For the first time, extreme poverty has fallen below 10% of the global population.
The new global poverty line uses updated price data to paint a more accurate picture of the costs of basic food, clothing and shelter needs around the world. In other words, the real value of $1.90 in today’s prices is the same as $1.25 was in 2005.
East Asian and Pacific regions have made the most progress. In 1990 just over 60% of the population lived in poverrty. Today that number is estimated at 4.1%. South Asia has also shown progress, moving from 51% to 13.5%, while sub-Saharan Africa remains the most challenged by poverty with 35.2% of the population living on less than $1.90 a day.
Investments in education, health and social safety, in addition to strong growth in developing countries,have been mainly responsible for the rapid decline in global poverty. “This new forecast of poverty falling into the single digits should give us new momentum and help us focus even more clearly on the most effective strategies to end extreme poverty,” said Jim Yong Kim, President of the World Bank, in a statement. Read the rest of this entry »
On display: an upgraded military relationship that could complicate U.S. strategy
BEIJING — Jeremy Page reports: When a Chinese honor guard joins a military parade in Russia’s capital this weekend, watched by China’s President Xi Jinping, it will mark more than just a symbolic recognition of the two countries’ contributions to the Allied victory in 1945.
China’s participation also reflects an upgrade of its military ties with Russia, including joint naval exercises and a revival of arms purchases, that could complicate U.S.-led efforts to counter both nations’ expanding military activities, analysts and diplomats say.
“They’ve basically come to a consensus that despite their differences over some national interests, they really face the same common enemy.”
The 102 Chinese troops who will join the Victory Day parade in Moscow on Saturday were seen during a rehearsal this week marching through streets near Red Square singing the Russian wartime ballad “Katyusha”, according to video footage posted online.
The only other foreign countries with troops in the parade are India, Mongolia, Serbia and six former Soviet states.
“I think they’re both sending a message that their relationship is stronger than outsiders generally expect and if others put pressure on either in their own arenas, the two will stand together.”
— Gilbert Rozman,an expert on China-Russia relations at Princeton University
The Chinese ships—two missile destroyers and a supply vessel — will then take part in joint exercises with the Russian navy in the Mediterranean Sea for the first time, according to Chinese and Russian authorities.
Both sides say the drills aren’t directed at other countries, but the timing, after Russia’s 2014 annexation of Crimea, and the location, on NATO’s southern flank, have compounded Western concerns about an emerging Moscow-Beijing axis.
“The main significance is that the two countries’ navies are learning how to jointly project power into the other regions of the world,” said Vasily Kashin, an expert on China’s military at Moscow’s Centre for Analysis of Strategies and Technologies.
The Chinese ships’ visit to Novorossiysk could be seen as a response to NATO ships holding exercises in the Black Sea in March, he said, the message being: “Russia has allies too.”
On Wednesday, Russia’s government unveiled a draft cybersecurity deal with China under which both countries agree not to conduct cyberattacks against each other and to counteract technology that might disrupt their internal politics.
The rapprochement between Moscow and Beijing has been driven in large part by Western sanctions which have forced Russia to seek new markets for its oil and gas and new sources of investment.
Mr. Xi also appears to share a personal affinity with Russian President Vladimir Putin who is seen by many in China as a strong, patriotic leader.
The relationship, though well short of a formal alliance, is now developing a more substantial military dimension as Russia ramps up air and naval patrols around Europe and China seeks to challenge U.S. military dominance in Asia. Read the rest of this entry »
Edited from an interview with William Kazer
Julia Leung has spent two decades engaged in financial policy work for the Hong Kong government. During her time as an official, she’s seen the city’s economy whiplashed by the 1997-1998 Asian financial crisis and again by the global crisis a decade later. She has also witnessed the territory’s increasing economic links to mainland China.
In her new book The Tides of Capital, Ms. Leung examines the origins and response to financial crises of the 1990s and 2008 that shook economies across Asia and the world. The former Hong Kong Monetary Authority official and ex-undersecretary for financial services and the treasury (who also had a decade-long stint with the Asian Wall Street Journal) contends that emerging economies need a greater voice in global financial governance. China Real Time caught up with the reporter-turned-policy maker to talk about the financial challenges facing emerging nations, as well as China’s own financial and economic reforms.
In your book you conclude that the IMF and the U.S. offered up the wrong prescriptions in the Asian crisis of 1997-1998. Where do you see policy leadership headed in the future?
Twenty years ago, the world was divided between the core and the outlying periphery….Financial crises only happened in the periphery, and the core dished out advice. In 2007, financial crisis erupted at the core and rippled to the periphery. Between 2008 and 2013, the size of China ’s economy doubled in dollar terms. The U.S. grew 14% during the same period, while Europe including the U.K. still falls short of the peak reached before the crisis. Combined GDP of emerging markets now make up more than 50% of global GDP, compared to one-third in 1990.
There will have to be considerable give-and-take between the country that is still the world’s leading economy and the other important players, especially China, that are assuming a progressively more important role. In view of the economic stagnation and political infighting besetting Europe, that continent will not be playing a full part in developing and policing a series of better standards for world economic and financial governance. The world will rely ever more on a U.S.-Asian tandem for policy leadership.
