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Discover China’s Natural Beauty: Four Luxe Train Journeys You Can’t Miss

KULTUR

Tendenzblick

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July 23, 2024

Discover China’s Natural Beauty: Four Luxe Train Journeys You Can’t Miss

The luxury train has always epitomized the pinnacle of high-end travel. Imagine a lavish five-star hotel gracefully gliding through breathtaking landscapes, traveling by night and pausing by day. As dawn breaks, travelers disembark to explore enchanting sights, only to return at twilight to indulge in opulent comfort, drifting off to sleep as the train whisks them to their next dreamlike destination.

In China, since the inaugural journey of the New Orient Express traversing from North to South in 1999, the allure of domestic luxury train travel has blossomed. The Hulunbeier in 2022, the Lindu in 2023, and the Silk Road Dream Sharing in 2024 have taken center stage, becoming icons in the realm of opulent journeys. Each route offers a unique tapestry of China’s rich heritage and stunning landscapes, promising travelers an unforgettable sojourn in unparalleled luxury.

The New Orient Express

Launched by the Urumqi Railway Bureau in 1999, the New Orient Express initially served only international tourists but has recently opened its doors to the domestic market. As China’s earliest and most prestigious luxury slow travel train, it epitomizes opulence and sophistication in domestic travel.

As the country’s sole New Orient Express, it is dedicated to delivering international-standard tourism services, offering an unparalleled journey through Xinjiang. The train is meticulously designed to provide the ultimate travel experience, blending luxurious comfort with exceptional service to ensure a memorable and indulgent exploration of the region’s stunning landscapes and rich cultural heritage.

The New Orient Express departs from Urumqi, the vibrant capital of Xinjiang Uygur Autonomous Region, and travels to the breathtaking Sayram Lake in Bortala Mongol Autonomous Prefecture. Spanning approximately 1,200 kilometers, this opulent journey extends over 15 days, crossing the varied landscapes of both South and North Xinjiang.

Crafted by experts with 30 years of experience in inbound tourism, the itinerary is the culmination of ten months of meticulous planning, involving over 50,000 kilometers of on-site inspections and extensive consultations with international guides. This thoughtfully designed route offers travelers a captivating exploration of Northern Xinjiang, bringing the ancient Silk Road dreams to life with unparalleled style and comfort.

After the original carriages were retired and abandoned in 2019, the decision was made to revamp the New Orient Express in response to strong demand from international guests. The extensive renovation, which spanned nearly a year, involved a substantial investment exceeding $50 million RMB.

The upgraded New Orient Express now features enhanced airtightness, stability, and shock absorption, ensuring superior comfort and a restful sleep experience. Expansive glass viewing windows offer breathtaking panoramic views of the passing landscapes. Each accommodation carriage, designed with approximately 10 square meters of space, includes four double en-suite rooms. With a maximum of eight guests per carriage, each room is attended by a dedicated butler, elevating the journey to an unparalleled level of luxury.

Orient Silk Road Express Railway

On July 6, 2024, the world-class luxury tourist train Orient Silk Road embarked on its maiden journey from Xining City, Qinghai Province. This exquisite train, a creation of Shanghai Sun Vision Tourism, a subsidiary of Fosun Infrastructure, was developed in collaboration with China Railway Qinghai-Tibet Group. The Orient Silk Road promises travelers an unparalleled experience, combining opulent comfort with the enchanting beauty of the ancient Silk Road.

Throughout this journey, travelers are treated to a kaleidoscope of stunning landscapes, from the vast, undulating dunes of the desert and the stark beauty of the Gobi to the surreal expanses of salt lakes. They will explore the internationally renowned cultural treasures of Dunhuang, marvel at the historic Xining Tal, and capture unforgettable images at the ethereal, mirror-like salt lake.

The train boasts a total of 15 luxurious carriages. Among them are full-bathroom sleeping cars, a plush living room saloon car, elegant Chinese and Western dining cars, and a versatile multifunctional car designed for scenic viewing, tea tasting, KTV singing, and other recreational activities.

A dedicated team of five vacation ambassadors and professional train butlers provide 24-hour service to ensure every need of the travelers is met. Additionally, two travel photographers accompany the journey, capturing unforgettable moments and preserving the magic of the experience. This meticulous attention to detail ensures that every aspect of the journey on the train is as memorable and enchanting as the landscapes it traverses.

Industry experts view Orient Silk Road Express Railway as the first truly domestic tourism train built to international standards, heralding a new era in the development of the internationalized tourism train industry in China. This innovation is also poised to invigorate the creation of international eco-tourism destinations in Qinghai Province.

Lindu “Forest Capital” Railway

The Lindu Railway, with its capacity limited to just 66 passengers and a dedicated staff of 34, represents a prestigious collaboration between the Yichun Forest Industry and the Harbin Railway Bureau. This exclusive journey weaves through the serene red pine forests and the majestic Xiao Hinggan Mountains, offering a deeply immersive experience of the tranquil and lush northeastern landscapes.

The Lindu Railway’s design features a groundbreaking integration of the locomotive and carriage body, a pioneering achievement in China’s tourist train history. Its exterior presents a striking contrast of pristine white with earthy tones, creating a visually captivating and harmonious look. The train’s sleek, flowing lines are both simple and dynamic, evoking a sense of graceful motion.

The train’s exterior is adorned with intricate patterns of red pines, mountains, deer, and snowflakes, reflecting the unique charm of the Xiao Hinggan region. These designs vividly capture the natural and ecological beauty of Yichun, symbolizing its lush forests, rich wildlife, and hopeful future.

The internal design of the train sets a new standard in international luxury and functionality. Spanning 15 carriages, it includes 5 specially designed functional carriages: a jazz bar, Chinese and Western dining venues, a tea room, a bookstore, and areas dedicated to live goods, children’s entertainment, and health care. The passenger carriages are outfitted with high-end soft sleeper compartments, featuring 30 premium suites.

Enhancing the overall travel experience, the ground itinerary features a vibrant array of activities, such as enchanting music and beer gardens, grand summer parties, forest music festivals, concerts, and lively barbecue and food festivals. These events are carefully designed to highlight the natural beauty and ecological richness of the Xiao Hinggan region.

Ms. Xu from Zhejiang shared her thoughts on the journey: “Traveling on the ‘Lindu’ not only immerses you in the untouched beauty of nature but also offers the comfort of a luxury mobile hotel. It’s an ideal mix of convenience and opulence, making the entire experience both delightful and restful.”

Hulunbuir Railway

From both its hardware and service perspectives, the Hulunbeier train distinguishes itself as one of China’s most elite luxury train experiences. Its journeys are highly sought after, with tickets often in short supply due to their popularity.

The train features a limited capacity of just 44 seats spread across 22 compartments, each equipped with a private bathroom. Unlike conventional trains, the Hulunbeier Railway does not have bunk beds. Instead, each carriage boasts a spacious design with only three or four compartments, ensuring an unparalleled level of comfort and privacy for every passenger.

The train showcases custom-designed porcelain that artfully blends the vibrant emerald green of the grasslands with an air of luxury. Featuring an elegant green base color accented by gold piping, each piece is meticulously crafted to transform porcelain into exquisite works of art. Guests are encouraged to appreciate these beautifully designed pieces, which significantly enhance the overall travel experience.

The summer itinerary of the Hulunbeier train presents a range of exclusive experiences. On this extraordinary journey, travelers are treated to a sequence of breathtaking experiences. At the Hailar Private Ranch, guests can witness the awe-inspiring spectacle of thousands of horses galloping across the plains, feel the rush of the wind, and admire the horseback riders when they skillfully perform with the horse head fiddle. This immersive glimpse into traditional nomadic life offers a refreshing escape from the city’s hustle, allowing travelers to savor the freedom and serenity of the expansive grasslands.

