The China-Trump trade war has spread to Australia. We’re now at risk of global currency war



The Australian dollar has already slipped, falling to its lowest point against the US since the global financial crisis.
Shutterstock

Hui Feng, Griffith University

When US President Donald Trump announced via Twitter on Friday that he was slapping tariffs on an extra US$300 billion of China’s exports, it was widely expected that China’s currency would slide against the US dollar.

What wasn’t expected was that on Monday it would break the seven Chinese renminbi (RMB) to the dollar barrier, a line held by China since 2008.

The RMB/USD exchange rate is tightly managed by the People’s Bank of China. The rate is permitted to move only 2% away from a midpoint fixed by the bank each day.

Although in its official statement the bank attributed the slide mainly to changes in demand and supply, the slide would not have happened had the bank not allowed it. In the past it spent as much as US$107 billion in a single month defending the renminbi.




Read more:
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It is more reasonable to believe that the devaluation was a deliberate decision taken to offset the effect of the punitive tariffs.

By making China’s exports cheaper in US dollars it will neutralise the effect of Trump’s decision to impose tariffs that would make them more expensive.

But it will have far-reaching implications, so far-reaching as to suggest that Beijing has run out of alternatives.

In part, China is hurting itself…

The exchange rate – the external price of money – affects almost everything, including inflation in China itself, which will receive a boost as imports to China become more expensive.

Chinese inflation is already on the rise due to disruptions in supply of food staples such as pigs.

There isn’t much the People’s Bank of China can do to restrain inflation. Pushing up interest rates might choke the economy given that China’s GDP just posted its smallest quarterly gain since 1992.

It would also make it even more difficult for already heavily indebted state-owned enterprises and local governments to make payments on their debt.

If the Chinese think the currency is going to continue to fall they’ll attempt to take their money out of the country while it still has buying power.

Although the People’s Bank of China has demonstrated its capacity to control capital flight, it has increasingly had to do it using harsh measures that harm legitimate trade and investment.

The devaluation will essentially act as tax on net importers, which in China are households. This means it will work against China’s goal of rebalancing the economy away from investment to private consumption.

…and endangering global recovery

An RMB that breaches seven is also bad news for the global economy. It means weaker demand from China, which will depress global economic growth.

In that way it can be thought of as spreading the cost of US tariffs onto China’s trading partners, which are themselves likely to devalue in something of a currency war. The Australian dollar has fallen through 68 US cents, a low not seen since the global financial crisis.

Asian economies are also likely to devalue, among them South Korea, Vietnam, Thailand and Indonesia. The European Central Bank has also signalled rate cuts and other measures to bring down its exchange rate as has the Bank of Japan.

Other nations will devalue…

The US Fed itself will be under pressure to cut rates further in what the Pacific Investment Management Company has warned
could lead to a “full-blown currency war with direct intervention by the US and other major governments/central banks to weaken their currencies”.

On Tuesday Australia’s Reserve Bank signalled its willingness to cut interest rate again, although in our case the drop in the Australian dollar might have made it nervous. It would prefer a controlled rather than unpredictable decline in the dollar.

John Connally Jr, Richard Nixon’s treasury secretary, once said in 1971 that the US dollar was “our currency, but your problem”. He meant that the rest of the world had to live with whatever the US did for its own reasons.

…meaning none of them will win

As the currency of the world’s second largest economy increasingly moves to the centre of global trade, China is able to say much the same thing. But an international currency war could hurt China as well by endangering the still not complete international recovery from the global financial crisis.

The People’s Bank of China has tried to reassure the world that it “has experience, confidence and capacity to maintain renminbi exchange rate at a reasonably stable equilibrium”.

It might do more for confidence if it wound down its control, as have other countries, relying less on manipulating the exchange rate for strategic reasons.




Read more:
What China wants: 3 things motivating China’s position in trade negotiations with the US


The Conversation


Hui Feng, ARC Future Fellow and Senior Research Fellow, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Buddhist Bhutan Proposes ‘Anti-Conversion’ Law


Already suppressed Christians say bill is designed to control growth.

THIMPHU, Bhutan, July 21 (CDN) — Christians in this Himalayan nation who are still longing to openly practice their faith were disheartened this month when the government proposed the kind of “anti-conversion” law that other nations have used as a pretext for falsely accusing Christians of “coercion.”

