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In 2010, China had used its dominance over rare earth elements (REEs) to effectively implement its ban on exports to Japan, ostensibly following the collision of a Chinese fishing vessel with Japanese coast guard vessels. Almost a decade later, as China threatens to ban exports to the United States (US), a replay of the same could be in the offing. US President Donald Trump upped the ante when on August 01 he announced an additional 10 per cent tariff on the remaining US$ 300 billion worth of Chinese imports, starting September 01, 2019.1 Interestingly, rare earths were excluded from the list. The REEs are a set of 17 minerals2 used to make, among other things, permanent magnets which are used in defence equipment, including actuators, to control guidance systems for airborne smart missiles, as well as in aerospace applications for aircraft components and airstrip maintenance equipment. REEs are also used in electronic items like television sets and cell phones and renewable ...

In this special Eurasia Review interview, David Shinn, an adjunct professor at the Elliott School of International Affairs, a former U.S. Ambassador to Ethiopia and Burkina Faso, and served previously as a Director of the Office of East African Affairs in Washington, explained some aspects of Russia’s engagement with Africa as well as the upcoming Russia-Africa summit planned this October in Sochi. a southern coastal city of Russia. Professor David Shinn spoke recently with Kester Kenn Klomegah from Eurasia Review and here are the interview excerpts: How do White House administration and American politicians interpret currently Russia’s intensified re-engagement with Africa? David Shinn: There has been minimal public comment by both the U.S. executive branch and U.S. Congress on Russia’s effort to intensify relations with Africa. Having said that, Africa has seldom arisen as a topic for discussion in the Trump administration. The U.S. national security policy under the Tr...

Russia’s pivot to the East, hitherto focussed on China and the Asia-Pacific region, has shifted − the high-profile attendance of Indian Prime Minister Narendra Modi at the 5th Eastern Economic Forum (EEF) in Vladivostok from 4-6 September 2019 was its  manifestation. The event was also attended by Japanese Prime Minister Shinzo Abe, Malaysian Prime Minister Mahathir Mohamad and Mongolian President Khaltmaagiin Battulga. Singapore’s Senior Minister and Coordinating Minister for Social Policies Tharman Shanmugaratnam also attended the event, in conjunction with his visit to Russia to co-chair the High-level Intergovernmental Commission (IGC), an annual dialogue to strengthen broad-based cooperation between the two countries. China, North Korea, South Korea, and Indonesia participated in the EEF as well. Russia’s Objectives at the 5th EEF Russia may have achieved three goals by convening the 5th EEF: Firstly, it acted as a signal to China and to the rest of t...

The Czech Republic exports only a small number of cars and car parts directly to the United States, but it’s likely to suffer significant economic damage if that country were to impose tariffs on auto imports. The reason: the Czech Republic supplies parts that are used to build cars exported by other European countries. Europe’s auto industry is one of many that are part of global value chains, in which different stages of manufacturing are dispersed among several countries. Because almost 70 percent of European exports are linked to value chains, tariffs imposed on products shipped by one country can affect many others. That is why, as we explain in a recent study, it’s important to view manufacturing through the prism of value chains when assessing the potential economic impact of tariffs or other economic shocks. Two yardsticks To do that, we need to distinguish between two yardsticks: gross value and value added. When a German resident buys a Volkswagen shipped from a...

The government in Oslo spending billions of oil export dollars to help the affluent buy an electric second car they wouldn’t otherwise want is European environmentalism at its phoniest and most hare-brained. It’s not that you can’t financially encourage societies to be more planet-conscious, but this charade of perverse incentives, inefficiencies, and negative side effects is not it. Norway’s electric car miracle is primarily one of numbers. Last year, EVs accounted for 49.8 percent of all cars purchased in the country, and so far this year three in five new cars bought in Norway are electric. For comparison, 2.1 percent of new cars registered in the US last year were EVs, while for the EU the figure is even lower – 0.9 percent. Thus, with a population of only 5 million, Norway has become the world’s third biggest electric car market. This has burnished the Scandinavian country's credentials as a land populated by uniquely-ethical people. But how has this incredible out...