Next, travelers will marvel at the Morigler River, renowned as the world’s first curved water, where they can appreciate nature’s artistry as the river meanders gracefully through the landscape. The journey then leads to Genhe, one of China’s highest latitude and coldest cities, where guests are invited to interact with a local tribe and feed reindeer moss.

In Mohe, the northernmost point of mainland China, guests will experience the remote and stark beauty of the far north. The adventure continues with a visit to Erguna National Wetland Park, Asia’s largest wetland, where travelers can immerse themselves in the majestic landscapes and raw power of nature. This meticulously curated journey promises an exceptional blend of comfort and excitement, offering a truly unique travel experience.

Source: YC Gov, Souhu, Silkroadtravel, Atrails, Global Times, Fosun, Travellinkdaily

Middle East Welcomes China’s Photovoltaic Overcapacity

WIRTSCHAFT

Freena Blanchard

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July 22, 2024

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Middle East Welcomes China’s Photovoltaic Overcapacity

In the past two years, China’s photovoltaic industry capacity has tripled, but the profit margin has fallen by 70%.

Due to super large-scale manufacturing and fierce market competition, China’s photovoltaic manufacturing costs are far lower than those in Europe, America, India, and other major countries. There are continuous technological advancements, including N-type TOPCon, BC batteries, Calcium Titanium Ore, and hundreds of other technologies. The conversion efficiency and effectiveness of China’s photovoltaic equipment, adhesive films, and auxiliary materials are world-leading, and the industry chain is complete.

As of 2023, China’s annual production includes 1.43 million tons of silicon, 622 GW of silicon wafers, 545 GW of batteries, and 499 GW of components, all of which rank first globally. Component production capacity exceeds 80% of the world’s total. The enormous production capacity can only be absorbed by exporting to the global market.

Production capacity at home and the market overseas has been a significant challenge for China’s photovoltaic industry. Before 2011, 57% of China’s photovoltaic products were sold to Europe, 15% to the United States, and only 6% to the domestic market, with even the whole of Asia being relatively inactive.

Source: SoloarPower Europe

However, in 2011, the European and American anti-dumping and anti-subsidy investigations brought a catastrophic blow to Chinese photovoltaic enterprises, causing major companies like Suntech Power to go bankrupt.

Policy changes in Europe and the United States have been a nightmare for the Chinese PV industry. To avoid these reviews, since 2014, leading enterprises have built factories in Southeast Asia to sell to Europe and the United States, marking the first stage of photovoltaic expansion overseas.

The United States, in an effort to limit the development of China’s photovoltaic industry, has raised tariffs and restricted imports while heavily subsidizing local enterprises. On May 14, the White House announced that, on top of the original Section 301 Tariff Action on China, tariffs on Chinese imports worth $18 billion would increase from 25% to 50% for solar cells. Furthermore, to prevent China from exporting photovoltaics through Southeast Asia, the United States initiated anti-circumvention investigations in four Southeast Asian countries, and tariff exemptions for these countries expired on June 6 this year.

At present, Jinko Solar, LONGi Green Energy, Trina Solar, and other giants have deployed at least 26 GW of silicon wafer production capacity, 60 GW of battery production capacity, and nearly 50 GW of component production capacity in Southeast Asia, accounting for more than half of the total local production capacity. These are mainly exported to the United States. However, with the United States imposing tariffs on Southeast Asian imports, the local photovoltaic industry is facing significant challenges.

Source: Caixin Global

On the other hand, the United States, through the enactment of the Inflation Reduction Act, allocated $7 billion to the Solar for All program for tax credits, subsidies, and other economic incentives. However, to qualify for the 17 cents/W subsidy, products must be manufactured in the U.S., clearly aiming to limit the competitiveness of Chinese PV enterprises in the American market. The most iconic event in this context is that U.S. company First Solar, despite having outdated technology and ranking only tenth in global module shipments, has become the world’s largest PV stock by market capitalization.

Since 2023, waves of Chinese delegations have visited the Middle East seeking investment opportunities. The Middle East’s climate is dominated by tropical deserts, with almost all areas receiving very high levels of solar radiation energy. The region is a natural fertile ground for the development of solar energy.

Source: Global Solar Atlas

From 2012 to 2021, the growth rate of total installed renewable energy capacity in the Middle East was only 76%, much lower than the world average of 112%. By the end of 2021, the global installed renewable energy capacity was 3,587 GW, while the Middle East’s capacity was only 24 GW, less than 1% of the global total.

With the advancement of dual-carbon goals, the global transition to clean energy has accelerated. The UAE has released Energy Strategy 2050, which aims to increase the share of clean energy to 50% by 2050 and achieve net zero greenhouse gas emissions by the same year.

The Saudi Vision 2030 states that by 2030, exports of non-oil energy will increase from 16% to 50% of GDP, aiming to increase non-oil revenues sixfold. Additionally, by 2030, Jordan plans to increase the proportion of renewable energy generation to 31%, and Oman plans to reach 20% renewable energy consumption, increasing to 35%-39% by 2040.

Among these efforts, photovoltaic energy is the most important new energy direction. Saudi Arabia plans to increase its installed PV capacity to 40 GW by 2030. If this target is realized, Saudi Arabia will be among the top 5 PV markets in the world. The country’s installed capacity in 2023 is only 7 GW, meaning it needs to increase nearly fivefold in the next seven years.

With huge production capacity, leading technology, and efficiency, China’s PV industry is well-positioned to thrive in the Middle East. This represents a mutually beneficial collaboration between large-scale supply and large-scale demand.

In the past two years, China’s photovoltaic products have accelerated their entry into the Middle East. From 2022 to 2023, China’s exports of photovoltaic modules to the Middle East and North Africa consecutively exceeded 10 GW, with Saudi Arabia and the United Arab Emirates showing rapid growth. TCL Central and Trina Solar decided to build factories in Saudi Arabia last year. In May 2023, TCL Central and Saudi Vision Industries reached a strategic cooperation to establish a joint venture for PV manufacturing.

Additionally, China Energy Engineering Group has secured the contract to build a 2.6 GW PV power plant in Al Shuaibah, Saudi Arabia, the largest single PV power plant project under construction worldwide. Covering an area of 53 square kilometers, the project will feature over 810,000 piles and more than 5 million PV panels, visible even from satellite imagery.

In 2024, China’s momentum in the Middle East remains strong. In April this year, China exported 2.3 GW of modules to the Middle East, a 142% year-on-year increase. From January to April, cumulative exports totaled about 10.3 GW, a year-on-year surge of 188%, with Saudi Arabia purchasing 1.4 GW in April, accounting for 59% of the Asia-Pacific market.

Source: powerengineeringint, Xinhua

The US Political Landscape and Ideological Shifts Behind Trump’s Assassination Attempt

POLITIK

Claudie Dubois

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July 18, 2024

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The US Political Landscape and Ideological Shifts Behind Trump’s Assassination Attempt

On the afternoon of the 13th July, former U.S. President and Republican presidential candidate Donald Trump was injured by a gunshot during a campaign rally in Pennsylvania. A shard of glass from a teleprompter caused him to bleed from his right ear. U.S. media characterized the incident as an “assassination attempt,” which has resulted in one death and two serious injuries in the audience; the suspect was killed.

This event is likely to boost Trump’s already strong poll numbers. Incumbent President Joe Biden condemned the shooting and announced the suspension of campaign rallies, indicating a shift towards more online canvassing and televised debates as the November election approaches.