The amendment bill would punish “proselytizing” that “uses coercion or other forms of inducement” – vaguely enough worded, Christians fear, that vigilantes could use it to jail them for following the commands of Christ to feed, clothe and otherwise care for the poor.

“Now, under section 463 [of the Penal Code of Bhutan], a defendant shall be guilty of the offense of proselytization if the defendant uses coercion or other forms of inducement to cause the conversion of a person from one religion or faith to another,” reported the government-run Kuensel newspaper on July 9.

“There was always a virtual anti-conversion law in place, but now it is on paper too,” said a senior pastor from Thimphu on condition of anonymity. “Seemingly it is aimed at controlling the growth of Christianity.”

Kuenlay Tshering, a member of Bhutan’s Parliament and the chairperson of its Legislative Council, told Compass that the new section is consonant with Article 7(4) of the Constitution of the Kingdom of Bhutan, which states, “A Bhutanese citizen shall have the right to freedom of thought, conscience and religion. No person shall be compelled to belong to another faith by means of coercion or inducement.”

He said that the National Council had proposed that offenses under the proposal be classified as misdemeanors, punishable by one to less than three years in prison.

Tshering said that the amendment bill “may be passed during the next session of Parliament, after the National Assembly deliberates on it in the winter session.”

Asked if he was aware that similar “anti-conversion” laws in neighboring India had been misused to harass Christians through vague terms of “inducement,” he said he was not.

Authorities usually act on complaints by local residents against Christian workers, so frivolous complaints can lead to their arrest, said another pastor who requested anonymity.

Of the 683,407 people in Bhutan, over 75 percent are Buddhist, mainly from the west and the east. Hindus, mostly ethnic Nepalese from southern Bhutan, are estimated to be around 22 percent of the population.

There are around 6,000 Christians, mostly ethnic Nepalese, but there is neither a church building nor a registered Christian institution. The Bible, however, has been translated into the national language, Dzongkha, as well as into Nepali.

The constitution guarantees freedom of religion, but the government has not officially recognized the presence of Christians, whose practice of faith remains confined to their homes.

The Drukpa Kagyue school of Mahayana Buddhism is the state religion, with Hinduism dominant in the south, according to Bhutan’s official website, which adds, “Some residues of Bon, animism and shamanism still exist in some pockets of the country,” but makes no mention of Christianity.

Still, since Bhutan became a democracy in 2008 after its first-ever elections – following more than 100 years of absolute monarchy – people have increasingly exercised their freedom, including religious choice.

 

‘Why More Religions?’

Home and Culture Minister Lyonpo Minjur Dorji told Compass that Bhutan’s government had “no problems” with Christianity or any other faith.

“But Bhutan is a small country, with a little more than 600,000 people, and a majority of them are Buddhist,” Dorji said. “We have Hindus, also mainly in southern parts. So why do we need more religions?”

Buddhism is closely linked with political and social life in Bhutan. Dorji’s office sits in a gigantic monastery in Thimphu known as Tashichho Dzong. Buddhism unites and brings people together, Dorji said, explaining that the social life of a village revolves around its dzong (monastery).

Dorji said India’s multi-religious society had led to tensions and bloodshed.

“India can survive riots and unrest,” he said, “but Bhutan may not, because it is a small country between two giants [India and China].”

With leaders who have been proud that they have not allowed it to be colonized, Bhutan historically has been keenly concerned about its survival. Bhutan’s people see their distinct culture, rather than the military, as having protected the country’s sovereignty. And it is no coincidence that Dorji’s portfolio includes both internal security and preservation of culture.

The constitution, adopted in July 2008, also requires the state to protect Bhutan’s cultural heritage and declares that Buddhism is the spiritual heritage of Bhutan.

A government official who requested anonymity said that, as Tibet went to China and Sikkim became a state in India, “now which of the two countries will get Bhutan?”

This concern is prevalent among the Bhutanese, he added.

Sikkim, now a state in India’s northeast, was a Buddhist kingdom with indigenous Bhotia and Lepcha people groups as its subjects. But Hindus from Nepal migrated to Sikkim for work and gradually outnumbered the local Buddhists. In 1975, a referendum was held to decide if Sikkim, then India’s protectorate, should become an official state of the country. Since over 75 percent of the people in Sikkim were Nepalese – who knew that democracy would mean majority-rule – they voted for its incorporation
into India.

Bhutan and India’s other smaller neighbors saw it as brazen annexation. And it is believed that Sikkim’s “annexation” made Bhutan wary of the influence of India.

