Is there a 'ticking time bomb' lurking in China's economy?

The Chinese economy has been hit hard by a string of negative developments over the past half year, including sluggish growth, record levels of youth unemployment, low levels of foreign investment, weak exports and currency, and a housing market that is in crisis.

Joe Biden, the Vice President of the United States, recently referred to the economy of the world's second-largest country as "a ticking time bomb," warning that public dissatisfaction will continue to rise.

In response, the leader of China, Xi Jinping, defended the "strong resilience, tremendous potential, and great vitality" of the economy.

Who then has the better argument, Mr. Biden or Mr. Xi? As is so frequently the case, the answer is most likely to be found somewhere in the middle.

China is facing enormous challenges that have their roots deep in the ground, despite the fact that the economy is not likely to collapse anytime in the near future.

A housing shortage combined with lower-income households
The country's real estate market lies at the heart of China's ongoing economic woes. Up until quite recently, a third of its total wealth was held in the form of real estate.

"Nothing about this made any sense. This makes absolutely no sense at all, according to Antonio Fatas, an economics professor at the INSEAD business school in Singapore.

Over the course of two decades, the industry flourished as a result of developers riding a wave of privatization. However, the problem didn't start until 2020. A widespread epidemic and a population decline within one's own country are not favorable conditions for an unrelenting program of housebuilding.

The government, fearing a financial collapse similar to the one that occurred in the United States in 2008, then placed limits on the amount of money that developers could borrow. They quickly ran up billions of dollars in debt that they were unable to repay.

Now that demand for houses is significantly lower, property prices have significantly decreased. As a result, Chinese homeowners, who had been subject to stringent coronavirus limitations for the previous three years, are now in a worse financial position.

"In China, property is effectively your savings," explains Alicia Garcia-Herrero, head Asia economist for the asset management firm Natixis. Up until very recently, it appeared to be a better option than investing your money in the unpredictable stock market or in a bank account with poor interest rates.

This indicates that, in contrast to the countries of the West, there has been neither a huge spending boom nor a major economic bounce back after the pandemic.

"There was this notion that Chinese people would spend like crazy after zero-Covid," Ms. Garcia-Herrero recalls. "There was this notion that Chinese people would spend after zero-Covid." "They'd go on vacation, visit Paris, and purchase the Eiffel Tower. But in reality, they were well aware that the decline in house values would put a significant dent in their savings, and as a result, they have made the decision to save whatever cash they have on hand.

Not only has this circumstance given the impression that households are in a worse financial position, but it has also contributed to the worsening of the debt crisis that the country's local governments are currently experiencing.

It is estimated that more than one third of their multi-billion dollar sales come from selling land to developers, which is an industry that is currently experiencing a crisis.

It is anticipated that it will be several years before the current turmoil in the housing market begins to ease.

A faulty model of the economic system
The real estate crisis has also brought to light weaknesses in China's economy and the way it operates.

Building was the driving force behind the country's phenomenal economic expansion during the past three decades. Construction was responsible for everything from industries and airports to residences, bridges, and train lines.The execution of this task falls under the purview of the various municipal governments.

Nevertheless, there are some economists who claim that this strategy is beginning to hit a brick wall, both figuratively and physically.

Yunan province in China, which is located close to the border with Myanmar, is home to one of the more peculiar manifestations of China's compulsive need to construct new structures. This year, officials there affirmed, for some inexplicable reason, that they would go forward with plans to build a new Covid-19 quarantine facility that would cost multiple millions of dollars.

The amount of pressure that is being put on heavily indebted local governments is so great that this year it was revealed that some of them were selling land to themselves in order to fund building programs.

The fact of the matter is that there is a limit to the amount of infrastructure that China can construct before it begins to be a financial drain. The nation must look into new means of providing prosperity for its population in order to move forward.

Professor Fatas believes that "we're at an inflection point" at the moment. "The old model is ineffective, but in order to shift focus, serious structural and institutional reforms are required."

For instance, he contends that if China desired to have a financial sector that could fire up its economy and compete with those of the United States or Europe, the Chinese government would first need to significantly relax regulation, giving a significant amount of authority to private interests.

In point of fact, the reverse has come to pass. The Chinese government has tightened its control over the financial industry, chastised "westernised" bankers for their hedonistic behavior, and increased pressure on large technological companies such as Alibaba.

The high unemployment rate among young people is one manifestation of this phenomenon. Millions of college grads across China are having trouble finding respectable white-collar work in the country's major cities.