This assassination attempt highlights a serious political divide within the U.S. and is expected to intensify the political climate, potentially exacerbating global tensions on the eve of the election. The U.S. election, held every four years, significantly impacts both domestic and international affairs.

Some believe Trump’s populism marks the end of the neoliberal era, a shift difficult to reverse despite Biden’s policies. Since Trump’s first term, the U.S. has moved away from free markets and trade towards industrial policy and protectionism.

However, it is Biden’s policies that more clearly signify the end of the neoliberal era. Since taking office, Biden has passed significant legislation, such as the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act, achieving more legislative success than previous presidents.

His administration’s efforts to rebuild America represent a comprehensive ideological shift, critiquing neoliberalism and moving towards a post-neoliberalism. Historically, neoliberalism’s dominance depended largely on the choices of international leaders, supporting the liberalization of the global economic system. With the U.S. government moving away from neoliberalism, its influence as the dominant global ideology has waned.

However, this shift does not mean the immediate disappearance of neoliberal influence. The U.S. remains deeply divided, and the assassination attempt adds to the uncertainty. Neither major political party has developed a coherent theoretical paradigm to replace neoliberalism. In this turbulent international economic climate, the debate over neoliberalism should be viewed in a complex historical context rather than a simplistic “state vs. market” paradigm.

Why do Biden’s policies signify the end of the neoliberal era? Trump’s administration initiated a trade war in 2018 by increasing tariffs, particularly against China, while still accusing other countries of violating neoliberal competition rules. Though Trump’s approach deviated from the neoliberal paradigm, it lacked theoretical support and was driven by populist politics. Recently, European countries have promoted industrial policies to address climate change, yet the U.S. remains the global leader in this ideological shift.

The Biden administration’s policy direction differs significantly from Trump’s. Upon taking office in 2021, Biden enacted the Infrastructure Investment and Jobs Act, followed by the Inflation Reduction Act and the CHIPS and Science Act, amounting to more than two trillion dollars. This remarkable legislative achievement surpasses those of his predecessors.

Biden’s vision of Rebuilding for a Better Future draws inspiration from Roosevelt’s New Deal, aiming to invest massively in society, infrastructure, the economy, and the environment. This policy emerged in response to the COVID-19 pandemic, which highlighted the U.S.’s dependence on China and global supply chains, the challenges posed by China’s rise, the need to upgrade U.S. infrastructure, address climate change, and societal disenchantment with neoliberal policies.

In line with this ambitious program, the Biden administration presented a corresponding thesis, exemplified by National Security Advisor Jake Sullivan’s speech at the Brookings Institution in April 2023. Sullivan argued that the U.S. economy had been weakened since World War II and that the post-war international order needs to be rebuilt. He highlighted challenges such as the hollowing out of the U.S. industrial base, increasing economic dependence on China, the urgent need for a clean energy system, and the unequal distribution of economic growth benefits, exacerbated by China’s impact on U.S. jobs, which threatens democracy.

The Biden administration’s countermeasures focus on an “industrial strategy” to promote industrial development by selecting target industries based on national security considerations and using public resources to boost investment and innovation in these sectors. Key industries include semiconductors and clean energy, aiming to build a resilient and secure industrial supply chain. The strategy involves subsidizing companies to produce in the U.S. and limiting the use of Chinese raw materials. To address concerns about protectionism, Sullivan emphasized coordination with allies and promoting several unilateral agreements. Additionally, the U.S. will continue to prevent China from acquiring advanced technologies through stringent controls.

Over the past four decades, the U.S. has periodically violated the neoliberal paradigm by imposing unilateral trade restrictions or sanctions on adversaries. For example, in the 1970s, the U.S. implemented Section 301 of the Trade Act to limit export growth in East Asia and other regions. In the 1980s, it curbed the development of Japan’s semiconductor industry.

However, these actions were exceptions and did not change neoliberalism’s dominance as the global ideology. In contrast, the Biden administration’s program represents a clear and comprehensive ideological shift, driven by a critique of neoliberalism. It argues that liberalization policies have failed to meet U.S. challenges.

The debate between neoliberalism and structuralism centers on the role of the state. Neoliberals argue that the state should avoid market intervention, as market outcomes are most efficient, while state intervention may lead to rent-seeking behavior. They view industrial policy as the worst form of state intervention. Structuralists, on the other hand, advocate for state intervention to promote industrialization, especially in late-developing countries where markets are imperfect, and private investment is risky.

Biden’s industrial policy differs from that of latecomers, who implemented industrial policy to catch up with advanced nations. Although the U.S. has declined in some aspects, it remains a global superpower with a strong position in many industries’ value chains. U.S. multinational corporations have moved manufacturing abroad but continue to profit from intellectual property and financial rents. For instance, U.S. firms still account for about 40% of the global semiconductor value chain. The U.S. targets semiconductor and green energy industries mainly for national security reasons, aiming to maintain its global leadership position, which differs from the motivations of late-developing countries.

Post-World War II U.S. industrial policy prioritized national security during the Cold War, focusing on technological leadership to maintain military supremacy, rather than commercial development. After the Soviet Union’s 1957 launch of Sputnik, the U.S. established agencies like DARPA and NASA to compete in the space and arms race. However, due to a tradition of opposing big government, U.S. society finds it challenging to support long-term economic industrial policy, despite backing national security programs.

Moreover, despite the strength of the Biden administration’s major legislative efforts, they have not garnered substantial social acceptance. In contrast, industrial policy implementation in East Asia generally receives high social support, likely because it aligns more closely with societal needs. In the U.S., populist politics plays a dominant role, and the Democratic Party is perceived as representing the highly educated elite.

Since taking office in 2021, the Biden administration has actively promoted industrial policy while criticizing past neoliberal policies. As the leader of the international economic order, the U.S. ‘s shift signals the end of neoliberalism’s decades-long status as the dominant global ideology.

While neoliberalism will continue to be influential, it is now viewed differently, given the social conflict, upheaval in the international economic system, and attempts by global leaders to change the dominant ideology. In this period of international economic disruption, it is crucial to examine the controversies surrounding neoliberalism beyond the simplistic “state vs. market” debate and consider them within a more complex historical context.

Source: BBC, CNN, The New York Times

Possibility of Never Contracting Covid-19: Investigating Cases of Claimed Immunity

Uncategorized

Tendenzblick

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July 15, 2024

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Possibility of Never Contracting Covid-19: Investigating Cases of Claimed Immunity

Covid-19 still claims around 1,700 lives a week globally, the WHO reported on July 11, urging at-risk populations to stay vaccinated. Meanwhile, a recent study on Covid-19 involved infecting 36 healthy adult volunteers who had never been vaccinated or previously infected. The study found that some individuals’ genetic makeup naturally protected them from SARS-CoV-2 infection.

According to French media, Le Parisien, Camille, a 37-year-old Parisian, has never been contracted Covid. Over four and a half years, she was tested eight times after close contact with infected individuals, with all results negative. She experienced one suspicious symptom, but it was caused by influenza, not SARS-CoV-2. “I was protected by nature,” she says, attributing her immunity to her genes. Researchers have long hypothesized that some people are naturally protected, and a new study in Nature supports this theory as a new wave of the pandemic peaks.

How many people have never been infected with Covid-19? According to last year’s U.K. data, about 5 to 10 percent of the population. Public Health England measured this by testing for the absence of post-infection antibodies in the blood. These individuals are likely to remain uninfected for years to come.

