Weekend reading links

1. China is using the Covid 19 pandemic to push through a legislation that would allow it to establish national security institutions. The legislation, which would by-pass Hong Kong's Legislative Council and be an annex to the Basic Law, the city state's constitution. It would allow the government to target people indulging in "splitting the country, subverting state power" etc.

A similar attempt in 2003 to insert a new national security law, Article 23, was shelved after massive pro-democracy protests.

2. Pakistan has awarded the first phase of the construction of the Diamer Bhasha dam project in Gilgit-Baltistan in occupied Kashmir to a joint venture between Power Construction Corporation of China and Pakistan Army's Frontier Works Organisation. The total project, estimated to now cost between $8.77-14 bn, will be funded from Chinese loans drawn from the China-Pakistan Economic Corridor (CPEC). The project is estimated to finally generate 4.5 GW of power and store 8.1 million acre feet of water.

3. The NAR reports of threats from China to retaliate against US actions on Huawei,

"Based on what I know, if the U.S. further blocks key technology supply to Huawei, China will activate the 'unreliable entity list', restrict or investigate U.S. companies such as Qualcomm, Cisco and Apple, and suspend the purchase of Boeing airplanes," said Hu Xijin, editor-in-chief at the Chinese Communist Party-affiliated Global Times, which published such a report Friday... After U.S. intentions to double down on its Huawei ban had become known in March, Huawei's rotating chairman Eric Xu said he does not think "the Chinese government would sit and watch Huawei be slaughtered" and warned of rippling ramifications if Washington went ahead with such a move.

This would effectively trigger the start of a tit-for-tat round of actions, whose end-game can be very unpredictable.

For a start, such retaliation will almost certainly force President Trump, facing an election, into even greater belligerence. And in the short and even medium-run the costs to China can be prohibitive. Besides, it would further entrench the new Cold War mentality in the US as a bipartisan consensus.

4. The China diversification game is easier said than done. Even as President Trump is urging US companies to diversify away from China, Apple appears to be yoking itself even deeper into China. In what is being seen as an attempt to diversify its supply-chain dependence on Taiwan's Foxconn, Apple has been propping up a fast growing Chinese competitor, Luxshare ICT.

Apple has advised one of its Chinese AirPods assemblers to make a major investment in an iPhone and MacBook metal casing provider, a move the California tech titan hopes will create a formidable alternative to another of its longtime suppliers, Taiwan's Foxconn. Luxshare-ICT, a fast-rising Chinese tech company known for its aggressive growth strategy, has been in talks with Catcher Technology, the world's second-largest metal casing provider, for more than a year and has recently entered a deeper round of negotiations... The deal, if realized, would give Luxshare the ability to produce high-quality metal casing as well as access to smartphone assembly know-how, which would take it a step closer to becoming the Chinese version of Foxconn -- a single company with operations that span nearly the entire electronics supply chain. Such a move could ultimately help Luxshare grab a share of iPhone production, which ships around 200 million units each year. Foxconn, the world's largest contract electronics manufacturer, has long been Apple's biggest supplier, accounting for more than 50% of iPhone production since the device's debut in 2007. 

5. Graphic details of Chinese encroachments into Indian territory gradually over the years by Phunchok Stobdan. This article by Sekhar Gupta has a nice description of the Chinese strategy on the border. 

Everything, from 1962 to Doklam, fits a pattern: Deliver a message, add leverage, and return. All the stand-offs after that, including recent ones such as Chumar, Depsang Plains, and Doklam, have ended the same way. The message is, see, who’s the boss out here.

6. Saudi Arabia's $325 bn SWF, Public Investment Fund (PIF) is on a bargain hunting spree to invest in the assets distressed by the pandemic.

This is even as the country is facing a fiscal crunch from low oil prices, which has forced deep cuts in government spending, new debts, painful austerity measures and a tripling of VAT to 15%.

7. How quickly food tastes change, from the US yogurt market,

Greek yogurt occupied 1 percent of the yogurt market in 2007; that jumped to 44 percent by 2013.

8. The Economist has a profile of Princeton economist Leonard Wantchekon,

In 2014 Mr Wantchekon founded the African School of Economics in Abomey-Calavi, Benin. Its aim is to offer African students the highest standards of mathematics and economics teaching, ensuring they can compete with graduates overseas. It is refreshingly drab, with no splurging on a flashy campus or needless technology. The 100 or so students pay $2,400 per year, about the same as at a public university. “This is not about doing something grandiose,” says Mr Wantchekon. It is a model that can be replicated. Another campus was opened this year in Ivory Coast. The school draws on several influences. The name nods to the London School of Economics. Princeton is one of more than a dozen “academic partners”.