Figures from July showed that the unemployment rate for job searchers between the ages of 16 and 25 reached a record high of 21.3%. The decision to stop publishing the numbers was made public by the relevant authorities the following month.

Professor Fatas believes that this is evidence of a "rigid, centralized economy" that is finding it difficult to accommodate such a large number of people into the labor field.

When it comes to constructing a new bridge, a top-down approach is the most efficient method; but, when the bridge in question has already been constructed but people are still looking for work, this approach appears to be tedious.

What actions will the government take in this situation?
A shift in the way we think about politics is necessary for an economic course correction. It doesn't appear that this will happen, given how recently the Chinese Communist Party (CCP) has been increasing its grasp on everyday life and how President Xi has been tightening his grip on the CCP. There is a possibility that those in charge will argue that it is not even required.

China is, in some senses, a victim of its own success as a nation. The current pace of growth is only regarded as "slow" when measured against the staggeringly high numbers recorded in earlier years.

China's annual GDP has increased by almost 9% on average every year since 1989. It is anticipated that this figure will be at around 4.5% in 2023.

It is a significant decrease, but it is still far higher than the economies of the United States, the United Kingdom, and most of the countries in Europe. Some people hold the opinion that this situation is ideal for China's top leadership.

The spending of individuals is typically the primary driver of economies in the West, but Beijing is suspicious of the consumerist paradigm. Not only is it seen to be wasteful, but it also demonstrates a strong sense of individualism.

It may assist to stimulate the economy if consumers are allowed to purchase new televisions, subscribe to streaming services, or go on vacation; yet, this does little to improve China's national security or its competitiveness with the United States.

Mr. Xi's ultimate goal is growth, but not expansion simply for the sake of expansion. It's possible that this is what's behind the current boom in cutting-edge industries like semiconductors, artificial intelligence, and green technology. These are all things that keep China globally competitive and make it less dependent on other countries and companies.

This concept may also shed light on why the government has taken such a muted response to the weakening economy. Instead of pouring enormous sums of money into the economy, all that has been done so far is some minor adjustments, such as loosening restrictions on borrowing or lowering interest rates by a fraction.

Investors from other countries who have money invested in China are understandably concerned and want the Chinese government to respond swiftly, but those in power appear to be playing the long game.

They are aware that, conceptually speaking, China still possesses a tremendous capacity for even further economic expansion. Even though it is an economic powerhouse, the annual income of its residents is only $12,850 on average. There are still about 40 percent of people who choose to live in rural areas.

Therefore, on the one hand, China has been afforded and will continue to be afforded the luxury of taking such a long-term view since it is not linked to election cycles.

On the other hand, many economists are of the opinion that a political system that is authoritarian cannot coexist with the kind of flexible and open economy that is required to achieve living standards that are comparable to those of nations that are classified as having "high income."

It is possible that Mr. Xi places an emphasis on ideology above efficient governance, or control over pragmatism. These are both potential outcomes.

When the economy is functioning well, this is often acceptable for the vast majority of people. But now that China is emerging from three years of zero-Covid, with many people finding it difficult to find work and the value of family homes plummeting, the narrative is very different.

This brings us back to Mr. Biden's "ticking time bomb" statement, which hints at the possibility of civil upheaval or, even more gravely, some type of dangerous action taken in response to it on the international front.

However, at this point in time, that is nothing but speculation. China has successfully navigated its way out of a variety of crises in the past. However, there is no question that the leadership of the country is currently confronted with a particular set of difficulties.

Are they concerned about the way things are currently going? "Of course, they are aware of the statistics," explains Professor Fatas.

"Are they conscious of the tasks that must be completed? I can't say for sure. My best opinion is that they are overlooking a few things that are absolutely necessary for the development of China.

In October, Australia will have a historic vote for Indigenous people through a referendum on voice

On October 14, the citizens of Australia will participate in a historic referendum to decide whether or not to establish an Indigenous Voice to Parliament.

If successful, the vote would recognize Aboriginal and Torres Strait Islander people in the country's constitution and establish a permanent body for them to give advice on laws. Additionally, the vote would establish a body for Aboriginal and Torres Strait Islander people to give advice on legislation.

In Australia, there is a heated debate going on about the plan right now.

Since the beginning of virtually the next half century, the nation has not had a referendum that was successful.

In order for it to be successful, it is necessary for the majority of Australians to vote in favor of it. In addition to this, there must be support from the population at large in at least four of Australia's six states.

The parliament would subsequently be responsible for designing and debating the body's make-up, its functions, and its powers; but, the body's recommendations would not carry any legal weight.