In this new study, researchers infected 36 healthy adult volunteers who had neither been vaccinated nor previously infected. The small sample size is due to the ethical issues of deliberately infecting humans with pathogens. “The ethical problems posed by this type of research make its implementation in France very difficult, if not impossible,” noted Mircea T. Sofonea, a lecturer in epidemiology and infectious diseases at the Université de Montpellier.

Of the 36 subjects, researchers closely monitored 16. Six tested positive and developed symptoms lasting more than 48 hours; three tested positive but were asymptomatic; and seven tested negative, despite being inoculated with the original SARS-CoV-2 strain. The virus failed to take hold in their bodies, preventing true infection.

Scientists screened over 600,000 blood and nasal cells from each group, discovering that a localized immune response in the nasal mucosa seemed to protect some participants. The study also found that high activity of a gene called HLA-DQA2 before exposure to SARS-CoV-2 helped limit the risk of long-term infection.

“Everyone has this gene, but its expression varies from person to person and may even vary by life stage,” explains Sofonea. This means some people are less susceptible to the virus, and the likelihood of infection can change over time. Hormone cycles might also impact the immune system.

Source: Le Parisien, Nature, Avvenire

Why International Law Doesn’t Obligate China to Rescue U.S. Astronauts

THINKVIEWS

Claudie Dubois

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July 14, 2024

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Why International Law Doesn’t Obligate China to Rescue U.S. Astronauts

On June 5, U.S. astronauts Sunita “Suni” Williams and Barry “Butch” Wilmore entered space aboard Boeing’s CST-100 Starliner. Originally scheduled to return to Earth on the 14th, the Starliner has been stranded in space for over a month due to a series of technical failures, and Boeing has been unable to provide a clear timetable for its return.

The development and service process of the Starliner has been troubled from the start. Initially set to fly in 2017, it finally launched on December 20, 2019, using the Kosmos-5 launch vehicle, but failed to enter the intended orbit.

An investigation revealed that an incorrectly set onboard clock caused the spacecraft to miss its ignition time. In 2022, the Starliner conducted two unmanned missions to test its docking capability with the international space station (ISS). The first mission was canceled due to thruster failure, and the second experienced a thruster ignition failure during flight, requiring the activation of a backup system to reach the ISS.

The Starliner was then scheduled to carry astronauts to the ISS in early 2023. However, the manned mission was delayed to late 2023, and then to May and June 2024. When it finally launched with two NASA astronauts, it encountered a helium leak and propulsion failure while docking with the ISS. The astronauts had to complete the docking manually. Persistent malfunctions led NASA and Boeing to postpone the return flight several times to investigate and resolve the issues.

Despite frequent accidents during unmanned flights, Boeing attempted manned flight missions without adequately improving the design and optimizing the flight system. Even before the current manned launch, the Starliner suffered a helium leak, which Boeing downplayed as “not a big problem” and forced the launch.

In contrast, China launched its first manned spacecraft, Shenzhou V, only after four successful unmanned test flights. Similarly, SpaceX’s Dragon2 conducted its first official manned mission in November 2020, following three unmanned test flights and one manned test flight, all of which met the predetermined targets.

Boeing is responsible for solving the issues according to its contract with NASA, which provided $4.2 billion for the development of the Starliner to carry NASA astronauts to and from the ISS. The contract stipulates that the Starliner must complete at least one manned flight test and between two to six official manned missions.

Allowing a third party to complete the mission would expose Boeing’s shortcomings and damage its credibility. NASA would likely refrain from awarding similar contracts to Boeing in the future and might even discuss liquidated damages or contract termination. The Starliner can remain docked to the ISS for up to 210 days, according to design specifications.

If a last resort is necessary, Boeing’s least likely option would be to use SpaceX’s Dragon2, as this would admit the superiority of SpaceX’s product and cede market share. This leaves Boeing with two theoretical options: China’s Shenzhou and Russia’s Soyuz.

Technically, the Soyuz docking system is compatible with the Russian segment of the ISS, and Soyuz has a long history of successful missions. The two American astronauts could transfer to the Russian segment and return to Earth on a Soyuz spacecraft with a Russian astronaut. In contrast, Shenzhou’s docking system is not compatible with the ISS, and the flight altitudes and orbital inclinations differ significantly.

Institutionally, the Soyuz remains a better option despite strained U.S.-Russia relations due to the ongoing war in Ukraine. U.S.-Russian cooperation around the ISS continues, though it is reduced compared to when U.S. astronauts leased Russian spacecraft.

The U.S. has banned official space cooperation with China under the Wolfe Amendment, and other regulations complicate space cooperation with China. Boeing requesting China’s help would violate the Wolfe Amendment, and NASA would not approve it. However, there have been instances where the Wolfe Amendment was flexibly interpreted, such as NASA’s inquiry about obtaining moon soil from China’s Chang’e 6.

Ultimately, the key issue is not China’s feasibility to rescue but whether China has a legal obligation to do so. If Boeing asks for help, does China have the right to ignore it?

With the development of human space exploration, safeguarding the lives of astronauts has become a crucial issue. International organizations, primarily under the United Nations, have formulated and adopted a series of norms to regulate space activities and prevent risks, forming the system of international space law. Key documents include the Outer Space Treaty and the Rescue Agreement, which both impose legal obligations. China signed these documents in 1983 and 1988, respectively.

As the first written law in the international space law system, the Outer Space Treaty establishes guiding principles for space activities, including the rescue of astronauts. Article V states:

“States Parties to the Treaty shall regard astronauts as envoys of mankind in outer space and shall render to them all possible assistance in the event of accident, distress, or emergency landing on the territory of another State Party or on the high seas. When astronauts make such a landing, they shall be safely and promptly returned to the State of registry of their space vehicle.”

The Rescue Agreement provides more detailed regulations by Article I: “Notify the launching authority or, if it cannot identify and immediately communicate with the launching authority, immediately make a public announcement by all appropriate means of communication at its disposal; Notify the Secretary-General of the United Nations, who should disseminate the information without delay by all appropriate means of communication at his disposal.”

Article II states:

“If, owing to accident, distress, emergency or unintended landing, the personnel of a spacecraft land in territory under the jurisdiction of a contracting party, it shall immediately take all possible steps to rescue them and render them all necessary assistance. It shall inform the launching authority and also the Secretary-General of the United Nations of the steps it is taking and of their progress.”

Article III extends this to situations where astronauts land on the high seas or any place not under any state’s jurisdiction, requiring States Parties in a position to assist to support search and rescue operations and notify the launching authority and the UN Secretary-General of the progress.

International law requires States Parties to make every effort to search and rescue astronauts who have landed on the surface, especially within their own territories, and to keep the international community informed. However, it does not require States Parties, even those with human spaceflight capabilities, to use personnel and equipment to carry out space rescues. The law lacks a clear definition of “accident” and “distress,” leaving discretionary power to States Parties to assess the situation according to their own judgment.

Under current international law, China is not obligated to launch a spacecraft to rescue the two U.S. astronauts unless they crash-land in or near China or in the open sea. NASA’s commercial manned program manager emphasized that the two astronauts are “very safe” and “not trapped,” so China has even more reason to believe there is no “accident” or “distress.” Therefore, even if Boeing seeks help from China, they may be refused.

In short, regarding the Boeing spacecraft astronauts, China has no responsibility, mission feasibility, or legal obligation to participate. What is notable is the significant gap in product development and operation levels between Boeing and SpaceX, despite their similar development models. The factors and lessons behind this disparity are worth in-depth consideration.

