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Farahat with Sandy Rios in the Morning

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China's Party Congress: a dose of foreign policy realism is needed

China's Party Congress: a dose of foreign policy realism is needed The World Today mhiggins.drupal 11 October 2022

In the final article of three on the 20th Chinese Communist Party Congress, which opens on 16 October, Yu Jie argues that Beijing must show more pragmatism about Taiwan and the West.

How important is foreign policy at the congress?  

The political reports delivered to the delegates of the week-long 20th Chinese Communist Party Congress, which happens every five years, follow a Marxist-Leninist formula. Economics and the means of production form the base, while politics and society fill in the superstructure. 

We can expect sections on the work of the Chinese Communist Party (CCP), ideological discussion, economics, domestic politics, foreign affairs, cultural reform and social developments. Usually, the report prioritizes big domestic political issues.  

The political report typically sheds some light on the status of, and relationships between, senior party members. It can also provide insights into the political fortunes of various interest groups. The report acts as a summary of the party’s achievements and its plans – expressed as the lowest common denominator of consensus between competing factions. 

The congress will address foreign affairs issues with long-lasting implications for the rest of the world

This year’s congress should be no different, and the political reshuffle that takes place is likely to signal how Beijing intends to rise to the many challenges at home and abroad. 

Given China’s growing power and its fraught relationship with the West, this year’s congress is expected to feature serious discussion on weighty foreign affairs issues affecting Beijing, and which will have long-lasting implications for the rest of the world.  

Which geopolitical issues will be priorities?  

When it comes to foreign affairs, China’s priorities rarely change. The CCP seeks to create a stable external environment to foster its domestic economic development. This conservative maxim was advocated in the 1980s by China’s then-paramount leader, Deng Xiaoping, and it will continue to guide Beijing’s relationships after this congress. 

While we don’t know the exact details of this year’s political report, we can expect discussion on relations with the US-led West, a possible shift in the relationship between Beijing and Moscow, and elaboration on China’s ties with the Global South.  

Notably, it’s likely that a separate chapter of the political report will see Taiwan treated alongside the special administrative regions of Hong Kong and Macau, signalling the party’s commitment to its claims over the contested island.  

Despite a chorus of nationalistic rhetoric surrounding the issue of Taiwan, Beijing will be careful not to stumble into an international conflict which risks causing colossal damage on all fronts. The choice of language on the so-called ‘Taiwan question’ in this political report will serve as a bellwether as to how, if at all, the party might fundamentally shift its views regarding Taiwan and deviate from the principle of ‘peaceful reunification’, the policy stated at every congress since 1979. 

How have China’s relations with the West worsened?  

President Richard Nixon’s visit to China in 1972, the first by an American president to the Communist nation, kicked off five decades of relative stability. However, as China’s global influence has grown, so have Washington’s fears.  

US-China relations, once stable and cooperative, are now volatile and competitive

The relationship has transitioned from the cooperation and relative stability that existed under President George W. Bush and President Hu Jintao in the early 2000s, into one characterized by volatility and competition under Xi Jinping, Joe Biden and Donald Trump. These tensions are almost certain to continue in Xi’s likely third term. 

Elements of China’s relationship with the West, such as cooperation over military and aviation technology, are becoming far more competitive. At the same time, trade and investment, once viewed as strong ties, have been rapidly deteriorating – as seen, for example, by several major publicly listed Chinese state-owned enterprises and large private companies withdrawing from the New York Stock Exchange.  

Will Beijing stand by the Kremlin despite Russia’s invasion of Ukraine?  

At the same time, Beijing’s close relationship with Moscow and its lack of opposition to Russia’s war in Ukraine have put China in an awkward position. The CCP has realized that cooperation with its long-standing ally and neighbour must come with substantial limits to avoid undermining its own political priorities and interests.  

Russia’s recklessness may spur Xi and the CCP’s senior leadership to minimize the economic, financial and political risks associated with the Kremlin’s pursuit of war against a country aligned with, and supported by, the West.  

Will China continue to support its regional partners?  

On its ties with the Global South, Beijing began to rethink its Belt and Road Initiative (BRI) as the US-led Indo-Pacific strategy gained geopolitical momentum. Regions of Southeast Asia and South Asia received a lot of funding and resources for BRI projects, as seen with Chinese support for the China-Pakistan Economic Corridor.  

Xi also recently introduced the Global Development and Global Security initiatives, which the political report should flesh out. 

