Lung cancer in never-smokers, right-sizing China economy: SCMP daily highlights
Despite drops in tobacco use worldwide, the incidence of lung cancer among people who have never smoked is increasing, with higher risks for younger generations and women – particularly in China – a global analysis led by the World Health Organization has found. 2. China has met most of its 5-year goals. It hasn't done so well on emissions
China met most of its targets under the current 14th Five-Year Plan to 2025 but has fallen short on energy efficiency and emission goals, according to Tsinghua University researchers. 3. Scholar Jing Qian on right-sizing China's economy in the age of Trump Illustration: Lau Ka-kuen
The researcher surveys the dividends of 'Made in China 2025' and shares why he thinks Trump's contradictions could benefit bilateral relations.
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AllAfrica
9 hours ago
- AllAfrica
'Japan first' electoral tide turns against Ishiba, LDP
TOKYO — Sunday's upper-house election results were brutal for Japanese Prime Minister Shigeru Ishiba's ruling Liberal Democratic Party (LDP). But they proved the 'bond vigilantes' right as Tokyo's fiscal trajectory is almost certain to shift toward budget-busting tax cuts. Without a majority in either house of parliament, the LDP will have to cobble together a governing coalition to maintain power. That will require the LDP accepting lower taxes in return, particularly on consumption. The election also shows that Japan is but the latest developed nation being upended by inflation and immigration. The former can be seen in surging rice prices and a 3.3% headline consumer price inflation rate, well above Tokyo's 2% target. The latter in the 'Japan first' Sanseito party emerging as a major force on Sunday. This scenario had bond traders bidding up Japanese bond yields in recent weeks. Along with the inflationary fallout from US President Donald Trump's tariffs, Tokyo is seeing bond punters refocus attention on its 260% debt-to-GDP ratio, by far the highest in the developed world. On top of that, Japan faces one of the worst demographic trajectories anywhere: an aging, shrinking population that features one of the globe's lowest birthrates. Any pivot back to aggressive fiscal loosening could make the volatility in Japanese markets seen in May look tame by comparison. For now, Ishiba is digging in and claiming he'll stay on as prime minister despite the LDP's historic defeat. One factor working in his favor is a shallow bench of obvious replacements. But given that Ishiba's approval ratings often wallow in the 20s, it's hard to imagine him clinging to power for much longer. This could alter the calculus for the Trump administration, which is increasingly desperate for another US-Japan trade deal. Trump 2.0 arrived believing Japan would be the easiest bilateral deal of all, a quick win for the 'art-of-the-deal' president. Ishiba shocked Trump World by slow-walking the process and even asking what concessions the US might offer. Tokyo politicos were perplexed by US Treasury Secretary Scott Bessent's presence in Japan last Friday (July 18). Most figured he was trying to rush a bilateral trade deal into reality before Washington has to restart negotiations with a new Japanese government. Yet even if Ishiba's government can survive, its latitude to make major concessions to Trump may be less today than when he shook Bessent's hand on Friday. That could put Japan even more in harm's way if Trump decides to increase the 25% tariff he's earmarked for Tokyo. It would be on top of a 25% tax on auto imports to the US, one already wreaking havoc for Asia's second-biggest economy. The trouble is that Japan's economy is not in a good place regardless of Trump's tariffs. In the first quarter, even before the worst of Trump's biggest taxes on China and beyond, Japan contracted 0.2% in the first quarter and the slowdown probably deepened in the April-June period. As Tokyo politics descend into disarray, it's an open question how Ishiba, or the premier to be named later, handles the Trump challenge. Indeed, making a deal to placate Trump World just became harder. Yet the tariffs Trump is sure to throw Tokyo's way could tip the economy into a painful recession. And what about China? The LDP is watching on as Trump pivots back to seeking a 'grand