BRICS summit to focus on local currency trade
Weeks before top BRICS leaders converge in Rio de Janeiro for summit talks, envoys of leading member nations of the grouping hinted that it could focus on greater use of national currencies for trade in the face of uncertainties over Trump administration's aggressive policy on tariff.
Russian Ambassador Denis Alipov reaffirmed Moscow's strong support for trade in local currency among BRICS member nations and described the grouping as 'a serious platform for discussing joint soluti'ons to big challenges'. The summit is unlikely to make any significant progress on the proposed BRICS currency as it will need significant structural changes and reforms.
In the last few months, President Donald Trump has cautioned BRICS member nations against rolling out a BRICS currency to replace the US dollar. 'BRICS is not a counter-bloc. It is a centre of gravity for countries seeking mutual respect and non-interference,' Alipov said at a conference titled 'BRICS in Rio: Shaping an Inclusive and Sustainable World Order' that was co-organised by the Embassy of Brazil in India and Centre for Global India Insights (CGII), a leading think tank focused on global affairs.
The 17th BRICS ((Brazil, Russia, India, China, and South Africa) summit will be held in Rio de Janeiro on July 6 and 7. Brazil is hosting the summit in its capacity as the chair of the influential bloc. Prime Minister Narendra Modi, Chinese President Xi Jinping, South African President Cyril Ramaphosa and several other leaders of the member nations of the grouping are expected to attend the summit. Enhancing the use of national currencies in settling intra-BRICS trade figured prominently in discussions, with all panellists backing the proposal, which is already being implemented by BRICS countries.
However, the panellists found the idea of a BRICS common currency impractical. Besides Alipov, India's BRICS sherpa and Secretary (Economic Relations) in the Ministry of External Affairs (MEA) Dammu Ravi, Brazil's Ambassador to India Kenneth Felix Haczynski da Nobrega, Indonesia Ambassador Ina Hagniningtyas Krisnamurthi and Egypt's envoy Kamel Zayed Kamel Galal attended the conference.
In his remarks, Ravi clarified that discussions around a BRICS common currency are still at a very early stage. 'Today, for now, we are only looking at trade settlement in national currencies. Harmonisation of fiscal and monetary policies is very, very difficult to achieve, he said.
Nobrega and Ravi both reiterated that a common currency would require far deeper policy harmonisation -- something the EU struggled with despite far more economic alignment.
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Indian Express
34 minutes ago
- Indian Express
UPSC Key: Roadmap on de-escalation, GLP-1 drugs, and Coastline paradox
Important topics and their relevance in UPSC CSE exam for June 28, 2025. If you missed the June 27, 2025, UPSC CSE exam key from the Indian Express, read it here. Syllabus: Preliminary Examination: Current events of national and international importance Mains Examination: General Studies-II: India and its neighbourhood- relations What's the ongoing story: Eight months after the disengagement of troops at the Line of Actual Control (LAC) in eastern Ladakh, Defence Minister Rajnath Singh has told his Chinese counterpart Admiral Dong Jun that there is need for a 'structured roadmap of permanent engagement and de-escalation'. He called for a 'permanent solution of border demarcation'. Key Points to Ponder: • What is LAC? • Know the names of the international boundaries between India and neighbouring countries • What is SCO? • What are the significance and challenges for India in the SCO? • What do you understand by de-escalation and disengagement? • What are the issues and challenges in the India-China relationship? • What is the defence engagement between India and China? • What do you understand by 'roadmap for de-escalation'? Key Takeaways: • In his talks Thursday with Dong on the sidelines of the meeting of Defence Ministers of the Shanghai Cooperation Organisation (SCO) in Qingdao, Singh underlined the need for 'bridging the trust deficit created after the 2020 border standoff, by taking action on ground'. • Even after the disengagement along the LAC in eastern Ladakh, de-escalation has not happened. An estimated 50,000-60,000 troops are still stationed on either side of the LAC in the region. • The mention of a 'structured roadmap' for permanent engagement and de-escalation is a new formulation – both sides have been working towards normalising their relationship after the bitter military standoff. • The previous meetings between the two sides had focused on trust, understanding and confidence-building through engagements and maintaining peace and tranquility along the borders. But there was no talk of a 'structured roadmap', key to the remaining steps for 'de-escalation'. • It said Singh 'acknowledged the work being undertaken by both sides to bring back semblance of normalcy in the bilateral relations' – the resumption of the Kailash Mansarovar Yatra is a pointer to that. • This was Singh's second engagement with Dong since October 2024 when both sides agreed to disengage in eastern Ladakh after a military standoff for more than four years. • Before this, Singh held three bilateral meetings with his Chinese counterparts since 2020 – in September 2020 in Moscow, in April 2023 in New Delhi (both on the sidelines of the SCO Defence