Beijing is fully aware that it can only prosper if its regional partners prosper

Beijing is fully aware that it can only prosper if its regional partners prosper, and it can only achieve resource security and border stability if its southern and western neighbours in Myanmar and Afghanistan cease to fight over land and resources. 

Chinese foreign policy over the last five years has been a strange combination of high-octane rhetoric and patient pragmatism. To respond to this contradiction, the congress could be used as an opportunity to inject a dose of realism.  

Read the two further articles in this series: the first is a guide to why the Chinese Communist Party Congress matters; the second discusses the key domestic policy themes that Xi Jinping is expected to outline at this year’s congress.




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Why a more inward-looking China is bad news for the world economy

Why a more inward-looking China is bad news for the world economy Expert comment LToremark 16 October 2022

The increased role of geopolitics and ideology in Beijing’s economic decision-making is bad news not just for China but for the world.

We should adhere to self-reliance, put the development of the country and nation on the basis of our own strength, and firmly seize the initiative in development. To build a great modern socialist country in an all-round way and achieve the second Centenary Goal, we must take the road of independent innovation.

President Xi Jinping, August 2022

This quote by President Xi clearly outlines the inward tilt of Chinese economic policymaking that is now becoming increasingly obvious to the rest of the world. But it actually has deep roots. Ever since the 2008 global financial crisis, when the West’s reliability as a trading partner was thrown into question, self-reliance has become a more decisive organizing principle for Chinese officials.

As a result, the export-dependent growth model on which China built its economic rise in recent decades has been fraying. Exports as a share of China’s GDP peaked at 35 per cent in 2007 but had fallen to around 20 per cent by last year, a level not seen since before China’s accession to the WTO in 2001. This shows that net exports no longer make any meaningful contribution to Chinese GDP growth.

Russia’s invasion of Ukraine has provided another geopolitical impetus to China’s pursuit of self-reliance.

Although China’s inward tilt may have started out as a response to purely economic phenomena – the post-crisis global recession, belt-tightening in the West, the eurozone crisis, and a general softening of global trade growth in the post-crisis years – geopolitical considerations are now dominant in shaping this shift toward self-reliance.

The role of geopolitics in pushing China towards a more inward-looking development path became clear in China’s response to the aggressive tariffs and export controls introduced by the Trump administration in the US. Because of these new constraints on China’s access to international markets and technology, Beijing sought to limit its dependence on the rest of the world.   

The most obvious result of this was the introduction of the ‘dual circulation’ strategy in May 2020, which sets out a rebalancing of China’s economy away from a reliance on external demand as a stimulus to growth (‘international circulation’) towards increased self-dependence (‘domestic circulation’). 

Russia’s invasion of Ukraine has provided another geopolitical impetus to China’s pursuit of self-reliance. Since it is not far-fetched to think that China, like Russia, might one day also face coordinated sanctions, Chinese authorities must be thinking hard about how to respond to such a risk. 

Within China itself, a new emphasis on the role of the state is increasingly apparent – and seemingly rooted in ideology. 

The only credible strategy that China can adopt is to reduce its economic dependence on the West by creating, in effect, a kind of economic fortress, as its dependence on imported technology, food, and fossil fuels in particular, has created a substantial strategic vulnerability.

Over the next few years, Chinese policymakers will likely attempt to build up the country’s ability to supply its own semi-conductors, food, and green energy sources.

This new approach to economic policymaking isn’t just about China’s relationship with the rest of the world. Within China itself, a new emphasis on the role of the state is increasingly apparent – and seemingly rooted in ideology. 

The previous National Congress of the Chinese Communist Party (CCP), in October 2017, made a push for ‘stronger, better, and bigger’ state-owned enterprises (SOEs) and the past five years have indeed seen a measurable rise in the role that SOEs play in the Chinese economy. These firms now account for more fixed investment in the economy than private firms, for the first time since 2005.




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Xi Jinping shows the world he is taking a tougher line

Xi Jinping shows the world he is taking a tougher line Expert comment NCapeling 16 October 2022

Xi opens the 20th National Congress of the Chinese Communist Party with a political report which demonstrates both change and continuity in the approach of his leadership.

The 20th Party Congress report is significantly shorter than the 19th, which is a clear indication of Xi’s success in centralizing power. The report acts as a summary of the party’s achievements and its plans – expressed as the lowest common denominator of consensus between competing factions. A shorter political report would seem to represent fewer factions now seeking consensus.

In the 20th Party Congress report, the language on Taiwan has been revised, reflecting the changes in tone and the policies of the CCP senior leadership. In addition to the conventional ‘peaceful reunification’ term, there is also an addition of more hawkish language on Taiwan to ‘not exclude the use of force as a last resort’.