Prime Minister Anthony Albanese referred to the election as "a once-in-a-generation chance to bring our country together and to change it for the better" when he made the announcement at a rally in Adelaide. The election will take place on May 18th.

He explained that "a committee of Indigenous Australians, chosen by Indigenous Australians, giving advice to government so that we can get a better result for Indigenous Australians" would make up "The Voice."

"You are being asked... to say yes to an idea whose time has come - to say yes to an invitation that comes directly from Aboriginal and Torres Strait Islander people themselves," the invitation reads. "You are being asked to say yes to an idea whose time has come."

The recommendation was included in a significant document that was published in 2017 and titled the Uluru Statement from the Heart. The declaration is considered to be the best call to action for reforms that will affect First Nations Australians, despite the fact that it was not unanimously agreed upon by its signatories, which number over 250 Indigenous leaders.

What exactly is the plan for Australia's Voice to Parliament?
The fact that Australia is the only country in the Commonwealth that has never signed a treaty with its Indigenous people is one of the reasons why campaigners believe the Voice is such a vital step towards reconciliation.

Indigenous Australians are subjected to disproportionately high levels of disadvantage across society, which is an issue that Australia has been having trouble addressing for a long time.

Peter Dutton, the leader of the opposition party and an opponent of Voice, has stated that there is little detail supporting the concept and has controversially asserted that it might racially divide Australians.

However, a large number of opponents of the motion, including Mr. Dutton, have been accused of distributing false material and engaging in racial slurs.

They, in turn, have leveled accusations of elitism and disregard for the legitimate concerns of average Australians at the Yes campaign.

Advocates for mental health have warned that the level of intensity and tone of the debate is having a negative impact on Indigenous people.

The most recent referendum that was held in Australia was in 1999, when the country decided against transitioning to a republic.

Only eight of Australia's total of 44 referendums have been successful, with the most recent one taking place in 1977. None of them have been passed without the support of both political parties.

Terry Gou is a Taiwanese iPhone billionaire with aspirations of becoming the country's president

Terry Gou, a 72-year-old millionaire and the creator of Foxconn, which is responsible for manufacturing iPhones, is the newest candidate to enter the contest for the presidency of Taiwan.

Mr. Gou is a magnetic entrepreneur who rose from humble beginnings to amass a fortune, a large amount of cash, and significant name recognition. According to observers in Taipei, Mr. Gou would have a decent chance of winning the election if he was the only candidate running against the Democratic Progressive Party (DPP), which is currently in power. However, he is not.

Instead, the opposition vote in the presidential election that will take place in January 2024 will be split three ways due to his candidacy.

When there are already two opposition candidates fighting to overthrow the incumbent party in a presidential system that awards all of the seats to the winner, adding a third candidate to the mix is probably not going to make the process any simpler.

The situation is a textbook illustration of the "law of holes," which states that if you find yourself in a hole from which it is difficult to escape, the first step you should take is to cease digging. It would appear like Taiwan's opposition is digging its own electoral grave at this point.

On Monday, Mr. Guo made his candidacy for an election that will have significant repercussions well beyond the borders of Taiwan public, and this is exactly what happened. An election for a new president will take place on the self-governing island in the midst of escalating threats from Beijing and an increasingly militarized region.

Mr. Gou, much like another charismatic billionaire on the other side of the Pacific, initially tried to have himself nominated as a candidate for Taiwan's most prominent center-right party, the old nationalist KMT (Kuomintang). In contrast to his success in the United States, he was unsuccessful.

As a result of the KMT's selection of another candidate, Mr. Gou resigned from the party. However, Mr. Gou's predicament is not only dependent on the KMT.

The Taiwan People's Party (TPP) is another opposition party in Taiwan, and Ko Wen-je, another popular populist, serves as the party's leader. Mr. Ko served as the mayor of Taipei city in the past, and he is now in second place in the polls. The younger generation of Taiwanese voters is very favorable to him.

It's not just his money and successful business career that make Mr. Gou such an attractive prospect. It is based on his job experience both in China and with the country.

Foxconn, also known as Hon Hai industries, is the largest electronics manufacturer in the world since it was the first company to pioneer the idea of merging the engineering know-how of Taiwan with the trained labor of China. Mr. Gou established massive industrial campuses in the south of China in the 1980s and 1990s, and he hired tens of thousands of young Chinese people to work there.

Because the strategy was so effective, he was finally able to convince Apple to contract out a significant portion of the production of MacBooks and iPhones to Foxconn. Because of this, Foxconn became the most successful company in Taiwan, and Mr. Gou became one of the wealthiest businesspeople in the country.

