By Dr. Kerstin Braun, President of Stenn
The ongoing US-China trade war has been epic for both generating headlines and creating needless headaches for companies involved in international trade. While a phase one deal may have been agreed, the squabbling has not come without damage. The sheer size of the US and Chinese economies ensures that the stakes are high. Together they constitute almost two-fifths of global GDP. Trade between the two countries has dropped $84 billion and counting since the trade war started.
Initially intended to push for structural change, Trump has succeeded in barely moving the needle in terms of putting the US in better economic position. The ripple effects have spread worldwide, and it will take some time for global economies spring back into action.
Even if all tariffs were erased today, long-term tensions between China and the US will remain in the areas of economic fair play, national security and human rights. Further, the conflict has shed light on major shifts in the global trade landscape: heightened volatility for companies, supply chain diversification, and a revised view of globalism.
The phase one truce has calmed economic jitters worldwide, at least for the time being. This alone is expected to increase global GDP by at least half a point. The conflict has created uncertainty in all regions of the world, which weighs on confidence, and therefore future investment.
US business investment trended down in 2019 and a recent Duke University survey reported that 56% of US CFOs are preparing for a recession in 2020. That means pulling back on spending and hoarding cash.
One way to remove the uncertainty of a capricious tariff war is for both countries to diversify their markets. US companies have ramped up their sourcing from a broader range of countries including Vietnam, India, Malaysia, Mexico and Thailand.
There’s a huge amount of work involved when a business decides to move its supply chains. Shifting to a new supplier goes far beyond making sure they can deliver the right products to the right specifications. New business relationships have to start from scratch and run credit checks, reroute logistics and arrange financing. This can be particularly difficult if an importer is purchasing from a new country that its bank may not support.
Likewise, China has sought to diversify as well, turning toward growing Asian markets in particular. The Trans-Pacific Partnership trade pact is expected to play a big role in boosting intra-Asia trade. The region is expected to account for 40% of global trade flows by 2027, up from its 34% share in 2010.
Long-term, the decoupling of the US and China could make both economies less prone to shocks and rebalance the flow of global trade. It would also lessen both country’s ability to use economic power as a political tool.
The current geopolitical climate, where national interests are at the forefront such as Trump’s “America first” diplomacy and Brexit, has put globalization in the spotlight. But globalism is not going to go away. And it’s bigger than simply trade.
We live in a global world where goods, technology and money flow across borders. Companies rely on international markets for growth. For example, 56% of market value of the world’s largest 500 companies is from their international operations.
There have always been “rules of the game” for our global interactions but I expect that today’s retreat from globalism will make things more complex. Multi-country trade pacts are being abandoned in favor of one-on-one agreements. Trump has put new countries (Argentina, Brazil and France) on his tariff radar, and the US has essentially neutered the World Trade Organization (WTO) as a governing body for global trade disputes.
International trade will stay complicated, as this era of trade spats and the volatility they bring is only going to get worse. This is good news for trade experts such as Stenn.
In the end we will see who the real winners and losers are. I suspect Asian countries such as Vietnam, India, Malaysia, Cambodia and Philippines will rise as winners, while the US will become a net loser as it loses economic and political power.
Duo glide around world’s largest fountain in Dubai
Paragliders Llorens and Goberna take magical flight above the Palm Fountain.
Horacio Llorens and Rafael Goberna defied gravity to perform The Breaking Pointe flight around the world’s biggest fountain at The Pointe, Palm Jumeirah in Dubai. Here is all you need to know:
– Spaniard Llorens is a five-time world champion and Infinity Tumbling Guinness World Record holder, who has performed a series of spectacular projects during the last five years including paragliding with a flock of starlings and with the beautiful Aurora Borealis as a backdrop.
– Brazilian Goberna was a Guinness Book of World Records winner at only 12-years-old and, in December 2016, he took to the skies above one of the seven wonders of the natural world when paragliding at Iguazu Falls.
– This time around, the duo teamed up in Dubai to showcase The Palm Fountain at the Pointe, Palm Jumeirah. They overcame a tricky preparation period to expertly glide between the fountain’s powerful jets of water.
– Spanning across the boulevard, the Palm Fountain features two giant floating platforms covering 14,000 square metres of sea water. Reaching an impressive 105 metres high and lighting up the Dubai sky with 3,000 LED lights, the fountain “dances” to hit songs from sunset until midnight.
– They undertook training first at Paramotor Desert Adventure on January 12 to test out their brakes and motors with technician Ramon Lopez finally arriving after being held up by the heavy snow in Madrid.
– Training was crucial for the challenge of flying during the night with low visibility as safety director Alan Gayton ensured they had a reserve parachute in case of a technical issue with the main parachute. Llorens and Goberna also had to study the movement of the water with great precision in order not to get caught up in the jets of water
– Flying over water, it was also mandatory to have a lifejacket with rescue boats, jet skis and divers on hand which came handy when Goberna suffered a technical malfunction on the first January 14 practice run.
– After repairs long into the night, they returned to Paramotor Desert Adventure to test out the motors again before completing the stunning flight on January 15 with Llorens and Goberna performing in harmony.