Xi also suggested that ‘resolving Taiwan Question should be in hands of the Chinese’, sending a further warning to the US and other Western allies which are perceived as interfering in Taiwan affairs.

In his remarks, Xi suggested the ‘zero-COVID’ strategy has worked for China although he gave no clear timeline on when the policy will end. He also proposed building a healthcare system able to cope with future pandemics. This implies that China is still in short supply of sufficient healthcare resources to cope with a disease like COVID.

Economic policy reveals anxiety

On economic policy, much of the emphasis is given to the extent to which security and economic growth should go hand in hand, which illustrates Beijing’s deep anxieties on supply chains and the high-tech sector. These supply chains need to become more ‘self-determined, self-controlled’, voicing frustration that the highest value-added elements of the Chinese tech sector remain reliant on overseas suppliers and vulnerable to geopolitical tensions.

Much of the emphasis is given to the extent to which security and economic growth should go hand in hand, which illustrates Beijing’s deep anxieties on supply chains and the high-tech sector

Also, he expected the Common Prosperity Initiative will further adjust uneven income distribution to increase the amount of middle-income population. He gave little favours for financial services and fin-tech companies but insisted that China should remain as a manufacturing-led economy with qualitative growth. That implies Beijing will tolerate much slower growth so long as the income gap between the rich and poor is closing.

On foreign affairs, Xi has completely abandoned the ‘new types of great power relations’ – instead he has stressed that China should further develop its ties with the Global South through the Global Development Initiative and the Global Security Initiative.




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Xi Jinping prepares the Communist party for new reality

Xi Jinping prepares the Communist party for new reality Expert comment NCapeling 20 October 2022

Political report reflects a worsened economic and diplomatic position as Xi knows his unprecedented third term as leader will be judged on results.

In stark contrast to the aura of triumphant glory that greeted Xi Jinping at the last National Congress of the Chinese Communist Party in 2017, this week’s convocation opened with an air of sobriety.

Amid a domestic economic downturn and a return to enmity with Western liberal democracies, Xi offered his own recipe for party legitimacy and the country’s economic survival in the lengthy executive summary of his political report to the CCP congress. The prime keyword was security, with some 73 mentions, underscored with a message of self-reliance.

The periodic report acts as a summary of the party’s achievements and of its future plans, with both expressed as the lowest common denominator of consensus between competing voices in the CCP. It thus typically sheds some light on relationships among senior party members and insights into the political fortunes of important intraparty groups.

Beijing is indeed turning to domestic consumption and homegrown technological prowess as the means to provide the rising wealth that the Chinese people have come to expect

Most portions of the new report combined Xi’s personal preferences with concessions to the reality of what is necessary for China’s economic survival. Both ends point to an urgent prioritization of economic and political self-reliance for Xi’s third term as party general secretary.

Holistic concept of security

On the domestic front, much emphasis was given to enhancing national security and promoting equitable growth.

Since even before COVID-19, Xi has advocated a holistic conceptualization of security that includes food, the internet, energy and manpower. Reflecting Beijing’s deep anxieties about high-tech development and its frustrations with dependence on overseas suppliers vulnerable to the vagaries of geopolitical tensions, the political report noted the need for China’s supply chains to become more “self-determined and self-controlled.”

Xi, though, went further to stress the importance of improving scientific education and grooming and attracting the necessary talent to accelerate China’s quest to achieve breakthroughs in semiconductor production and overcome development choke points created by Western technological monopolies.

As China has traditionally relied on connectivity with the rest of the world to support innovation and attract talent, a turn toward autarky is not a viable option, given Xi’s technological priorities. Yet the renewed mention of his ‘dual circulation’ strategy in the report signals that Beijing is indeed turning to domestic consumption and homegrown technological prowess as the means to provide the rising wealth that the Chinese people have come to expect from the Communist Party.

Worsening Sino-US relations and tightening access to overseas markets for Chinese companies have prompted party leaders not only to reconsider the country’s sources of economic growth but have also forced them to reconfigure their approach to foreign affairs.

Judging by his report summary, Xi has completely abandoned the ‘new type of great power relations’ concept used repeatedly in the last two editions of his congressional update to refer to his preferred approach to relations with the US-led West.

The omission shows that Beijing has concluded that its fraught relationship with advanced developed nations is here to stay, with little prospect of improvement soon. To this end, China needs to prepare for the worst of decoupling and become more self-reliant in terms of markets and technologies.

