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For North Korea, this element matters, and it is not uranium
Jul 13, 2017 | The Straits Times
Despite the international opprobrium over its nuclear ambitions, North Korea has managed to take advantage of a loophole in United Nations sanctions by increasing its exports of iron ore. The key buyer, as usual, is China. -
New Xinjiang highway to open up West
Jul 16, 2017 | Global Times
By Liu Caiyu
A new highway between Beijing and Northwest China's Xinjiang Uyghur Autonomous Region officially opened to traffic on Saturday after the last sections were finished, which experts said will benefit the region in realizing its importance as a key transit point on the Silk Road Economic Belt. -
U.S. Considers New Sanctions on Chinese Firms
Jul 14, 2017 | U.S. News & World Report
By Katelyn Newman
The Trump administration may impose new sanctions on small Chinese banks and firms within weeks for not being more strict in their trade with North Korea, two senior U.S. officials told Reuters Thursday. -
China vs. USA in the Trump era
Jul 16, 2017 | Fox News
By Ying Ma
Chinese leaders are determined to challenge U.S. dominance in Asia and had never planned on asking for American permission, no matter who occupies the White House. -
Russian energy projects breathe life into Northern Sea Route
| Journal of Commerce
By Bruce Barnard
As sea temperatures warm and the polar ice cap recedes, the Arctic route has attracted heavy-lift shipments to Russian energy projects. The route is ice-free for only four months a year and remains challenging operationally, but a small band of heavy-lift carriers have been willing to accept the risks. -
Trans-Pac spot rates slip as peak season warms up
Jul 14, 2017 | Journal of Commerce
By Bill Mongelluzzo
Spot rates in the eastbound Pacific declined slightly for the second consecutive week, although the 2 percent drop to the East Coast reflects a tightening of capacity, whereas the 5 percent decline to the West Coast indicates that the bigger ships calling in Los Angeles-Long Beach still have sufficient space.
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For North Korea, this element matters, and it is not uranium
Jul 13, 2017 | The Straits Times
North Korea has little the world wants, but it does have iron.
Despite the international opprobrium over its nuclear ambitions, North Korea has managed to take advantage of a loophole in United Nations sanctions by increasing its exports of iron ore.
The key buyer, as usual, is China.
In global terms, the dollar figure is small: North Korea exported an estimated US$74 million (S$102 million) of iron ore and concentrates to China during the first five months of 2017.
Still, that is real money for the economically isolated country - which shares a land border with China - and represents a 212 per cent increase from the year before, according to data from the Korea International Trade Association.
North Korean iron tends to be of higher quality than the ore found in China, according to Ms Sabrin Chowdhury, a commodities analyst with BMI Research in Singapore.
That makes it attractive to some state-owned Chinese steelmakers looking to reduce costs, she said. "There is genuine demand for North Korean iron ore," she said added.
North Korea is a minor player compared with suppliers such as Australia and Brazil.
China imported about 445 million tonnes of iron ore in the first five months of 2017, according to Bloomberg Intelligence, of which just 1.1 million tonnes came from North Korea.
Still, Chinese purchases of North Korean iron ore are contributing to tensions between the United States and China following President Donald Trump's statement last week expressing annoyance about China-North Korea economic ties.
Two-way trade between China and North Korea rose 10.5 per cent to US$2.55 billion in the first half of 2017, according to data released by the Chinese government on Thursday (July 13).
China's exports to North Korea rose 29 per cent from the same period in 2016, General Administration of Customs spokesman Huang Songping said at a briefing in Beijing. Imports from North Korea fell 13 per cent.
China has seriously carried out United Nations sanctions on North Korea, said Mr Huang. Chinese exports to the North were mainly consumer goods such as textiles, which are not on the list of sanctioned items, the spokesman said.
For the Chinese government, purchases of iron ore provide a way to support the regime of Mr Kim Jong Un now that sanctions more strictly cover North Korean coal.
In 2016, sales of coal accounted for more than 50 per cent of North Korean exports to China and about a fifth of the country's total trade. However, in February 2017, China said it would halt purchases until the end of the year, in compliance with Security Council resolutions over the North's nuclear programme.