Ministers' Meeting) and in November 2024 at Vientiane, Laos, on the sidelines of the 11th ASEAN Defence Ministers' Meeting-Plus. Do You Know: • The origins of SCO lie in the 'Shanghai Five' which was formed in 1996, consisting of China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan. With the dissolution of the USSR in 1991 into 15 independent countries, there were concerns in the region about extremist religious groups and ethnic tensions coming to the fore. To manage these issues, a grouping was created for cooperation on security matters. • Building on this, SCO was established on June 15, 2001, in Shanghai as an international organisation, and also included Uzbekistan as a sixth member. The Charter of the SCO was signed at the St. Petersburg Summit in June 2002 and became effective on September 19, 2003. Additionally, in 2006, the SCO announced plans to combat international drug trafficking as a means to finance global terrorism. • Today, it consists of 10 member countries- India, Iran, Kazakhstan, China, Kyrgyzstan, Pakistan, Russia, Tajikistan, Uzbekistan, and Belarus. India and Pakistan became full members in 2017. • The LAC is the demarcation that separates Indian-controlled territory from Chinese-controlled territory. India considers the LAC to be 3,488 km long, while the Chinese consider it to be only around 2,000 km. It is divided into three sectors: the eastern sector which spans Arunachal Pradesh and Sikkim, the middle sector in Uttarakhand and Himachal Pradesh, and the western sector in Ladakh. Other Important Articles Covering the same topic: 📍Line of Actual Control (LAC): Where it is located, and where India and China differ 📍Shanghai Cooperation Organisation (SCO) Previous year UPSC Prelims Question Covering similar theme: (1) 'Belt and Road Initiative' is sometimes mentioned in the news in the context of the affairs of : (UPSC CSE 2016) (a) African Union (b) Brazil (c) European Union (d) China Previous year UPSC Mains Question Covering similar theme: 'China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia', In the light of this statement, discuss its impact on India as her neighbor. (UPSC CSE 2017) Syllabus: Preliminary Examination: Current events of national and international importance Mains Examination: General Studies-III: Science and Technology- developments and their applications and effects in everyday life. What's the ongoing storyDanish pharmaceutical giant Novo Nordisk launched its blockbuster weight-loss injectable semaglutide earlier this week, months after its competitor Eli Lilly's tirzepatide hit Indian markets — and nearly four years after these GLP-1 therapies took the United States by storm.: Key Points to Ponder: • What do you know about weight loss drugs? What are the recent developments in this field? • What is the role of insulin in the body? • Know the reason and cause of diabetes in the human body? • What is obesity? How is it defined by the WHO? • What are the challenges of diabetes in India? Key Takeaways: • The bottom line is this: these drugs have been shown to be extremely effective for weight-loss, helping people lose 15% to 20% of their body weight, equivalent to what they would otherwise lose with bariatric surgeries. • Both semaglutide and tirzepatide belong to a new class of medicines called GLP-1 (glucagon-like peptide-1) receptor agonists. They are prescribed for the management of type-2 diabetes and obesity. • These drugs mimic certain naturally-occurring gut hormones called incretins (GLP-1 is one such incretin) produced in the small intestine, and are hence also known as incretin mimicker. • They work by: (a) improving the secretion of insulin that allows more of the glucose in the bloodstream to enter cells where it can be used for energy; (b) inhibiting the secretion of the hormone glucagon that stimulates the liver to release stored glucose into the bloodstream; (c) slowing down the emptying of the stomach so that the glucose levels in the bloodstream doesn't spike; and (d) reducing appetite by signalling to the brain that one is satiated. • Semaglutide and tirzepatide both mimic the action of GLP-1. Tirzepatide additionally also mimics the action of another hormone called glucose-dependent insulinotropic polypeptide (GIP). • While incretins were known as early as 1906, research into these gut hormones was overshadowed by the discovery of insulin in 1921. The substance produced by the pancreas has been used to manage diabetes for the past century. • Tirzepatide, which uses an additional target gastric inhibitory polypeptide (GIP), has been shown to lead to a weight-loss of up to 20% of the body weight. The medicine was also approved for the treatment of obesity-related obstructive sleep apnoea — a condition where a person's breathing stops and starts while they sleep. • Oral GLP-1 drugs such as orforglipron and danulipron may soon be available as well. Two other drugs, which use two targets GLP-1 RA and glucagon — Survodutide and Mazdutide are also in phase 3 clinical trials. Do You Know: • There are two kinds of diabetes. Both are related to the body's ability to synthesise and react to insulin, the hormone that breaks down sugar in the blood to produce energy. • Type 1 diabetes, which often starts in childhood, occurs when the pancreas do not produce insulin (or enough insulin). Type 2 diabetes sees the cells of the body develop resistance to insulin, meaning greater amounts are reequired that what is produced by the pancreas. • Both conditions