China central bank pledges to adjust policy pace based on internal, external economic conditions
The People's Bank of China, in a summary of a quarterly meeting held by its monetary policy committee, said that it would guide financial institutions to step up credit supply, and push for lowering of social financing costs.
(Reporting by Yukun Zhang, Ethan Wang and Kevin Yao. Editing by Jane Merriman)
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Gulf Today
an hour ago
- Gulf Today
Vietnam aims to become the next Asian tiger economy
Beneath red banners and a gold bust of revolutionary leader Ho Chi Minh in Hanoi's central party school, Communist Party chief To Lam declared the arrival of "a new era of development" late last year. The speech was more than symbolic- it signaled the launch of what could be Vietnam's most ambitious economic overhaul in decades. Vietnam aims to get rich by 2045 and become Asia's next "tiger economy" — a term used to describe the earlier ascent of countries like South Korea and Taiwan. The challenge ahead is steep: Reconciling growth with overdue reforms, an aging population, climate risks and creaking institutions. There's added pressure from President Donald Trump over Vietnam's trade surplus with the US, a reflection of its astounding economic trajectory. In 1990, the average Vietnamese could afford about $1,200 worth of goods and services a year, adjusted for local prices. Today, that figure has risen by more than 13 times to $16,385. Vietnam's transformation into a global manufacturing hub with shiny new highways, high-rise skylines and a booming middle class has lifted millions of its people from poverty, similar to China. But its low-cost, export-led boom is slowing, while the proposed reforms — expanding private industries, strengthening social protections, and investing in tech, green energy. It faces a growing obstacle in climate change. "It's all hands on can't waste time anymore," said Mimi Vu of the consultancy Raise Partners. Investment has soared, driven partly by US-China trade tensions, and the US is now Vietnam's biggest export market. Once-quiet suburbs have been replaced with industrial parks where trucks rumble through sprawling logistics hubs that serve global brands. Vietnam ran a $123.5 billion trade surplus with the US trade in 2024, angering Trump, who threatened a 46% US import tax on Vietnamese goods. The two sides appear to have settled on a 20% levy, and twice that for goods suspected of being transshipped, or routed through Vietnam to avoid US trade restrictions. During negotiations with the Trump administration, Vietnam's focus was on its tariffs compared to those of its neighbors and competitors, said Daniel Kritenbrink, a former US ambassador to Vietnam. "As long as they're in the same zone, in the same ballpark, I think Vietnam can live with that outcome," he said. But he added questions remain over how much Chinese content in those exports might be too much and how such goods will be taxed. Vietnam was preparing to shift its economic policies even before Trump's tariffs threatened its model of churning out low-cost exports for the world, aware of what economists call the "middle-income trap," when economies tend to plateau without major reforms. To move beyond that, South Korea bet on electronics, Taiwan on semiconductors, and Singapore on finance, said Richard McClellan, founder of the consultancy RMAC Advisory. But Vietnam's economy today is more diverse and complex than those countries were at the time and it can't rely on just one winning sector to drive long-term growth and stay competitive as wages rise and cheap labor is no longer its main advantage. It needs to make "multiple big bets," McClellan said. Following China's lead, Vietnam is counting on high-tech sectors like computer chips, artificial intelligence and renewable energy, providing strategic tax breaks and research support in cities like Hanoi, Ho Chi Minh City, and Danang. It's also investing heavily in infrastructure, including civilian nuclear plants and a $67 billion North-South high-speed railway, that will cut travel time from Hanoi to Ho Chi Minh City to eight hours. Vietnam also aspires to become a global financial center. The government plans two special financial centers, in bustling Ho Chi Minh City and in the seaside resort city of Danang, with simplified rules to attract foreign investors, tax breaks, support for financial tech startups, and easier ways to settle business disputes. Underpinning all of this is institutional reform. Ministries are being merged, low-level bureaucracies have been eliminated and Vietnam's 63 provinces will be consolidated into 34 to build regional centers with deeper talent pools. Vietnam is counting on private businesses to lead its new economic push — a seismic shift from the past. In May, the Communist Party passed Resolution 68. It calls private businesses the "most important force" in the economy, pledging to break away from domination by state-owned and foreign companies. So far, large multinationals have powered Vietnam's exports, using imported materials and parts and low cost local labor. Local companies are stuck at the low-end of supply chains, struggling to access loans and markets that favored the 700-odd