This is a mighty impressive achievement. The School has campuses in Benin and Cote d'Ivoire.

This is a good example of what reputed academic researchers based in US universities can do for their native countries - promoting academic pursuits there, instead of just using them as platforms to promote their professional careers. 

9. Has Covid 19 ushered in the return of the permit raj in India? The number of notifications and guidelines issued by the central and state governments in India is 4890 and counting. Naushad Forbes has a good listing of the new regime faced by his company here.

10. Good chronicle of a migrant student's misery in a journey from Ahmedabad to Warangal on the Shramik Special train. Sensitivity is not a trait that Indian state shows even in best of times. For sure, there are reasons. But the reality cannot be denied.

11. The Economist has a fascinating article on overseas Chinese diaspora billionaires. 

According to The Economist’s analysis of data from Forbes magazine, last year more than three-quarters of $369bn in South-East Asian billionaire wealth was controlled by huaren (a Mandarin term for “overseas Chinese” who are citizens of other countries). A lot resides in Singapore, a rich majority-huaren city-state. But plenty is spread from Indochina and Indonesia to the Philippines. Malaysia’s Robert Kuok oversees an empire that spans everything from sugar to Shangri-La hotels. In Indonesia Lippo Group, owned by the Riady family, is active in banking, property and health care. On last year’s list 15 of 17 Filipino billionaires were ethnic Chinese; SM Group, run by the Sy clan, has high-end malls across China. Myanmar is too poor for billion-dollar fortunes, but many of its leading businessmen are Chinese-Burmese, like Serge Pun of Yoma, a property-to-banking concern, or Aik Htun of Shwe Taung Group, with interests in infrastructure and real estate...

Although Chinese settlers first arrived in South-East Asia in the 15th century, many founders of today’s top huaren business dynasties fled south to escape poverty and violence in the early 1900s. Most assimilated culturally and, like Chia, took local names. They prospered first as traders, then in some cases by cosying up to power. Liem Sioe Liong of Salim Group, a noodles-to-finance conglomerate, enjoyed famously close ties with Suharto, Indonesia’s dictator from 1967 to 1998, picking up lucrative monopolies and licences in areas from flour-milling to clove imports. Around the region such links helped the tycoons build vast, vertically integrated groups as Asia boomed in the 1990s. Together these constituted what has sometimes been described as a “bamboo network” of firms with Chinese roots, united by Confucian values of diligence and thrift. Trading and feuding with one another in turn, their bosses ended up dominating industries from farming to finance.

And as with everything that has a Chinese connection, there is plenty to be concerned about,

The Overseas Chinese Affairs Office was recently folded into the Communist Party’s shadowy United Front propaganda division. Many suspect that Mr Xi Jinping wants to muddy the distinction between huaren and huaqiao (Chinese nationals living abroad). Some huaren business leaders are handed roles on Chinese state bodies, such as the Chinese People’s Political Consultative Conference, a talking shop. Politicians in South-East Asia worry in private about “influence operations” from Beijing.

12. Jean Dreze argues in favour of a dramatic expansion of the NREGS and making it a true demand-driven program,

This situation calls for large-scale opening of NREGA works on a proactive basis. Every village needs at least one major worksite, where a good number of people can work at short notice (with adequate distancing precautions). Ideally, workers should be allowed to enrol at the worksite... Much can be done to facilitate this: expanding the list of permissible works, hiring more gram rozgar sevaks (employment assistants), simplifying the implementation process, mobilising para-teachers for work application drives, and so on. And of course, top-down orders to expand the scale of works could work wonders... It is also worth considering a return to cash payment of NREGA wages, at least as an option for the duration of the crisis. This would not only help to ensure timely and reliable payment of wages, but also spare workers the ordeal of extracting their wages from overcrowded banks or business correspondents. Further, cash payment of wages would act as a tremendous incentive for rural workers to demand NREGA work, whatever it takes. 

13. Business Standard has an article examining the case for private prisons. This is an area where the tide has already turned in countries ranging from US, UK, Australia etc, as stories of problems with prison privatisation mount. An editorial in the Financial Times, no less, threw in the towel on privatised prisons last year. Another example of how trends which have played itself out and become discredited in developed economies continue to enjoy credibility among commentators in India (developing countries).

14. Finally, there is growing evidence of Indian lenders becoming over-cautious due to the mounting Covid 19 distress and turning away borrowers.