On April 1, Chinese authorities announced the establishment of a new special economic zone located in the Hebei province. The Xiongan New Area will adopt a similar model to the special economic zones set up in Shenzhen and Shanghai over 30 years ago. The areas, which offer tax breaks and special financial incentives, were historically pursued in the early 80s as a tool to kick-start a shift towards a more market-oriented economy.
The move comes at a time of declining economic growth in China, after 2016 marked the lowest level of economic expansion in a quarter of a century.
The policy is part of a broader effort to integrate the development of Beijing, Tianjin and Hebei, while shifting economic momentum away from the capital
The Xiongan New Area lies at the centre of the triangular zone, which is formed of Beijing, Tianjin and Hebei’s provincial capital, Shijiazhuang – some 100 kilometres south of downtown Beijing.
The policy is part of a broader effort to integrate the development of Beijing, Tianjin and Hebei, while also shifting economic momentum away from the heavily polluted capital. More specifically, it aims to phase out some of the “non-capital functions” performed in Beijing.
A series of steps have been taken over recent years to cool rapid expansion in the capital, including an effort to curb population growth. Various ‘non-essential facilities’ have also been shifted outside the capital, with manufacturing and logistics operations moved to nearby regions.
According to an official state circular, the move is a “major historic and strategic choice made by the Central Committee [of the Communist Party of China] with Comrade Xi Jinping as the core”. The Committee described the decision as “a strategy crucial for a millennium to come”.
Chinese President Xi Jinping believes the promotion of high-end industries is key to the area’s development, and underscored its potential as a new platform for greater openness and international cooperation.
As part of the same announcement, China officially established seven new free-trade zones. As reported in The Huffington Post, Zhou Ying, CEO of Blue Technology, said: “The Chinese economic system is now fully equipped to become a global economic powerhouse in the 21st century. There are still things to work out in detail, but I’m optimistic about the situation.”
The world is more aware than ever before of gender inequality, and the negative impact it can have in workplaces.
When women are not supported by organisations, this not only has a detrimental impact on morale, but can have widespread economic effects too. Consistently, research shows that diversity boosts financial outcomes; McKinsey has found that companies with more women in senior roles perform better.
In spite of this, the financial industry has been sluggish in its commitment to enhancing gender equality, prompting recent criticism from Bank of England Governor Mark Carney.
Still, it’s not all doom and gloom – and some companies have taken the initiative in the fight for gender equality, investing in schemes and policies to level out the sexes. We take a look at five of the most female-friendly banks in the industry.
1 – Barclays Last month, in its report on the most female-friendly companies, job site Glassdoor identified Barclays as a trailblazer. It has been instrumental in enhancing female aspirations, creating a promotion mentoring programme for women. Its management is also keen to get more women into IT careers, through the bank’s networking group Barclays Women in Technology.
2 – First Direct In the same release by Glassdoor, First Direct was identified as a top employer for women. The online and telephone bank even has its own onsite crèche for female workers. As having children is one of the major barriers to female advancement in the workplace, this has greatly helped many of its employees achieve a work-family balance. In addition, employees have access to a Costa café, staff restaurant, gym and concierge.
3 – Tanzania Women’s Bank (TWB) TWB has been described as the most women-friendly bank in Africa, with a commitment to empowering women economically and socially. The institution was founded by a number of female entrepreneurs, and is not only keen to promote the interests of staff, but women around Tanzania in many different financial situations.
4 – Bank of America Merrill Lynch Bank of America Merrill Lynch is renowned as one of the most female-friendly banks in the world, with numerous programmes to promote the advancement of women. It was recently recognised by Bloomberg, in its Financial Services Gender-Equality Index, and has been praised by many for its ability to connect emerging women leaders to mentors and opportunities.
5 – Goldman Sachs Goldman Sachs has been highlighted by publications such as The Times for its championing of women. One of its most famous campaigns is 10,000 Women – a global initiative that gives female entrepreneurs around the world business and management education, as well as capital, education, mentoring and networking. Every year, it does its utmost to celebrate International Women’s Day.
On March 30, Mexico’s central bank, Banxico, raised the interest rate by 25 basis points to 6.5 percent. In a bid to strengthen the peso and reduce inflation, the rise marked the bank’s fifth consecutive hike and the fourth since US President Donald Trump was elected in November. Though the rise was somewhat more relaxed than the previous three – which had been twice as steep – the 6.5 percent rate is Banxico’s highest since 2009, and more than double that of 2015.
