater shift in international relations. In Europe, Russia is embroiled in a showdown with the West over Ukraine, with Moscow’s military adventure in Crimea being followed by Western sanctions. In the Asia-Pacific, China’s encroachments in the South China Seahas inflamed tensions with other Asia-Pacific countries allied with the U.S. These developments have forced Russia and China to look for allies, which explains the bonhomie between the two powers of late. Some analysts question whether a partnership motivated by external factors could lead to an alliance of countries that formerly distrusted each other. But the old adage “the enemy of my enemy is my friend” fits perfectly well here; the single most important factor that overrides all others is their concurrent perception of the U.S. and its “policy of containment” towards them. China needs allies to change the world order and it begins with Asia.

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Pak-China to cooperate in space as part of Karamay declaration


PESHAWAR: The Chinese government has agreed to a proposal by the Federal Minister for Planning and Development Ahsan Iqbal, initiating the collaboration between Pakistan and China in space technology as part of the Karamay declaration under China-Pakistan Economic Corridor (CPEC).

At the Pakistan-China forum meeting held in Karamay-Xinjiang last week, Ahsan Iqbal, proposed space technology collaboration between China and Pakistan, an official of the forum told APP.

His proposal was approved and made a part of the Karamay-Xinjiang Declaration. The declaration was later approved unanimously after the two-day meeting.

At the concluding session, Ahsan Iqbal said that bilateral collaboration on space technology would take Pakistan-China relations to new heights. He stressed upon a joint launch of space missions which would consist of astronauts from both countries.

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China devalues the yuan, cutting rates by 1.9%

China Rattles Markets With Yuan Devaluation

China devalued the yuan in a move that rippled through global markets, as policy makers stepped up efforts to support exporters and boost the role of market pricing in Asia’s largest economy.

The central bank cut its daily reference rate by 1.9 percent, triggering the yuan’s biggest one-day drop since China ended a dual-currency system in January 1994. The People’s Bank of China called the change a one-time adjustment and said its fixing will become more aligned with supply and demand.

Read more » Bloomberg
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After Greece & China, the next domino to fall: Latin America

The next domino to fall: Latin America

Greece needs a bailout and China’s stock market is in meltdown mode. But the global economy has another rising red flag: Latin America.


Every major Latin American economy is slowing down or shrinking. The World Bank predicts this will be Latin America’s worst year of growth since the financial crisis. As if that’s not dire enough, the world’s two worst performing stock markets are in the region as well.

And things could get even uglier later this year for Latin America, a region which is double the economic size of India.

“The weakness in Latin America is reflecting the weaker global outlook,” says Win Thin, senior economist at Brown Brothers Harriman.

The ‘most vulnerable’: After years of checkered progress, Latin America is the “most vulnerable” region to China’s sputtering economy and market meltdown, experts say. It’s become a trade battleground area between the United States and China.

China is the biggest trade partner to many Latin countries, but the U.S. has tried to reassert its presence in recent months. Still, China’s sluggish growth is pulling Latin America down with it.

“We’re expecting very, very weak growth,” says Eugenio Aleman, senior economist at Wells Fargo Securities. “Brazil is in bad shape. Argentina isn’t much better. Chile has slowed down to a trickle…Peru is slowing down considerably.”

That’s just the beginning. Venezuela is arguably the world’s worst economy with sky-high inflation. Next door, Colombia has the world’s worst stock market this year. Its index is down 13% so far this year. The second worst is Peru, down 12.5%. By comparison, America’s S&P 500 is flat this year. (Argentina has the world’s best stock market, but that’s more a reflection of politics than economics).

While many are focused on Greece right now, “a deeper downturn in China remains the key external risk for Latin America,” says Neil Shearing, chief emerging market economist at Capital Economics.

The big problem: The three “C’s” are weighing down Latin America: China, commodities, and currency.

Read more » CNN
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China shares fall more than 8% on growth concerns

Shares in mainland China have recorded their biggest one-day fall for more than eight years following a sell-off towards the end of the trading day.

The Shanghai Composite closed down 8.5% at 3,725.56 after more weak economic data raised concerns about the health of the world’s second largest economy.

Profit at China’s industrial firms dropped 0.3% in June from a year ago.

That followed data on Friday indicating that factory activity in July saw its worse performance for 15 months.

Bernard Aw, market strategist at trading firm IG, said the surprisingly weak manufacturing data “added to worries that there could be further weakness in the Chinese economy, after the patch of recent economic data showed signs of stability”.

The Shanghai market’s fall was the biggest one-day loss since February 2007.

Read more » BBC
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With China, for China – As China arrives, Pakistan cleans house

By Wajahat S. Khan

The Sino-Pak axis has matured. The decades old ‘Cheen-Pak Bhai Bhai’ narrative is fast moving beyond pan-Karakoram fraternal rhetoric complemented by scenically exotic highways, shared rocket designs and muted nuclear deals to morph into optically sound, fundamentally critical, even mutually loud and proud policy, infrastructure and defense initiatives on the ground. China – and not just its submarines – is coming to Pakistan, and Pakistan is getting ready to receive the People’s Republic. The ‘Bhai’ in Beijing, as the mood in Islamabad indicates, is now a BFF – Best Friend Forever – even a Friend With Benefits.