Source: Space, SpaceNews, ZLSA Design, New Space Economy

How Green Revolution Failed in Asian Countries

THINKVIEWS

Tendenzblick

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July 10, 2024

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How Green Revolution Failed in Asian Countries

Ecological civilization is characterized by the need to repair the contradictory relationship between human and nature, and human and the environment. The phenomenon of the concentration of fertility from one place to the city, turning it into garbage, is the material basis of the contemporary urban-rural conflict.

Over the past two hundred years, in response to this problem, everyone from Liebig to Borlaug has advocated the cultivation of artificial fertilizers to supplement soil fertility. In the 19th century, before the advent of the organic chemical industry, the so-called fertilizers were bird droppings.

In order to dig up guano, many Chinese laborers were shipped to the region as workers, and the basis of the agricultural revolution in Europe and America at that time was these cheap Chinese laborers. After entering the 20th century, compound fertilizer was widely used in agricultural production through different ratios of various elements such as nitrogen, phosphorus, and potassium. However, this did not solve the problem at its root, but made agriculture more and more dependent on fossil fuels and compound fertilizers.

The various ways of fertilizing the soil are often a central part of the so-called “Green Revolution,” but this is not the greening of “green ecology.” Instead, it is mainly to distinguish it from the “Red Revolution.” Before liberation, the Rockefeller Foundation had conducted scientific experiments in Mexico and social experiments in China. The imperialists tried to explore new ways of governing the underdeveloped societies of the East but ultimately failed. The Chinese revolution drove the Rockefellers and their experiments out of China, and the Ford Foundation and other such organizations looked to India to take over the techno-social experiments of the past and create a new philosophy, the so-called “Green Revolution.” The Green Revolution was epitomized by Borlaug, who was awarded the Nobel Peace Prize, but not for science, which is self-explanatory.

Paul Hoffman, president of the Ford Foundation in the early days of the Cold War, was also a Marshall Plan executive. He once mentioned that If the U.S. had done the Green Revolution in China in 1945, it would have cost no more than $200 million a year. India was China in 1945 for him.

China’s ecological civilization construction in the past two to three decades has made brilliant and remarkable achievements. However, looking towards the future, this work has a long way to go, and how to do a better job of ecological civilization construction is a problem that China must solve at present and in the future.

The “Green Revolution” was not a simple technology but a political project with clear Cold War political connotations.

In terms of per capita cereal production in India, wheat yields rose rapidly after 1965, while yields of other important crops, such as rice and sorghum, increased slowly. The rate of growth of per capita cereal production in India did not show much change after this period. The so-called Green Revolution involved seeds, fertilizers, water projects, and other technological tools that did not truly improve and enhance the ability of Indians to feed themselves.

Worldwide, per capita cereal production was on an upward trend from the 1960s to the early 1980s, but it has stagnated since then. In the 2010s, per capita cereal production had not even surpassed the levels of the early 1980s. Thus, the potential of the Green Revolution has been exhausted, even in terms of overall world productivity.

North Korea invested heavily in the Green Revolution. As early as the Kim Il Sung period, North Korea proposed the electrification of agriculture, and its agricultural development achieved very good results, surpassing South Korea’s. However, this success was entirely dependent on the use of fertilizers and inputs.

From 1961 to 1991, fertilizer and cereal output in North Korea showed an upward trend. In the early 1990s, geopolitical changes led to a 90% reduction in North Korea’s fertilizer inputs, which caused a significant decline in grain output and triggered a period of food hardship known as the “March of Misery.” At that time, North Korea’s heavy industry was one of the best in Northeast Asia, but it paid a high price for its complete dependence on industrialized agriculture and has not yet emerged from this predicament completely.

How do South Korea and Japan perform compared to North Korea? Looking at the grain yields of several East Asian countries in 2020, the DPRK, with a fertilizer intensity of about 14 kg per hectare, produced 3,496 kg of grain, which is quite a good performance. Japan and South Korea’s fertilizer intensity exceeds North Korea’s by more than ten times, but their grain yields are only twice that of North Korea. In fact, Japan and South Korea rely heavily on chemical inputs combined with large grain imports to maintain their current situation. In contrast, North Korea’s ability to achieve its present level under difficult conditions is remarkable, reflecting its efforts to move away from chemical and industrialized agriculture within the constraints of industrial civilization.

The highly developed market economies in Europe and the United States rely on a high density of long-distance trade, embedded in local labor and the fertility of the land. African coffee and Latin American fruits are shipped to New York and Europe to become consumer goods, where their nutritional value is eventually transformed into local garbage.

In cities with developed market economies, these products often end up as waste. However, in traditional agricultural societies, substances such as human feces and urine are not considered garbage; they are invaluable resources. Without long-distance trade and frequent movement of materials across regions, these nutrients flow back to where they came from and continue to circulate. In this sense, a circular economy and ecology is a closed-loop system.

Source: Asiapress, Getty Images, Carton Movement

Intelligence system of the Taliban Government of Afghanistan

THINKVIEWS

Tendenzblick

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July 2, 2024

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Intelligence system of the Taliban Government of Afghanistan

In the more than two years since the Afghan Interim Administration was established, Afghanistan’s political landscape has largely stabilized, yet a deep humanitarian crisis persists alongside sporadic terrorist attacks.

According to the United Nations, Afghanistan still hosts approximately 20 active terrorist organizations, primarily linked to the Afghan Taliban. The Islamic State Khorasan Province (ISKP) stands out as the primary adversary to the Afghan Interim Administration.

Sirajuddin Haqqani, leader of the Haqqani Network, now serves as the deputy leader of the Afghan Interim Authority and Acting Minister of the Interior. This integration has made the Haqqani Network an essential component of the Interim Authority’s intelligence apparatus.

Construction of the Afghan Interim Government’s Intelligence System

The Afghan intelligence system, which is based on the liquidation of the intelligence system of the previous government and is a continuation and development of the intelligence system of Atta’s first administration (1996-2001), consists of four main institutions: the General Intelligence Directorate, the Ministry of the Interior, the Ministry of Defense, and the Ministry for the Promotion of Virtue and the Prevention of Vice.

The former Afghan government’s intelligence apparatus primarily comprised the Afghan National Directorate of Security (NDS), established in 2002 with assistance from the U.S. Central Intelligence Agency (CIA), alongside the National Security Forces (NSF) and local police.

The Afghan National Security Forces (ANSF) encompassed the Afghan National Army (ANA), Afghan Air Force (AAF), and Afghan National Police (ANP). The ANA, established in 2002, provided various military and support functions. The AAF, formed in 2007, focused on airborne intelligence gathering and firefighting. The ANP, including the Afghan Uniformed Police (AUP), the Afghan National Civil Order Police (ANCOP), and the Afghan Border Police (ABP), maintained law and order across different regions and borders.

The Afghan Local Police (ALP), supported by the U.S. and UK, assisted the National Security Forces against insurgency. However, under Atta’s leadership, former government intelligence officers were purged, resulting in executions and forced disappearances. Many fled the country, while others went into hiding. Despite amnesties, reprisals continued, leading to a significant reduction in the former government’s intelligence capabilities.

Building the Intelligence System of this Government

The Afghan intelligence system encompasses four main agencies: the General Directorate of Intelligence (GDI), the Ministry of the Interior (MOI), the Ministry of Defense (MOD), and the Ministry for the Propagation of Virtue and the Prevention of Vice (MPPV).

The General Directorate of Intelligence (GDI), under the leadership of Abdul Haq Wasiq, operates under the supreme leadership of Hibatullah Akhundzada. It focuses on defending the regime and safeguarding cultural, religious, and property rights through human and open-source intelligence gathering methods.