The peso plummeted against the dollar in November and reached a record low in January following Trump’s inauguration. By March 30, it had recovered 17 percent, nearing pre-November levels. Nonetheless, Banxico remains cautious in light of uncertainty over the US administration’s trade policy.
Banxico wanted to keep the country’s rates in line with those set by the US Federal Reserve, which threatened
the peso’s recovery
As reported by The Wall Street Journal, the bank said: “Despite the significant appreciation of the national currency against the dollar since our last [February] meeting, uncertainty prevails in the external backdrop.”
Inflation was another factor driving the increase. The country’s bi-weekly consumer price index rose 5.3 percent year on year in the first two weeks of March, driven largely by a spike in fuel prices in January. Banxico also wanted to keep the country’s rates in line with those set by the US Federal Reserve, which threatened the peso’s recovery with a 0.25 percent rate hike on March 15.
“It’s a relatively hawkish statement that’s consistent with Banxico still hiking a bit more, but now following the Fed one to one”, explained Bank of America’s chief Mexico economist Carlos Capistran. “Having said that, given that we expect the economy to decelerate and higher inflation to be temporary, we believe the central bank is close to ending its hiking cycle.”
Banxico may draw optimism from suggestions that Trump’s administration will soften its stance on NAFTA, with Trump said to be planning ‘tweaks’ rather than a full overhaul of the trade deal – contrary to promises made on the campaign trail.
Neil Shearing, Chief Emerging Markets Economist at Capital Economics, said: “Policymakers will continue to ‘monitor pass-through to inflation from a weaker currency’ but there is clearly much less urgency now compared to a couple of months ago.”
A complacent Banxico would be a dangerous prospect, given inflation is still far above the central bank’s modest three percent target. Thankfully, it has remained diligent in recent months, with rate hikes part of a contingency plan put in place last year.
On March 29, European regulators struck down an attempted $31bn merger between the London Stock Exchange (LSE) and Deutsche Börse, citing concerns over competition. The move occurred on the same day the UK government began the process of leaving the EU by triggering article 50.
“In some markets Deutsche Börse and London Stock Exchange both provide the same services. In some of these markets they are essentially the only players and the merger would therefore have led to a de facto monopoly”, said European Competition Commissioner Margrethe Vestager.
Discussions of the merger began in January 2016, with many spectators considering the move to be a bet against the UK’s EU referendum
Together, the LSE and Börse dominate the UK, German and Italian stock exchanges, as well as controlling several clearing houses across Europe. This sparked concerns the combined entity would undermine competition services for bond trades.
Discussions of the merger began in January 2016, with many spectators considering the move to be a bet against the UK’s EU referendum, which was held in June 2016. The deal was curbed after the UK voted to leave the EU, with issues including the location of the combined entity’s headquarters and clearing business putting a strain on negotiations.
Speaking in January, European Central Bank (ECB) President Mario Draghi said: “The UK’s withdrawal… may lead to a loss of oversight and supervision of UK central counterparties by the ECB. Thus, it will be important to find solutions that at least preserve, or ideally enhance, the current level of supervision and oversight.”
The exchanges now face a number of challenges moving forward: the LSE, for example, offered shareholders a £200m ($248.9m) buyback to compensate for the deal’s collapse. The LSE later revealed this figure roughly equated to the return it expected should the deal have succeeded.
GreySpark Partners CEO Frederic Ponzo stated: “Börse is under more pressure to do something… it is a bit sub-scale to compete on a global basis in the derivatives market. CME and ICE competition is only going to intensify as more derivatives are cleared.”
On March 29, Toshiba’s crisis-ridden nuclear unit, Westinghouse, filed for Chapter 11 bankruptcy in a New York court. The bankruptcy, caused by high cost overruns at two US construction projects, has dragged parent company Toshiba into financial turmoil and caused shares to fall by some 60 percent.
The collapse marks a huge blow for the Japanese conglomerate, with Westinghouse comprising around a third of Toshiba’s revenue. Upon the announcement, Toshiba warned its annual losses could reach a record JPY1.01trn ($9.1bn), more than doubling its previous forecast.
