Chinese economy receives a package of stimulus program

China is about to infuse a multi-billion dollar financial package in order to maintain growth and insulate its economy against global slowdown. Among the top priorities are building of new roads, airports and hydropower stations, subsidizing purchases (on energy saving products) and reviving cash-for-clunkers programs (to boost up sales in the automobile sector). The fresh boost of investment is estimated to be around $150 billion or more.

China's economic stimulus program has barely received any formal acknowledgement; although, Chinese premier has agreed “new emphasis on growth.” The Prime Minister of China has also stressed on the importance to develop strategic emerging sectors, particularly when the economy is feeling downward pressure.

It is reported that China has sanctioned 868 new projects in the first four months of this year, followed by another 100 projects in the month of May alone. This is a remarkable shift from recession hit economies as both the investment and the consumption incentives are totally backed by the state. As of now, Chinese planners are treading cautiously, watching the impact of economic stimulus on Chinese economy.

World leaders use Seoul nuclear summit to warn North Korea

In the ongoing nuclear summit in Seoul (South Korea), the plan to launch a rock-powered satellite by North Korea has reportedly dominated all other discussions, despite not being on the agenda list. Leaders from 50 different nations, including the United States, Russia and such others have assembled together to discuss how to make the world safe from nuclear terrorism. It is also being said that the world leaders are choosing the summit platform to bore on the North Korean leadership to abandon its rocket launching plan next month (mid-April) or face consequence.

The North Korean leadership has said that they intend to launch a weather satellite as part of their ‘peaceful space program’. However, the nations opposing North Korea hold a different opinion. They believe that North Korea is going for a test missile launch.

In his opening speech in the nuclear summit, the Prime Minister of Japan, Yoshihiko Noda, has urged North Korea to exercise self-restraint. Pointing out further, he stated that North Korea’s nuclear aspirations would undermine the efforts of international community to ensure a safer world through nuclear disarmament.

On Monday, the United States President, Barak Obama, has clearly stated that Pyongyang’s pursuit for nuclear power would not ensure the security that it seeks. Rather, it would endanger North Korea and make it totally isolated from the rest of the world. In fact, Obama minced no words saying that if North Korea chooses to go with its plan, any potential threat would be met jointly by the United States and China. Chinese leadership has expressed “serious concerns” about the latest development.

Earlier in the day, President Obama along with his South Korean counterpart Lee Myung-bak have cautioned Pyongyang that it would face further economic sanctions if it does not abandon its launch plans. South Korea has also warned that it would closely track its (missile’s) trajectory and would not hesitate to shoot it down if found within the South Korean territory.

Around two months ago, North Korea have requested food assistance from the United States in exchange for suspending its nuclear program. But it seems to have retreated its stand. Currently, North Korea is in acute food shortage.

Annan’s peace mission in Syria finds Russian support

The UN-Arab League special ambassador Kofi Annan had a high level meeting with Russian President Dmitry Medvedev on Sunday about Syria. Annan is currently on an official tour to Russia and China to ramp up support for restoration of peace in Syria. While extending his full support, the Russian President acknowledged that Kofi Annan could be President Bashar-Al-Assad’s last chance to avoid a violent civil war and restore peace in the country. Kofi Annan would round off the tour with China.

To end the relentless fighting since the beginning of Syria uprising last year, Annan is trying to build consensus for immediate cease fire and unfettered entry for humanitarian aid in Syria. While President Barak Obama of the United States and Turkish PM are chewing over sending medical and communications equipments, termed as non-lethal aid, to anti-government activists in Syria, it is not yet determined the nature of Moscow’s participation in Annan’s peace mission.

Despite the latest diplomatic efforts, cities of Homs and Idlib are continued to be bombarded by Syrian forces, as claimed by Syrian opposition. Unconfirmed sources have claimed 30 deaths from all across Syria on Sunday, particularly from Homs and Idlib. While some towns like Hirak and Daraa are facing acute food shortage, others are believed to be pounded by military aircraft.

Sensex hammered to 17,196.47 as rupee weakens

Sensex plummeted to a two-week low of 17,196.47 on Thursday’s trading session as Indian currency, Rupee, lost its shine against dollar in response to increase in global oil demand. Currently, the global crude oil price is oscillating between $105 and $110 per barrel. The weak Industrial data from the Eurozone and China has also added to the weakening of rupee from 50.68 to 51.28 on Thursday.

In the domestic front, the partial rollback of railway fares during the latest railway budget has already dampened the market sentiment. In such a scenario, if there is hike in fuel price, following the global cue, it could inflate the prices of goods and services. On the other hand, if the current trend of global oil price rise is not matched with hike in fuel prices in India, there is a fear that the additional subsidy burden could add to the fiscal deficit and hurt Indian economy. All eyes are now on policy review meet next month when RBI is going to take its decision on interest rate cut.

This apart, a recent CAG report (the Comptroller and Auditor General) has revealed that the decision to allot coal blocks without auctioning them during the period 2004-2009 has not gone down well with the Indian economy. It has cost the Indian government a loss of Rs 10.67 lakh crore.

But experts are hopeful that as long as economic growth rate remains positive and foreign institutional investors (FIIs) continue to stay invested in Indian market, it should stay strong.

Iran is demanded unfettered access for nuclear inspection

The five permanent members of the UNSC (United Nations Security Council) including the United States, Britain, France, China and Russia along with Germany have called on Iran on Thursday to allow unrestricted access to all its nuclear sites, especially at Parchin. The latest development took place a day after the International Atomic Energy Agency (IAEA) chief, Yukiya Amano, expressed doubts about Iran’s intention for full nuke inspection. The international nuclear experts suspect that the military base at Parchin contains a testing chamber for atomic weapons.