bargain' trade deal with Xi Jinping's government. The New York Times reports that Trump's Commerce Secretary Howard Lutnick has set off a bidding war of sorts among CEOs looking for a seat on Air Force One for a China visit soon. Ishiba's Japan might now have to contend with one of its biggest fears – that the real prize for Trump is a 'grand bargain' trade deal with China. This might sound like good news for Japan if it avoids the financial carnage sure to come with a new trade war. But a US-China deal might leave Tokyo and Japan Inc's biggest companies on the outside looking in. Adding to the challenge is that both of the traditional policy levers Tokyo would normally employ are less available at present. The Bank of Japan, for example, has been raising interest rates for 12 months now. The current inflation rate suggests more tightening moves are needed. That is, if not for the recession risks that Japan's US$4.2 trillion economy now faces. Also, if not for the extreme bond market turmoil that rocked Japan in May. That turmoil may be about to return as the odds of fiscal loosening via tax cuts increase in Tokyo. Ostensibly, the surge in Japanese government bond yields was a side effect of the chaos that Trump tariffs unleashed in US Treasuries. Yet it was also a matter of the bond vigilantes refocusing attention on Tokyo's crushing debt load. Trump 2.0's import taxes triggered near-unprecedented turmoil first in US Treasury securities and then in debt markets everywhere. The volatility culminated in mid-May when a 20-year Japanese bond auction flopped with global investors. The typically routine sale of $6.9 billion issues maturing in 2045 drew the least interest since 2012. The 'tail,' or gap between the average and lowest-accepted prices, was the worst since 1987. Suddenly, #JGBCrash was trending on social media. It was Tokyo returning the favor, sending shockwaves back toward the US. At the time, Bessent said worries about Japan were indeed pushing US yields higher. Some argue Japan worries are much ado about nothing. For example, Japanese Finance Minister Katsunobu Kato's team managed to tame markets by signaling a shift in bond issuance toward shorter-dated securities. It helps explain why a less-than-stellar 40-year bond sale in late May didn't slam world markets. Markets are betting that, for now, Tokyo is on top of things. Masahiko Loo, senior strategist at State Street Global Advisors, argues that Japan's volatility issues 'are largely addressable through adjustments in issuance volume or composition.' Loo adds that 'we believe the concern on loss of control over the super-long end is overblown. Around 90% of JGBs are domestically held, and the 'don't fight the BOJ/Ministry of Finance' mantra remains a powerful anchor. Any perceived supply-demand imbalance is more a matter of timing mismatches, which is a technical dislocation rather than a fundamental flaw. We expect these imbalances to be resolved as early as the third quarter.' Yet risks abound. In a note to clients, Macquarie Bank analysts warn that rising JGB yields could be a 'trigger point' that catalyzes a wave of capital repatriation with Japanese investors pulling funds from dollar assets. There's also a risk of upsetting the so-called 'yen-carry trade.' Twenty-six years of near-zero rates turned Japan into the top creditor nation. Investors everywhere made it standard practice to borrow cheaply in yen to bet on higher-yielding assets from New York to Sao Paulo to Seoul. That's why the slightest plunge or rally in the yen can send shockwaves through asset markets around the world. This creates a fresh dilemma for BOJ Governor Kazuo Ueda, should sudden yen gyrations challenge his ability to tame longer-term bond yields. No one knows if Team Ueda might make good on its hawkish rhetoric earlier this year. But now that Trump's tariffs are hitting Japan, it's highly likely that the BOJ will become even more reluctant to tighten for fear of a yen surge unnerving Asia's No 2 economy. The last thing the BOJ wants is to be blamed for a recession. Yet the trade war, coupled with Japanese rate volatility, is bad news on a number of levels. Not least of which is that 2025 was supposed to be the year Japan's long-awaited virtuous cycle finally arrived to hasten consumer spending and broader GDP growth. In spring 2024, unions scored the biggest wage increase in 33 years — 5.28%. By year-end, though, the increase failed to materialize. Wages ended 2024 essentially flat. Then came Trump's trade war, which is making wage gains even less likely. Might wage cuts now be the question? The 25% import tax that Trump just slapped on Japan, effective in August, and his 25% auto tariff will be devastating to Japan Inc. 