Prime Minister Narendra Modi has made exports a high priority. Indeed, India would do well if it gave them the highest priority and pursued their success in mission mode. No nation has sustained growth rates of 9-10% for two or more decades without succeeding in global markets. China’s share in global merchandise exports rose from 2% in 1991 to 12.4% in 2012. These two decades saw China fully transform from a primarily agrarian to a modern industrial economy. Today, India’s share in global merchandise exports remains low at 1.7%. In 2000, when China’s GDP was no more than India’s today, it already accounted for 4% of global merchandise exports. Sustaining high growth and creating good jobs will require a strategy centred on building an exportfriendly ecosystem in the country. The starting point for this strategy is shedding three of our current obsessions: import substitution, micro and small enterprises, and a strong rupee. Import substitution has never produced sustained ...

A few days ago, when talking to an the assembled chief ministers of India’s states, Prime Minister Narendra Modi declared that he wanted India to be a “$5 trillion economy” by 2024, when he once again faces reelection. This would, he said, be “challenging, but achievable.” Modi could never be accused of lacking ambition, but the fact is that getting India’s GDP to $5 trillion in five years will be far more challenging than achievable. India is, currently, a $2.8 trillion economy; to reach the $5 trillion mark by 2024, the economy would require nominal growth in dollar terms of over 12% a year. To put this in context, in the last quarter for which data is available, India grew at slower than 6% in real terms — and, if you believe the Modi government’s former top economist, that data is flawed and India may well be growing a few percentage points less than that. India could and should aspire to double-digit growth. Without sustained growth at that level it has little hope of em...

In her Budget speech, finance minister Nirmala Sitharaman said that India would start borrowing in external markets in external currencies. This is a marked change from the past when India issued government bonds in rupees, and borrowed in foreign exchange only from official lenders like the World Bank. Two possible rationales in the speech are that, first, “India’s sovereign external debt to GDP is among the lowest globally at less than 5%” and, second, this will “have [a] beneficial impact on [the] demand situation for the government securities in domestic market”. The first is not really a rationale. India’s sovereign external debt is low precisely because past policymakers worried about the risks of issuing in foreign currency. Indeed, Arun Jaitley wrote in the finance ministry’s own status paper on public debt published in February 2018 that “Most of the debt is of domestic origin insulating the debt portfolio from currency risk.The limited external debt, almost entirely fro...

In 2010, scientists warned we’d already built enough carbon-dioxide-spewing infrastructure to push global temperatures up 1.3 ˚C, and stressed that the fossil-fuel system would only continue to expand unless “extraordinary efforts are undertaken to develop alternatives.” In a sequel to that paper published in Nature today , researchers found we’re now likely to sail well past 1.5 ˚C of warming, the aspirational limit set by the Paris climate accords, even if we don’t build a single additional power plant, factory, vehicle, or home appliance. Moreover, if these components of the existing energy system operate for as long as they have historically, and we build all the new power facilities already planned, they’ll emit about two thirds of the carbon dioxide necessary to crank up global temperatures by 2 ˚C. If fractions of a degree don’t sound that dramatic, consider that 1.5 ˚C of warming could already be enough to expose 14% of the global population to bouts of severe heat, m...

China has been steadily accumulating U.S. treasury securities for decades. Additionally, trade data from the U.S. Census Bureau shows that China has been running a big trade surplus with the U.S. since 1985. This means that China sells more goods and services to the U.S. than the U.S. sells to China. The question is, is China—the world’s largest manufacturing hub and an export-driven economy with a burgeoning population—trying to “buy out’ the U.S. markets through its debt accumulation, or is it a case of forced acceptance? This article discusses the business behind the continuous Chinese buying of US debt. Chinese Economics China is primarily a manufacturing hub and an export-driven economy. Chinese exporters receive U.S. dollars (USD) for their goods sold to the U.S., but they need Renminbi (RMB or Yuan) to pay their workers and store money locally. They sell the dollars they receive through exports to get RMB, which increases the USD supply and raises demand for RMB. China...