Diplomacy

China’s rare metals swipe has more bark than bite

4 Jul 2023

Beijing is imposing export controls over gallium and germanium, used in chips, fibre optics and military equipment. This confirms Western fears that the country might leverage its strategic metals dominance to push back on sanctions. Yet market realities blunt China’s edge.  

Ukraine can rebuild without a Russian asset grab

30 Jun 2023

Using Moscow’s frozen assets to fund Kyiv’s $400 bln-plus recovery risks violating the rule of law. Suing Russian entities for the damages brought by the war is more promising. It allows Ukraine to build up claims that would be part of future peace talks.

Markets are far from pricing in peace

26 Jun 2023

Germany’s Rheinmetall and other defence shares fell after an aborted Russian mutiny. Domestic instability may shorten the Ukraine war, curtailing lucrative contracts. Yet chaos in Moscow, Western tensions with China and rising cyberthreats will keep the world amply unsafe.

Europe has more Russian lessons to learn

26 Jun 2023

Yevgeny Prigozhin’s failed mutiny rams home the EU’s need to protect itself from trouble abroad. Leaders meeting this week in Brussels are thinking in more geostrategic terms and may now agree a China policy. But until they act as a bloc they will lack clout, says Hugo Dixon.

China plus one is best glue for India-US romance

23 Jun 2023

Prime Minister Modi’s largely successful state visit points to how India can help US firms like Tesla and Micron rejig supply chains. In sensitive areas like defence, trust is growing but remains in short supply. It keeps any hope of prising India away from Russia out of reach.

Ukraine’s push for speedy rebuild faces obstacles

23 Jun 2023

Kyiv is keen to put aid money to work on an early start of the reconstruction effort. Foreign donors and investors remain wary of the war dangers. A scheme to insure those risks could speed up things, but going too fast could also compromise Ukraine’s long-term recovery effort.

Donors can digest Ukraine dam attack damage

21 Jun 2023

The destruction of the Kakhovka dam is a big blow to Kyiv and adds billions of dollars to its recovery bill. Yet international donors meeting this week in London can absorb the long-term shock. Especially if they take the assault as a sign of Russia’s rising military desperation.

EU phase-out of Huawei, ZTE is tricky but vital

20 Jun 2023

Commissioner Thierry Breton wants EU countries to end use of Chinese telecoms gear on national security grounds. Some states have already cut Huawei and ZTE from 5G networks. The EU survived decoupling from Russian energy, and it can manage this. But it requires German buy-in.

US and China are decoupling, and it is permanent

19 Jun 2023

Forget de-risking or containment. In this Exchange podcast, Gavekal research director Chris Beddor explains the political framing of the slogans, unpicks changing trade and financial flows between the world’s two biggest economies and explains why China hasn’t retaliated more.

Securonomics is fuzzy new lodestar for investors

2 Jun 2023

Globalisation, which lowered barriers for trade and financial flows, is in retreat. Taking its place is a doctrine that places national security above economic efficiency. Felix Martin argues the shift for money managers is profound – and throws up some big policy contradictions.

Capital Calls: Saudi Arabia and the BRICs

29 May 2023

Concise views on global finance: The oil economy is in talks to become the ninth member of the Shanghai-based “BRICS bank”, another sign of Middle East money stepping up to fill gaps in Asia created by Western-led sanctions.

How US allies can mitigate Trump 2.0

29 May 2023

A return to the White House for the pro-Putin, protectionist and climate-sceptic former President would pose many challenges for other rich democracies. Their best insurance is to ramp up support for Ukraine, promote trade and speed up action on global warming, says Hugo Dixon.

EU will go easy on Indian resale of Russian fuel

23 May 2023

Fuelled by imports from Moscow, oil products sales to Europe from refiners including Reliance and Nayara have nearly doubled to $15 bln. The trend shows anti-Russian sanctions are not watertight. Yet, risks of an energy inflation revival make a European Union ban a tough call.

G7 says “de-risking”, China hears “containment”

22 May 2023

Wealthy democracies argue they’re diversifying, not decoupling, from the world’s second-largest economy. Yet Beijing sees them hobbling strategic industries, undercutting its global leadership and boosting defence budgets. “Escalation” or “retaliation” are more accurate synonyms.

Russia sanctions become a high return investment

19 May 2023

As older penalties lose their bite, Western powers are preparing a new round of measures to tighten the screws on Vladimir Putin. That will hurt the Kremlin and be a marginal sacrifice for Europe, which no longer depends on Moscow for its energy – a good cost-benefit balance.

Ukraine rebuilding would be small wager for Europe

16 May 2023

The Ukrainian economy shrank by 30% last year but the war didn’t break it. Reconstruction will cost $410 bln over a decade, according to the World Bank. The European Union could fund the bulk of those efforts by spending just 0.1% of annual GDP. That would be a shrewd investment.

Rich world has three ways to win over global South

15 May 2023

Leaders from the Group of Seven, who gather this week, need to develop a stronger pitch to poorer non-aligned nations. A strategy based on peace, prosperity and protecting the planet could work. It’s more effective than delivering lectures on democracy, says Hugo Dixon.

Rebuilding Ukraine depends on luring private money

10 May 2023

International agencies and allied governments are taking care of the war-torn country’s immediate needs. An estimated $400 bln reconstruction bill, however, requires additional investors. Economic incentives and new laws would help attract them even before Russia’s invasion ends.

How US and allies can find common ground on China

17 Apr 2023

Emmanuel Macron is not the only US partner wary of being drawn into a Taiwan crisis. But America and its allies will be stronger if they can agree more about dealing with the People’s Republic. Part of the answer is to focus on de-risking rather than decoupling, says Hugo Dixon.

China reluctantly keeps sanctions powder dry

12 Apr 2023

President Xi Jinping is swatting some firms like Micron but is deferring harsher retaliation against US export restrictions. If he scapegoats American capital, he risks pushing other countries into Washington’s camp. China’s soft economy means Xi can’t afford to lose his temper.