are managed by the administration of synthetic insulin. But this poses a fundamental challenge as the blood glucose levels in the body are not constant. Blood glucose levels falling too much due to the overdosage insulin in the body can be life-threatening Other Important Articles Covering the same topic: 📍How 'smart insulin' promises to revolutionise diabetes treatment Prelims Question Covering similar theme: (2) Which of the following statements regarding insulin harmone is correct? (UPSC CAPF 2018) (a) Insulin is a protein hormone which is not produced in human body. (b) Insulin is a steriod hormone which is produced in human body. (c) Insulin is a cholesterol-driven hormone given to human (d) Insulin is a protein hormone which is produced in human body. Syllabus: Preliminary Examination: Indian and World Geography – Physical, Social, Economic geography of India and the World Mains Examination: General Studies-I: Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclones. etc., geographical features and their location-changes in critical geographical features (including water-bodies and ice-caps) and in flora and fauna and the effects of such changes. What's the ongoing story: India's coastline is now far longer than it used to be, almost 50% more than the previous length. This increase has happened not because of any acquisition of territory, but due to more accurate measurements that have recently been carried out. Key Points to Ponder: • What is the significance of the coastline for a country? • What is the strategic significance of India's location? • What is the length of India's coastline? • How has the use of higher resolution technology helped the geospatial sector? • What is the significance of the GIS software? • What is the coastline paradox? • Why is it difficult to measure the coastline? Key Takeaways: • Additionally, the number of islands in India has increased slightly. This rise in the number has taken place due to India's reassessment and recount of its offshore islands. • The increase in the length of the coastline and the number of islands is interesting and significant from administrative and strategic perspectives. However, there has been no change in the ground situation. • The length of India's coastline used to be 7,516 km, something that was ascertained in the 1970s. But this coastline has now been measured to be 11,098 km, an increase of 3,582 km, or nearly 48%. The main reason for such a big difference is in the scale of data used for measurement. • The earlier measurement was based on data that were of the scale of 1:4,500,000 (one to forty-five lakh), or smaller. However, with time, much better resolution data has become available, making the measurements more accurate. The recent exercise calculated the length of the coastline using data that had a scale of 1:250,000 (one to 2.5 lakh). • Coastlines are highly irregular structures. Increasing the resolution of data is like reducing the ruler being used for measurement. A one-km ruler, for example, will ignore many small irregularities in the land structure that a one-metre ruler will be able to map. • Higher resolution data can capture the coastline, its bends and curves, in more intricate details. In low-resolution data, these details get smoothened out, and appear as straight lines. The loss of bends and curves would shorten the length. • Also, the previous estimation was a result of more conventional and manual calculations. These have now been replaced with modern GIS software, which is able to capture the irregularities of the landmass much more accurately. • Another reason for the increase has been the inclusion of coastlines of many off-shore islands that had been left out of previous calculations. Some of these islands were either not visible in smaller-scale data or were omitted due to the practical constraints of manual methods of measurement. • While the new length of India's coastline is a much more accurate estimate, it is still not the actual length. In fact, the actual length of India's coastline, or any other coastline for that matter, can not be measured. This is the famous coastline paradox. • Highly irregular features like a coastline do not have a finite length. Their length depends on the scale or resolution at which they are being measured. They can always be observed, and measured, in more detail, which will lead to a longer length. • The coastline paradox extends to many other similar natural features such as river networks and mountain ranges. The path that a river takes, for example, is very irregular. The banks of a river are not a straight line. Calculating the length of a river along its banks would lead to the same kind of problem as in measuring the coastline. However, river lengths are mostly calculated along the main stream, and not along the banks. Other Important Articles Covering the same topic: 📍UN: Growing threat to oceans a global emergency Previous year UPSC Prelims Question Covering similar theme: (3) Which of the following statements about the coasts of India is/are correct? (CDS 2022) 1. The West Coast of India is a high rocky, retreating coast. 2. The West Coast of India is dominated by erosional landforms. 3. The East Coast of India, however, is a low sedimentary coast exhibiting depositional forms. Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 and 3 only (c) 1 only (d) 1, 2 and 3 Syllabus: Preliminary Examination: Current events of national and international importance Mains Examination: General Studies-II: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora. What's the ongoing story: Kanti Bajpai writes: The American strikes against Iran's nuclear facilities at Fordow, Natanz, and Isfahan have brought to the fore three major issues: The success of the strikes, the future of Iran's highly enriched uranium (HEU), and the nature of US-Israel-Iran dealings going forward. Key Points to Ponder: • Know the location of Fordow, Natanz, and Isfahan on the map • What is the current status of the conflict between Iran and Israel? • What is highly enriched uranium (HEU)? • What are the issues regarding Iran's Nuclear Programme? • What is the role of the IAEA? • What is the Joint Comprehensive Plan of Action (JCPOA) agreement? • Understand the nuclear technology Key Takeaways: • It is too early to know the extent of the damage inflicted on the Iranian facilities. Of greatest interest is Fordow. Twelve GBU-57 bombs were used against the main ventilation shafts in an attempt to destroy the centrifuges and control centre, which are 80 metres underground. • If Fordow has effectively been sealed and control over the centrifuges is lost, a direct hit on the centrifuge hall may not matter. The centrifuges will, over time, simply become inoperable. In this sense, the US President may be at least partly right: Fordow may have been obliterated functionally. • Once the HEU is located, what can the US and Israel do? They could choose to do nothing, on the calculation that Iran will have difficulty in enriching the HEU for the bomb. • The problem is that any direct strikes on the HEU would be tantamount to unleashing 'dirty bombs', in which radioactive materials are vented without a nuclear chain reaction. The global outcry would be significant were this to occur, and both the US and Israel may be wary of the blowback. Plus, Israel must worry that its own nuclear reactors could be targeted someday to produce a similar result. It may not, therefore, want to legitimate such an action. • For a new deal to be struck on Iran's nuclear activities, the United States will need to negotiate a successor to the JCPOA. In his comments on the strikes on Iran, US President Donald Trump drew a parallel to the Hiroshima and Nagasaki attacks during World War II, seeming to suggest that Iran is similarly prostrate. In fact, the parallel is far from accurate. Iran is not an occupied country. • The conditions are ripe, therefore, for a new nuclear deal. That said, the ceasefire must hold, and Iran must have an authority figure that can deliver a deal. Neither is certain. In addition, the US may have to sweeten the deal economically by lifting sanctions. Do You Know: • Nuclear technology is one of the few innovations that have changed the modern world profoundly and controversially. It involves harnessing nuclear reactions of atomic nuclei through the processes of nuclear fission and fusion. • Nuclear fission is a process in which a heavy atomic nucleus splits into two or more lighter nuclei. It is also associated with the process of radioactive decay as heavier nuclear elements decay into lighter ones. In contrast, nuclear fusion is considered a process of creation as it involves the formation of a new, heavier atomic nucleus from the merger of two lighter and smaller nuclei. • Both processes release a huge amount of energy. While the practical application of nuclear fusion is still under research, nuclear fission has been harnessed for destructive as well as constructive purposes since its discovery in 1938 by Otto Hahn and Fritz Strassmann. • The first practical application of nuclear fission was the creation of nuclear weapons using Uranium and Plutonium by the US under the Manhattan Project. These weapons were used in the atomic bombing of Hiroshima and Nagasaki in 1945, which led to the beginning of the 'nuclear or atomic age'. • The international regulation of nuclear technology started in 1957 with the establishment of the IAEA as an intergovernmental forum for the peaceful use of nuclear technology. In 1970, the Nuclear Non-Proliferation Treaty (NPT) entered into force with the main objectives of non-proliferation, disarmament, and the promotion of peaceful use of nuclear technology. Other Important Articles Covering the same topic: 📍Understanding nuclear technology in the wake of US attack on Iran 📍Knowledge Nugget | International Atomic Energy Agency (IAEA), the nuclear watchdog: A must-know for UPSC exam Previous year UPSC Prelims Question Covering similar theme: (4) In India, why are some nuclear reactors kept under 'IAEA safeguards' while others are not? (UPSC CSE 2020) (a) Some use uranium and others use thorium (b) Some use imported uranium and others use domestic supplies (c) Some are operated by foreign enterprises and others are operated by domestic enterprises (d) Some are State-owned and others are privately owned UPSC Mains Question Covering similar theme: What are the risks associated with nuclear energy, and how can they be mitigated through policy and regulation? What role does the International Atomic Energy Agency (IAEA) play in regulating the peaceful use of nuclear energy? Syllabus: Preliminary Examination: Economic and Social Development Main Examination: General Studies III: Major crops-cropping patterns in various parts of the country What's the ongoing story: The Union Cabinet approved a proposal on Wednesday (June 25) to set up a regional wing of the Peru-based International Potato Center (CIP), a