With the central government grappling with the country’s domestic economic woes, its spending spree on development assistance has had to come to an end

In place of the discarded concept, Xi stressed that China should further develop its ties with the global South through the Global Development Initiative and the Global Security Initiative he announced earlier this year. These efforts aim to reshape the global governance agenda in multilateral forums and to project Beijing’s influence on the developing world.

Meanwhile, the party’s latest official rhetoric about the Belt and Road Initiative shows it is no longer a one-size-fits-all slogan but on its way to becoming a genuine tool of trade and investment promotion with China’s near neighbors but with provincial governments taking the lead rather than Beijing.

With the central government grappling with the country’s domestic economic woes, its spending spree on development assistance has had to come to an end. The new political report clearly signals this change.

A modern socialist society is still the aim

The current economic downturn and dangerous geopolitical tensions have not dented the CCP’s ambitions to build a modern socialist society by 2035 and thus join the world’s club of upper middle-income countries, but this is easier said than done.




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The G20 will survive but needs major repair

The G20 will survive but needs major repair Expert comment NCapeling 15 November 2022

Russia’s attack on Ukraine is the biggest challenge to the existence of the G20 since its foundation.

The leader-level version of the G20 was founded in 2008 to coordinate the international response to the global financial crisis across advanced and major emerging economies.

At the outset it was judged a great success. The 2009 London Summit demonstrated a high degree of unity among the world’s largest economies on a comprehensive action plan to tackle the crisis.

The group’s subsequent performance has disappointed. Particularly during the pandemic and the Donald Trump presidency in the US, the group made only a limited additional contribution to policies which national governments were pursuing in any case.

The existing G20 approach for tackling debt distress in low-income countries, the ‘Common Framework’, is progressing far too slowly

Nonetheless, its members continued to see it as an essential forum without which it would be even harder to tackle a growing list of global economic challenges. This faith was partly repaid when, following the election of the Joe Biden administration in the US, agreement was reached on the $650 billion special drawing rights (SDR) general allocation by the International Monetary Fund (IMF) in summer 2021.

Impact of the war in Ukraine

Following Russia’s attack on Ukraine earlier this year, leading western members of the group called for Russia to be suspended from the G20 as Russia’s action ran directly against the key principles of the rules-based international system on which the G20 was founded.

Western countries also walked out of meetings of the G20 Finance Ministers’ and International Monetary and Financial Committee this spring rather than sit at the same table as Russian representatives.

This contrasted with 2014 when Russia was suspended indefinitely from the G7 for its takeover of Crimea but no action was taken against it in the G20.

However, China and India, supported by several other emerging economies declined to suspend Russia, creating a standoff which could have resulted in a rapid collapse of the G20, particularly as its informal structure means that, in contrast to the international financial institutions (IFIs), there are no legal principles or procedures to determine how to address such a situation.

It appears the West has now concluded (rightly) that the G20 is too important as a forum for working with China and the other major emerging economies to be allowed to disappear.

This is likely to be because there are no straightforward alternatives. The G7 is too narrow to fill the role and China is now highly unlikely to attend a future G7 Summit as a guest. The boards of the IFIs are not equipped to coordinate across institutions, which is a vital role of the G20, and the United Nations (UN) system does not offer the scope, speed, leader-level engagement, or flexibility of the G20.

Moreover, as evidenced by the chair’s summary of the third G20 Finance Ministers’ and Central Bank Governors’ meeting in July, once the group gets past the dispute over how to handle Russia, there is a worthwhile agenda of issues which can be agreed on.

Russia is unlikely to play a disruptive role as preserving its membership of the group will be its key objective, and it will not want to undermine support among other emerging economies

As the 2022 president of the G20, Indonesia has been determined to produce a final communique for the leaders’ summit and it looks increasingly like this will be achieved, even though it was impossible to agree concluding statements for some earlier G20 ministerial meetings.

The key will be to deal with the differences over Ukraine between the West and emerging economies with a short opening paragraph reflecting both views. This would then be followed by a consensus text on all the areas where the two groups do agree.

Russia is unlikely to play a disruptive role as preserving its membership of the group will be its key objective, and it will not want to undermine support among other emerging economies by blocking issues that all agree on.

However, even with a final communique achieved, returning to a fully functioning agenda setting, coordination, and decision-making role for G20 will be very challenging, particularly while the war in Ukraine continues.

Tackling sovereign debt distress should be a top priority

There are critically important issues on which G20 action is urgently needed. Top of the list is the acute problem of sovereign debt distress. Some 60 per cent of low-income countries are now judged to be in debt distress or at high risk of debt distress.