state-owned giants, from colonial-era beer factories with arched windows to unfashionable state-run shops that few customers bother to enter. "The private sector remains heavily constrained," said Nguyen Khac Giang of Singapore's ISEAS-Yusof Ishak Institute. Again emulating China, Vietnam wants "national champions" to drive innovation and compete globally, not by picking winners, but by letting markets decide. The policy includes easier loans for companies investing in new technology, priority in government contracts for those meeting innovation goals, and help for firms looking to expand overseas. Even mega-projects like the North-South High-Speed Rail, once reserved for state-run giants, are now open to private bidding. By 2030, Vietnam hopes to elevate at least 20 private firms to a global scale. But Giang warned that there will be pushback from conservatives in the Communist Party and from those who benefit from state-owned firms. Even as political resistance threatens to stall reforms, climate threats require urgent action. After losing a major investor over flood risks, Bruno Jaspaert knew something had to change. His firm, DEEP C Industrial Zones, houses more than 150 factories across northern Vietnam. So it hired a consultancy to redesign flood resilience plans. Climate risk is becoming its own kind of market regulation, forcing businesses to plan better, build smarter, and adapt faster. "If the whole world will decide it's a can go very fast," said Jaspaert. When Typhoon Yagi hit last year, causing $1.6 billion in damage, knocking 0.15% off Vietnam's GDP and battering factories that produce nearly half the country's economic output, roads in DEEP C industrial parks stayed dry. Climate risks are no longer theoretical: If Vietnam doesn't take strong action to adapt to and reduce climate change, the country could lose 12-14.5% of its GDP each year by 2050, and up to one million people could fall into extreme poverty by 2030, according to the World Bank. Meanwhile, Vietnam is growing old before it gets rich. The country's "golden population" window — when working-age people outnumber dependents — will close by 2039 and the labor force is projected to peak just three years later. That could shrink productivity and strain social services, especially since families — and women in particular — are the default caregivers, said Teerawichitchainan Bussarawan of the Centre for Family and Population Research at the National University of Singapore. Vietnam is racing to pre-empt the fallout by expanding access to preventive healthcare so older adults remain healthier and more independent. Gradually raising the retirement age and drawing more women into the formal workforce would help offset labor gaps and promote "healthy aging," Bussarawan said. Associated Press
Khaleej Times
an hour ago
- Khaleej Times
Moody's upgrades Pakistan's credit rating to 'Caa1'
Moody's said on Wednesday it had raised Pakistan's credit rating by one notch to 'Caa1' from 'Caa2' due to an improving external financial position and it assigned the country a "stable" outlook. The announcement came within hours of Pakistan's Finance Minister Mohammed Aurangzeb saying there was more room for the central bank to cut the country's key policy rate from 11% on the back of positive economic indicators. "The credit rating's improvement is a sign that economic policies are heading toward the right direction," Prime Minister Shehbaz Sharif said in a statement. Pakistan's international bonds rose as much as 1 cent to between 90 and 100 cents on the dollar following the ratings upgrade. It lifted most of them to their highest since early 2022 when fears of a full-blown debt crisis sent them plunging to as little as 30 cents. Moody's decision to raise the rating by one notch after Fitch and SP did the same will help Pakistan's capability to raise external debt. Pakistan says its economy is on a recovery path after a $7 billion IMF bailout helped to stabilise it. "We changed the outlook for the Government of Pakistan to stable from positive," Moody's said in a statement. "The upgrade to Caa1 reflects Pakistan's improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility (EFF) program," it said. Pakistan's debt affordability has improved, but remains one of the weakest among rated sovereigns, Moody's said, adding that the Caa1 rating also reflected the country's weak governance and high degree of political uncertainty. Aurangzeb told a gathering of businessmen in Islamabad ahead of the Moody's announcement that he was expecting an improvement in Pakistan's credit rating by other agencies after Fitch and SP. "We are hopeful of progress in terms of the policy rate going south," he added. Aurangzeb said it was his personal view that there was more room for a rate cut towards the end of the year, adding that it was for the central bank to make the final call on the issue. The next policy rate announcement is due on September 15. The central bank left its key interest rate unchanged at 11% on July 30, going against analyst expectations. In a Reuters poll they had forecast a reduction of 50 to 100 basis points. The bank said the inflation outlook had deteriorated due to rising energy prices. Inflation accelerated to 4.1% year-on-year in July.