premier research-for-development organisation with a focus on the potato and sweet potato. Key Points to Ponder: • What is the International Potato Center (CIP)? • What is the function of CIP? • What is the position of India in potato production? • What is the significance of this move? • Know about potato cultivation in India – type of soil, temperature • Is potato a tuber or a bulb? Key Takeaways: • The proposed CIP-South Asia Regional Center (CSARC) will come up at Singna in Agra district, and cater not only to farmers in India's potato belt states, like Uttar Pradesh, Bihar and West Bengal, but also to South Asian countries. • UP Chief Minister Yogi Adityanath wrote to Union Agriculture Minister Shivraj Singh Chouhan on January 20, urging him to direct ministry officials to facilitate the early establishment of the center. • 'Establishment of this center will boost domestic potato seed production, thereby reducing India's dependence on seed imports from neighbouring countries', the source added. • The proposed Agra center comes eight years after China set up a similar CIP wing. Known as the China Center for Asia Pacific (CCCAP), it was established in Yanqing, Beijing, in 2017. The center serves China, East Asia and the Pacific regions. • The proposed CSARC will be the second major international agricultural research institution to set up operations in India. In 2017, the Agriculture Ministry supported the establishment of a regional centre of the Philippines-based International Rice Research Institute (IRRI). The IRRI-SARC is established in Varanasi. Do You Know: • The potato is the third most available food crop in the world, after rice and wheat, while sweet potato is in the 6th position after maize and cassava. Though India is the second largest potato producer in the world, followed by China, its average yield is 25 tonnes per hectare — about half of its potential of over 50 tonnes per hectare. A major reason for these low numbers is a lack of availability of high-quality seeds. • India's sweet potato yield is just 11.5 tonnes per hectare, which is much less than the potential of 30 tonnes per hectare. With the establishment of the CSARC, India will have access to the largest global collection of germplasm (the cells or tissues from which a new organism can be generated) available with the CIP, a source said. • China is the top potato producer and consumer in the world, followed by India. In 2020, China's production was recorded at 78.24 million tonnes, while India produced 51.30 million tonnes. Both countries together accounted for over one-third of the global potato production (359.07 million tonnes). • In India, Uttar Pradesh (15 million tonnes), West Bengal (15 million tonnes) and Bihar (9 million tonnes) were the top three potato producers in 2020-21. Gujarat, Madhya Pradesh and Punjab also have significant production. • As of now, at least two different ICAR centres work on tuber crops. While the Shimla-based ICAR-CPRI (Central Potato Research Institute) is working on the potato, the Thiruvananthapuram-based ICAR-CTCRI (Central Tuber Crops Research Institute) is working on the sweet potato. Other Important Articles Covering the same topic: 📍Nod for South Asia unit of International Potato Center in Agra Syllabus: Preliminary Examination: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation, of resources, growth, development and employment What's the ongoing story: The country's current account balance recorded a surplus of $13.5 billion, or 1.3 per cent of gross domestic product (GDP) in January-March 2025 quarter as against $4.6 billion, or 0.5 per cent of GDP, in the same quarter of the previous fiscal. Key Points to Ponder: • What is GDP? How is it calculated? • What is the difference between the current account and the capital account? • What is the current account deficit? • If the CAD of the country increases, what does it tell about the economy? • What is the FDI? Why is it important for the economy? • What is the FPI? How is it different from FDI? • What do you understand by the external commercial borrowings (ECBs)? Key Takeaways: • For the fiscal 2024-2025, the country's current account deficit was $23.3 billion, or 0.6 per cent of GDP, compared to $26 billion, 0.7 per cent of GDP during 2023-24, primarily due to higher net invisibles receipts. • The current account deficit is the difference between exports and imports of goods and services. It is a key indicator of the country's external sector. • In the financial account, foreign direct investment (FDI) recorded a net inflow of $0.4 billion in January-March 2024-25 as compared to an inflow of $2.3 billion in the corresponding period of FY2024. Net inflow under FDI at $1 billion during 2024-25 was lower than $10.2 billion during 2023-24. • Foreign portfolio investment (FPI) recorded a net outflow of $5.9 billion in Q4 FY2025 as against a net inflow of $11.4 billion in the same quarter of FY2024. During FY2025, FPI recorded a net inflow of $3.6 billion, lower than $44.1 billion a year ago. • Net inflows under external commercial borrowings (ECBs) to India amounted to $7.4 billion in Q4 FY2025, as compared to $2.6 billion in the corresponding period a year ago. • Non-resident deposits (NRI deposits) recorded a net inflow of $2.8 billion in fourth quarter of FY2025, lower than $5.4 billion a year ago. • There was an accretion of $8.8 billion to the foreign exchange reserves (on a Balance of Payment basis) in Q4 FY2025 as compared to an