'If the high tariffs persist, negative effects on exports and capital investment will be unavoidable,' says Takeshi Yamaguchi, chief Japan economist at Morgan Stanley MUFG. An immediate loser is the BOJ, which spent the last year working to normalize interest rates. That, adds Stefan Angrick, senior economist at Moody's Analytics, complicates the BOJ's way forward. 'With wage growth stumbling and inflation proving sticky, the BOJ's job will get much harder,' Angrick says. Yet things are getting more complicated in Japan, socioeconomically speaking, as its version of Trump's #MAGA party gains rising popular support. Sunday's election shows, Angrick notes, that 'established opposition parties are increasingly eclipsed by the far-right, populist Sanseito party, which has capitalized on public anger over the economy to push strident anti-foreign rhetoric. That rhetoric has struck a chord, as more and more ordinary citizens are priced out of housing and services while foreign investors snap up real estate and record numbers of tourists flood the country.' Unlike elsewhere in Asia, Angrick says, 'foreign property buyers face almost no restrictions in Japan. This grates when housing prices have surged to multi-decade highs and tourists can claim refunds on the very consumption tax at the heart of this campaign. Future governments would do well to take note.' Coupled with how rising inflation is reducing living standards, these anti-immigration currents put Japan in league with similar backlash in the US and Europe. They make the road ahead for Ishiba, or his successor, increasingly uncertain and treacherous.
AllAfrica
10 hours ago
- AllAfrica
Trump's pivot on Ukraine still leaves the onus on Europe
Everything that President Donald Trump says is unreliable, simply because he says so much and because he has succeeded in politics by making image and sensation his priority, rather than substance. So if we want to decide how seriously to take his sudden reversal of position on helping Ukraine, the right people to listen to are the Ukrainians themselves and their opponents, the Russians. Neither has shown signs that they consider this American reversal to be truly game-changing. President Volodymr Zelensky, of course, welcomed Trump's new promises to supply more weapons and missile-defense systems, contradicting a decision by the US Department of Defense just a week earlier, but Zelensky also promptly got on the phone to European leaders asking them to supply more weapons too, and urgently. If you are fighting a war for national survival, the only weapons that truly count are the ones that actually arrive in the hands of your soldiers. Until that happens, and with still no clear information about when American weapons will arrive, Trump's promise has some value in terms of the message it sends to Ukraine's invader, Vladimir Putin, but that value is strictly temporary until new things are said in the White House, and it saves no lives directly. On his side, Putin has continued his army's 'summer offensive' to try to seize more Ukrainian territory, has continued to bombard Ukrainian cities, and has stuck to the uncompromising list of conditions he says he requires before any serious ceasefire talks can occur. In fact, in one important sense, Trump's announcement may have even relaxed the pressure on Putin to stop the fighting. While the decision to resume weapons deliveries was obviously important, an equally important decision may have been the one to set a 50-day deadline before any new economic sanctions will be imposed on Russia by the United States. This gives Putin an incentive to try to achieve as much as he can on the battlefield between now and mid-September, at which point he will most likely try to resume talks with the United States so as to persuade Trump to delay the sanctions deadline even further. This really is as perfect a situation as Putin could have hoped for, short of a complete alignment by America with his war aims. The summer offensive