Now, Mr. Gou thinks that he can use the experience he gained investing and working in China to safeguard Taiwan's safety. Terry Gou has stated that one of his goals is to keep Taiwan from "becoming another Ukraine." In his announcement that he was running for office, he stated that he would lead Taiwan "back from the abyss of war with China."

He is not the only one who views the danger posed by China as becoming more severe as time goes on. Over the course of the past year, Beijing has significantly ramped up its military actions in the region surrounding the island.

The People's Liberation Army (PLA) published a professionally produced propaganda video the previous week, in which it showed Chinese troops engaging in what appeared to be training for an invasion of the beaches of Taiwan.

Protests break out in Libya as a result of the country's ties with Israel

After her meeting with her Israeli counterpart in an unofficial capacity, the Prime Minister of Libya has decided to suspend his Foreign Minister.

Protests have broken out in the predominantly Arab state of Libya as a result of a meeting between Israeli and Palestinian officials. Libya is a staunch supporter of the Palestinian cause.

The Foreign Minister of Israel According to Eli Cohen, the meeting that he had with Najla al-Mangoush was a historic first step in the process of establishing connections.

Israel is making efforts to forge deeper ties with Arab and Muslim-majority countries, despite the fact that these nations do not formally recognize it.

However, Libya's Presidential Council, which is made up of representatives from all three of the country's provinces, stated that normalizing relations with Israel was against the law.

Ms. Mangoush has been charged of high treason by the Speaker's Office in parliament, and Prime Minister Abdul Hamid Dbeibah has forwarded the matter to the appropriate authorities for inquiry.

Given that Israel was not known to be wooing Libya, a staunch foe and defender of the Palestinian struggle, especially under the former Libyan leader Muammar Gaddafi, the disclosure by Israel that conversations had taken place was surprising given that it was not known to be courting Libya. During his reign, numerous synagogues were burned down and thousands of Jewish people were driven from the country of Libya.

The statement was particularly remarkable in the amount of detail it provided, which may have been done with the intention of offsetting any anticipated denial from the Libyan side. Additionally, the statement identified and acknowledged Italian foreign minister Antonio Tajani for hosting the conference in Rome.

An unnamed Israeli official stated to the Reuters news agency on Monday that the meeting took place "at the highest levels" in Libya and that it lasted for more than an hour. This information was provided on Monday.

Mr. Cohen stated in his statement that he had seen Ms. Mangoush the previous week in Rome on the sidelines of a meeting, and that during their conversation they had discussed "the great potential for the relations" between Israel and Libya. The statement was released on Sunday.

According to him, they discussed the necessity of preserving Jewish legacy in Libya, including the renovation of synagogues and cemeteries, as well as Israeli assistance in the management of humanitarian concerns, agriculture, and water management.

However, according to Libya's foreign ministry, Ms. Mangoush turned down the opportunity to meet with Israeli personnel, and what actually occurred was "an unprepared, casual encounter during a meeting at Italy's foreign affairs ministry."

The ministry "renews its complete and absolute rejection of normalization" with Israel, according to a statement that also noted the encounter did not include "any discussions, agreements, or consultations."

Following the news of the meeting, demonstrations took place in several places, including the nation's capital of Tripoli. Although it appears that very few people participated in the demonstrations overall, roads were shut down, tires were set on fire, and demonstrators waved the Palestinian flag.

There has been unrest in Libya for many years, and the country is currently divided between the interim government that is internationally recognized and is based in Tripoli and a rival government that is based in the east.

In the event that a settlement between Israel and Libya were to be negotiated, it would be difficult due to the political divide that has remained between the two countries ever since Gaddafi was deposed 12 years ago.

In the city of Tobruk, located on the eastern coast of Libya, an alternative government is led by General Khalifa Haftar of the Libyan National Army (LNA).

In recent years, Israel has made efforts to establish diplomatic connections with nations in the Arab League with whom it does not already have formal relations. These countries range from moderate states to countries that have been Israel's adversaries in the past.

Since the year 2020, it has negotiated agreements known as the Abraham Accords, which have normalized its relations with the United Arab Emirates, Bahrain, Sudan, and Morocco. These agreements were brokered by the United States. The Palestinians are outraged by the accords and have accused the Arab signatories of being traitors. The agreements have been met with indignation by the Palestinians.

On Sunday evening, the Presidential Council of Libya sent a message to the administration asking for "clarification" about what had taken place. The duties of the head of state, as well as those of the commander in chief of the armed forces, are delegated to the Presidential Council.