accretion of $30.8 billion in Q4 FY2024. Do You Know: • Gross Domestic Product (GDP) is an important macroeconomic indicator that measures the economic growth of a country. It is also an easy parameter for comparing the growth of a country with that of other countries in the world. • GDP is the sum of the market value of all the final goods and services produced within the geographical boundaries of a country each year. If a country produces 'n' commodities each year with quantities represented by q₁ to qₙ and their corresponding market prices denoted as p₁ to pₙ, then GDP is calculated by multiplying the price per unit with the total quantity produced and summing it across all goods and services. This is indicated in a mathematical format below: GDP = (q₁×p₁)+(q₂×p₂)+(q₃×p₃)+…+(qₙ×pₙ) • GDP accounts for the value of only newly produced goods – goods produced during the year for which GDP is being calculated, normally taken as the financial year. For example, the price obtained from the resale of a house is excluded from GDP, as the house was not constructed in the year of estimation Other Important Articles Covering the same topic: 📍Why is GDP considered a key measure of economic growth? 📍Three approaches to measuring GDP and why they matter Previous year UPSC Prelims Question Covering similar theme: (5) With reference to the gross domestic product (GDP), consider the following statements: 1. It is the market value of all the final goods and services produced within a country in a specific time period. 2. Real GDP refers to the value of goods and services evaluated at current market prices without factoring in inflation. 3. Nominal GDP refers to the value of goods and services evaluated after adjusting inflation or deflation. How many of the statements given above are correct? (a) Only one (b) Only two (c) All three (d) None Subscribe to our UPSC newsletter. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X. 🚨 Click Here to read the UPSC Essentials magazine for June 2025. Share your views and suggestions in the comment box or at Khushboo Kumari is a Deputy Copy Editor with The Indian Express. She has done her graduation and post-graduation in History from the University of Delhi. At The Indian Express, she writes for the UPSC section. She holds experience in UPSC-related content development. You can contact her via email: ... Read More
Hindustan Times
an hour ago
- Hindustan Times
China securing loans to low-income nations with revenue streams in Chinese banks
New Delhi: China is securing loans to low-income and developing nations with commodity revenue streams and cash held in restricted escrow accounts in Chinese banks, with such practices implemented for almost half of the total loans worth $991 billion, according to a new study. China significantly ramped up loans to developing countries in Asia, Africa and Latin America after launching its Belt and Road Initiative (BRI) in 2013. (Representational image) The study, done by the Kiel Institute for the World Economy, AidData and Georgetown University and Oxford University and released on Thursday, found such practices prevalent in some of India's neighbours, such as Myanmar, where the country's gas revenues are being deposited directly into restricted Chinese bank accounts. In the case of Pakistan, the country is required to simultaneously hold cash collateral in four Chinese escrow accounts. Figures are available for holdings in only one account, and the overall cash holdings in the four accounts are likely to be significantly larger, according to the study titled 'How China Collateralizes'. The partially government-guaranteed loan from Bank of China and China Eximbank for the 1,320-MW Patuakhali thermal power plant project in Bangladesh was supported by 50% equity stakes that Bangladesh's Rural Power Company Ltd and China's NORINCO International Cooperation Limited hold in a special purpose vehicle responsible for the venture. China significantly ramped up loans to developing countries in Asia, Africa and Latin America after launching its Belt and Road Initiative (BRI) in 2013, but there have been significant concerns about the opacity surrounding agreements covering both loans and projects taken up under BRI. In December 2017, Sri Lanka handed over the strategic port of Hambantota to China on a 99-year lease after struggling to pay debts to Chinese firms. India never signed on to BRI because a significant component - the China-Pakistan Economic Corridor (CPEC) - passes through Pakistan-occupied Kashmir. The Indian side also has concerns about the lack of a level playing field under BRI. The study said China's total public and publicly guaranteed lending to low-income and developing countries between 2000 and 2021 was worth $911 billion, and nearly half - or $418 billion provided to 57 countries - is secured with cash deposits in Chinese bank accounts. The study concluded China's practices are impeding the ability of borrowing countries to effectively manage their finances. Borrowing countries are forced to route incomes from their main commodity exports to Chinese bank accounts, the study said. 'Our findings reveal a previously undocumented pattern of revenue ring-fencing, where a significant share of commodity export receipts never reaches the exporting countries,' it said. 