China may retaliate to US Huawei ban using rare earth metals

Rare earth metals are minerals which are very hard to extract and in which China is one of the world’s biggest supplier of, these metals are used in various products like mobile phone cameras and automobile catalytic converters.

The US is one of the world’s biggest consumers of rare earth metals coming from China. Media in China has now suggested that China may limit exports of rare earths to the US escalating the trade war even further, after the US banned Chinese telecommunications company Huawei.

80% of Chinese rare earth metal exports are to the US and the limitation of these metals will spark price increases for a number of tech products made by US companies. President Donald Trump avoided putting rare earth metals on the tariff list for this very reason.

So far consumer and producers in both countries are bearing the brunt of the US-China Trade war, which is also propelling a negative outlook on global and tech markets. The trade war is escalating and both sides are claiming to have the upper hand, with no end in sight while holding the world hostage.

 By Mokgethi Mtezuka

Africa’s move to ban tariffs

The African Continental Free Trade Area (AfCFTA) has come into effect legally, however, countries that have ratified have a month to decide how the agreement will work.

24 out of 54 African countries have signed the agreement, Africa’s biggest economy, Nigeria is yet to sign. The AfCFTA will make Africa the largest free trade area created since the formation of the World Trade Organisation (WTO) and is intended to particularly benefit SMEs and young people.

It is believed that South Africa will benefit the most from the trade agreement. The credit rating agency, Moody’s said in a report that countries like South Africa, Kenya, and Egypt were likely to benefit the most – this due to their “large manufacturing bases and relatively robust infrastructure, particularly given their access to electricity.”

READ MORE: African Continental Free Trade Agreement

The agreement comes during a time where the trade war between the US and China is escalating. Africa is bypassing tariffs and putting together the world’s largest free trade zone.

 

By: Kgothatso Nkanyane

South Africa’s new Carbon Tax Law

South Africa has finally made the carbon tax an official law, first drafted in 2010 the law has had a long road in getting approval, with 3 postponements due to mining companies, steel  manufactures and even government owned enterprises disputing the law saying it will hurt profits and push up costs.

South Africa being one of Africa’s worst when it comes carbon emissions can move towards lowering emission in agreement with global climate change requirements.

Signed in to law by President Cyril Ramaphosa it will come in to operation 1 June December 2022, with a tax rate of R120 ($8.34) per tonne of carbon dioxide equivalent. Climate change activists believe that the law is still not doing enough to lower carbon emission and are called for more stringent measures.

 Source: ewn.co.za

The NBD has the potential to reshape the world of development finance

 The New Development Bank has the potential to change the world of development finance, says Professor Karin Costa Vazquez, in an article on the Financial Express.

Prof. Vazquez is the Assistant Dean for Global Engagement, Executive Director, Center for African, Latin American and Caribbean Studies at School of International Affairs, O.P Jindal Global University.

The NDB has been in operation for less than four years, however, it has thus far received an AA+ rating international credit rating and built a portfolio of 35 projects worth USD 9.2 billion – nearly half the World Bank’s lending in 2018, reports the Financial Express.

READ MORE: S&P rates Brics New Development Bank AA+

The Professor outlined the key features that set the NBD part; the bank is committed to close the infrastructure gap in developing and emerging countries, it is focused on sustainable development and the bank’s equity in power-sharing.

 

By: Kgothatso Nkanyane

Trump visits Japan, North Korea resumes missile testing

US President Donald Trump travelled to Japan to meet with Prime Minister Shino Abe for a four day visit which started on Saturday. On the agenda will be the new US-Japan trade deal, the new raising in tension with North Korea.

The US-North Korea deal seems to be back in the improbable category even though Trump has claimed that there is still a chance for a deal. North Korea on the other hand has returned to testing its missile which is a further indication of a no deal situation.

Japan is the US’s closest Asian partner with military, technology and financial ties link the two countries since the Second World War, North Korea’s missile test is very worrisome for Japan due its proximity, while Trump and South Korea have done played the recent aggressions by not calling out Kim Jong-un.

Trump’s visit to Japan also serves as good getaway from Washington as there is a push by certain democrats to have him impeached according to CNN.com. With the trade war with China escalating and no deal with North Korea, Japan could be a good place for Trump to score and easy win in Asia.

By Mokgethi Mtezuka

Theresa May’s Resignation leaves more questions on BREXIT.

British Prime Minster Theresa May’s failure to pass any deal on BREXIT has left her with no options but to announce her resignation and is expected to stay in office until the end of July. In her resignation address she stated that she will official resign 7 June and will remain as interim prime minister until the next prime minister is chosen.