The bankruptcy has dragged parent company Toshiba
into financial turmoil and caused shares to fall by some 60 percent
Toshiba has been forced to put its promising memory chip business up for sale in order to cover the heavy losses, with Westinghouse-related liabilities amounting to a massive $9.8bn.
According to a statement from Westinghouse, the strategic reshuffling will attempt to resolve financial issues relating to its US power plant projects, while protecting its core business.
The company claimed its operations in Asia, Europe, the Middle East and Africa would remain unaffected, with the company having secured $800m in debtor-in-possession financing to support the reorganisation.
Interim President and CEO José Emeterio Gutiérrez said: “We are focused on developing a plan of reorganisation to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader.”
Toshiba has recently announced it will not build any more nuclear facilities, instead shifting its focus to supplying parts and engineering.
On March 22, telecommunications equipment manufacturer ZTE pleaded guilty to violating US sanctions on North Korea and Iran. The Chinese multinational had been accused of integrating US-made components into products before selling them to the embargoed states. The guilty plea marked the culmination of a five-year investigation into ZTE’s dealing with the sanctioned countries, and could entail penalties of up to $1.2bn.
The company pleaded guilty to three separate charges: conspiring to export US-made goods to Iran without a US government licence, obstructing justice and making a material false statement.
The plea follows the company’s settlement earlier in March, which involved the payment of an $892m fine, as well as an additional penalty fee of $300m to the US Bureau of Industry and Security. The latter charge has been suspended for five years on the condition ZTE complies with US demands.
The guilty plea marked the culmination of a five-year investigation into ZTE’s dealing with the sanctioned countries, and could entail penalties of up to $1.2bn
Following the settlement agreement, ZTE directors apologised in a statement on March 7: “[The company] acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company.”
A Reuters report – which remains unconfirmed – stated ZTE would slash five percent of its 60,000-strong workforce in anticipation of counterbalancing the penalties.
Aside from incurring the mammoth fees, the prospect of the US Department of Commerce thwarting ZTE’s global supply chain was sufficient leverage to yield concessions from the company. As such, the settlement and guilty plea have been vital in maintaining ties with US companies such as Qualcomm, Microsoft and Intel, which are integral suppliers of 25 to 30 percent of ZTE’s components.
The US is also a substantial market for ZTE’s finished products, as US consumers are generally willing to pay higher prices for top-end devices. For example, in 2015, ZTE smartphone sales in the US grew 30 percent, to 15 million units.
The plea is the last in a long series of actions taken by ZTE to navigate the fallout of the revelations, which initially emerged in a Reuters investigation in 2012. In April 2016, the company restructured its management, appointing various new Executive Vice Presidents and promoting the existing CTO, Zhao Xianming, to President and Chairman of the board of directors.
ZTE then appointed Matthew Bell as its US-based Chief Export Compliance Officer in October 2016. Zhao said Bell’s nomination was made to ensure the company’s international compliance programme was “robust” and “exceed[ed] the requirements under the applicable laws and regulations in all global markets”.
Despite the investigation having been executed almost entirely under Barack Obama’s tenure – whose prosecutors had sought a larger $1.4bn settlement – the new administration claimed the case illustrated a tougher approach to China, and a more rigorous upkeep of US sanctions under President Trump.
South Korea’s state banks have unveiled an ambitious KRW2.9trn ($2.6bn) bailout package for Daewoo Shipbuilding & Marine Engineering; which is struggling to overcome huge losses from offshore projects. The fresh cash injection intends to prevent the shipbuilder from defaulting on its extensive debts.Without such a bailout, the company would likely be pushed into bankruptcy when its debt matures next month.
In 2015, Daewoo Shipbuilding received some KRW4.3trn ($3.84bn) in aid from the Korea Development Bank and Export-Import Bank of Korea, with the two state-run banks later warning no further bailouts would be extended to the company.
The shipping industry’s downturn has been particularly harmful to South Korea, where shipbuilding is a national industry
However, a Daewoo Shipbuilding bankruptcy would prove costly to the South Korean economy, particularly in the midst of intense political upheaval and uncertainty. The most recent cash injection will be followed by a major debt restructuring at the firm, and a revision of its loss-making offshore businesses.