Khaleej Times
4 hours ago
- Khaleej Times
Grok sides with Altman in clash with Musk over App Store rankings
Elon Musk has accused Apple of unfairly favoring ChatGPT on its App Store and threatened legal action, triggering a fiery exchange with OpenAI CEO Sam Altman on Tuesday. "Apple is behaving in a manner that makes it impossible for any AI company besides OpenAI to reach #1 in the App Store, which is an unequivocal antitrust violation," Musk said in a post on his social media network X on Monday, without providing evidence to back his claim. "xAI will take immediate legal action," he said, referring to his own artificial intelligence company. X users responded by pointing out that China's DeepSeek AI hit the top spot in the App Store early this year, and Perplexity AI recently ranked number one in the App Store in India. DeepSeek and Perplexity compete with OpenAI and Musk's startup xAI. OpenAI CEO Sam Altman called the accusation "remarkable" in a response on X on Tuesday, adding that Musk was alleged to "manipulate X to benefit himself and his own companies and harm his competitors and people he doesn't like." Musk then called Altman a "liar" in a heated exchange, prompting the OpenAI boss to ask whether Musk would sign a sworn legal statement declaring that he had never ordered changes to the X algorithm to harm competitors or help his own companies. A user then asked Grok, xAI's AI assistant, to evaluate the argument. Grok's reply, surprisingly, was in favour of Altman, saying that Musk indeed has a history of directing the X algorithm to be changed to help his own interests, as per ongoing probes. Forbes reported that Musk responded by saying that Grok relies on legacy media too much, and that this was an issue he intended to fix. OpenAI and xAI both released new versions of their AI assistants, ChatGPT and Grok, in the past week. App Store rankings listed ChatGPT as the top free iPhone app on Tuesday, with Grok in fifth place. Apple did not respond immediately to a request for comment. Factors going into App Store rankings include user engagement, reviews and the number of downloads. AI wars OpenAI and Apple announced an alliance in June last year to enhance iPhones and other devices with ChatGPT features. ChatGPT-5 rolled out free to the nearly 700 million people who use it weekly, OpenAI said in a briefing with journalists last week. Tech industry rivals Amazon, Google, Meta, Microsoft and xAI have been pouring billions of dollars into artificial intelligence since the blockbuster launch of the first version of ChatGPT in late 2022. Chinese startup DeepSeek shook up the AI sector early this year with a model that delivers high performance using less costly chips. OpenAI filed counterclaims against multi-billionaire Musk in April, accusing its former co-founder of waging a "relentless campaign" to damage the organization after it achieved success without him. OpenAI alleged in legal documents filed at the time in the northern California federal court that Musk became hostile toward the company after abandoning it years before its breakthrough achievements with ChatGPT. The lawsuit was another round in a bitter feud between the generative AI (genAI) start-up and the world's richest person, who accused OpenAI of betraying its founding mission in a lawsuit last year. OpenAI alleged in its countersuit that Musk "made it his project to take down OpenAI, and to build a direct competitor that would seize the technological lead -- not for humanity but for Elon Musk." Musk founded his own genAI startup, xAI, in 2023 to compete with OpenAI and the other major AI players.
