Emerging Markets Daily - June 9
China-Led Supergrids to Transform Power, Commodity Supercycle Driven by Clean Energy, Peru Election, China Factory Inflation. $1 Trillion Needed for Developing World to Hit Emissions Goals
The Top 5 Emerging Markets Stories from Global Media - June 9
The Future of Power Is Transcontinental, Submarine Supergrids
Bloomberg
“Ever since President Xi Jinping pitched the idea of a ‘global energy internet’ to the United Nations six years ago, China’s been trying to persuade the world to build the high voltage highways that would form its backbone. That plan to wrap the planet in a web of intercontinental, made-in-Beijing power lines has gone pretty much nowhere. Yet the fortunes of so-called supergrids appear to be turning, if not on quite the spectacular, Bond-villain scale Xi first envisaged.”
“China has both a manufacturing and technological edge in ultra-high-voltage direct current (UHVDC) transmission lines, and has taken a lead in proposing global technical standards and governance for them. If Xi’s plans are ever realized, those are advantages that some believe could have profound geopolitical implications, granting China power and influence similar to what the U.S. gained by shaping the global financial system after World War II.”
“Yet it isn’t China that’s driving renewed interest in cables that can power consumers in one country with electricity generated hundreds, even thousands, of miles away in another. That’s because carbon-neutrality commitments, technological advances, and improved cost incentives are accelerating a broad expansion of renewable power generation.” Marc Champion reports
Commodity Supercycle Driven by Clean Energy
Financial Times
”Kamoa-Kakula in the Democratic Republic of Congo is a rare commodity in the modern resources industry: a high-grade copper mine that one day could produce enough metal to satisfy more than 5 per cent of China’s annual demand.”“Surrounded by small villages, the mine employs around 7,000 workers and has its own road for trucks to carry rock to a nearby smelter. The company is also upgrading a 40-year-old hydropower station on the Congo River to provide electricity to run the mine. The first phase of the $2bn project began operating in May, more than four years after the last big copper mine of similar scale, MMG’s Las Bambas, in Peru, came online.”
“Despite these examples, years of belt tightening mean the pipeline of new copper projects is running dangerously thin just as demand for the metal — used in everything from wind turbines to electric vehicles — is set to soar.”
“Governments around the world are launching huge stimulus programmes focused on job creation and environmental stability. The coming together of such demand and potential supply shortages has many people on Wall Street, and in the City of London, hailing the arrival of a commodities supercycle and asking if copper is set to become the new oil, a strategically important raw material.”
“‘We see potential for a multi-decade commodity cycle ahead driven by decarbonisation of the global economy and shift to cleaner energy,’ says Tal Lomnitzer, a senior fund manager at Janus Henderson. “It has more legs to it than the China boom of the early 2000s.’” Neil Hume and Henry Sanderson report.
Geopolitics: Far-Left Castillo Appears to Win Election in Peru
El Pais
“Pedro Castillo announced on Tuesday that he has won the elections in Peru, according to the count of his auditors. The rural professor addressed his followers, who have been stationed since the count began under the balcony of his party's headquarters, in Lima, to assure them that the victory was theirs.”
“Castillo has anticipated the end of the count, which is 98.3%. At the moment, the rural teacher leads Keiko Fujimori by almost 72,000 votes. The conservative hoped to shorten the distance in this last stretch of the vote with the votes of Peruvians abroad, but at the same time the minutes of the most remote areas of Peru, where Castillo has received massive support, reached the capital.” Juan Diego Quesada reports (in Spanish)
China’s Factory-gate Price Inflation Hits Near 13-Year High
South China Morning Post
“…The producer price index (PPI), which reflects the prices that factories charge wholesalers for their products, rose by 9 per cent in May from a year earlier, up from a gain of 6.8 per cent in April, the National Bureau of Statistics (NBS) said.”
“This was above expectations, as a Bloomberg survey of analysts had predicted a rise of 8.5 per cent, and the highest level since 9.1 per cent in September 2008.”
“China’s official consumer price index (CPI), meanwhile, rose 1.3 per cent in May from a year earlier, from 0.9 per cent in April, the NBS said.” Andrew Mullen
and Orange Wang report1 Trillion Dollars of Investment Needed to Help Developing World Reach Carbon Neutrality, IEA says
The National
“The world needs up to $1 trillion worth of clean energy financing by 2030 to help developing economies meet net-zero emissions targets by 2050, according to the International Energy Agency.”
“The requirement is nearly seven times the $150 billion spent on aiding energy transition by emerging and developing economies last year.”
“Spending on renewables fell 8 per cent last year, according to the Paris-based agency, which expects a rebound in 2021.”
“A surge in spending is expected to bring major economic and societal benefits but would require "far-reaching efforts" to improve domestic environment for clean energy investment, the agency said in its report Financing Clean Energy Transitions in Emerging and Developing Economies.” Jennifer Gnana reports
What We’re Also Reading…
In Rural Vietnam, Facebook Finds a New Approach to Growth
Nikkei Asia
“Facebook is taking lessons from rural Vietnam as part of its advertising business becomes more difficult and online merchants embrace video and chat to connect with customers.”
“Vietnam's increasingly prosperous rural population is adapting quickly to smartphone use and especially to video and chat functions, according to the U.S. social media giant whose business relies almost entirely on advertising.”
“Facebook told Nikkei Asia that Vietnam, along with Thailand, leads the world in the use of chat functions in online retail, as measured by the volume of messages swapped between businesses and customers.”
“‘It's also very eye-opening for a lot of our colleagues in the U.S.,’ Khoi Le, the head of Facebook's Vietnam business, said of the chat trend. ‘We actually build a lot of things to be scaled to the global audience. If you're coming from the U.S. and you see things like this in Vietnam, it's quite fascinating.’” Lien Hoang reports