Eight possible candidates have been highlighted as possible replacements for May. The most controversial is Boris Johnson who is very divisive not only in his own party, but in the UK and EU. Johnson a Brexiteer is also the bookies favourite for the top job and has many MP’s in his own party planning to block his succession.  

It is expected that Johnson will be more than willing to have a no-deal BREXIT if he becomes Prime Minister. Britain is expected to finally leave the EU 31 October and a no deal situation with EU is now looking to be more than likely given May’s failure. Add with the fact that the British parliament is unable to come to any agreement on BREXIT the next prime minister will face the same challenges as May.

By Mokgethi Mtezuka

 

Indian Elections: Modi claims victory for BJP

After seven weeks long and seven phases the India election which started on 11 April, has finally come to a close. Prime Minister Narendra Modi garnered a landslide victory securing he and the Bharatiya Janata Party (BJP) another term – vote counting is on-going.

According to The guardian, the BJP amassed 290 seats. The BJP is expected to gain almost 300 seats out 542 in congress which is up from their previous result in 2014 of 282 seats.

A new five year term for Modi and an endorsement of his policies means that he has more breathing space and stronger mandate to enact policies unable in his previous term.

Modi also promised to unity India after elections, the second most populous country in the world is not without its divisions.  In terms of foreign policy, Modi will now the tackle the tension with Pakistan and  resolve its issues with the US over Iranian oil and Russia weapons purchases.

 

By Mokgethi Mtezuka

Brazil announces plans to drop WTO sugar case against China

“Brazil and China have reached an understanding regarding the consultations made at the World Trade Organisation (WTO) on sugar,” Brazil’s Foreign Affairs and Agriculture ministries said in a statement, on Tuesday.

READ MORE:Brazil’s Vice President’s Visit To China

Brazil opened a case last year, questioning China’s anti-dumping tariffs on sugar. The Brazilian government sought the panel at the WTO investigate China’s sugar trade policies. The policy reduced Brazil’s sugar sales to the Asian nation – China used to be one of its top clients.

READ MORE: NDB President And Vice-President Of Brazil Meet

Brazil said without elaborating that, “there will be no need for the implementation of a panel at the WTO”.

 

Source: Reuters

US companies fear retaliation from China after Huawei Ban.

A trade lobby group representing American companies in China has real concerns that china will retaliate to the US ban on Huawei. China so far has retaliated to all US sanctions, tariffs or aggravations in a similar fashion.

The ban not only affects Huawei’s ability to access Android services which is mainly software, but will limit its access to US hardware tech companies as well. This creates problems not only for Huawei but for US tech companies who could lose Huawei’s business and may never regain it again.

China also has a number of measures which it could implement to restrict US companies which operate or are reliant on Chinese companies. The US-China trade war only seems to be escalating as now the US is willing to use Chinese corporations as leverage to gain an upper hand.

By Mokgethi Mtezuka

NDB President And Vice-President Of Brazil Meet In Shanghai, Discuss Bank’s Strategy And Operations In Brazil

( Xangai – China, 20/05/2019) Vice-Presidente da República, Hamilton Mourão, durante Encontro com o Presidente e a nova diretoria do Novo Banco de Desenvolvimento (NDB) Foto: Adnilton Farias / VPR

Strengthening the New Development Bank’s strategy and its operations in Brazil was the main focus of discussion between Mr. K.V. Kamath, the NDB President and Gen. Hamilton Mourão, the Vice-President of Brazil during their meeting on 20 May 2019. The meeting was held at the Bank’s office in Shanghai, during the official visit of the Vice-President to the People’s Republic of China.

“The NDB is a 21st century bank, designed to provide the necessary financial support to emerging economies. We welcome the upcoming inauguration of the NDB Americas Regional Office, based in São Paulo, with a branch in Brasília. Such Office will allow the NDB to become more familiar with the Brazilian business culture and regulatory environment, thus contributing to our efforts to foster investment in infrastructure and sustainable development,” said Gen. Hamilton Mourão.

Mr. K.V. Kamath briefed Gen. Hamilton Mourão on the progress of the NDB, including the growth of the Bank’s portfolio of approved projects.

“It’s a privilege to host Gen. Hamilton Mourão in NDB’s Headquarters. The NDB is fully committed to supporting Brazil’s agenda of infrastructure investments as formulated by the Brazilian Government with a greater participation of the private sector, in line with the Bank’s mandate of mobilizing resources for infrastructure and sustainable development. We are looking forward to opening the Bank’s Americas Regional Office later this year, which will play an important role in project identification and preparation,” said Mr. K.V. Kamath

 

RELEASED BY: NEW DEVELOPMENT BANK (NDB)