The Ministry of the Interior (MOI), headed by Sirajuddin Haqqani, oversees law enforcement and public order, predominantly utilizing the intelligence network of the Haqqani Network. It maintains ties with Pakistani intelligence agencies and various terrorist organizations, facilitating intelligence sharing.

The Ministry of Defense (MOD), led by Mohammad Yaqoob, prioritizes border security and national sovereignty. Its intelligence capabilities are rooted in Atta’s traditional network, employing regional commanders and village community groups for information dissemination.

The Ministry for the Propagation of Virtue and the Prevention of Vice (MPPV), led by Sheikh Muhammad Khalid Hanafi, upholds Islamic ideology by monitoring and enforcing adherence to Islamic norms in various aspects of society. Its efforts extend to military establishments and civilian life, ensuring compliance with Islamic decrees and values.

Effectiveness of the intelligence system of the Afghan Interim Authority

The Afghan intelligence system focuses on safeguarding the Islamic regime, controlling hostile forces, aiding reconstruction, and defending Islamic ideology. It has upheld a positive image of the regime by monitoring and guiding the media and enforcing strict societal regulations.

This includes banning music, controlling protests, and imposing dress codes. Additionally, it purges and integrates former government armed forces while combating terrorists both domestically and internationally. Efforts have also been made to persuade fugitive talents to return and maintain international cooperation, particularly with Pakistan’s ISI and the US CIA.

The system has effectively maintained a positive portrayal of the Islamic regime by closely monitoring and influencing media content, enforcing stringent societal regulations such as dress codes and music bans, and suppressing dissenting voices.

It has also played a significant role in purging and integrating former government armed forces, combating terrorist groups like ISIS, and encouraging the return of skilled professionals to contribute to the nation’s development.

Furthermore, the intelligence system has actively engaged in international cooperation, notably with Pakistan’s ISI and the US CIA, to address mutual security concerns and foster diplomatic relations.

Challenges to the intelligence system of the Afghan Interim Authority

The Afghan intelligence system has made significant strides in safeguarding the Islamic regime, combating hostile forces, and aiding in post-war reconstruction over the past two years. However, it faces challenges from domestic, regional, and major powers.

Domestically, resistance from pro-democracy factions persists, with concerns over inclusivity and women’s rights. Terrorist organizations, including Al-Qaeda and ISIS-K, continue to operate with some autonomy under the regime’s umbrella, posing internal threats.

Regionally, neighboring countries like Pakistan and Iran maintain infiltration through their intelligence services. Tajikistan, in particular, expresses hostility towards the Afghan government.

Internationally, the U.S. continues to monitor and act against potential threats, while Russia and India exert pressure on the regime to combat terrorism and ensure inclusivity.

Source: Middle East Institute, Long War Journal, Intelligence Briefs

The rise of “Made in Vietnam” is driven by China’s strong production capacity

East Asia

Xiaoer Lundao

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June 27, 2024

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The rise of “Made in Vietnam” is driven by China’s strong production capacity

Faced with the restructuring of the global value chain, insufficient foreign demand, and numerous uncertain factors, my country confronts significant challenges in foreign investment and trade. This year China’s government work report once again stresses the importance of expanding high-level opening up the linkage effect between domestic and international markets.

Amidst the backdrop of global economic slowdown, rising protectionism, and anti-globalization sentiments, China’s foreign trade dynamics have undergone notable structural shifts. In 2022, China’s top five trading partners included ASEAN, the European Union, the United States, Japan, and South Korea. While the share of traditional partners like Japan and the United States has declined, there has been a rapid increase in trade with countries along the Belt and Road initiative, Russia, and ASEAN nations.

The transformation in China’s trade and export structure is evident, reflected in the expanding trade surplus. Unlike a decade ago when China primarily exported light industrial products such as shoes, socks, and toys, there has been a significant upgrade in export products and added value, contributing to the growth in export volume.

China’s foreign trade exports have been restructuring notably, especially in recent years amidst the pandemic. Notably, exports to non-Western countries have been on the rise, surpassing exports to the United States, Europe, and Japan in 2023. This shift is attributed to several factors.

Firstly, China has been diversifying its export destinations to mitigate risks associated with overreliance on developed markets like the United States, Europe, and Japan. This strategic diversification began around 2010, accelerated by geopolitical tensions.

Secondly, the advancement of the One Belt, One Road initiative has significantly boosted exports to non-traditional markets, buoyed by increased foreign investments. China’s extensive infrastructure projects in Belt and Road countries have not only facilitated trade but also boosted exports of high-value electromechanical machinery and equipment.

Thirdly, Western countries increasingly perceive China as a formidable competitor, prompting trade disputes under the guise of national security concerns. Despite such challenges, China’s robust performance in overseas markets has cemented its position as the largest trading partner for numerous countries, prompting trade tensions with the West.

Observing the evolution of China’s export trade reveals a broader shift, including the relocation of production to Southeast Asia and South Asia. Consequently, China’s industrial and supply chains have also undergone significant restructuring, with raw materials and semi-finished products processed in Southeast Asian countries before reaching US and European markets.

This phenomenon has resulted in a significant shift: ASEAN countries have emerged as China’s primary trading partners, yet a considerable portion of China’s exports to ASEAN consists of intermediate products rather than final goods. These intermediates are assembled in ASEAN nations and then exported to the United States. Global trade data indicates a rising trend in China’s exports to ASEAN alongside an increase in ASEAN countries’ exports to the United States.

For instance, approximately 70% of products exported from Vietnam to the United States originate from China, leading to an apparent surge in “Made in Vietnam” trade volume, primarily driven by increased exports from China.

A similar scenario unfolds in Mexico, where many Chinese manufacturers have shifted production, leveraging Mexico’s membership in the North American Free Trade Agreement to benefit from low tariffs on exports to the US. Consequently, China’s trade surplus with Mexico and Mexico’s trade surplus with the United States have both expanded, ultimately accumulating trade deficits for the United States across various countries.

As China’s primary trading partner in ASEAN for four consecutive years, China’s exports to ASEAN predominantly include electromechanical and audio-visual equipment (constituting 37.5% of the total), base metals, textile raw materials, chemical products, and more. Both market and non-market factors influence these dynamics. Market factors primarily revolve around shifts in comparative advantages, such as lower land and labor costs in ASEAN compared to China.

Non-market factors, particularly geopolitics, also play a significant role. Pressure from the United States to relocate suppliers, impose tariffs on Chinese goods, or prohibit direct imports from China has compelled some Chinese companies to adapt. For instance, restrictions related to Xinjiang cotton over alleged human rights violations have disrupted supply chains, affecting industries like artillery manufacturing. Some Chinese firms, entrenched in US and European markets, reluctantly redirect part of their production to South and Southeast Asian countries in response to geopolitical conflicts, driven not only by economic considerations but also political pressures.

The government work report underscores the importance of promoting stable growth and optimizing the structure of foreign trade, emphasizing the export of electric vehicles, lithium batteries, and photovoltaic products. These sectors have seen significant growth, representing strategic industries with high added value and alignment with green and low-carbon trends.

Despite the success, concerns have been raised about over-investment and overcapacity in these fields, a common occurrence in emerging industries. Similar challenges were faced during the rise of the internet industry in the United States, where market competition led to consolidations and mergers among companies.

China’s electric vehicle sector is poised for similar transformations, with government subsidies and corporate investments driving initial growth. As competition intensifies and the market matures, some companies may face elimination or consolidation, ultimately leading to a balanced supply-demand equilibrium and sustainable profitability.

The emergence of “new productivity” signals a trend towards combining digital technologies like artificial intelligence with new machinery and equipment to develop innovative products and services. While promising, such ventures entail risks, including uncertainties in marketization and investment failures that governments must navigate.