'Revenues routed overseas secure priority repayment for the creditor; they remain out of public sight and largely beyond the borrower's reach until the secured debts are repaid,' it added. More than 60% of collateralised public and publicly guaranteed loans by Chinese creditors to low-income and developing countries rely on collateral unrelated to the stated purpose of the debt, the study said. This means bank accounts securing Chinese infrastructure project loans are not typically funded from project revenues. Instead, most cash flows come from sales of the borrowing country's leading commodity export, such as gas in Myanmar and Indonesia, oil in Angola, and copper in Congo. A state-owned enterprise of the borrowing country typically agrees to sell commodities under an offtake agreement with a Chinese state enterprise, and both enterprises 'agree to deposit the proceeds directly into bank accounts that secure unrelated infrastructure finance', the study said. 'Chinese creditors and their debtors have taken extraordinary measures to shield the use of escrow accounts - and the cash deposits that they hold - from public scrutiny,' the study said. The deposits in Chinese bank accounts, which are controlled by the lending entities, can average more than 20% of annual payments made by low-income countries to service external debt, the study found. 'Some of these revenues remain offshore beyond the control of the borrowing government for many years,' it said, adding the lack of access or transparency compromises the ability of borrowing countries to monitor and manage their fiscal affairs. Another important feature of Chinese lenders using cash collateral pools is that they simultaneously act as security for multiple debts. Cross-collateralisation accounts for 46% of China's collateralized public and publicly guaranteed lending volume to low-income and developing countries and this 'can exacerbate debt distress and complicate a debt restructuring if multiple creditors have competing rights to the same assets', the study said. The study also found that a common source of collateral supports multiple loans from the same Chinese creditor, and this practice 'poses a different challenge: it can cede government control over assets or revenue streams to a single creditor for long periods of time, until all the underlying debts for all the financed projects or programs are repaid'. Such a process can take decades, the study said.
Time of India
an hour ago
- Time of India
Global car market gazing through the lens of a top Chinese brand
While Chinese automobile brands are increasingly going global to seek new growth opportunities, the risks in the overseas market are also increasing by the day. This is due to pressure from trade protection policies in the United States and Europe, notes SAIC Motor Corporation in its latest annual report. At the same time, as international competition is transferred to the domestic market, Chinese automakers will participate 'more deeply' in competition in the global market. It is expected that in the next 3-5 years, the proportion of the country's domestic vehicles in global sales will increase from the current 30 per cent to around 45 per cent. SAIC Motor is no stranger to India where MG Motor is its business and retail brand with operations in Halol, Gujarat. The company had recently divested part of its stake to the JSW group and the road ahead will see greater focus on electrification. The competitive landscape of China's automotive industry is undergoing a disruptive Motor Corporation Annual Report SAIC set up shop here by buying out General Motors' (a longterm ally back home in China) facility in 2017 and then rapidly beginning production. Its debut SUV offering, Hector, caught the imagination of Indian customers and it has now thrown up another potentially huge success story with the more recently launched Windsor EV. Going global In 2024, China's domestic market share of self-owned (homegrown) brands stabilised above 60 per cent and their average selling price increased by more than 30 per cent compared to five years ago. Self-owned brand automakers like Geely, SAIC, BYD etc have also been accelerating their 'going global' efforts and the growing trend of 'domestication of international competition' is now becoming increasingly evident. SAIC says the new round of a technological revolution is driving profound changes in the global automotive industry. With the deep integration of electrification and intelligence, the product definition and user experience of automobiles are undergoing 'revolutionary changes'. Self-owned brands have also risen profoundly in the domestic market. Not only have their market shares surpassed those of joint venture brands, but with the cross-border entry of ICT (Information and Communications Technology) enterprises, the Internet strategy and traffic marketing have brought new challenges to the traditional marketing model of the automotive industry. 