Leaders of the Quad meet at Kantei Palace in Tokyo last week. AP Photo
Leaders of the Quad meet at Kantei Palace in Tokyo last week. AP Photo
Leaders of the Quad meet at Kantei Palace in Tokyo last week. AP Photo
Leaders of the Quad meet at Kantei Palace in Tokyo last week. AP Photo


If the US and China want peace, they need to accept having mutual friends


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June 01, 2022

It has been an extraordinarily frantic period for the Asia Pacific of late. At the beginning of last week, US President Joe Biden launched the Indo-Pacific Economic Framework (IPEF) for Prosperity, with seven out of 10 Association of South-East Asian Nations (Asean) members signed up, plus Australia, New Zealand, Japan and South Korea. The next day, the leaders of the Quad – the US, India, Japan and Australia – had a meeting, also in Tokyo, and issued a comprehensive joint statement.

Further south, all eyes were on Chinese Foreign Minister Wang Yi, who began a 10-day “grand tour” of the Pacific on Wednesday. Having already signed an agreement with the Solomon Islands, Mr Wang added another bilateral with Samoa on Saturday, and hopped over to Fiji to host a meeting of 10 nations’ foreign ministers on Monday.

Last Thursday, US Secretary of State Antony Blinken delivered a speech titled “The Administration’s Approach to the People’s Republic of China” in Washington, an event so hotly anticipated that I gather there were some unseemly arguments about who should be allowed to sit in the front rows.

And as a backdrop to all of the above, there has been frenzied discussion in academic and policy circles over Mr Biden’s answer at a news conference to the question: “Are you willing to get involved militarily to defend Taiwan if it comes to that?" He replied: “Yes. That's the commitment we made.” Within moments, shockwaves were felt around the globe that Mr Biden appeared to have ended the decades-long policy of “strategic ambiguity”, whereby the US supplied the island with arms but made no formal commitment to defend it – only for the White House to send out a quick clarification saying “as the President said, our policy has not changed”.

The events of the last week have taken place in an atmosphere of unprecedented hostility

In calmer times, it could be that most of the above might appear unexceptional, or even good news. Don’t the nations of the Asia Pacific want more multilateral agreements? Why shouldn’t the Biden administration outline its approach to the world’s other superpower? (The exception, of course, would be Taiwan. The question makes clear that the island is a potential touchpoint for conflict between the US and China.)

But the events of the last week or so have taken place in an atmosphere of unprecedented rivalry and hostility. The idea that China might sign a new deal at the meeting with Pacific states was greeted with hysteria by Australian politicians, while the US State Department warned of “shadowy, vague deals with little transparency” with Beijing. A consensus couldn’t be reached at the event, but Mr Wang was clearly undaunted, continuing his tour, adding other bilateral agreements and promising a forthcoming paper on further co-operation proposals.

We appear to be in a situation in which “each side assumes the other has the worst intentions", Michael Green of the Centre for Strategic and International Studies told the Hong Kong daily South China Morning Post, which also quoted Susan Thornton, a former US acting assistant secretary of state for East Asian affairs, as saying: “People are worried about an accident because everyone’s on such a hair trigger.”

By an accident, Ms Thornton meant an unintended military escalation. But the verbal exchanges have already become exceptionally bellicose. Mr Blinken had a long list of accusations to level at China in his speech last week, including “undermining peace and security” and “breaking trade rules”, and he alleged “the ruling Chinese Communist Party has become more repressive at home and more aggressive abroad".

It is not entirely surprising that China’s foreign ministry hit back, saying Mr Blinken was “essentially spreading disinformation”, “smearing China’s domestic and foreign policy”, and trying to “contain and suppress China’s development and uphold US hegemony". The spokesman added: “The US always places its domestic law above international law and follows international rules selectively,” which was actually a perfectly fair comment.

It was all very well for Mr Blinken to end his speech by saying: “There’s no reason why our great nations cannot coexist peacefully, and share in and contribute to human progress together.” But many of the previous paragraphs did not exactly pave the way for peaceful coexistence – unless he expects Beijing to meekly accept a public berating and change what Mr Blinken views as its errant ways.

Chinese Foreign Minister Wang Yi leaves after a joint news conference with Fijian Prime Minister Frank Bainimarama in Suva. AFP
Chinese Foreign Minister Wang Yi leaves after a joint news conference with Fijian Prime Minister Frank Bainimarama in Suva. AFP

A voice of sanity was provided last week by Singapore Prime Minister Lee Hsien Loong. At the Nikkei International Conference on the Future of Asia in Tokyo, Mr Lee took a statesman-like line and was careful to praise the contributions and the legitimate aspirations of all. “The US has provided the framework for peace and stability for the region since the end of the Second World War. Even as the strategic balance shifts, the US still retains this essential role, which no other country can take over,” he said, making a statement many other leaders might privately echo, but will be glad Mr Lee said for them instead.

At the same time, he also said that “China’s economic influence in Asia is large and growing. This is a natural and positive consequence of China’s continuing growth and development. It has benefited the region immensely", and others must accommodate its “growing influence and legitimate interests”.

This was not just far more sensible. It reflects the reality on the ground that states in the region have to deal with the “inescapable neighbour”. Referring to the conflict in Europe, Mr Lee said that “the stakes are high” in Asia, too. “Countries must be willing to show restraint, accept differences and live with compromises.” Again, all exactly right, in my opinion.

But he put his finger on the real route forward at another point: “Countries with stakes in one another’s economic success have greater incentive to work together and to overcome problems between them.” In which case, there should be no arguments about which is better, IPEF or Mr Wang’s bilaterals, RCEP or CPTPP (to name two other big trade pacts). Let a mountain of agreements be built in the Asia Pacific, so that the US and China can have, as Mr Lee put it, “overlapping circles of friends, and countries find it possible to have friends on both sides".

Step back from the recent frenzies, and it becomes clear that that is the only solution. Exaggerated suspicions of the other side must not stop it being so.

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Men's wheelchair 800m T34: 1. Walid Ktila (TUN) 1.44.79; 2. Mohammed Al Hammadi (UAE) 1.45.88; 3. Isaac Towers (GBR) 1.46.46.

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Produced: Sajid Nadiadwala and Phantom Productions
Directed: Vikas Bahl
Cast: Hrithik Roshan, Pankaj Tripathi, Aditya Srivastav, Mrinal Thakur
Rating: 3.5 /5

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Director: James Cameron

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Rating: 4.5/5

UK’s AI plan
  • AI ambassadors such as MIT economist Simon Johnson, Monzo cofounder Tom Blomfield and Google DeepMind’s Raia Hadsell
  • £10bn AI growth zone in South Wales to create 5,000 jobs
  • £100m of government support for startups building AI hardware products
  • £250m to train new AI models
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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VEZEETA PROFILE

Date started: 2012

Founder: Amir Barsoum

Based: Dubai, UAE

Sector: HealthTech / MedTech

Size: 300 employees

Funding: $22.6 million (as of September 2018)

Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC

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At a glance

- 20,000 new jobs for Emiratis over three years

- Dh300 million set aside to train 18,000 jobseekers in new skills

- Managerial jobs in government restricted to Emiratis

- Emiratis to get priority for 160 types of job in private sector

- Portion of VAT revenues will fund more graduate programmes

- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government

Updated: June 01, 2022, 4:00 AM