Emerging Markets Daily - June 28
An Anxious Centenary Birthday for China Communist Party, SE Asia Stocks Fall, Africa FDI, China's Digital Yuan, India Shifts 50K Troops to China Border
The Top 5 Emerging Markets Stories from Global Media - June 28
An Anxious 100th Birthday for China’s Communist Party
The Wall Street Journal
“The Chinese Communist Party can point to many achievements as it celebrates its centenary in early July. It presides over the world’s second-largest economy, soon to be #1 if trends continue; an expanding high-tech military, including the world’s largest navy; sophisticated modern cities with a vast, entrepreneurial middle class; and universities and research centers pitching for leadership in the key technologies of the century ahead. Within its ranks there is no sign of challenge to the authority of the top leader, Xi Jinping, and the party enjoys strong support among the Chinese public.”
“Still, the CCP is worried—and for good reason. There is an obvious tension between its self-interest as a ruling party and its stated long-term goals for China. By 2049, the 100th anniversary of the founding of the People’s Republic, the CCP has declared that it intends to make China a ‘strong, democratic, civilized, harmonious and modern socialist country.’ The great dilemma for the party is that the citizens of such a highly developed country are unlikely to accept the infantilizing control that its increasingly authoritarian regime imposes on them. A generational shift is under way in China, with traditional values giving way to more liberal attitudes, and it does not favor the long-term prospects of the CCP.”
“Such a crisis of legitimacy would hardly be the first in the party’s long history. It has teetered on the brink of disaster many times, and each time it has had to find new sources of public support.” Andrew Nathan reports
Southeast Asia Stocks Selloff Led by Malaysia, Thailand
Bangkok Post
“Thai stocks fell on Monday while Malaysian equities tumbled to a seven-month low, leading a selloff across many of southeast Asia’s markets, after the government in Kuala Lumpur extended a nationwide lockdown due to elevated Covid-19 infections.”
“The FTSE Bursa Malaysia KLCI Index dropped as much as 1.3% on Monday, while Indonesia’s stock benchmark fell the most in six weeks. In Thailand, the key index sank by as much as 1.1% to the weakest since late May, although it later pared losses and was down 0.2% at the close.”
“The baht and Philippine peso led declines among Southeast Asian currencies, weakening 0.3% each versus the dollar. Indonesia’s rupiah dropped 0.1%.”
“Nations across Southeast Asia are struggling to contain the pandemic, clouding recoveries in their economies. Indonesia reported fresh records in daily cases while the Thai goverment suspended dine-in services for a month at restaurants in Bangkok and nearby provinces.”
“‘The tightening in restrictions in some parts of Southeast Asia to curb rising Covid-19 cases will hurt domestic demand and hold back economic recovery,’ said Khoon Goh, head of Asian research in Singapore at Australia & New Zealand Banking Group Ltd. ‘Given the need for more policy support, especially on the fiscal side, this is weighing on domestic asset prices in those countries.’” The Bangkok Post reports.
Investment: Post-Pandemic Prospects for Africa
African Business
“Foreign investment in Africa plummeted in 2020, however, certain sectors – such as energy and mining - and a certain number of countries managed to weather the storm.”
“2020 was a particularly mediocre year for foreign investment in Africa due to the pandemic and the fall in commodity prices.”
“However, with a drop of 16% ($40bn in 2020 against $47bn in 2019), Africa does not seem to be doing as badly as Europe (-80%) or North America (-40%), according to the World Investment Report 2021 published on 21 June by the United Nations Conference on Trade and Development (UNCTAD).” Alain Faujas reports
Does the Digital Yuan’s Rollout Give China the Edge in the Internet’s Future?
South China Morning Post
“In February, China is expected to use the Beijing Winter Olympics to unveil a home-grown marvel of intense international interest: the digital yuan, the first major central bank digital currency, or CBDC.”
“Consumers are unlikely to notice much difference shopping with e-CNY, as the currency is officially known. It will be worth the same as cash and will activate with a tap, swipe or QR code. But the questions this form of money raises are profound. How will state-sponsored digital money affect China’s economy, its trading relationships and – most weighty of all – the future of the global financial system now dominated by the United States and the dollar?”
“‘The question is not whether China’s CBDC will upend the current rules of global trade and commerce,’ said Pauline Loong, director of Hong Kong-based research consultancy Asia-Analytica. “The only question is how far-reaching the ramifications will be across issues related to who controls access to capital and its movements.” Forcast.News reports
Geopolitics: India Shifts 50,000 Troops to China Border in Historic Move
Bloomberg
“India has redirected at least 50,000 additional troops to its border with China in a historic shift toward an offensive military posture against the world’s second-biggest economy.”
“Although the two countries battled in the Himalayas in 1962, India’s strategic focus has primarily been Pakistan since the British left the subcontinent, with the long-time rivals fighting three wars over the disputed region of Kashmir. Yet since the deadliest India-China fighting in decades last year, Prime Minister Narendra Modi’s administration has sought to ease tensions with Islamabad and concentrate primarily on countering Beijing.”
“…Still, despite India’s strategic shift and the troop movements, China retains an advantage along the border, said Sana Hashmi, a visiting fellow at the Taipei-based Taiwan-Asia Exchange Foundation.” Sudhi Ranjan Sen reports
What Else We’re Reading….
China’s Cyber Power at least a Decade Behind the US
Financial Times
“China’s strengths as a cyber power are being undermined by poor security and weak intelligence analysis, according to new research that predicts Beijing will be unable to match US cyber capabilities for at least a decade.”
“The study, published on Monday by the International Institute for Strategic Studies, comes as a series of hacking campaigns have highlighted the growing threat of online espionage by hostile states.”
“…As a result, only the US is ranked as a “top tier” cyber power by the think-tank, with China, Russia, the UK, Australia, Canada, France and Israel in the second tier. The third tier comprises India, Indonesia, Japan, Malaysia, North Korea, Iran and Vietnam.” Helen Warrell reports
