Islamabad: The international impact of the stock market collapse was felt in Pakistan, said a daily here on Tuesday.
An editorial “Black August” in the News International said that following the panic in the international stock markets created by a slowdown of the Chinese economy, the Karachi Stock Exchange (KSE-100) plummeted by 1,300 points near the close of trading on Monday, down around 4 percent on a single day.
Analysts have blamed the panicking small investors and the exit of foreign investors from the market. Some suggest foreign investors made profits by selling Pakistani stocks as they suffered serious losses in other emerging markets.
The daily said that market capitalization fell by Rs.300 billion.
“In addition to the Chinese slowdown, the international downturn is also being attributed to the fall in international commodity prices, uncertainty over when US Federal Reserve might raise interest rates and the Greek economic collapse.”
The editorial said that the crisis started when the Chinese government decided to devalue the yuan by around 2 percent two weeks ago which sparked concerns over low growth in Chinese exports. Experts have now predicted that the devaluation of the Chinese currency is likely to flood the market with cash.
“The biggest impact was felt by Chinese stock markets where the Chinese Shanghai Composite index came down by 8.5 percent on Monday. This is the biggest one-day slump in China since 2007.”
“…The impact of what is being called ‘Black Monday’ is being felt across the globe with KSE-100 being a small part of the global collapse… While some observers are calling it a ‘correction’ in the global markets, Monday has shown an underlying instability in the global financial system,” said the daily.
The editorial went on to say that the three key nodes of the global economy are in a steady crisis. “Europe, the US and China are all facing serious problems.”
“There are no immediate remedies available in the stock market as the international impact of the collapse will be felt in Pakistan.”
It added that the month of August has wiped at least $5 trillion off the global economy.
“Is this a full-blown economic crisis?,” the daily asked and added: “It is too early to say.”
“But it does say something about the volatility of the global economy that a decrease in the value of the Chinese currency has set off questions about the entire economic recovery story that has been painted since the last global economic crisis in 2007,” it said.
“Beijing claims it is committed to working with other countries to foster environment-friendly and sound development, but the practice so far has raised some serious concerns,” said Yaqui Wang, HRW's China researcher.
Thailand, China and Laos will sign a memorandum of cooperation on a new bridge for a railway across the Mekong River during Prime Minister Prayuth Chan-o-cha’s Beijing visit this week, a Thai foreign ministry official said Tuesday.
The bridge would link Thailand’s northeastern Nong Khai province with the Laotian capital Vientiane, Thai officials told BenarNews, in what analysts believe will reinforce China’s ambitions to build a high-speed railway network in Southeast Asia, stretching through Malaysia and feeding into Singapore.
Prayuth, who is scheduled to be in the Chinese capital on April 26-27, is expected to sign the trilateral pact on the sidelines of a conference of world leaders on China’s massive One Belt, One Road (OBOR) infrastructure initiative, Busadee Santipitaks, spokeswoman for the ministry of foreign affairs, told BenarNews, an RFA-affiliated online news service.
“Thailand, Laos PDR and China will sign a three-nation memorandum of cooperation to build a bridge for a high-speed railway at Thai-Lao border,” Busadee said.
Thai officials did not respond to BenarNews emails requesting more details on the memorandum.
China, which aims to increase its footprint in Southeast Asia through OBOR, has managed to push ahead with its strategy to build a trans-Asian railway network.
Last month, Laotian officials announced that a 414-km (257-mile) high-speed railway linking Vientiane with Kunming city, capital of China’s southwestern province of Yunnan, was almost half-complete and on track to be in service by December 2021. Construction for that project began four years ago.
Under China’s planned 3,000-km (1,875-mile) pan-Asian railway network, Chinese rail lines will extend farther south – all the way to the tip of the Malay Peninsula, linking Beijing to Singapore, one of Washington’s closest allies in the region and a strategic gateway to the Strait of Malacca.
China’s OBOR initiative has drawn criticism, including from Malaysian leader Mahathir Mohamad, who told reporters last month that the Philippines should be wary of Beijing’s “debt-trap diplomacy” that includes extending excessive credit with the alleged intention of extracting economic or political concessions from the debtor country.
Economists contend that the initiative forces emerging economies to take on unsustainable levels of debt to fund Beijing-backed projects, highlighting such concerns after a Chinese state-owned company took over the majority stake in Sri Lanka’s Hambantota port after Colombo struggled to repay its loans from China.
Thailand officially kicked off its high-speed railway project in December 2017 when Prayuth and Chinese officials led a ground-breaking ceremony for a 3.5-km (2-mile) segment of the rail in the northeast province of Nakhon Ratchasima.
The junta-led government under Prayuth has approved a 179-billion baht (U.S. $5.8 billion) budget for the first phase of the 253-km (158-mile) railway linking Nakhon Ratchasima with Bangkok.
The second phase linking Nakhon Ratchasima to Laos is awaiting approval, officials told BenarNews.
OBOR, Chinese President Xi Jinping’s signature policy, is an estimated U.S. $1 trillion-plus initiative that stretches across 70 countries. It aims to weave a network of railways, ports and bridges, linking China with Africa, Europe and Southeast Asia.
Prayuth’s Beijing visit would include a roundtable meeting with leaders of 38 countries during which he is expected to express the commitment of the Association of Southeast Asian Nations (ASEAN) to support China’s OBOR projects, Thai government spokesman Lt. Gen. Weerachon Sukhonthapatipak told BenarNews.
“First, we stress Thailand’s role as the ASEAN chair in supporting and committing to China’s attempt to link sub-regions and regions,” he said.
Prayuth, as current chairman of the 10-member ASEAN, will meet Xi and other Chinese officials, including Prime Minister Li Kequiang and Deputy Prime Minister Han Zheng to discuss ways to bolster bilateral relationship and economic cooperation, Weerachon said.
Prayuth will be accompanied by his deputy, Somkid Jatusripitak, the minister of transport and the minister of foreign affairs, he said.
China has ranked as Thailand’s largest trading partner since 2012, buying about U.S. $30 billion of Thai products last year, according to the Thai Ministry of Commerce.
Respect human rights, HRW tells Beijing
Meanwhile, in a statement issued on Sunday, New York-based Human Rights Watch (HRW) urged Beijing to ensure that the OBOR initiative would be respectful of the human rights of people living in areas near the infrastructure projects.
Under OBOR, Beijing should set out requirements to enable consultation with groups of people potentially affected by proposed projects, ensuring that affected communities can openly express their views without fear of reprisal, HRW said in a statement.
“Beijing claims it is committed to working with other countries to foster environment-friendly and sound development, but the practice so far has raised some serious concerns,” said Yaqui Wang, HRW’s China researcher.
“Criticisms of some Belt and Road projects – such as lack of transparency, disregard of community concerns, and threats of environmental degradation – suggest a superficial commitment,” Wang said. (RFA)