In the 1980s, Bhutan’s king began a one-nation-one-people campaign to protect its sovereignty and cultural integrity, which was discriminatory to the ethnic Nepalese, who protested. Their non-compliance, however, resulted in a harsh crackdown by authorities, leading to the expulsion or voluntary migration of over 100,000 ethnic Nepalese, many of whom were Christians, to the Nepal side of the border in Jhapa in the early 1990s.

“Bhutan did not want to become another Sikkim,” said a local resident, explaining why the government did not tolerate the protests.

Bhutan is also rigorous in implementing its laws related to the use of the national language, the national dress code and the uniform architectural standards throughout the country to strengthen its cultural integrity. Bhutanese men are required to wear the gho, a knee-length robe tied at the waist by a cloth belt, when they go to work or attend a public function. Women have to wear the kira, an ankle-length dress clipped at one shoulder and tied at the waist. Non-compliance can lead to fine
and imprisonment.

 

Brighter Future

One hopeful pastor said he expects the government to officially acknowledge the existence of Christianity in Bhutan in the near future.

“Religious freedom will be good for both Christians and the government,” he said. “If Christians are not officially acknowledged, who will the government go to if it wants to implement an executive decision related to religious communities?”

Explaining the reason for his hope, he recalled an incident in the Punakha area in January, when a house under construction was demolished after rumors that it was used as a church.

“The house owner, a Christian, went to his majesty [King Jigme Khesar Namgyel Wangchuck] and told him he was not constructing a church but would have worship with other believers on Sundays,” the pastor said. “The king allowed him to build the house.”

He also said that a delegation of Christians met with Prime Minister Lyonchen Jigmey Thinley in May 2009, who reassured them that there would be more freedom soon.

Christianity is gradually growing, but through word-of-mouth – testimonies of those who have received healing from sickness – and not public preaching, he said, adding that Christians needed to understand and be patient with the government, “which cannot and should not make changes or give freedom overnight.”

 

SIDEBAR

Christians’ Skulls, Bones Used for Buddhist Ritual

The ambiguity in Bhutan over the status of Christians has brought with it a new difficulty: A national daily recently reported that at least eight graves of Christians had been exhumed and the skulls and thigh bones extracted for a Buddhist ritual.

Although the report marked the first time the practice had made the news, Christian leaders said more than 100 graves have been dug up as the trade in human bones has been going on for more than five years.

A local resident of the Lamperi area, near Thimphu, identified as Namgay, told the Bhutan Observer that he found eight graves in a “secret forest graveyard” that had been exhumed by hunters of craniums and thigh bone.

“We saw skulls without craniums and a hand sticking out of a grave,” he was quoted as saying in the daily on May 27.

A human skull garners between 5,000 ngultrum (US$105) and 10,000 ngultrum (US$211) in Bhutan, with men’s skulls considered more valuable. The skull of a man affected by leprosy is not considered ideal for purification. Rather, such skulls are considered best for rituals to subdue evil spirits.

In a visit to the graveyard, the Bhutan Observer found at least eight graves freshly dug up. “Hand gloves, khaddar [a coarse homespun cotton cloth], a currency note, a wooden cross, and a wooden hammer lay scattered all over,” it reported.

The daily said the graveyard apparently belonged to the Christian community in Thimphu and nearby areas.

“Christians in the country say that there should be an official recognition that there are Christians in the country, and other things like burial rights will naturally follow,” the report noted.

A local pastor told Compass that since Christians did not have a burial ground, they buried their dead in forests.

“More than 100 bodies have been dug up, even though we have changed several locations for burial,” he said. “I wonder how the traders in human bones discover these locations. Where do we go now?”

Some local residents reportedly believe that a Christian grave brings bad luck.

Damcho Wangchu, a resident of Thinleygang area, told the daily that the area surrounding the graveyard was holy. He attributed all misfortune in the area – including storms, the death of three students and of four others – to the Christian cemetery.

“We never experienced such misfortunes in our gewog [cluster of villages] before,” he said.

The daily explained that the tradition of use of human skulls and thigh bones in Buddhist rituals was as old as Tantric Buddhism itself. “Thoepai Dagpa is a generic name for the text that illustrates the use and study of quality of skulls,” it reported.

Tantric Buddhism, widespread in Bhutan, involves rituals as a substitute or alternative for the earlier abstract meditations.

An editorial in the same newspaper noted, “Our hunt for the criminal will probably lead us from the unplanned graveyard to the sacred altar.”