But the existing G20 approach for tackling debt distress in low-income countries, the ‘Common Framework’, is progressing far too slowly, and there is no agreed mechanism for handling the growing list of emerging economies in debt distress.

Without tackling debt distress, it is extremely hard to see how it will be possible to generate the vast flow of private sector climate finance necessary to help the developing world progress to net zero.

And yet the G20 is one of the few forums in which a high-level approach to debt distress can be defined because China – along with the IFIs and the western-based private sector – is a key player in any solution.

Urgent repairs needed

However, there is a critical lack of trust among G20 participants which, although in part a reflection of the disagreements over handling Russia, is also about longer-term factors such as the growing geopolitical tensions between China and the US on trade and investment in high tech.

An example of how this has played out was the action China and India took at the Rome G20 Summit in 2021 in blocking Italy’s efforts to establish a new ministerial task force designed to address the threat of future pandemics – a subject which all G20 countries agree is important.




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Beijing briefing: China’s wish for 2023? An end to lockdown

Beijing briefing: China’s wish for 2023? An end to lockdown The World Today mhiggins.drupal 29 November 2022

Xi Jinping will try to beef up Global South relations in 2023, but weary Chinese and the business sector need pandemic restrictions to end, says Yu Jie.

This past year in Chinese politics was capped by a highly anticipated 20th Party Congress in Beijing in October which marked the beginning of General Secretary Xi Jinping’s unprecedented third term. Xi stacked the all-powerful Politburo with male loyalists and left the rest of the world to sift through the implications of his leadership reshuffle.

Meanwhile, Xi made headlines at the G20 summit in Indonesia, maintaining a largely positive tone with President Joe Biden and being caught on camera chiding Canada’s Justin Trudeau for leaks after their talks. So, what can we expect Xi to pull out of the hat in 2023, the Chinese Year of the Rabbit? 

In February and March, the conversations around Beijing dinner tables will focus on the composition of the new central government – the important seats within the Chinese State Council. This body must deliver Xi’s ‘security-oriented’ economic agenda as well as his much-promoted ‘Common Prosperity’ initiative.

The ‘Zero-Covid’ strategy has exacerbated youth unemployment and tested the patience of China’s upwardly mobile middle-class

Pundits will be paying particular attention to who is put in charge of economic planning, who the new foreign minister might be and who will govern the central bank. I will offer my reading of these tea leaves as the year unfolds.

In April and May, speculation may turn to whether China will finally open its borders to foreign visitors and those compatriots who want to be reunited with loved ones after enduring the pandemic lockdown. While some loosening of restrictions began in November 2022, China is still balancing its twin aims of containing the spread of Covid and re-engineering its economy along similar lines to Europe.

Beijing’s controversial ‘Zero-Covid’ strategy has intensified economic pressures, exacerbated rising levels of youth unemployment and tested the patience of China’s middle class, which has led to unprecedented civil disobedience. Those not employed by the state have been hit particularly hard. It is difficult to see how China’s economy can crank up again until Beijing reduces its internal restrictions and reconnects with the world.

A pivot to the Global South

June and July will be prime season for Beijing’s diplomacy with the Global South. Xi recently announced that China would host the third Belt and Road Forum in 2023 – a meeting of heads of states from predominantly developing countries to discuss his flagship foreign affairs initiative. As seen in the Political Report of the 20th Party Congress, Xi has abandoned the ‘new type of great power relations’ language he previously used to describe relations with the US-led western world. 

In its place, Xi is stressing that China should develop its ties with the Global South through his Global Development and Global Security initiatives which were announced in 2021 and 2022 respectively. These aim to reshape the global governance agenda in multilateral forums and project Beijing’s influence on to the developing world.

Sport will dominate throughout August and September. While Beijing’s spending spree on football promotion might have failed to see the national side qualify for the World Cup, its table tennis team has proved invincible and continues to cheer up the nation. I will offer my own verdict on why there is such a stark contrast between the success of the two men’s teams and explain the meaning of sports in modern Chinese society.

In October and November, young graduates will begin their careers while new university students start to arrive on campus. Chinese students are constantly subjected to strenuous testing. And like their western peers, they face the inevitable pressures of finding a job, repaying the mortgage and other everyday facts of life.

The burnout of China’s Generation Z 

The term ‘involution’ – neijuan – has been adopted by China’s Generation Z to describe their feelings of burnout at the ever-increasing expectations associated with high performance. Equally, they have strong opinions about their own government as well as western liberal democracies. China’s leaders of the future will come from their ranks so it will be worthwhile spending some time trying to understand what makes them tick.