The Daewoo Shipbuilding bailout marks the latest in a series of blows to the floundering global shipbuilding industry, which has suffered in recent years from low freight rates and a surplus of vessels. The industry’s financial woes have already seen the collapse of one of South Korea’s largest shippers, Hanjin Shipping. Once South Korea’s biggest shipping company, Hanjin filed for bankruptcy protection last year, leaving over $14bn in cargo temporarily stranded at sea.
The industry’s downturn has been particularly harmful to South Korea, where shipbuilding is a national industry. The nation is home to the world’s three biggest shipyards, and Daewoo Shipbuilding is the world’s second largest shipbuilder after fellow Korean rival Hyundai Heavy Industries. Overall, the industry accounts for seven percent of South Korean exports and five percent of the nation’s employment.
However, South Korean shipbuilders have seen their profits slide in recent years, with the global financial crisis paving the way for low-cost Chinese competitors to command an increasing portion of the market.
Despite ongoing efforts to cut costs, Daewoo Shipbuilding reported its fourth straight annual loss in 2016, recording a net loss of KRW2.7bn ($2.41bn). The company also failed to meet its annual $11.5bn target for ship orders, reaching just 10 percent of this total. Despite this latest bailout package, it appears unlikely Daewoo Shipbuilding will be able to turn its fortunes around and return to prosperity.
Malaysia’s notorious 1MDB political corruption scandal is set to take another turn as the US prepares to file criminal charges against one of the alleged perpetrators. According to The Wall Street Journal, US authorities intend to charge Malaysian financier Jho Low with wire fraud and money laundering in connection to the corruption scandal.
In addition to the proposed charges against the businessman, the US Department of Justice is attempting to seize over $1bn in Low family assets, including a $165m superyacht controlled by Low. Citing people familiar with the matter, TheWall Street Journal claimed Singapore is also in the process of building a criminal case against Low and his associates. With authorities around the world closing in on Low, the Malaysian businessman has gone into hiding and his whereabouts are currently unknown.
With authorities around the world closing in on Low, the Malaysian businessman has gone into hiding and his whereabouts are unknown
The criminal charges against Low relate to his alleged involvement in the ongoing 1MDB scandal, which has emerged as one of the largest cases of financial fraud in modern history. In 2015, Malaysian Prime Minister Najib Razak was accused of misappropriating over MYR2.67bn ($603m) from a state investment fund called 1Malasia Development Berhad (1MDB).
In addition to directly channelling funds into the Prime Minister’s personal bank accounts, 1MDB has approximately MYR42bn ($9.5bn) in outstanding debt, a large portion of which stems from a 2013 state-guaranteed $3bn bond sale led by Goldman Sachs. The Wall Street stalwart is believed to have earned at least $500m from arranging bond sales for the 1MDB fund.
Since the scandal first broke in 2015, six countries have launched investigations into the fund’s financial malpractices. Prime Minister Najib has consistently denied any wrongdoing, insisting he has never taken money from 1MDB or any other public fund. Despite maintaining his innocence, many have called for Najib’s resignation, while former Malaysian Prime Minister Mahathir Mohamad has filed a lawsuit against his successor over his alleged interference into government probes on 1MDB.
While the US chases 1MDB convictions, the majority of arrests have occurred in the regional financial hub of Singapore. The nation is renowned for its tough stance on political corruption, and was indeed the first country to file criminal charges relating to the scandal. Singapore has jailed four private bankers to date, and is closing in on its local branches of BSI and Falcon Private Bank – two Swiss private banks allegedly used to transfer illicit funds during the scandal.
Imports of Brazilian meat were curbed on March 20 as several nations reacted to the bribery scandal engulfing the country’s keystone beef and poultry industries. On March 18, a number of police raids on meat processing centres exposed the widespread bribery of health inspectors by the nation’s industry leaders. Fearing tainted produce, Chile and China subsequently blocked all meat imports from the country, while the EU and South Korea also imposed restrictions. Both JBS and BRF, two of Brazil’s largest meatpacking companies, were implicated in the scandal.
The news could be extremely damaging for Brazil, which is currently struggling against its worst ever recession. The Latin American country is the world’s largest exporter of beef and poultry, selling a combined $10.2bn of meat to 150 countries last year. In 2016, the livestock industry once again proved to be a rising star of the Brazilian economy, with beef alone accounting for three percent of the country’s total exports.