– Llorens, 38, revealed: “As soon as we got the opportunity, we wanted to fly there. We needed to know the area really well beforehand and we needed to know how to ‘play’ with the fountain – this was new for us. Such strong streams of water shooting 100 metres up is a lot, so we had to be really prepared.”
– Goberna, 26, explained: “The motor wasn’t flying so good because, prior to arriving in Dubai, it was last used in Europe at high altitude. I needed to adjust the carburettor in the air inside the motor. In the first practice flight over the water, I broke one propeller. I really couldn’t understand what was happening and then another one broke. Eventually, a backup motor was required. After a long journey, the final result was beautiful! The team worked incredibly hard to make it.”
– Llorens added: “The highlight for me was playing between the super shooters with Rafael, because it’s something we’ve never done before; it felt really new and really powerful.”
EU sets itself jobs, training and equality targets for 2030
By Jan Strupczewski
BRUSSELS (Reuters) – The European Commission on Thursday announced goals for the 27-nation bloc to reduce poverty, inequality and boost training and jobs by 2030 as part of a post-pandemic economic overhaul financed by jointly borrowed funds.
The EU executive arm said the European Union should boost employment to 78% in 2030 from 73% in 2019, halve the gap between the number of employed women and men and cut the number of young people neither working nor studying to 9% from 12.6%
“With unemployment and inequalities expected to increase as a fallout of the pandemic, focusing our policy efforts on quality job creation, up- and reskilling and reducing poverty and exclusion is therefore essential to channel our resources where they are most needed,” the commission said.
The goals, which will have to be endorsed by EU leaders, also include an increase in the number of adults getting training every year to adapt to the EU’s transition to a greener and more digitalised economy to 60% from 40% now.
Finally, over the next 10 years, the EU should reduce the number of people at risk of poverty or social exclusion by 15 million from 91 million in 2019.
“These three 2030 headline targets are deemed ambitious and realistic at the same time,” the commission said.
The goals are part of the EU’s set of 20 social rights, agreed on in 2017, to make the EU more appealing to voters and counter eurosceptic sentiment across the bloc.
They say everybody has the right to quality education throughout their lives and that men and women must have equal opportunities in all areas and be paid the same for work of equal value.
The unemployed have the right to “personalised, continuous and consistent support”, while workers have the right “to fair wages that provide for a decent standard of living”.
(Reporting by Jan Strupczewski; Editing by Nick Macfie)
UK aero-engineer Meggitt eyes return to growth after pandemic slump
LONDON (Reuters) – British engineer Meggitt said that it could return to profit growth in 2021 provided there are no further lockdowns, despite a weakening in the struggling aviation market at the end of 2020 and early this year.
Pandemic restrictions halted much flying globally last year and forced plane makers Boeing and Airbus to cut production rates, dragging down suppliers like Meggitt, which makes and services parts for such aircraft.
Meggitt’s underlying operating profit plunged by 53% to 191 million pounds ($267 million) in 2020, it said on Thursday, despite continued growth in its defence business which makes parts for military jets and accounts for about 45% of the business.
Meggitt, however, said it expected air traffic to recover in the second half of the year which would help it return to profit growth over the year, although its guidance for flat revenue disappointed analysts who had expected growth of 6%.
Meggitt’s Chief Executive Tony Wood said in November that he had expected flying to start to recover by Easter, but new variants have led to more restrictions and delayed the recovery.
“It has gone back a couple of months… it’s now very much in the summer,” Wood said of the recovery in an interview on Thursday.
Further in the future, Meggitt is positioning itself for the move to lower emissions flying, and its sensors and electric motors will be used on electric urban air mobility platforms, such as flying taxis, and in hybrid aeroplanes being developed.
But Meggitt said new tax breaks announced in Britain’s annual budget on Wednesday aimed at encouraging investment would not change its plans.
“Yes, it will be a benefit. Are we looking at any acceleration as a result specifically of that? Not really,” Woods said.
Shares in Meggitt were down 1% to 427 pence at 0943 GMT. The stock has risen by 50% since news of a COVID-19 vaccine last November, but is still down 23% on where it was pre-pandemic.
($1 = 0.7165 pounds)
(Reporting by Sarah Young; Editing by Alistair Smout and Susan Fenton)
Five ways to mitigate the risk of AI models
By Dave Trier, VP of Product at ModelOp In recent years, the banking industry has been at the forefront of...
Honda’s part self-driving Legend a big step for autonomous tech
TOKYO (Reuters) – Honda Motor Co Ltd on Thursday unveiled a partially self-driving Legend sedan in Japan, becoming the world’s...
Airbus to avoid redundancies in Germany, France, Britain
BERLIN (Reuters) – Airbus will make no forced redundancies in France, Germany and Britain, the European planemaker said on Thursday,...
Duo glide around world’s largest fountain in Dubai
Paragliders Llorens and Goberna take magical flight above the Palm Fountain. Horacio Llorens and Rafael Goberna defied gravity to perform...
2020: the year mortgages went digital
By Francesca Carlesi, co-founder and CEO, Molo It’s safe to say that the past year has changed everything. With restrictions...