Billions will want a return to normal life without the fear of having the wrong colour – yellow or red – on their Covid health QR code

Whatever the Year of the Rabbit holds for China, billions of its people will want to have their life return to normal without the fear of having the wrong colour – yellow or red – on their Covid health QR code. Only a green code shows a person is healthy and free to move around. The Covid threat has hovered over people for three years and as borders reopen, they may be holding their breath. 

A slowing economy dimming consumer confidence and a precarious international environment make it look even harder for President Xi to pursue the agenda outlined in October 2022. As the Year of the Rabbit dawns, China doesn’t need a Mad Hatter or a March Hare, instead it urgently needs a sound path to economic recovery and a plan to reopen its borders that works for everyone. 




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Russia and China in Antarctica: Implications for the Five Eyes

Russia and China in Antarctica: Implications for the Five Eyes 15 December 2022 — 11:00AM TO 12:00PM Anonymous (not verified) 2 December 2022 Online

This event explores Russia’s and China’s postions on the Antarctic and offers a critical assessment of their actions in the region.

Ever since the 1959 Antarctic Treaty System (ATS), signed at the height of Cold War, Antarctica has remained a demilitarized continent.

Today, even though the ATS is not in immediate danger of collapse, Antarctica and the Southern Ocean are no longer insulated from wider geopolitical tension, with China and Russia posing challenges to regional governance. 
 
This event also discusses key recommendations for the Five Eyes regarding Russian and Chinese current and future efforts at undermining the ATS and Antarctic governance. 

The discussion is informed by Mathieu Boulègue’s paper ‘Russia and China in Antarctica and the Southern Ocean: Implications for the Five Eyes’ published by the Sea Power Centre of the Royal Australian Navy.




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Director's briefing: Key challenges for China’s economy in 2023

Director's briefing: Key challenges for China’s economy in 2023 6 February 2023 — 8:00AM TO 9:15AM Anonymous (not verified) 18 January 2023 Chatham House

This event examines the structural challenges facing the Chinese economy in the wake of the 20th National Congress of the Chinese Communist Party.

This event examines the structural challenges facing the Chinese economy after the 20th National Congress of the Chinese Communist Party in October 2022 and how President Xi Jinping is responding to short and long-term domestic pressures.

The panel, including Professor Huang Yiping, discuss how quickly the Chinese economy could rebound after the Chinese government abandoned its ‘Zero COVID-19’ policy in December 2022 and to what extent the Chinese economy is pivoting toward Xi Jinping’s stated goal of ‘self-reliance’. The panel also discuss the broader implications for the global economy.
 
Key questions to be explored:

  • Which sectors will China prioritize in pursuit of greater economic self-reliance?

  • If China is turning inward, how will it drive technological innovation in the coming years?

  • Is China’s economy robust enough to withstand geopolitical turbulence and other external shocks?

This event is held under the Chatham House Rule.




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Beijing briefing: China aims for tech self-reliance

Beijing briefing: China aims for tech self-reliance The World Today mhiggins.drupal 28 March 2023

Xi Jinping’s new appointments are tasked with a technology led recovery, but they face a daunting task to restore growth, writes Yu Jie.

The three-day state visit to Moscow by President Xi Jinping in March may have eclipsed the National People’s Congress in Beijing a fortnight earlier, but as Xi seeks to establish a new global order with China at its centre, the political events in the Great Hall of People provide an important insight into the country’s longer-term economic plans.

While a new cohort of cabinet members was appointed to sit on the State Council for the next five years, much of the attention remains on China’s economic stimulus plan to enable a rapid post-Covid recovery, as well as proposals to restructure central government.

Mountainous task

Three aspects of this year’s Congress deserve deeper scrutiny: Li Qiang’s confirmation as premier to succeed Li Keqiang’s decade-long subdued tenure under Xi; the extent to which Xi’s new cabinet sheds light on China’s economic and scientific self-reliance; and the unveiling of a major restructuring of central government administration in sectors such as finance and science.

Local government debt and the volatile property market threaten huge economic uncertainty

China’s new premier initially faces the mountainous task of restoring growth and market confidence. During a press conference much shorter than his predecessor would hold, Li Qiang praised China’s private business sector and repeated the words ‘China remains open to foreign business’ to address the growing anxieties among foreigners and Chinese private entrepreneurs.