Brazil is the world’s largest exporter of beef and poultry, selling a combined $10.2bn of meat to 150 countries last year
China and Chile are among the biggest buyers of Brazilian meats, importing $1.7bn and $400m worth in 2016, respectively. South Korea, which gets 80 percent of its chicken imports from Brazil, said it would temporarily block sales of BRF chicken products and subject chicken meat imports to closer inspections.
EU regulators have promised to halt purchases from the companies implicated in the scandal, while the European Commission has demanded the Brazilian government also prevents the export of meat. According to Capital Economics, Brazil could stand to lose as much as $3.5bn in export revenues – roughly 0.2 percent of its GDP.
President Michel Temer was keen to play down the scandal, hosting foreign diplomats at a steak house on March 19 and asserting the revelations only affected 21 of the country’s 4,800 meat-processing units. The length of the bans will largely determine the scandal’s affect on the economy, so there could be room for optimism looking forward.
Nonetheless, it is the reputational damage that currently poses the biggest threat to Brazil’s meat industry. As Vistor Saragiotto, Securities Analyst at Credit Suisse, explained: “[The scandal] could be enough to compromise temporarily Brazilian protein’s acceptance worldwide.”
The key question now centres on the scandal’s timeframe, and how long it will take for importer confidence to be restored. If the controversy is drawn out, Brazil’s economy could find it even harder to emerge from an already tumultuous recession.
On March 17, Beijing and three other major Chinese cities introduced a new round of lending curbs in an attempt to suppress the overheating property market in China’s largest cities.
In the first two months of 2017, the total investment in real estate development was RMB985.4bn ($142.9bn), up 8.9 percent year-on-year. For the same period, sales of residential buildings were up 22.7 percent, according to official data.
Price hikes are particularly pronounced in large cities where land for new developments is becoming increasingly scarce. For example, the Tier 1 cities of Beijing, Shanghai, Shenzhen and Guangzhou, have seen markedly greater price rises than those of other regions. In fact, estimates suggest it could take several years to work off existing housing inventories in some of China’s smaller cities.
China’s new housing policies are the latest in a series of other tightening measures employed across the country over recent months
Beijing’s new measures include steeper requirements on down payments for buyers of a second home, which are up from 50 to 60 percent. In addition, more people will be classed as ‘buyers of a second home’, where previously those who had already paid off a mortgage would have been classed as first time buyers. Similar measures were employed in the provincial cities of Guangzhou, Shijiagzhuang, Changsha and Zhengzhou. The new policies are the latest in a series of other tightening measures employed across the country over recent months.
Just four days after the new measures were announced, the OECD released its annual report on the Chinese economy, advising that authorities “urgently” address the overheating property market. The report stated: “Soaring property prices in Tier 1 cities and leveraged investment in asset markets magnify vulnerabilities and the risk of disorderly defaults.”
It further warned a collapse in housing prices would hurt several important sectors, including real estate, construction, refurbishment and home appliances. This said, the report conceded the impact of such a housing market collapse could be mitigated by stringent prudential regulations, and the financial sector could likely absorb the shock.
Yet, authorities must perform a delicate balancing act. A housing bubble poses financial dangers and triggers frustration for homebuyers, but more liquid monetary conditions also play a key role in supporting growth. The overheating housing market is also specific to certain locations, prompting authorities to consider differentiated policies across the housing market.
For example, Wang Zhaoxing, Deputy Director of the China Banking Regulatory Commission, said during a media briefing last week: “For third and fourth-tier cities with excessive pressure of reducing inventories, and for buyers with solid demand (people who migrated from rural areas to urban areas), favorable credit financing policies will be given as a support.”
On March 20, David Rockefeller, the former head of Chase Manhattan Bank and the last-surviving grandchild of the US’ first billionaire, John D Rockefeller, died at his home in Pocantico Hills, New York, aged 101.
Born June 12, 1915, David was the youngest of John D Rockefeller Jr’s six children. After graduating from the London School of Economics, he went on to gain a PhD in 1940 from the University of Chicago – an institution founded by his family.
Rockefeller’s first job involved drafting letter replies on behalf of the Mayor of New York for an annual salary of $1. Though he initially resisted joining the military at the beginning of the Second World War, he soon enlisted as a private, forgoing the use of his family name to secure the role of officer. Rockefeller rose to Captain during his service between 1942 and 1945.