North Korean iron ore is not covered by the same sort of restrictions. The Security Council approved a resolution in November 2016 that exempted transactions in iron and iron ore intended "exclusively for livelihood purposes".
The volume of Chinese imports of North Korean iron ore nearly doubled in the first five months of 2017 compared with the same period last year, according to Bloomberg Intelligence.
Since North Korea relies on Chinese imports for many of its basic requirements, maintaining exports of iron ore and other commodities helps to keep the flow of essentials from drying up, said Mr Leonid Petrov, Korean Studies researcher at Australian National University's College of Asia and the Pacific.
"They need grain, they need fuel, they need consumer goods and that's what China provides," he said.
North Korea's biggest need is to pay for fuel, since the country does not come close to producing enough oil.
"North Korea is not self-sufficient," said international relations associate professor Robert Kelly at Pusan National University in the South Korean city of Busan. If China were to cut off supplies, "it would be economically disastrous", he said.
A spokesman for China's Foreign Ministry said the two countries "maintain normal trade relations" and that China's position on denuclearisation on the Korean Peninsular is "firm and clear".
"According to UN Security Council resolution 2321, iron and iron core imported from DPRK for the purpose of people's livelihood, and not for the purpose of generating profits for its nuclear programme, is not on the sanctions list," ministry spokesman Geng Shuang said in a briefing in Beijing, referring to North Korea's official name, the Democratic People's Republic of Korea.
"The Chinese side will continue to comprehensively, accurately, earnestly and strictly comply with UN Security Council resolutions."
In the 1980s and 1990s, North Korea was a major supplier of iron ore to Chinese steelmakers, according to Mr Philip Kirchlechner, director of Iron Ore Research in Perth.
Since then, the country has fallen far behind industry leaders. Exports to China have moved within a relatively narrow range, reaching three million tonnes in 2013 and falling to 1.6 million tons in 2016.
"There hasn't been a dramatic change in volume," said Mr Kirchlechner. "In terms of economic significance today, it's been reduced to nothing."
While a further tightening of UN sanctions could jeopardise that trade, for now, the North Koreans stand to benefit as Chinese state-owned enterprises saddled with debts look for inexpensive raw materials.
Given their proximity to that market, North Koreans can make money without having to be as efficient as industry leaders, said BMI's Ms Chowdhury. "Even if their cost is double that of Australia's, they're still making a profit."
http://www.straitstimes.com/asia/east-asia/for-north-korea-this-element-matters-and-it-is-not-uranium
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New Xinjiang highway to open up West
Jul 16, 2017 | Global Times
By Liu Caiyu
A new highway between Beijing and Northwest China's Xinjiang Uyghur Autonomous Region officially opened to traffic on Saturday after the last sections were finished, which experts said will benefit the region in realizing its importance as a key transit point on the Silk Road Economic Belt.
The 2,768 kilometer-highway, the G7, links six provinces and regions - Beijing, Hebei, Shanxi, Inner Mongolia Autonomous Region, Gansu and Xinjiang. It lops 1,300 kilometers off the previous route.
"The highway makes the distance between the central government and Xinjiang people shorter," Gao Jianlong, head of the Xinjiang Academy of Social Sciences, told the Global Times. Communications among regions will increase along with the highway, which will increase understanding of Xinjiang, Gao added.
"Offering multiple options for cargo transportation, the highway will benefit Xinjiang to realize its future position as a core zone and transportation hub of the Silk Road Economic Belt," Gao noted.
Xinjiang's main products of fruit, oil and cotton will benefit from the new highway.
It will also bring more vitality to local border cities such as Alashankou and Khorgas, on the frontier with Kazakhstan, which will boost central and western Asian countries, Gao added. The highway will become the most convenient way for transshipments through Khorgas to the port of Tianjin, linking the Silk Road on land to the 21st Century Maritime Silk Road.
A high-speed railway line in Xinjiang also went into operation in 2014, linking the region with Lanzhou, capital of Northwest China's Gansu Province.
The last three sections of the highway were put into operation on Saturday - the 930-kilometer section from Linhe in North China's Inner Mongolia Autonomous Region to Baigeda in Gansu, the 134-kilometer section from Baigeda to Mingshui, Xinjiang and the 178-kilometer section from Mingshui to Hami, Xinjiang.