The latest joint statement made by the six nations is aimed at bringing Iran to the negotiation table over its nuclear program. It is also meant to send out the signal that Iran has lost the support of two of its key allies, Russia and China, after the way it has carried on with producing uranium enrichment in spite of repeated appeals for its immediate suspension.

The statement also mentioned the last two visits of IAEA inspectors to Iran, in January and February this year, when they were denied access to the “relevant sites,” despite Iran’s assurance.

The last negotiation fell through more than a year ago and brought a series of economic sanctions on Iran, thus raising the global oil price. Iran has maintained that its nuclear program is meant for civilian and peaceful purposes and not for building nuclear weapons.

Iran to discuss its nuclear program with global powers

After more than a year of diplomatic standoff, the six-nation global powers are to resume dialogue with Iran on the highly contentious Iran nuclear program. The announcement came from the Chief of foreign affairs of EU, Catherine Ashton, on Tuesday who is currently acting for the six global powers – the United States, Britain, France, Germany, China and Russia.

The offer for negotiations was made by Iran last month amid tremendous international pressure to halt its nuclear program. On Tuesday, Iran has made another peace offer. For the first time, it has shown willingness to give access to International Atomic Energy Agency (IAEA) nuclear experts to visit its main nuclear complex. By making such an offer, it is believed, Iran is trying to send out the message that its nuclear program is for peaceful purposes only, that it has nothing to hide.

The United States together with the neighboring Israel have been alleging Iran of using its nuclear program for building nuclear weapons. While, Israel has openly declared its intention to destroy Iran’s nuclear facility, the United States has shown marked restrain from making any such comments till now. President Obama of the United States has pointed out “beating the drums of war” is of no use. It has to justify the costs and merits of military action.

In fact, in today’s world, war should not be an option. Whichever side wins, it is colossal loss to mankind. War must not be justified under any pretext.

China allocates a whopping 11 percent for defense budget

On Sunday, China has declared that it would spend more than 11 percent on defense in the year 2012. The hike in defense budget would shoot up China’s military spending to around $106 billion in 2012. This is approximately 68 billion dollars more as compared to last year’s budget.

China’s double-digit spending program has raised concerns in the United States as it fails to clarify China’s real intention behind such a large-scale investment on defense other than strengthening its (sovereign) security. There is also no mention regarding the type of weapons China is going to build. It is believed that the real figure could be much higher keeping in mind China’s policy to keep its decision-making under wrap.

Since the last decade, China has been gradually increasing its defense spending. It is believed that China’s defense policy is aimed at counteracting growing American presence in the region. China is a growing economic power in Asia along with India.

Currently, the United States is pushing for more clarity in China’s military policy. Last year, the two countries were engaged in strategic security dialogue, attended by several military officials and senior citizens from both Washington and Beijing. Though it failed to produce any result, analysts are of the opinion that more dialogues are needed in the future to ease the tension between the two countries.

How different is Syria unrest from recent Arab uprisings?

As the death toll rises in Syria, diplomacy fails and call for help intensifies, for the first time countries of the world are at a loss regarding how best to handle Syria crisis. Unlike other countries Libya, Yemen, Egypt or Tunisia where the autocrat rulers were overthrown by the people of their country, toppling the current regime in Syria presents some unique problem.

While many believe that the Syria unrest would eventually make the Bashar-Al-Asaad government to step down from power, but not everyone is buying into the idea. Since the onset of revolution and President Assad unleashed crackdown on protestors, there is something unique going on in Syria. This is the proxy war that the larger powers in the world are reported to be engaged in with each other (due to geopolitical proximity or business stakes) in Syria. This means if the current regime is toppled, this may divide the world.

For many years, Syrian regimes have shared closed ties with Russia and Iran and allowed them to extend business interest into their country. On the other hand, they have also maintained fairly good relationship with the United States and a stable one with the neighboring Israel. But the gross human rights violations in Syria have put the United States against Russia and China who are against foreign military intervention.

Also, unlike rebels in Libya who were unified and used to have a strong hold in Bengazi, protestors in Libya are scattered and unorganized. This has made them an uncertain entity and therefore rules out support from outside, especially with artillery or machines.

Finally, as opposed to other Arab uprisings, especially in Egypt, the Bashar-Al-Asaad regime has the backing of its army. The Syrian army is powerful, modern and unified as compared to its Libyan counterparts. It is also being said that Asaad still enjoys some support in Syria. This makes an outright military intervention in Syria highly unlikely.

Europe calls for China to rescue Euro

Concerns over weak Euro have prompted EU leaders to seek out for Chinese investment. In what is seen as a major shift of power towards the East, top EU officials have initiated talk with China to rescue Europe with fresh funds. If this happens, this would give China the perfect opportunity to get a very strong hold in the Western financial world.

China indicated that it doesn’t want to be a mere spectator in the current debt crisis – Europe being their biggest trading partner. But Chinese government certainly needs to ensure that European heads meet certain key conditions – it doesn’t want to “throw away the countries wealth.” China has alluded that in exchange of emergency rescue fund, it expects European leaders, and the rest of the world, to stop criticizing its economic policy. In addition, it is also expected that China might demand various other concessions, which might include financial guarantees and concessions in trade policies, etc.

Klaus Regling, the head of the European rescue fund, on his visit to Beijing on Friday acknowledged that he doesn’t expect an immediate deal with China. Reports are going around that China has also made a tough proposal.

It is anticipated that if China choose to rescue Europe, it will bring the beginning of a new world order – overthrow the world’s most powerful financial power long held by the United States. Does that mean China is the new super power in the making? We have to wait and watch...