After the war, aged 30, Rockefeller joined the company in which he would stay for the rest of his professional career: Chase Manhattan Bank. He was the only one of the five brothers to spend his entire career in the corporate world.
In his later years, Rockefeller became known for his spectacular philanthropy, having donated hundreds of millions to the Rockefeller Brothers Fund
Rockefeller joined Chase Manhattan Bank while his uncle Winthrop Aldrich was serving as Chairman. Though he was unsurprisingly dubbed as a ‘spoiled rich kid’, he proved his worth throughout the years, spending time in numerous departments and gradually working his way up the ranks to become co-CEO in 1960 – sharing the responsibility with George Champion.
During his time at the helm of Chase Manhattan Bank, Rockefeller used his far-reaching network and incredible global influence to increase the number of foreign branches from 11 to 73, providing loans in Asia, Africa and Latin America. Indeed, under his leadership, Chase became the first Western bank to open branches in China and Russia, securing its position as a global institution. Rockefeller became sole CEO in 1969.
As well as introducing a forward-thinking international strategy, Rockefeller was responsible for re-energising the bank from within: creating HR, planning and marketing departments with the help of the ‘father of management’, Peter Drucker.
While the 1970s proved to be a rocky period (with a number of unstable real estate investments, bond losses and scandals, as well as mounting board pressure) Rockefeller held the role of CEO until his retirement in 1981. Today, the bank is the US’ biggest bank by assets– a feat made possible by Chemical Bank’s acquisition in 1995 and the subsequent merger with JP Morgan in 2004.
During his lifetime, Rockefeller, along with his brother Nelson (the Governor of New York between 1953 and 1973), played a central role in shaping Wall Street. Crucially, the pair were deeply involved in the development of the World Trade Centre, with the towers nicknamed ‘David’ and ‘Nelson’ respectively by the press during construction.
After his retirement, Rockefeller continued to travel extensively, becoming the confidante of numerous world leaders, including Nelson Mandela, China’s Deng Xiaoping and the Shah of Iran. Despite his influence on New York’s financial district, in his later years, Rockefeller became known for his spectacular philanthropy, donating hundreds of millions to the Rockefeller Brothers Fund, the Museum of Modern Art and Rockefeller University.
President Trump’s latest travel ban has been met with just as much controversy as the first. Hours before it was due to be implemented, a Hawaiian court struck it down, citing the “questionable evidence” backing up its national security goals. The next day, a Maryland judge followed suit. Trump has since promised to appeal both rulings.
Like the original, the second ban hoped to suspend the country’s refugee programme, withholding new visas from the citizens of six predominantly Muslim countries: Yemen, Iran, Syria, Somalia, Libya and Sudan.
The public outcry prompted by the ban fell into two camps: those who argued it would cause social damage and those who said it would damage the economy. But, for several reasons, only the former has grounds.
Gloomy forecasts
Pundits have suggested three major reasons the ban poses an economic threat. The first suggests it could prompt a trade war between the US and the six countries it has blacklisted. In February, journalist John Wasik warned banned states could “slap import fees on US goods and refuse to admit US citizens into their countries”. This, he argued, would “cripple the US economy”. Professor Amrita Dhillon, lecturer of Economics at King’s College London, added it “might create a certain amount of political risk”.
The travel ban could
inadvertently discourage the smartest individuals in non-banned areas like Europe and India from moving to the US
The second economic argument relates to a decline in tourism. Travel companies Hopper and Forward Keys reported a fall in US bookings of 10 and six percent respectively when compared to the same period last year. Both squarely blamed the first travel ban and the growing reputation of the US as an intolerant country for this drop.
The third economic argument maintains it will discourage highly skilled workers from moving to the US. The ‘brain drain’ notion fears the US workforce will get ‘dumber’ as bright foreign minds will either be refused entry or will simply be put-off living in a country where they feel alienated. In the wake of the first ban, Apple, Amazon, Facebook and Microsoft all released statements to this effect; 58 other technology companies followed suit on March 15.
Brighter outlooks
The least convincing of the aforementioned arguments is the idea a trade war would have a devastating impact on the US economy. Simply put, the US would hardly feel any negative effects as a result; the six banned states account for less than 0.5 percent of US trade in goods each year.
Professor Dhillon said: “The only way that this is going to create a huge problem for trade would be if other Muslim countries, in solidarity with these countries, decided to do something all together.