Report from Compass Direct News

PAKISTAN: CHRISTIANS BURNED TO DEATH IN ISLAMIST ATTACKS


14 believers reportedly killed; more than 100 homes burned in Gojra town, Korian village.

 

GOJRA, Pakistan, August 1 (Compass Direct News) – Islamic extremists today set ablaze more than 50 houses and a church in this town in northeastern Pakistan following an accusation of “blasphemy” of the Quran, leaving at least 14 Christians dead, sources said.

The dead include women and children, with several other burn victims unable to reach hospitals for medical care, according to the Centre for Legal Aid Assistance and Settlement (CLAAS). The attack came amid a protest by thousands of Muslim Islamists – including members of banned militant groups – that resulted in another six people dying when participants shot at police and officers responded with tear gas and gunfire.

The same rumor of desecration of the Quran that led to today’s massive protest and attack in Gojra, 50 kilometers (31 miles) from Faisalabad, also prompted an arson assault on Thursday (July 30) by Islamic extremists on the village of Korian, seven miles from Gojra, that gutted 60 houses.

Punjab Minister for Law Rana Sanaullah reportedly said an initial investigation of allegations of the Quran being blasphemed indicated “there has not been any incident of desecration.”

Because of the earlier assault in Korian, Pakistani officials were already in the area and had sought reinforcements to help control the 11 a.m. demonstration today in Gojra, but security forces were slow to respond, according to CLAAS.

“There were unaccountable people in the mob and they were out of control because only four police constables were trying to stop the mob of thousands of people,” a CLAAS report said.

Crowd size and attacks grew, and Islamists managed to block main roads and railways to keep fire brigades from fighting the house fires, according to CLAAS.

With authorities also blocking roads to keep more Muslim extremists from entering from neighboring villages, clerics at local mosques broadcast messages that those “who love Muhammad and Islam should gather with them to defend the Islam because it is in danger,” according to CLAAS.

Asam Masih, a Christian in Gojra, said that that women and children were severely burned and had no way to get to a hospital, according to CLAAS, which was helping to transport victims for medical care.

Islamists set on fire a Catholic church on Sumandri road and destroyed it using firearms and explosives, according to CLAAS.

“50 houses are burned and totally destroyed,” the CLAAS statement read. “14 people including children, women and men are expired.”

Wedding and Funeral

As Christians have begun defending themselves against the onslaughts, mainstream media have already begun referring to the overwhelmingly Islamist aggression as “Christian and Muslim rioting.”

Compass investigated the facts of the trigger incident in the village of Korian, where more than 500 Muslims, responding to calls from a mosque, attacked Christians in Toba Tek Singh district. Local sources said nearly all village Christian families fled. The fires destroyed their homes – collapsing their wooden roofs or melting T-iron roofs – and all belongings within that the attacking Muslims had not first looted.

“Our house is burnt and everything is gone, but Muslim neighbors around are not willing to give us a loaf of bread or a sip of water to us,” 80-year-old Baba Sharif Masih told Compass.

He and his wife Hanifa Bibi, 73, were the only Christians left in the village in the northeastern province of Punjab. Masih, who is paralyzed, said the attackers let them live when they pleaded that they were unable to run away.

Two church buildings were ransacked but not burned, Compass sources said.

One Christian resident of Korian identified only as Shabir said the blasphemy accusation grew out of an incident at a wedding on Sunday (July 25). During the ceremony, Christian wedding guests tossed currency notes and coins into the air according to custom, with children catching most of them as they fall. Shabir told Compass a Muslim funeral was taking place at the same time, however, and that mourners told wedding celebrants to stop their music; they apparently declined.

The next day, Muslims met with the parents of the bride, Talib and Mukhtar Masih, and told them that their sons had cut pages of the Quran the size of currency notes and had been throwing them in the air the previous night, Shabir said.

“Talib said that nothing like this has happened, but that if there was anything, ‘I’ll call my son and he will definitely apologize for it,’” Shabir said. “But then they immediately began beating them and left Talib when he fell unconscious.”

Shabir said that afterward when Christian women went to the Muslims and told them that they were wrong to beat Talib Masih, the assailants yelled at them and tried to attack them, but they were able to flee to their homes.

On Thursday (July 30), Shabir said, Muslim clerics announced from the village mosque that “if any infidel Christian wanted to save his or her life, then get out of here or they would be killed.”