Beside the daunting task of economic recovery, Li Qiang faces another big challenge. Unlike his predecessors, he has never worked as a vice premier and overseen ministries under the State Council. The test for him will be to pursue a sound economic recovery plan while coordinating numerous central government agencies. He will also need to regulate relations among provincial heads who have a tendency to argue endlessly over the distribution of public finances.

Even though Xi is secure in his third term, his involvement in shaping and implementing macro-economic policies is keenly felt. Li Qiang made explicit the State Council under his leadership will be the chief implementor of all policies approved by the president. This is a less equal working partnership with Xi than his predecessors on the State Council enjoyed in the past.

Beijing published its official plan to restructure its central government administration announcing planned cuts of 5 per cent of its civil service. The newly established Central Commission on Finance intends to deal with systemic financial risks and to coordinate the financial regulatory bodies, central bank and Ministry of Finance. This is seen to reflect the Chinese leadership’s growing concern with the poor performance of local government loans and debt as well of the volatility of the property market, all of which threaten huge uncertainty for the economy.

Beijing is responding to the tough US measures designed to dent China’s ambitions of technology supremacy

As well as reorganizing the financial sector, Xi’s intention to pursue an integrated national strategy combining economic and scientific self-reliance has led to significant appointments following the Congress. As a starter, a new Central Commission for Science under the party leadership has been established. This commission will focus on providing a renewed impetus to accelerate China’s drive to achieve ‘scientific reliance’ and to ease the choke points in the economy, such as the supply chain for semiconductors.

It remains unclear who will head this new commission or who will be on it, however, as scant detail has been made public. It is seen as a direct response to the tough measures adopted by the United States designed to dent China’s ambitions of technology supremacy.

Departure from the past

New appointees to the Politburo come with substantial backgrounds in science as well as a solid track record of running state-owned enterprises. This is a departure from the past.

Instead of inserting financial specialists, Xi appointed two scientists, Liu Guozhong and Zhang Guoqing, as the vice premiers overseeing science, education and industrial policies. This signals that Xi intends to prioritize science and innovation during his third term. The appointment of technocrats to the State Council is seen as a move to strengthen innovation and prepare the Chinese economy, political system and society for potential external shocks.




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Analysis of {beta}-lactone formation by clinically observed carbapenemases informs on a novel antibiotic resistance mechanism [Enzymology]

An important mechanism of resistance to β-lactam antibiotics is via their β-lactamase–catalyzed hydrolysis. Recent work has shown that, in addition to the established hydrolysis products, the reaction of the class D nucleophilic serine β-lactamases (SBLs) with carbapenems also produces β-lactones. We report studies on the factors determining β-lactone formation by class D SBLs. We show that variations in hydrophobic residues at the active site of class D SBLs (i.e. Trp105, Val120, and Leu158, using OXA-48 numbering) impact on the relative levels of β-lactones and hydrolysis products formed. Some variants, i.e. the OXA-48 V120L and OXA-23 V128L variants, catalyze increased β-lactone formation compared with the WT enzymes. The results of kinetic and product studies reveal that variations of residues other than those directly involved in catalysis, including those arising from clinically observed mutations, can alter the reaction outcome of class D SBL catalysis. NMR studies show that some class D SBL variants catalyze formation of β-lactones from all clinically relevant carbapenems regardless of the presence or absence of a 1β-methyl substituent. Analysis of reported crystal structures for carbapenem-derived acyl-enzyme complexes reveals preferred conformations for hydrolysis and β-lactone formation. The observation of increased β-lactone formation by class D SBL variants, including the clinically observed carbapenemase OXA-48 V120L, supports the proposal that class D SBL-catalyzed rearrangement of β-lactams to β-lactones is important as a resistance mechanism.




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The endosomal trafficking regulator LITAF controls the cardiac Nav1.5 channel via the ubiquitin ligase NEDD4-2 [Computational Biology]