is not going well for Russia, but there is still time for progress to be made. Unless nearby European countries choose to send weapons and missile-defense systems immediately, Ukraine's military will remain at a disadvantage, valiant and innovative though it certainly is. Under the scenario now laid out for him by Trump, Putin does not really need to think hard about the future of his war until after the summer. By that time, Putin will be thinking, Trump may have changed his mind and his message multiple times. And Putin may well have seen recent political arguments taking place inside Ukraine about President Zelensky's cabinet reshuffle and claims about corruption as being encouraging signs that the Ukrainian government is itself becoming vulnerable to political pressure and criticism. For these reasons, Trump's latest change of mind still leaves the true initiative in the hands of European governments. His decision to resume weapons deliveries is predicated on those weapons being paid for by European countries, so if weapons are to arrive soon those payments had better be agreed upon and made soon. Moreover, all talks about those purchases will take place against the background of the European Union's negotiations with the United States over trade tariffs, which risks handing more bargaining power to the Americans for as long as those talks continue. This may mean until the recently announced deadline of August 1, or it may mean the date hinted at by the US Treasury Secretary Scott Bessent of September 1. That highly contentious background could complicate the process of getting purchases agreed and weapons delivered. After all, the EU trade negotiators have this week been briefing the media about how they are preparing retaliatory tariffs and controls on US services exports to the EU, which mainly means by the big technology platforms, if the Americans stick to Trump's latest threat of a 30% tariff on EU goods. A transatlantic trade war would not be a happy or helpful scenario against which to carry out the urgent task of helping Ukraine withstand the real war inflicted on it by Russia. Above all, the four European countries leading Europe's defense efforts —Germany, France, the United Kingdom, and Poland —must maintain a strict focus on Ukraine's daily needs and not become complacent by Trump's apparent reversal on US weapons deliveries. The countries with the weapons stocks and production lines that are best able to help Ukraine emerge from the summer feeling strong are these European ones. In the long term, Europe wants to buy defense equipment and materials mainly from European producers rather than from the United States. That need not preclude purchases from America in the short term, if supplies are available, but it does mean that the sooner that long-term orders can be placed with European suppliers to allow them to invest and plan ahead, the better. It also means that Ukraine's now large, innovative and highly cost-competitive defense industry promises to become a big future asset for Europe, making the protection of it from Russian attacks even more important. In the tense atmosphere of this fourth summer of Russia's war in Ukraine, risks are going to have to be taken by those leading European governments in order to prevent a worsening of the security situation for the whole of Europe. Trump's reversal could offer some reassurance that weapons will be available from America in future months and in 2026, making it easier for Europeans to hand over their own critical missile-defense systems to Ukraine in the coming weeks and, ideally, the long-range missiles that the Ukrainians need to hurt and deter Russia. The time for worrying about escalating the conflict with Russia has long passed. President Putin is the one who has been doing the escalation. If Ukraine and the rest of Europe are to deter him and even push him back, the Europeans will have to send some clear messages of their own, not in words but in actions. Formerly editor-in-chief of The Economist, Bill Emmott is currently chairman of the Japan Society of the UK, the International Institute for Strategic Studies and the International Trade Institute. This is the English original of an article published in Italian by La Stampa and in English on the Substack Bill Emmott's Global View. It is republished here with kind permission.