The comprehensive Chinese assistance package – hinged on the 3000 kilometer-long China-Pak Economic Corridor, an aggressive energy build-up and military modernization – is the largest planned foreign investment program for any country, ever, touching almost crossing over $100 billion in the next decade and a half, and is being seen as the next, and perhaps the last, big thing that war-weary Pakistan must grab on to, at any cost.

The Peking Promise

The plan is simple: The deep-sea port of Gwadar is going to drive Chinese imports, largely oil and gas, into western China, which is relatively underdeveloped versus the rest of the PRC and prone to militancy. The levies, infrastructure and traffic will tone up the CPEC network to create jobs, roads and even entire towns along the way from Pakistani Balochistan, through all of the Islamic Republic’s other provinces, to Chinese Kashgar in Xinjiang. Add the potential of Chinese naval presence in Gwadar that will let it over see Hormuz and neighboring ports and the reality of Pakistan’s newly formed and purpose-built 34th Infantry Division to protect Chinese assets and personnel, and there is a single-minded confidence that the corridor must be secured and will be secured. After all, the Pakistanis have given their word to Beijing.

“China is Pakistan’s only strategic friend…not even the Saudis get to have that privilege any longer” said a senior intelligence officer last month when China’s deputy intelligence chief, Dong Haizhou was promised “no hurdles for CPEC” by army chief General Raheel Sharif during a visit to GHQ, according to the military spokesperson’s office.

So, fuelled by the blank political cheque presented to the civilian and military security apparatus by popular support after the terrible Peshawar Army Public School massacre last December – which has granted the military, police and federal investigators unprecedented constitutional powers to clean house – whoever gets in the way of a CPEC-oriented Pakistan must move aside, or be pushed out. The purge is here, and the reasoning is to satisfy China.


But this isn’t just the regular arrests and assassinations purge, the type that Pakistanis are used to. It’s more of a wide-ranging political rethink, a housekeeping exercise that runs from the south to the north, just like the corridor it is meant to pave. In Karachi and Sindh, the drive against ‘corrupt’ political parties like former president Asif Ali Zardari’s Pakistan Peoples Party has begun, which has forced him to take some respite and exit the country; also, that’s where the ‘violent’ wings of Karachi’s all-powerful Muttahida Qaumi Movement are being clipped, with some help from the BBC (which claims that India’s Research and Analysis Wing funded and trained the party’s militants) and British authorities (who are investigating the MQM’s leadership in London for murder and money laundering). Karachi, too violent and complicated to tackle alone, needed a pincer move to control it, and the Pakistanis have managed to find a partner here in the UK.

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Putin: Let’s trade in BRICS currencies

President Vladimir Putin says Russia is interested in using national currencies with other BRICS members after agreeing on such an arrangement with China.

He made the announcement after meeting leaders of Brazil, Russia, India, China and South Africa in Ufa in the Urals for a summit of BRICS nations.

“I think that such development with India, Brazil and South Africa would be interesting and could no doubt lift the level of trade turnover,” Putin said.

The BRICS accounts for almost half the world’s population and about one-fifth of global economic output. Member states have established the New Development Bank with an initial capital of $100 billion and an additional pool of $100 billion currency reserves.

“A pool of nominal currency reserves, with capital of $100 billion, will give us an opportunity to react to financial market fluctuations in a timely and appropriate manner,” Putin said.

The Russian leader said the new development bank will begin financing energy projects next year.

“The New Development Bank will be financing large-scale transport and energy projects and industrial development,” he said.

Economists see the new bank as a challenge to the domination of the World Bank and the International Monetary Fund which are under the US influence.

Putin said BRICS nations will work out a roadmap for investment cooperation by the end of the year when the first projects will be launched.

Read more » Press Tv
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Chinese chaos worse than Greece

WHILE the world worries about Greece, there’s an even bigger problem closer to home: China.
A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of “monstrous” public disorder.

And the effects for Australia could be serious, affecting our key commodity exports and sparking the beginning of a period of recession-like conditions.

“State-owned newspapers have used their strongest language yet, telling people ‘not to lose their minds’ and ‘not to bury themselves in horror and anxiety’. [Our] positive measures will take time to produce results,” writes IG Markets.

“If China does not find support today, the disorder could be monstrous.”

In an extraordinary move, the People’s Bank of China has begun lending money to investors to buy shares in the flailing market. The Wall Street Journal reports this “liquidity assistance” will be provided to the regulator-owned China Securities Finance Corp, which will lend the money to brokerages, which will in turn lend to investors.

The dramatic intervention marks the first time funds from the central bank have been directed anywhere other than the banks, signalling serious concern from authorities about the crisis.

At the same time, Chinese authorities are putting a halt to any new stock listings. The market regulator announced on Friday it would limit initial public offerings — which disrupt the rest of the market — in an attempt to curb plunging share prices.

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China offers $50 billion for hydroelectric projects in Pakistan


ISLAMABAD: China’s state-run power company, Three Gorges Corporation (CTG), is keen to participate in a financing consortium to fund up to $50 billion of hydroelectric power projects in Pakistan, a media report said.

This disclosure was made at the meeting of the Cabinet Committee on Energy on June 18. The CTG expressed interest in financing projects in Pakistan in conjunction with the International Finance Corporation, a World Bank subsidiary, the Express Tribune .

Learn more » The Economic Times

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