To support innovation, China should focus on nurturing imaginative small businesses capable of technological advancements. These companies often become acquisition targets for larger manufacturers, leading to wider applications and improved profits.

The external market landscape is further complicated by geopolitical tensions and trade protectionism, as evidenced by recent restrictions imposed by the European Commission on electric vehicle imports from China. Negotiations between governments and international organizations like the WTO will play a crucial role in safeguarding trade interests amid evolving geopolitical dynamics.

China’s decreasing foreign trade dependence reflects a shift towards a more balanced development model, reducing reliance on external markets. However, sustaining economic growth requires mobilizing both domestic and foreign markets, emphasizing product quality and developing consumer markets in developing countries.

As China progresses from being an original equipment manufacturer (OEM) to setting global standards, concerns from Western nations about China’s technological advancements may lead to restrictions. Nevertheless, China’s commitment to innovation and adherence to its technological trajectory will ultimately establish Chinese standards and brands as dominant forces in global markets.

In contrast to Russia, China’s robust capabilities enable swift adaptation to market gaps left by foreign companies, ensuring the stability of its industrial and supply chains. Encouraging Chinese private enterprises to fill these vacancies and protecting their manufacturing capabilities are critical for sustaining growth.

While both China and Russia face challenges from foreign capital withdrawals, China’s ample foreign exchange reserves provide a buffer against such risks, ensuring stability amidst changing market conditions.

Source: Guancha, Reuters, China Daily, Asia Times

Hong Kong’s Revival: Surpassing Singapore in the Asian Capital Management Race

THINKVIEWS

Tendenzblick

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June 23, 2024

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Hong Kong’s Revival: Surpassing Singapore in the Asian Capital Management Race

In 2023, Hong Kong SAR, China, solidified its position as Asia’s top hedge fund and wealth management hub, aiming to surpass Switzerland globally. Regulatory reforms and positive interactions between the government and industries drive its success. New policies allowing private equity funds to register under Limited Partnership Fund (LPFs) have boosted Hong Kong’s appeal, matching Singapore’s LPF registrations within three years. LPFs are expected to further influence investment strategies and financial ecosystems in Hong Kong in 2024.

Progressive Logic of Reform

As a Special Administrative Region (SAR) of China, Hong Kong maintains a close economic and trade relationship with the Mainland market. The surge in affluence within mainland China has fueled significant growth in cross-border wealth management activities in Hong Kong. Data from the Hong Kong Securities and Futures Commission (SFC) reveals a staggering 143% increase in assets under management for Hong Kong’s asset and wealth management sector over the past decade.

However, industry observers note a shift in dynamics. Previously, before 2018, Hong Kong was the unequivocal offshore destination of choice for mainland wealth management. Yet, recent geopolitical developments and other unfavorable factors have begun to erode Hong Kong SAR’s traditional role as a primary intermediary. In contrast, Singapore has experienced fewer adverse effects and maintains a robust competitive edge and reputation in various aspects.

While Hong Kong boasts strong offshore financial characteristics, a significant portion of its assets under management originates from outside Hong Kong, with many funds not registered locally. This is particularly evident in private funds, where historically, the majority were registered non-locally. Such practices not only impede operational efficiency and increase costs but also complicate compliance efforts.

These challenges are linked to shortcomings in Hong Kong’s company and related systems. The Limited Partnership Ordinance, enacted in 1912, governs business partnerships. However, over time, this outdated system has failed to adapt to the needs of modern investment funds.

Previously, most local funds in Hong Kong operated on a trust-based structure, such as Unit Trusts. Corporate funds from overseas markets launched in Hong Kong typically took the form of public or private offerings. This was due to local restrictions on reducing contributions and allocating funds, often necessitating the establishment of funds as unit trusts. Additionally, until April 1, 2019, there was no tax exemption regime safeguarding investment profits for private equity funds registered in Hong Kong, potentially subjecting them to profits tax.

An official from the Financial Services and the Treasury Bureau of Hong Kong pointed out that the existing legislation lacks flexibility for capital investment and profit distribution, fails to provide contractual flexibility, and lacks a straightforward dissolution mechanism.

In contrast, offshore jurisdictions like the Cayman Islands were favored for incorporating private equity funds due to easy registration, operational flexibility, and fewer restrictions. Exempted Limited Partnerships (ELP) and Segregated Portfolio Companies (SPC) were particularly popular choices for fund managers and investors.

The industry has long advocated for institutional-level reforms, including registration procedures. Amid various pressures, 2020 marked a significant turning point for Hong Kong, China, with the initiation of several institutional reforms.

The introduction of new fund structures allows external funds in Hong Kong to benefit from similar registration forms, thus enticing capital flow into the region.

A pivotal phase in the series of changes can be traced back to 2018. In July of that year, the Open-ended Fund Company (OFC) regime was introduced in Hong Kong, marking a significant shift in fund structure. Investment funds incorporated in Hong Kong gained the option to adopt a corporate fund structure alongside the traditional unit trust structure. They could be established as public or private funds, or as sub-funds, with the flexibility to invest in diverse sectors such as technology, environmental protection, healthcare, and artificial intelligence.

As market recognition grows, funds naturally follow suit. By the end of October 2023, a total of 194 OFCs and 372 sub-funds had been incorporated or relocated to Hong Kong in accordance with relevant policies.

The formal launch of the Limited Partnership Funds Ordinance (Cap. 637) in August 2020 brought significant attention to the LPF system. This operational and management model in the fund industry comprises a general partner and a limited partner, serving as infrastructure widely acknowledged for providing new facilities for the establishment and operation of private equity funds in Hong Kong, as well as offering tax relief.

The range of policy measures implemented by the HKSAR is widely regarded as very competitive due to their flexibility and applicability to various private equity structures. Drawing on past experience and major private equity legal frameworks, these measures have gained significant momentum since their inception.

According to the Hong Kong LPF Association (HKLPFA), the number of local limited partnership fund registrations as of July 2023 had already equaled that of Singapore (680), surpassing it officially in August 2023. By the end of November 2023, this figure had further risen to 740 registrations.

In contrast to Hong Kong SAR of China, Singapore initiated its regime reform much earlier, starting in May 2009. However, despite this early start, Singapore’s number of registrations has not yet reached 700 in 14 years.

Future Challenges and Opportunities

The increasing number of LPFs registered in the HKSAR is catalyzing the development of the asset and wealth management industry in Hong Kong, acting as a new conduit for capital inflow.

From a longer-term perspective, this phenomenon is linked to the classification of the asset and wealth management industry in HKSAR, which encompasses four main areas: private investment, private banking, trust management, and fund consultancy.

According to HKSFC, in 2022, Hong Kong’s assets under management totaled HK$30.5 trillion (US$3.9 trillion), with a net capital inflow of HK$88 billion (US$11 billion). Since the second half of 2022, the funds under management of funds domiciled in Hong Kong have experienced accelerated growth, with assets rebounding by 15% from the third quarter of 2022 to reach HK$1.3 trillion (US$171 billion) by the end of June 2023.

The expansion of scale presents opportunities as the large capital market system and diversified product structure gradually interact with the new models introduced by LPFs. A closer look at the investment categories of LPFs reveals a shift: the proportion of LPFs choosing to invest in a wide range of sectors has decreased from 58% in 2021 to 49% in 2023, while those focusing on investing in specific sectors have increased year by year.

At a micro level, the growing number of LPFs is enhancing the local treasury ecosystem, offering more opportunities for talent growth. Moreover, as acceptance grows, LPFs are emerging as alternative structures for fund managers. Since 2022, private equity fund managers have been leveraging Hong Kong’s LPF structure to invest in diverse industries globally, such as retirement and art collections. Additionally, the number of funds investing in North America and Europe is on the rise.