You say the U.S. Congress is standing in the way of reforming International Monetary Fund quotas that would give more say to emerging markets. What will happen if there’s no reform?
The IMF is ideally positioned to provide policy leadership, particularly at times of crisis, but its effectiveness is undermined by its shareholding and governance structure, which has not kept pace with the shift in economic power to emerging markets. It is not surprising that developing countries have shown considerable frustration and exasperation with this imbalance, leading to new regional financing facilities, such as the Asian Infrastructure Bank and the New Development Bank.
When the core of the old world order continues to write rules that don’t take developing countries’ interests into account, the “peripheral” nations will use their own vast resources to start a new core…and write their own rules.
You say Asia needs to speak with a more coordinated voice. How much progress do you see here and what steps are still needed?
Even if Asia has a coordinated voice, it’s hard for it to be heard in the councils of the world power when the governance of these councils is slow to reflect shifting power. Read the rest of this entry »
“It is not a surprise that China’s economy is big but this is just because its population is big…”
In two essays, the FT’s chief economics commentator and Asia editor examine the significance of China’s imminent emergence as the world’s biggest economy
For FT.com, Martin Wolf and David Pilling write: This week we learned that China is about to overtake the US as the world’s largest economy. Since the latter is believed to have had the world’s largest economy since the early 1870s, this is a noteworthy moment. But it is not as noteworthy as many fear and others hope.
Start with what these calculations, derived from the World Bank’s longstanding international comparisons project, mean. This is an attempt to compare standards of living across countries. In 2011, China’s gross domestic product per head at market exchange rates was just 11 per cent of US levels. But once the low prices of many of China’s relatively non-tradeable goods and services are taken into account, this rose to a fifth of US purchasing power per head.
Nevertheless, China is still a poor country: the purchasing power of its GDP per head was 99th in the world. Since China also invests close to half its output, relative consumption per head was lower still.
China is, however, an enormous country, with a population of 1.34bn in 2011. Compared with this, even the US, with 312m, is almost a minnow. So in spite of being so much poorer, the purchasing power of aggregate Chinese GDP was 87 per cent of US levels in 2011. The purchasing power of China’s GDP has by now surely surpassed US levels.
It is possible to debate whether the newly revised numbers are right. The answer is that they are reasonable. A more important question is what they mean. What they do not mean is that China is already the world’s greatest economic power. Read the rest of this entry »
China has rejected a World Bank report that suggests it might pass the United States this year to become the biggest economy measured by its currency’s purchasing power.
China is on track to become the No. 1 economy by sheer size by the early 2020s and possibly sooner. But its leaders downplay such comparisons, possibly to avert pressure to take on financial obligations or make concessions on trade or climate change.
“…the NBS of China does not endorse these results as official statistics.”
— China’s National Bureau of Statistics
The estimate by the World Bank’s International Comparison Program says that based on 2011 prices, the purchasing power of China’s currency, the yuan, was much stronger than was reflected by exchange rates.
“It does bring home the sheer size of the Chinese economy, in the services and goods and that people in China are producing.”
— Mark Williams, chief Asia economist for Capital Economics
By that measure, China’s economy was 87 percent the size of the United States’ in 2011, or 15 percent bigger than the previous estimate, according to a calculation by RBS economist Louis Kuijs. Faster-growing China would pass the United States in purchasing power terms this year, though it still would be about 60 percent the size of the U.S. economy at market exchange rates. Read the rest of this entry »
He prevented a South African explosion. Will his successors do the same?
Travis Kavulla writes: Dignity, humility, and courage. Those are the words, predictable as they are proper, that are being used to describe Nelson Mandela after his death on Thursday.
Few other people in the annals of the 20th century suffered such great personal indignities and yet turned the other cheek. Few others, too, managed such an explosive political moment so deftly.
Certainly no African leader is more deserving of a cult of personality (on a continent where this practice is widespread). Yet Mandela was one of those Gandhi-like figures who, if occasionally vain and tempestuous, was no self-indulgent demagogue.
In the 1980s and ’90s, as the chorus to end apartheid reached its high notes, a guerilla campaign was waged on all sides in South Africa — white segregationists versus blacks, a Zulu nationalist faction versus Mandela’s African National Congress, “coloreds” (a South African term for the Afrikaans-speaking, darker-skinned, but not black, population) on both sides. There was a very real chance that South Africa would become another Zimbabwe. The forecast was for civil war, followed by an inevitable victory by black nationalists, and then decades of score-settling through expropriation and clannish misrule.
That South Africa has avoided this outcome thus far is remarkable. The country’s internal social and economic inequality makes the United States look like a nation of levelers. (South Africa’s distribution of income is the most unequal of any country for which the World Bank compiles statistics.) Even today, it is not clear what fruits the end of apartheid has delivered to most black South Africans — except the basic dignities of the freedom of movement and the freedom of the ballot, which are not to be mocked, but which at the same time don’t fill empty bellies. Read the rest of this entry »