As the Muslim mobs gathered, he said, Christians immediately fled – leaving their meals prepared and fires burning in stoves.

“These assailants first looted these houses and then set them on fire and closed the door,” he said. “Since then, not a single Christian is left there except a very old couple.”

Islamist’s Version

Village Muslims declined to open their doors when Compass reporters called on them.

But one of three Muslim leaders standing with a crowd of turban-clad Islamists at the entrance to the village, Qari Noor Ahmed, told Compass the story of the alleged cut pages of the Quran at the marriage ceremony.

“Because it was night, no one noticed, but in the morning we saw that the pages of the Quran had been cut to currency note size, and they were trampled under people’s feet,” he said.

Ahmed said that village authorities later met and called in Talib and Mukhtar Masih. He said that council authorities decided that their son should apologize.

“But when his son came in the meeting, he by no means seemed apologetic, rather he was aggressive,” Ahmed said. “This was the root cause, and we told Talib and Mukhtar to tell their children to apologize.”

Ahmed said that afterwards they searched for Talib and Mukhtar Masih and their sons but could not find them.

“Then Muslims became furious that first they had profaned the Quran, and now they had fled and were not apologizing,” Ahmed said. “Then the villagers attacked their houses. All the Christians who are visiting here are armed, and we are sitting here to avoid any untoward incident. It is better for you to leave now or you may be attacked.”

Munawar Masih, a 20-year-old Christian in Korian, said that he was preparing supper around 7 p.m. when he heard the announcement from the mosque that “infidel Christians had profaned the Holy Quran, and let’s teach them exemplary lesson.”

He looked outside as his family was about to sit down to dinner and saw a large mob approaching.

“We just fled from there to save our lives, and since then we are hiding in Gojra,” he said.

Private TV channel reporter Ghulam Muhauddin told Compass that after the Korian houses were set on fire, the Islamic extremists blocked the Faisalabad-Gojra Highway to keep firefighters from arriving.

“When the attack was unleashed, several people were injured and even some domestic animals were killed,” he said.

Muhauddin said that after negotiations between the District Police Officer and the protestors, Station House Officer (SHO) Jamshed Iqbal Nasir was suspended for not properly handling the incident.

Christians Accused

Officials at the Sadar Police Station, in whose precincts the attack took place, were not available for comment, but a deputy called Imam Din said that a First Information Report (FIR) had been filed under Section 295-B, or blasphemy of the Quran, against Talib and Mukhtar Masih.

He said that the complainant in the case was Muhammad Ashraf, and that police had possession of the alleged burnt or cut papers of the Quran. Din said that after SHO Nasir was suspended and Ashiq Hussein replaced him, Hussein was willing to file an FIR against those who had ransacked and burned houses of Christians. He said the accused were still at large and that police would arrest them after Christians returned to their homes.

Asked if police were under pressure from Islamists or the government, Din declined to comment.

Advocacy group Community Development Initiative (CDI) field officer Napoleon Qayyum said that the group had informed high officials about the Korian attack, including the presidency, and that soon afterward the president issued a notice. Qayyum noted that the Korian and Gojra attacks follow a July 1 attack in Kasur, where swarms of Islamists ransacked and damaged 110 homes.

“It is a clear sign that violent attacks against Christians have dramatically increased in recent days,” he said, adding that CDI would provide legal help to victims. CDI works with assistance from the American Centre of Law and Justice.

Muhauddin of the private TV channel added that Punjab Chief Minister Shahbaz Sharif had taken the notice of the attacks and was forming an investigative team comprising the Faisalabad Regional Police Officer and Faisalabad Commissioner, which will send a report to him.

A spokesman from the Pakistani president’s office, former Sen. Farhatullah Babar, told Compass that President Asif Ali Zardari had taken a notice of the attack and had asked the provincial government to investigate. He said the president has condemned the attack and that there was no justification for anyone taking the law into their own hands.

Asked why the committee constituted by the provincial government did not have any Christians on it, he responded that it was the discretion of the provincial government to determine the make-up of the panel and that the federal government was concerned only about the report. Asked why an FIR had been filed against Christians and not Muslims for ransacking and vandalizing, he said only that appropriate action would be taken after the inquiry.

Member of National Assembly Farahnaz Ispahani, wife of Pakistani Ambassador to the United States Husain Haqqani, told Compass that President Zardari had directed Federal Minorities Affairs Minister Shahbaz Bhatti to visit the area and “express sympathy with the victims.”

Report from Compass Direct News