'The competitive landscape of China's automotive industry is undergoing a disruptive reconstruction,' SAIC has noted in its annual report. The industry characteristics of "internal competition and external pressure" persist and as the automotive industry enters the "elimination competition" stage, the domestic market has experienced intense "internal competition" with price wars becoming increasingly fierce. Demand for improvement According to SAIC's annual report, one of the main factors driving China's automotive consumption is the demand for improvement. Based on the experience of leading countries, as the number of cars per capita increases and "non-first-time buyers" become the dominant factor in new car purchases, consumers have a stronger desire for larger car sizes and better comfort. Considering the competitive characteristics of the Chinese market, continues SAIC, while products are trending towards larger sizes and higher-end features, the average price continues to decline. More cost effective large-sized vehicles could become the preferred choice for consumers when they make replacement purchases. Two, plug-in hybrid products (including extended-range models) will gain greater popularity. Thanks to zero range anxiety and their strong adaptability to the environment, the growth rate of plug-in hybrid products (including extended-range models) has been significantly higher than that of pure electric products in recent years. In SAIC's view, the average annual growth rate of plug-in hybrid products (including extended-range models) will exceed 30 per cent in the next three years, thereby becoming the main growth driver in the new energy vehicle market. Taking the launch of the new large-sized extended-range SUV as an opportunity, [IM Motors] will expand its scale… aiming to achieve a 50% increase in annual Motor Corporation Annual Report Proliferation of technologies Three, the demand for intelligence has increased and with the rapid iteration of technologies such as AI, consumers' attention and demand for intelligent cabin and driving technologies have also grown significantly. Meanwhile, tech equity (where everyone is able to access and benefit from technology) has promoted coverage of intelligent automotive technologies to mid and low-priced products. Finally, says SAIC, the diversification of consumer groups and scenarios has led to more segments of the market especially among female and silver-haired users, as well as the emergence of new scenarios such as self-drive travel. 'It is an important new opportunity for the Blue Ocean (new or untapped) market, as well as a new challenge for product definition and marketing transformation,' adds the company. SAIC believes that the automotive industry in China will still maintain a stable and positive development trend in 2025 with sales of domestic automobiles expected to be approximately 32.9 million vehicles (including exports). Of this tally, new energy vehicles will be approximately 16 million, a year-on-year growth of 24.4 per cent, and exports of automobiles estimated to be 6.2 million units. Lessons from consumer electronics From SAIC's viewpoint, by learning from the experience of leading consumer electronics companies in areas of research and development, operation, and marketing, it aims to enhance product competitiveness, user experience, and channel coverage. The goal is to achieve annual vehicle sales of over one million units with a year-on-year growth of more than 40 per cent. IM Motors (the joint venture of SAIC, Zhangjiang Hi-Tech and Alibaba group) will also 'continue to lead' with innovative technologies. 'Taking the launch of the new large-sized extended-range SUV as an opportunity, it will expand its scale and enhance its publicity efforts, aiming to achieve a 50 per cent increase in annual sales,' says SAIC. To improve innovation efficiency, the company will focus on moving the definition of products from "engineer's thinking" to "user's thinking", opening up product and marketing links and achieving interlocking. Based on the 5S user experience elements of styling, smart, safety, sustainability and satisfaction, a cost-competitive core value system for products will be prepared. SAIC has said that it will achieve mass production and implementation of independent core technologies. More innovative achievements will be launched aiming to create unique selling points for vehicle products and further enhance differentiated competitive advantages in intelligent connected new energy vehicles. Against the backdrop of intensified intra-industry competition in the domestic auto market and increased external pressure from international trade protection, the competitive landscape of China's auto industry was undergoing profound Motor Corporation Annual Report Leveraging the scale effect Beyond this, the organisational operation process will be continuously optimised through measures such as cutting management levels, streamlining the organisational structure, deepening the empowerment of AI digital tools etc. The scale effect will also be leveraged to optimise the procurement strategy and improve cost-competitiveness. Quoting data from the China Association of Automobile Manufacturers, where total sales were a little over 31 million units in 2024, SAIC's annual report states that the recovery pace of the domestic market was relatively lagging behind with sales 2.41 million vehicles lower than the peak in 2017. 'Against the backdrop of intensified intra-industry competition in the domestic auto market and increased external pressure from international trade protection, the competitive landscape of China's auto industry was undergoing profound changes,' it adds. In 2024, the number of vehicles traded in for new ones across the country exceeded 6.8 million, an increase of 2.4 million. The penetration of new energy vehicles accelerated to reach over 40 per cent, an increase of nearly 10 per cent over the previous year, with the growth rate of plug-in hybrid vehicles exceeding 80 per cent, becoming a new driving force behind the growth of new energy vehicles. The sales growth of new energy vehicles in smaller cities was significantly faster too.