It was said in a letter that came from the organization that the meeting between the two foreign ministers "does not reflect the foreign policy of the Libyan state, does not represent the Libyan national constants and is considered a violation of Libyan laws which criminalise normalisation with the 'Zionist entity.'"

Additionally, it requested that Mr. Dbeibah "apply the law in the event that the meeting took place."

Yevgeny Prigozhin: Wagner defied Putin and now its leader may be dead

When Yevgeny Prigozhin and his Wagner troops launched their insurrection two months ago, Vladimir Putin made his feelings more than clear. He called it "treachery" and a "stab in the back" of Russia. He promised that the perpetrators would be punished.

So there was incredulity in Russia when they were not. When a deal was cut between Mr Prigozhin and the Kremlin to end the mutiny; when all the charges against the Wagner founder and his fighters were dropped, despite the fact that Russian servicemen had been killed during the murky but brief insurrection.

It made President Putin look weak.

Commenting on the agreed compromise (ending the mutiny in exchange for immunity from prosecution) one Russian newspaper commented: "This kind of compromise is normally made with political opponents. Never with criminals and terrorists. Does that mean we should view Mr Prigozhin now as a political figure?"

Suddenly things look rather different.

Exactly two months on, Mr Prigozhin is presumed dead after his private jet crashed and exploded in a field. Wagner commander Dmitry Utkin was on the same jet.

The Russian elite will shed few tears over Mr Prigozhin's reported demise. That goes for Russia's military leadership, whom Mr Prigozhin had publicly and vocally condemned and whom he demanded be sacked. The Wagner boss claimed that the so-called "March of Justice" (his euphemism for the insurrection) had not targeted the Kremlin but had instead been directed at Defence Minister Sergei Shoigu and the Chief of the General Staff, Valery Gerasimov.

In reality, the Wagner mutiny had been a direct challenge to President Putin's authority and a humiliating 24 hours for the Kremlin. Mr Putin himself pointed out that the Russian state had been financing Wagner. Money had clearly not bought loyalty.

If this was an act of revenge by those in power, that sends two clear messages to Mr Prigozhin's loyalists and to anyone else in Russia who may have been contemplating armed resistance:

Don't try

Look what happens to those who do.

That means that President Putin could emerge from these dramatic events stronger domestically.

But what if Mr Prigozhin becomes a martyr? What if those who had pledged loyalty to him - and who are well-trained fighters - call for their own acts of revenge?

Grey Zone, a Telegram channel linked to Wagner, blamed Mr Prigozhin's reported death on "Russian traitors".

It did not clarify who it believed those traitors were and what Wagner's response would be.

If this crash was foul play, that will come as little surprise to many in Russia. Ever since the mutiny there has been feverish speculation about Mr Prigozhin's fate, about whether his actions really would be forgiven.

He must have known that. Yet, in recent weeks, as he jetted around on his private plane he clearly did not view air travel as a danger. Perhaps he believed that he was too powerful, too crucial a figure in today's Russia to be taken out?

First foreign flight for North Korean airline after the collapse of the Soviet Union

The state airline of North Korea has successfully completed its first overseas flight since the epidemic began.

Flight JS151, operated by Air Koryo, took off from Pyongyang early on Tuesday morning and arrived at Beijing Capital Airport at 9:16 local time, which corresponds to 01:16 GMT, according to data provided by the real-time flight tracking service Flightradar24.

It is unknown who was on board the JS151 or how many people it was transporting at this time.

According to Koryo Tours, a travel firm, the route between Pyongyang and Beijing has been reopened so that North Koreans can travel back home.

Flightradar24 reports that flight JS151 was operated by a Tupolev Tu-204 aircraft, which has the capacity to accommodate a maximum of 210 passengers.

It is unknown how many people were on board the return flight, JS152, which was scheduled to depart from Beijing for Pyongyang at 13:05 local time.

According to Kyodo News, the check-in booth for Air Koryo at the Beijing airport was completely crowded with passengers who were wearing North Korean flag pins on their chests and dragging luggage carts full of belongings.

More than three and a half years after they were halted because to Covid border controls, Air Koryo flights to Beijing were authorized to resume on Monday, according to the Chinese foreign ministry, which claimed it has cleared the restart of the flights.

It was only lately that Pyongyang restarted some limited international passenger transit.

This past week, a group of North Korean athletes made their way across the border into China on their route to compete in the global championships for Taekwondo in Kazakhstan, which is located nearby.

The capital of North Korea was also visited by delegations from Russia and China in July to commemorate the 70th anniversary of the armistice that ended the Korean War. These delegations were the first known foreign organizations to be invited to the country since the year 2020.