AllAfrica
11 hours ago
- AllAfrica
Decoding China's silence on Trump's financial pressure play
On July 5, 2025, President Donald Trump signed into law what he dubbed the 'Big & Beautiful Bill,' a sweeping legislative package aimed at confronting what he called 'China's financial warfare against America,' a signature political flourish attached to what may become a turning point in the US-China financial relations. While the bill does not directly authorize the freezing of Chinese assets, it coincides with broader legislative momentum in Washington, such as the Chinese Currency Accountability Act of 2025 and the China Financial Threat Mitigation Act of 2025. These efforts empower the US Treasury to seize or freeze Chinese foreign exchange reserves in case of national security threats, pandemic reparations or Taiwan-related aggression. The legislation, tied to Trump's broader push to hold China 'accountable' for global disruption, is a seismic move with implications for over US$800 billion in Chinese reserves and decades of global financial norms. Its passage has intensified concerns in Beijing that the US may be inching closer to weaponizing the dollar and financial infrastructure against the world's second-largest economy. Yet despite the gravity of the moment, the Chinese government has remained notably silent since the bill was signed. There has been no statement or protest from the Ministry of Foreign Affairs, nor a fiery editorial in the state-run Global Times or Xinhua News Agency. Nor have they been any data updates or renminbi (RMB) adjustment comments from the People's Bank of China linked to the bill. Compared with past patterns, even symbolic US sanctions provoke a loud rebuttal from Beijing. This time, though, there is conspicuous silence for a government typically quick to denounce perceived affronts to its sovereignty. The official silence surrounding a move that could potentially freeze China's foreign exchange reserves is not an oversight, but a deliberate strategy. While the July 5 legislation falls short of authorizing outright asset seizure, its symbolic weight—and the cumulative direction of US financial policy—has not gone unnoticed in Beijing. Trump administration officials have framed the legislation as a necessary step to 'defend America's economic sovereignty,' referencing China's currency practices, data flows and alleged 'covert economic warfare.' The accompanying bills are more explicit: the Currency Accountability Act seeks new reporting mechanisms and penalties for perceived exchange rate manipulation, while the Financial Threat Mitigation Act calls for contingency planning in the event of Chinese financial coercion, including stress-testing the implications of decoupling or asset freezes. Although there is no 'smoking gun' provision for freezing China's foreign reserves, the message is clear: the US is actively positioning itself to respond financially to a crisis over Taiwan, cyber intrusions or other strategic flashpoints. In Beijing's view, this opens a dangerous door—Washington is clearly escalating pressure on Beijing's global financial influence. In turn, China's silence to the threat 1. Containment Over Confrontation Given the Trump administration's preference for public clashes, in the Chinese policymakers' view a vocal rebuttal would only fuel Trump's confrontational narrative that China is an existential threat. In his second term, Trump is portraying China as both a geopolitical rival and a domestic political target. Beijing may assess that open retaliation would justify the US escalation, including via further economic 'decoupling' or sanctions. Engaging in a tit-for-tat war of words could risk escalation—both rhetorical and financial. Beijing appears to be opting for containment over confrontation, betting that silence is a way to avoid validating the bill's political utility. Quietly engaging allies behind the scenes—especially in the Global South and Europe—may be seen as more effective than shouting into Trump's echo chamber. 2. Preserving Financial Market Stability Holding over $800 billion in US Treasuries, as such dollar-denominated assets, might now be viewed as a vulnerability rather than a security. However, publicly acknowledging the risk to dollar-denominated reserves could trigger unintended consequences—such as capital outflows, RMB depreciation or investor panic. The Chinese leadership has long prioritized financial stability as a pillar of social and political order. An explicit Chinese protest could trigger turbulence in the RMB, capital markets or foreign exchange flows. With youth unemployment high and domestic economic recovery still fragile, Beijing has every incentive to keep markets calm. Remaining quiet buys time and avoids spooking global markets that are already jittery amid renewed tensions between the US and China. Public acknowledgment of the bill's implications might cause more harm than good, at least in the short term. 3. Controlling the Narrative at Home Domestically, visible panic would be politically costly; the Chinese Communist Party (CCP) remains highly sensitive to perceptions of weakness. In Xi's China, to acknowledge vulnerability is to question the supremacy of CCP control. The government is tightly controlling economic messaging amid slowing growth, record-high youth unemployment, and concerns about local government debt. Acknowledging that the United States might target Chinese financial assets would undermine the state's narrative of stability, sovereignty and competence. For Beijing, saying nothing avoids sending the wrong message to its own citizens. 