The Linhe-Baigeda section, which had to overcome harsh environmental problems, is the world's longest expressway to transit a desert, the Xinhua News Agency reported. The highway section crosses the Badain Jaran Desert, the third- largest desert in China.
Niu Tao, a staffer responsible for the Linhe-Baigeda project, was quoted by Xinhua as saying that the team had to build special slopes to stop the road being covered by shifting sands.
Ding Yifan, a deputy director of the Institute of World Development at the State Council's Development Research Center, told the Global Times the highway is crucial infrastructure to further boost western China economically.
"The project will help reduce the geographical disadvantages that have long inhibited western China's development, and it puts the region at the forefront of economic development," Ding said.
It will be a core traffic route to support China's Western Development strategy, Ding added.
Together with the construction of the highway, a 935-kilometer power supply line and a 458-kilometer water pipeline were also built in Inner Mongolia.http://www.globaltimes.cn/content/1056573.shtml
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U.S. Considers New Sanctions on Chinese Firms
Jul 14, 2017 | U.S. News & World Report
By Katelyn Newman
The Trump administration may impose new sanctions on small Chinese banks and firms within weeks for not being more strict in their trade with North Korea, two senior U.S. officials told Reuters Thursday.
The timing and scope of the economic sanctions will depend on how China responds to this increased pressure during an upcoming meeting, an official told Reuters.
The threat on Chinese firms comes after North Korea successfully launched its first intercontinental ballistic missile on July 4. The Trump administration has continuously urged Beijing to pressure its neighbor on its missile tests, and the new sanctions would specifically target smaller companies with connections to North Korea's nuclear and missile programs, an official told Reuters.
Larger companies would not be affected, at least initially, by the sanctions, an official explained.
Chinese Foreign Ministry spokesperson Geng Shuang said Thursday in a press briefing that the ongoing iron ore trade between China and North Korea – which has increased by 10.5 percent since the start of this year – does not violate either the U.S. or United Nations' sanctions against Pyongyang.
"China's stance of staying committed to denuclearization of the Korean Peninsula is firm and clear, and it will continue to implement the relevant Security Council resolutions in a comprehensive, accurate, faithful and strict manner," Geng said.
"The maintenance of normal economic and trade exchanges between China and the DPRK does not violate Security Council's resolutions," he continued.
Senior U.S. and Chinese officials are scheduled to meet and talk about China's trade with the U.S. and North Korea in Washington Wednesday. Meanwhile, U.S. ambassador to the U.N. Nikki Haley has been trying to persuade Russia and China to join in on a U.N. Security Council resolution that would implement stiffer sanctions on North Korea for its nuclear missile program.
https://www.usnews.com/news/world/articles/2017-07-14/us-considers-more-sanctions-against-chinese-firms-for-north-korea-ties
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China vs. USA in the Trump era
Jul 16, 2017 | Fox News
By Ying Ma
Conventional wisdom says that President Donald Trump has been propagating America’s retreat from the world, giving China a golden opportunity to fill the void and make its case for global leadership on issues such as trade and climate change. These declarations grew to a crescendo at the G-20 Summit in Hamburg, Germany, earlier this month, but they are fundamentally mistaken about U.S. leadership and Chinese reforms and ambitions.
Chinese leaders are determined to challenge U.S. dominance in Asia and had never planned on asking for American permission, no matter who occupies the White House.
U.S. global leadership also is not premised on blindly following the preferences of other countries. Additionally, under Trump’s predecessor, U.S. foreign policy bounced between setback and blunder, especially in Asia. The Trump administration would be wise not to rush into the same exercise.
After the new U.S. president took office, the Chinese commerce minister admonished America: “Now is no time for protectionism.” Instead, he observed, more “openness and cooperation” between the two countries was the right path forward.
His message, delivered in 2009, was intended for President Barack Obama, who came to office promising to renegotiate NAFTA unilaterally and oppose free trade pacts concluded by the George W. Bush administration.
Today, Communist China has again taken to preaching the virtues of globalization. Those who declare the world has been turned upside downobviously have a short memory, but they also fail to appreciate that China’s pronouncements stem from more than pure opportunism; they are about the core tenets of the country’s messy economic reforms as well.