From the perspective of long-term investors and local financial service practitioners, the proximity to mainland China’s vast market and the continued enhancement of Hong Kong’s IPO listing system are conducive to financing and investment management in Hong Kong. This symbiotic relationship between LPFs and the IPO market holds promise for the region’s fund industry development. For example, mainland investors can leverage the synergistic effects of LPFs and IPO markets when undertaking relevant projects.

From a relevance perspective, a series of HKSAR government policy drives are seen as closely linked to the growth in LPF registrations. In February 2023, in a bid to attract more family offices to Hong Kong, the government allocated HK$100 million in funding to Invest Hong Kong over the next three years. Additionally, in May, the local tax relief ordinance for Family Investment Control Vehicles (FICVs) came into effect, followed by the official launch of the Family Office Service Network (FOSNET) in June. These initiatives, aimed at enhancing the family office ecosystem, are expected to drive LPF development, given their significance in family office asset allocation.

Furthermore, the long-awaited New Capital Investment Entrant Scheme Office (“New CIES Office”), expected to be implemented by the end of 2023, is anticipated to provide further momentum to LPFs.

Looking ahead to 2024, the development of Hong Kong’s offshore RMB business is anticipated to witness further breakthroughs, with LPFs expected to facilitate the flow of funds between Hong Kong and other cities in the Guangdong-Hong Kong-Macao Greater Bay Area, serving as a vital tool for financial interoperability in the region.

According to analysis from People’s Daily, compared to other pilot regions, Hong Kong investors participating in relevant pilots enjoy lower access requirements, a wider investment scope, more convenient cross-border investment processes, simplified consultation processes, and other characteristic advantages.

Source: InvestHK, Bloomberg

Ukraine fatigue: A Growing Phenomenon in the West

Claudie Dubois

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June 18, 2024

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Ukraine fatigue: A Growing Phenomenon in the West

The Ukrainian crisis has entered its third year, with the conflict reaching a stalemate. Despite initial victories, the Ukrainian side’s performance faltered in the second year, failing to meet President Zelensky’s expectations for a turnaround.

Fatigue among U.S. and European leaders in addressing the Ukrainian crisis, which emerged in 2023, continues to spread. Additionally, since October 2023, a new round of the Palestinian-Israeli conflict has had a cascading effect in the West, contributing to a decline in public opinion regarding the Ukrainian crisis.

America’s Weariness of Ukraine’s Struggles

During Zelensky’s second visit to the U.S. in September 2023, he encountered a notably different atmosphere in Congress compared to his previous visit at the end of 2022. With the House of Representatives now under Republican control, support for Ukraine waned. His third visit in December further underscored the chilly political climate in Washington.

Amid Republican demands linking border security, immigration policy, and aid programs to Ukraine, the Biden administration’s $60 billion aid proposal to Ukraine on February 13 stalled in Congress, ultimately blocked by Republican extremists in the House of Representatives.

By July 2023, a CNN-commissioned poll revealed deep divisions among Americans regarding aid to Ukraine. While 55% of respondents felt Congress shouldn’t authorize additional funding, 51% believed current aid efforts were adequate, and 48% thought more should be done.

Partisan divides were stark: 71% of Republicans opposed new funding, contrasting with 62% of Democrats who favored increased support. By November 2023, a poll by AP-NORC Center for Public Affairs Research found growing sentiment (45%) that the U.S. was overspending on aid to Ukraine, up from 52% in October.

Meanwhile, the U.S. presidential election saw former President Donald Trump securing the Republican nomination early, pledging not to protect NATO members underspending on defense and emboldening Russia. Trump’s rhetoric of potentially ending the war within 24 hours of his presidency alarmed European nations reliant on U.S. security guarantees. Hungarian Prime Minister Viktor Orbán’s meeting with Trump further solidified the message: “no more aid for Ukraine” under a potential Trump administration.

Europe’s Anxiety Amidst Growing Exhaustion

Since the eruption of the Ukrainian crisis in February 2022, the EU initially showed strong support for Ukraine, imposing multiple rounds of sanctions on Russia and granting Ukraine EU candidate status promptly. However, at the December 2023 EU summit, Hungary’s opposition led to the postponement of the EU’s plan to provide €50 billion in financial aid to Ukraine. Hungary’s concerns were assuaged only in February 2024, with the proposal of a control mechanism for aid funds. In Slovakia, the Fico government halted military aid to Ukraine, citing concerns about Ukraine’s sovereignty and its alignment with the United States.

European solidarity with Ukraine has dwindled over time. Central and Eastern European countries, dissatisfied with the impact of cheap Ukrainian imports on domestic agriculture, threatened to reduce aid to Ukraine and implemented temporary bans on Ukrainian food imports. Protests erupted against the EU’s decision to grant Ukrainian trucks unrestricted access, leading to border blockades and demonstrations by Polish and Slovakian truckers.

The influx of Ukrainian refugees into Europe, totaling 5.9 million according to UNHCR data, has strained resources and exacerbated economic challenges. As Europe grapples with high inflation and weak economic growth, solidarity with Ukrainian refugees wanes. Several EU member states are contemplating reducing financial support for Ukrainian refugees in 2024.

Public support for Ukraine in Europe has also diminished. While earlier polls showed overwhelming support for humanitarian, financial, and military aid to Ukraine, recent surveys indicate a decline in support. German citizens, for instance, increasingly view financial support to Ukraine as excessive, and skepticism grows regarding Europe’s ability to compensate for reduced U.S. aid. Polish sentiment has shifted as well, with a significant portion opposing additional aid to Ukraine.

Furthermore, European popular support for providing arms to Ukraine has declined, with Italians particularly opposed to EU arms supply to Ukraine. These trends underscore a shifting landscape in European attitudes toward the Ukrainian crisis.

The exchange of fire between Russia and Ukraine persists with no indication of easing. A breakthrough at the proposed “peace conference on Ukraine” slated for Switzerland in summer 2024 appears improbable, given the starkly differing stances of the two sides. As the crisis lingers, Europeans grow increasingly anxious about the repercussions of their support for Ukraine on their own well-being. A January 2024 poll conducted by the European Council on Foreign Relations across 12 European countries revealed widespread pessimism regarding the war’s outcome, with only 10% of respondents believing in Ukraine’s victory.

Yet, mainstream European discourse maintains that “Ukraine must win” and “Europe must spare no effort to support Ukraine until the end.” European nations have redoubled their support for Ukraine, stepping up as primary providers of foreign aid amid U.S. congressional obstacles to Ukraine’s budget. Several countries, including Germany, France, Britain, Italy, Canada, Denmark, and the Netherlands, have inked ten-year security agreements with Ukraine. French President Emmanuel Macron has hinted at the possibility of deploying troops to aid Ukraine, a sentiment echoed to some extent by Poland’s leadership. Europe has embraced the Czech initiative to procure 800,000 rounds of artillery for Ukraine, and on March 13, the EU committed an additional 5 billion euros to the European Peace Fund for weapons procurement on Ukraine’s behalf, both within Europe and beyond.

Despite the resolve exhibited by top government officials, there is a growing contrast with the weariness felt by the population, which could ultimately dampen political resolve at the highest levels. The Ukrainian crisis is poised to be a pivotal issue in the upcoming European Parliament elections in June 2024 and the U.S. elections in November. The impact of war-weary voters on both elections remains to be seen.

Source: wap1934, X, the Moscow Times, Global Times