4. Silent Realignment in Progress China's silence does not mean inaction, but rather is a form of diplomacy. Beijing can present itself as the more restrained actor, in contrast to an increasingly erratic Washington. By not reacting immediately, China avoids alienating other countries—particularly in the Global South and Europe—who may share concerns about the politicization of global finance. In recent years, Beijing has actively reduced its exposure to the US dollar through de-dollarization, increasing its store of gold reserves, and expanding cross-border RMB settlements. It is also hedging by deepening bilateral swap lines, investing in digital currency infrastructure and exploring alternatives to the SWIFT system. These are not reactions—they are preparations. A China-US tit-for-tat may still come, but Beijing wants it to be controlled, asymmetrical and possibly delayed. 5. Signaling to Global Audiences- Time to Recalibrate If the dollar's role as a reserve currency is no longer 'neutral', all will watch closely how China reacts before considering their own exposure. By remaining measured, China presents itself as the mature actor—especially to emerging economies and non-aligned states. The contrast between an aggressive Washington and a composed Beijing may help China win diplomatic ground among countries wary of the US's politicization of the global financial system. Perhaps most importantly, silence gives China space to act behind the scenes in pushing ahead with de-dollarization. The July 5 legislation likely reinforced that trajectory. The next move may not be announced in headlines, but rather in gradual, structural shifts. To be clear, a full-scale freeze of China's US-based assets or exclusion from SWIFT remains unlikely. Such actions would reverberate through the global financial system, damaging not only China's economic interests but also US credibility as the steward of the world's reserve currency. It would set a precedent that even the US allies would find unnerving. In this sense, the so-called 'doomsday scenario'—complete Chinese asset seizure or removal from SWIFT—remains unlikely. Yet the risk calculus in Beijing is no longer based solely on likelihood. Trump has already defied expectations before. In his second term, buoyed by a loyalist Congress, armed with a legislative mandate plus a politicized Treasury, and a post-Ukraine global precedent for asset seizures, the possibility of financial brinkmanship can no longer be dismissed. Beijing is not only watching what Washington does—but also how the US courts reinterpret the limits of executive power under perceived emergencies. In Mason v. United States of America (2023), the Supreme Court upheld broad authority for the executive branch to freeze or reallocate foreign-held assets tied to adversarial states, even absent direct hostilities. While the case involved Iranian assets, the court's ruling effectively lowered the threshold for asset seizure on grounds of national security. The ruling signaled a shift toward greater legal latitude for financial coercion under US law. For Chinese policymakers, Manson underscores a deeper concern: that the legal and institutional safeguards once moderating US financial actions are eroding. The risk of precedent-enabled overreach is no longer theoretical. From Russia's reserve freeze to Venezuela's blocked accounts, Beijing sees a pattern—the unthinkable is now merely implausible, not impossible, and is preparing accordingly. As a result of these concerns, Beijing is taking active steps to mitigate risk by protecting itself from potential US financial pressure. These include strengthening its financial system, increasing domestic consumption, expanding the use of its own currency in international trade, diversifying its foreign exchange reserves, including increasing its gold holdings and exploring alternatives to the dollar-centric global financial system. The Chinese government's non-reaction is not a sign of confusion or paralysis—it is a disciplined move with a calculated approach. By choosing not to retaliate publicly, Beijing maintains strategic flexibility. It keeps markets calm, retains diplomatic maneuverability and avoids giving Trump the satisfaction of a public spat. For Washington, the silence should not be mistaken for complacency; the long-term implications are profound. In Beijing's strategic playbook, stillness is often the opening move, not the endgame. It reacts to Trump's policies with a mix of defiance, strategic counterpunches and diplomatic maneuvering, ultimately weathering the storm without major economic collapse. While headlines focus on Trump's bombast and Beijing's stillness, the real shift may be structural: an acceleration in China's quest to insulate itself from Western financial leverage and a weakening of the dollar's uncontested supremacy. China is already adapting its financial posture to reduce reliance on the US-dominated system. Over time, this quiet recalibration may do more to undermine American financial power than any headline-grabbing confrontation. The risk is not that China reacts now, but that it quietly and slowly restructures its entire financial strategy, with long-term and negative consequences for the US-led financial order. The question now is not whether China will retaliate, but how subtly and how soon.
