CHINA HAS AN ADDICTION PROBLEM
China has been on a spending spree, borrowing money to build cities, create manufacturing giants and financial markets — money that drove its economic growth. But the debt-fuelled binge can now sap the world’s second largest economy. And the money is increasingly flowing through opaque channels that operate outside the regulated banking system. As Moody’s Investors Service cut the country’s debt rating, its first downgrade for the country since November 1989, China faces a complex, economic puzzle: how to squeeze debt-fuelled speculation out of the system without choking growth. China unleashed a wave of spending to build highways, airports and real estate developments. Local governments and state-run companies borrowed heavily. Insurers, trusts, non-bank financial companies, small local banks and other semi-regulated or unregulated businesses have all been trying to ride China’s ever-expanding credit markets to quick profits.
IS IT TRUMP’S AMERICA OR BILL CLINTON’S?
Renowned writer Thomas L. Friedman just took a four-day road trip through the heart of the landscape that Donald Trump painted as scattered with “rusted-out factories”, disappeared jobs and rampant drug addiction. “Trump is half right in his diagnosis, but his prescription is 100 per cent wrong,” Friedman writes. “The big divide in America is not between the coasts and the interior. It’s between strong communities and weak communities. It’s community, stupid — not geography.” The strong communities are those where local businesses, foundations, civic groups are involved in the school and college system, connecting talent and skills to the demands of the global economy. “It’s not your grandparents’ America, but it is also not Trump’s America. The picture is much more complex. It’s actually Bill Clinton’s America,” he writes. “Only strong communities, not a strong man, will make America great again.”
U.S. COMPANIES UNCLEAR ABOUT PROMISED JOBS
In Riyadh, Donald Trump claimed that the mammoth arms deal he had just signed would create “many thousands” of American jobs. Ask the companies involved. Nobody is sure how many jobs will be created and where. In his typical style, Trump said the deal will bring “jobs, jobs, jobs”. Raytheon, Lockheed Martin, Boeing and General Dynamics signed the MOU with Saudi Arabia. Is there any way for Raytheon to estimate how many jobs the deal will create? “No,” said the spokesman. Lockheed Martin said the deal would “support” thousands of jobs in the U.S. and Saudi Arabia. Boeing said the deal would “create or sustain” jobs in both countries. Beyond the bluster of Trump’s tweets and declaration, a White House statement said it would be “potentially supporting” tens of thousands of new jobs in the U.S.
TAIWAN’S SAME SEX MARRIAGE MOVE IS A FIRST FOR ASIA
Taiwan has become the first nation in Asia to legalize same-sex unions. A court has ruled in favour of allowing same-sex marriages saying the country’s Civil Code, which states that only a man and a woman can marry, violated constitutional guarantees. The court has given the legislature two years to implement the change. Taiwan’s LGBT activists have fought for decades for marriage equality, inspiring similar struggles across Asia. Indonesia arrests and beats gay people, Singapore criminalizes gay sex and China cracks down on LGBT organising. In Taiwan, school textbooks extol equality, gays and lesbians serve openly in the military, and Taipei’s annual gay pride parade is legendary. But in the past year, religious groups mobilised against marriage equality, saying it threatens children and families, likening it to incest and bestiality.
TRUMP AND OBAMA IN EUROPE
Who will attract the eyeballs in Europe today? Barack Obama or Donald Trump? As Trump marks his first official visit to Europe, he risks being overshadowed by an awkwardly timed trip by Obama. Germany’s Angela Merkel and Obama will participate in a public discussion in front of Berlin’s most famous landmark. About 80,000 spectators are expected to watch the event. Trump’s relationship with Europe has been complicated. He has equated Brussels with a “hellhole”, and accused Merkel of “ruining Germany” with her immigration policies. More than any recent U.S. leader, Europeans had warmed to Obama and trusted his viewpoint. For Merkel, who is facing a federal election later this year, the chance to associate herself with both Obama and Trump in one day could be a positive.