“You have OPEC as an example… but of course this depends on how important crude oil is to the US economy right now.”
Fears for the future of US tourism, meanwhile, do have sturdier statistical foundations. Nevertheless, the travel ban itself may not be the only cause of the dips reported by Hopper and Forward Keys. For example, Steve Blackburn of the North America Travel Service said his company experienced a similar, albeit smaller, dip in the same January-February time frame.
Blackburn said while “one or two clients” have made “a handful of negative comments” regarding Trump, holidaymakers might be deterred by other factors instead, “such as the dollar against sterling rate of exchange”. In his view, the ban has not “directly affected” his business at all, but did concede this may not be the case everywhere.
Protests against Trump’s travel ban have extended around the world
On the other hand, the brain drain argument is not without merit; it only takes one genius, from anywhere, to change the world. This led Google to publicly condemn any measures that “create barriers to bringing great talent to the US”. Nevertheless, a major hole in the brain drain argument is the fact the ban would only cause aggregate workforce skill levels to decline very slightly.
This is because the barrier that it builds is very minor in the grand scheme of things; in 2015, the six banned countries constituted less than 3 percent of total US legal immigration. To put this in perspective, India’s contribution was double that and Mexico’s five times as much. India’s technology institutes are also a key reason for the country’s citizens getting 70 percent of the 85,000 H-1B work visas issued by the US each year. Until Trump starts putting limits on the US’ major sources of immigration, neither Silicon Valley nor the wider economy has too much to worry about.
Few seem to be motivated by the fact the ban may restrict trade, tourism and talent… instead, they dislike its Islamophobic connotations
It could be argued the travel ban has already indirectly limited high-skilled immigration. After all, it contributes to the US’ hostile image, which could discourage the smartest individuals in non-banned areas like Europe and India from moving to the US. But, as Professor Dhillon explained: “People don’t believe everything they read… America is still attractive and… the economic incentive is still there. It’s only when the scale of the kind of discrimination or racism increases a lot that people will be discouraged.”
Although the ban will probably have a negative effect on the economy to some degree, it will most likely cause less damage than many people fear. That said, while most economic arguments fail to hold much water, it is understandable why they have been made: opponents of the ban want to prove Trump wrong from every possible angle, especially socially and economically. Few seem motivated to oppose the ban simply for its possible restrictions to trade, tourism and talent. Instead, they rally against its Islamophobic connotations.
However justifiable this aversion may be, for credibility’s sake, these pundits should conserve their arguments for more solid economic cases, such as highlighting the drawbacks of rescinding the Trans Pacific Partnership agreement. In arguing against the travel ban, critics can only make good, reliable points through social commentary. Still, this is not necessarily bad news: after all, the fight for minority rights in the US really should be a fight for the country’s soul rather than its wallet.
China’s Minister of Industry and Information Technology, Miao Wei, has defended the country’s Made in China 2025 economic development plan. The policy has attracted substantial criticism from the West, with many claiming it provides Chinese manufacturers with an unfair economic advantage.
As reported by The New York Times, Miao asserted the policy was not intended to isolate foreign industries, but did admit some modifications may be necessary. Speaking at the China Development Forum, Miao said: “We never thought about closing ourselves and doing it only at home, but I think we need some adjustments.” He further emphasised the country still welcomed foreign companies interested in operating in China.
The Made in China 2025
plan provides $300bn in government aid to Chinese-owned businesses making the transition from low-end manufacturing to more advanced fields like robotics and biopharmaceuticals
The scheme provides $300bn in low-cost loans and government aid to Chinese-owned businesses making the transition from low-end manufacturing to more advanced fields like robotics and biopharmaceuticals. The stated aim of the plan is for Chinese companies to own as much as 80 percent of manufacturing in these specific markets.
Many have warned the plan is highly protectionist, and argue it would result in foreign companies handing over the technology they develop to the Chinese government in order to continue operating in the country. There are also concerns the low-cost loans could fuel a wave of acquisitions.
In a report released this month, the European Union Chamber of Commerce in China stated the Made in China 2025 plan would severely curtail the position of foreign business in China and nationalise key industries. US businesses have been equally critical, with Washington-based think-tank the Information Technology and Innovation Foundation stating: “America cannot respond with either flaccid appeasement or economic nationalism; it must assemble an international coalition that pressures China to stop rigging markets and start competing on fair terms.”