The QT interval is a recording of cardiac electrical activity. Previous genome-wide association studies identified genetic variants that modify the QT interval upstream of LITAF (lipopolysaccharide-induced tumor necrosis factor-α factor), a protein encoding a regulator of endosomal trafficking. However, it was not clear how LITAF might impact cardiac excitation. We investigated the effect of LITAF on the voltage-gated sodium channel Nav1.5, which is critical for cardiac depolarization. We show that overexpressed LITAF resulted in a significant increase in the density of Nav1.5-generated voltage-gated sodium current INa and Nav1.5 surface protein levels in rabbit cardiomyocytes and in HEK cells stably expressing Nav1.5. Proximity ligation assays showed co-localization of endogenous LITAF and Nav1.5 in cardiomyocytes, whereas co-immunoprecipitations confirmed they are in the same complex when overexpressed in HEK cells. In vitro data suggest that LITAF interacts with the ubiquitin ligase NEDD4-2, a regulator of Nav1.5. LITAF overexpression down-regulated NEDD4-2 in cardiomyocytes and HEK cells. In HEK cells, LITAF increased ubiquitination and proteasomal degradation of co-expressed NEDD4-2 and significantly blunted the negative effect of NEDD4-2 on INa. We conclude that LITAF controls cardiac excitability by promoting degradation of NEDD4-2, which is essential for removal of surface Nav1.5. LITAF-knockout zebrafish showed increased variation in and a nonsignificant 15% prolongation of action potential duration. Computer simulations using a rabbit-cardiomyocyte model demonstrated that changes in Ca2+ and Na+ homeostasis are responsible for the surprisingly modest action potential duration shortening. These computational data thus corroborate findings from several genome-wide association studies that associated LITAF with QT interval variation.




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30 Years of Non-Maghreb: What next for Algeria-Morocco relations?

30 Years of Non-Maghreb: What next for Algeria-Morocco relations? 10 September 2024 — 2:00PM TO 3:15PM Anonymous (not verified) Online

Experts discuss Algeria-Morocco relations and implications for regional actors.

In 1989, the establishment of the Arab Maghreb Union (UMA) brought a promise of economic integration and strengthening of ties between Algeria, Libya, Mauritania, Morocco and Tunisia for the benefit and prosperity of their societies.

Decades on, very little has been accomplished in developing the Maghreb project, and the region remains one of the least integrated in the world, despite significant social and cultural similarities between member countries. The last time the full UMA leadership met was back in 1994, with August 2024 marking 30 years of closed borders between Algeria and Morocco.

Relations between the two largest Maghreb countries have deteriorated further since 2020 due to disagreements over issues of Western Sahara, and, most recently, the Abraham Accords, with Algeria cutting diplomatic ties with Morocco in 2021.

In this webinar, experts will discuss:

  • Which primary obstacles are hindering Maghreb integration and Algeria-Morocco relations?
  • What are the costs and implications for regional countries?
  • What are the positions of Libya, Tunisia, and Mauritania?
  • What is required for a rapprochement and how can external partners support this? 




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What is the future of cross-border data flows?

What is the future of cross-border data flows? 16 September 2024 — 6:00PM TO 7:00PM Anonymous (not verified) Chatham House and Online

Navigating long-standing tensions and newfound difficulties for unlocking shared prosperity among modern, digital economies.

Cross-border data flows can unlock shared prosperity among digital economies, advance international security, and address cybercrime and global crises. But ensuring the free flow of data across borders involves navigating complex regulatory, security, trust, political, and technical challenges. Developing effective frameworks and agreements to support data flows is a significant undertaking.

Recent bilateral and multilateral agreements and initiatives have advanced data-sharing, respecting the right to privacy and upholding notions of sovereignty. This has contributed to clearer rules and (potentially) better solutions such as the OECD declaration on government access to data held by companies. Further progress, supportive of public safety and national security, is on the horizon, like G7 support for data free flow with trust and industry-led, trusted cloud principles on protecting human rights and competitiveness.

More work is needed to operationalize commitments and advance ongoing negotiations, like US–EU negotiations on e-evidence in criminal proceedings. This is key for ensuring ‘hard’ legal and regulatory mechanisms complement OECD principles. Stakeholders from law enforcement, national security, data protection and industry must confront tensions between sovereign prerogatives and cooperation. They must also overcome traditional silos between law enforcement and national security work. On the horizon are newfound challenges (for example, in harmonizing legal frameworks and responding to advances in technology). All the while, stakeholders must work together to promote economic interests, data protection, privacy and cybersecurity.

This expert panel discusses the future of cross-border data-sharing, raising questions including:

  • What value does cross-border data-sharing bring and where are its current ‘pain points’?
  • To enable data free flows, how should principles complement ‘hard’ legal and regulatory mechanisms?
  • Beyond states, law enforcement, major industry players and international organizations, what roles should SMEs, the technical community and civil society stakeholders play in shaping and operationalizing principles?
  • Looking ahead, where is progress in data-sharing principles and arrangements expected or possible?

A drinks reception follows the event.

This event is supported by Microsoft as part of a project on data sharing. The project has benefited greatly from the insights of a multi-stakeholder taskforce and concludes with an open-access special issue of the Journal of Cyber Policy.