Beijing had professed its affection for the market economy long before Trump surprised the world with his trade rhetoric. Indeed, China’s economic reforms of the past 38 years featured precisely a raging battle between free-market capitalism and state control. In November 2013, the Chinese Communist Party even issued a “blueprint” pledging to give the market a “decisive role” in its ongoing economic experiment.
Yet China is in no way qualified to lecture the U.S. on economic freedom. In its “blueprint,” the Chinese Communist Party could not even bring itself to refer to the private sector by name, and opted to call it the “non-public ownership economy.” Whatever Xi may say about open economies at fancy international gatherings, he has expressed little interest to stand on the side of the market reforms against statism at home.
Meanwhile, those familiar with China’s trading practices know not to buy into Xi’s speechmaking at face value. Trump’s threats of drastic tariffs might be over the top, but China hardly has the moral high ground. After all, this is the country that favors domestic industries while restricting imports, coerces technology transfer from foreign firms wishing to operate in the China market, and steals over $200 billion of intellectual property from the U.S. each year.
Similarly, Beijing’s supposed leadership on climate change means standing together with Europe and other countries on an agreement that would have almost no discernable impact on the climate.
Amid these contradictions, Beijing’s intent to challenge the U.S.-led order in Asia is no joke, and it would be a mistake to assume, as the Obama administration did, that China will back down simply because the U.S. says so.
Notably, China’s “One Belt, One Road” initiative, a grand vision for building infrastructure and promoting development along maritime and land routes of the old Silk Road, has been touted as China’s effort to create a new world order. Already, the initiative has attracted 68 other member countries, on whom China has promised to spend over $100 billion.
Many see this as an opening for China to challenge the international financial architecture that America helped built, but the unmistakable rebuke to U.S. leadership in this realm actually took place a couple of years ago when Obama tried and failed to strong-arm allies into boycotting the Asian Infrastructure Investment Bank (AIIB), an entity established by China to fulfill the unmet infrastructure needs of Asia’s emerging markets. Allies from Europe to Asia ignored U.S. wishes and signed on. The AIIB is now a key funding organization for “One Belt, One Road” projects.
The Obama administration’s ham-handed approach to the AIIB fit into an overall Asia policy that was ineffective and inadequate. Having begun by over-promising an accommodation of Beijing’s interests, the administration then announced a muscular “pivot” to Asia. Beijing saw the effort as a thinly veiled effort to contain China’s rise and pushed back harder. Before China’s aggressive land grabs in the South China Sea, intimidation of neighbors and outrageous cyber-attacks against the U.S. government, the Obama administration’s response was frequently hapless.
Obama’s inability to enforce the red line he drew for Syria’s use of chemical weapons in 2013 further eroded U.S. credibility. It sent a message to the capitals of Asia that America might talk tough but would do little.
In short, recollections of the success of U.S. global leadership before Trump are simply misplaced, as rumors of the imminence of a Chinese global takeover are greatly exaggerated.
This does not mean that the U.S. should graciously yield power to China, and the Trump administration has never argued as such. Just in recent weeks, it grumbled about China’s inability to rein in North Korea’s nuclear ambitions, announced sanctions against a Chinese bank for aiding North Korea, approved a new arms sales package to Taiwan (to help it defend against China), and conducted a “freedom of navigation” exercise in the South China Sea near an island that is claimed by China but disputed by its neighbors.
Contending with China’s rise will require a much more comprehensive strategy than just a tougher posture, but trying something new might actually be a good idea, and was exactly what the American electorate ordered last November.
http://www.foxnews.com/opinion/2017/07/16/china-vs-usa-in-trump-era.html
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Russian energy projects breathe life into Northern Sea Route
| Journal of Commerce
By Bruce Barnard
As sea temperatures warm and the polar ice cap recedes, the Arctic route has attracted heavy-lift shipments to Russian energy projects. The route is ice-free for only four months a year and remains challenging operationally, but a small band of heavy-lift carriers have been willing to accept the risks.