Following his first trip to Asia, US Secretary of State Rex Tillerson also called for a strengthening of ties between the two nations: “We know that through further dialogue we will achieve a greater understanding that will lead to a strengthening of ties between China and the United States and set the tone for our future relationship of cooperation.”
On March 16, financial communications platform SWIFT announced it would disconnect the last four remaining North Korean banks on its system. The decision was taken after Belgian regulators threatened to prevent the platform from offering its services to UN-sanctioned banks. SWIFT stated the move was made as the banks were “no longer compliant with SWIFT’s membership criteria”. However, it is widely thought broader political pressure prompted the decision.
SWIFT is a member-owned cooperative boasting over 11,000 financial institutions in 200 countries. Established in 1973, SWIFT has become a key player in the communications infrastructure, allowing users to organise payments between themselves from across the globe.
North Korea has continued to spark international concern with its mounting nuclear programme and heightened
international tensions further by test-firing four ballistic missiles towards Japan
Meanwhile, North Korea has continued to spark international concern with its mounting nuclear programme. In February, a UN report claimed Pyongyang had been using the international banking system to proliferate its nuclear weapons for years. On March 15, the isolated state further heightened international tensions by test-firing four ballistic missiles towards Japan.
As news of disconnecting the North Korean banks emerged, SWIFT did not detail its membership criteria, although its terms of use do allow the platform to drop users deemed to damage the platform’s “reputation, brand or goodwill”.
All North Korean banks cut by the platform are currently under sanction by the US Treasury. One, the state-owned Foreign Trade Bank of the Democratic People’s Republic of Korea, was sanctioned by the US in 2013 for funding nuclear proliferation.
The news coincides with claims from US Secretary of State Rex Tillerson that the US policy of “strategic patience” with North Korea has ended. He told reporters during a state visit to South Korea that a “new strategy” is needed and could involve military, diplomatic, security and economic options.
“Certainly we do not wish things to get to military conflict”, he said. “If they elevate the threat of their weapons programme to a level that we believe requires action, then, that option’s on the table.”
SWIFT’s decision to disconnect the North Korea’s remaining banks means the state no longer has access to a major means of circumventing financial sanctions. Nonetheless, the state will most likely continue as before, albeit in darker, more underground forms. As Dan Wager of Lexis Nexis solutions asserted, the move by SWIFT will “drive North Korean banks and the North Korean regime to go into new and innovative ways to launder funds, to support their proliferation and purchasing activities for sanctioned commodities and goods”.
The Saudi royal family has ramped up efforts to broaden economic ties with key commercial partners in a bid to shift away from the kingdom’s long-standing dependency on oil. The diplomatic effort aims to attract global investment to Saudi Arabia, while also creating investment opportunities of its own.
On March 16, King Salman met with Chinese President Xi Jinping to discuss the prospect of deepening the nations’ strategic partnership across energy, trade, aviation, finance, culture, education and security. The talks resulted in a multitude of agreements, including a proposal for 35 projects worth a total of $65bn, according to a report by Xinhua.
The dwindling price of oil has lead to a constriction of the Saudi economy, making the diversification of investment increasingly urgent
Interestingly, Prince Mohammed met with President Trump just two days earlier, establishing an agreement to develop a four-year joint plan for economic cooperation. The plan involved potential investments worth over $200bn and encompassed energy, industry, infrastructure and technology.
The investment push is an important part of the Saudi plan to diversify its economy through non-oil investments, but also plays to Trump’s job creation mantra. According to the White House, the investments could create a million new jobs in the US, The Wall Street Journal reported.
King Salman also met with Japanese Prime Minister Shinzo Abe, with talks culminating in the announcement of the Saudi-Japan Vision 2030. As part of the vision, economic zones will be created in Saudi Arabia in order to lure investment from Japanese companies.
The tour comes at a pivotal time, as the Saudi leadership decides where to list the shares of state-owned oil giant Aramco for its upcoming IPO – touted as the largest in history. The IPO is expected to go ahead in 2018 and would mark the first major push towards the diversification of the Saudi economy.
The dwindling price of oil has lead to a constriction of the Saudi economy in recent years, making the move increasingly urgent. During his recent trip to China, King Salman said: “We take care of our interests, as well as the interests of those working with us.”