The Arctic market has seen “unbelievably high traffic” in the past two to three years, said Gleb Faldin, commercial manager at Hansa Heavy Lift, one of the major players in a region that opened up to the heavy-lift and project cargo shipping business only a decade ago.
The bulk of the route’s heavy-lift traffic has been linked to Russia’s $27 billion Yamal liquefied natural gas (LNG) plant, some 600 kilometers (375 miles) north of the Arctic Circle, and a few other projects including the Tobolsk petrochemical plant. With the Yamal project nearing completion and scheduled to deliver its first LNG later this year, heavy-lift traffic to the Russian Arctic market is set for a temporary slowdown. However, Russia hopes to develop the Northern Sea Route across its Arctic coast as a transit route that shaves 4,500 nautical miles from the voyage between East Asia and North Europe.
Several carriers have ordered vessels to operate in the region. In March, Amsterdam-based Spliethoff Group announced an order for six ice-class, multipurpose vessels with capacities of 18,000 deadweight tons.
The ships are scheduled for delivery from China’s Ouhua shipyard in two-month intervals beginning in January 2019. The vessels are designed with high fuel efficiency that will permit them to operate in extremely remote places, including the Northern Sea Route, said Sander Schuman, Spliethoff marketing manager. The Russian Arctic niche reflects a trend toward specialization in cargo vessels.
“There is a definite trend in owners looking at vessels with more specific capabilities — whether this is ice-class or heavier lift or dynamic positioning systems,” said Susan Oatway, lead analyst for multipurpose shipping at Drewry Maritime Research. “It is more a need for owners to focus on something that other owners don’t have to give them a competitive edge.
http://www.joc.com/maritime-news/trade-lanes/russian-energy-projects-breathe-life-northern-sea-route_20170715.html
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Trans-Pac spot rates slip as peak season warms up
Jul 14, 2017 | Journal of Commerce
By Bill Mongelluzzo
Spot rates in the eastbound Pacific declined slightly for the second consecutive week, although the 2 percent drop to the East Coast reflects a tightening of capacity, whereas the 5 percent decline to the West Coast indicates that the bigger ships calling in Los Angeles-Long Beach still have sufficient space.
The peak season spike in US imports from Asia should be just around the corner. Normally the lower-value holiday merchandise begins arriving in August, and by late September the higher-value consumer items are moving. As ships fill up, first to the East Coast and then to the West Coast, spot rates increase from week to week, sometimes by double-digits, and cargo is often rolled to subsequent voyages. The spot rate for shipping a 40-foot container from Shanghai to the East Coast was $2,251, down 2 percent from $2,307 last week. The West Coast rate was $1,265 per FEU, down 5 percent from $1,333 last week, according to the Shanghai Containerized Freight Index published under the Market Data Hub on JOC.com.
Container volumes are settling into normal seasonal flows, signalling that ports and shipping lines appear to have adjusted to recent events in the trade. These include the April 1 shotgun start of the restructured global vessel-sharing alliances, the deployment of larger vessels on the East Coast following the Panama Canal expansion project, the raising of the Bayonne Bridge in New York-New Jersey last month, and the June 27 cyber attack that affected Maersk Line vessels and the marine terminals of its sister company APM Terminals.
Spot rates can increase quite dramatically during the peak season from July to October, surging as much as $1,000 per FEU. Last year, for example, the East Coast rate increased in big jumps from $1,727 per FEU in mid-July to $2,836 in October. The West Coast rate increased from $1,166 per FEU to $2,034 during that period. As ships fill up, some lower-priced shipments are rolled to subsequent voyages by higher-paying freight as carriers attempt to maximize profits.
This prospect is likely this peak season because carriers were generally not able to exceed break-even rates in their service contracts with larger accounts, so they hope to achieve profitability with rate hikes during the peak months. Peak-season volumes can sometimes contribute to congestion at marine terminals and equipment shortages, especially in Southern California and New York-New Jersey, although terminal operators and truckers in Los Angeles-Long Beach, the largest US port complex, said this week terminals are fluid and there are no serious chassis shortages, therefore they are optimistic the ports can handle the peak-season volumes this autumn.
http://www.joc.com/maritime-news/trade-lanes/trans-pacific/trans-pac-spot-rates-slip-trade-preps-peak_20170714.html
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