- New Zealand has been raised to ‘investment grade’ level
- China’s call to the US to restore the relationship
- European Union’s new trade strategies
New Zealand has been Raised to ‘Investment Grade’ Level
New Zealand was the first developed economy to raise its rating to investment grade since the beginning of the coronavirus outbreak. The country’s handling of the pandemic and strength of economic recovery has been recognized with a raise in the sovereign international credit rating.
S&P Global Ratings upgraded New Zealand’s credit rating. New Zealand was the first developed economy to raise its rating to investment grade since the beginning of the coronavirus outbreak. S&P raised New Zealand’s foreign currency credit rating from AA to AA + and local currency credit rating from AA + to AAA, pointing to a faster-than-expected economic recovery.
The outlook was determined as ‘stable’. “New Zealand is recovering faster than most of the developed economies from the Covid-19 outbreak. Although downside risks continue, we expect New Zealand’s financial indicators to recover in the next few years,” the S&P Global statement said.
“We now believe that the government’s credit metrics can withstand potential damage from negative shocks to the economy, including a possible weakening of the real estate market, and its fiscal position at the ‘AA+’ rating level.”
S&P said the upgrade was the first for any economy since the outbreak of the pandemic.
“New Zealand’s debt profiles compare well to those of its similarly rated peers and support its credit rating, even though its debt levels are higher than in the past,” the agency’s commentary said.
It cited the booming real estate market and consequent rise in private debt as risks, but ones that were manageable. “High property prices and household debt present a risk to the economy. However, the sovereign has headroom at the current rating to address a modest correction in property prices should it occur.”
The other main ratings agencies Fitch and Moodys rate New Zealand at AA+ and AAA respectively.
China’s Call to the US to Restore the Relationship
Senior Chinese diplomat Wang Yi called on the administration of U.S. President Joe Biden to work with Beijing to reopen dialog between the two countries to restore a bilateral relationship damaged under the presidency of Donald Trump.
Wang Yi called on the new US administration, led by President Joe Biden, to lift restrictions on trade and people-to-people interaction between the two countries.
Speaking at the Lanting Forum held in Beijing, Wang reminded that the US is in the process of evaluating and reviewing its foreign policy with the new administration.
“We hope that decision-makers in the US can keep up with the times and clearly see the trends in the world, put aside prejudices and unfounded doubts, and put Chinese policy back on a reasonable course for the stable development of Sino-US relations.”
He reiterated the need to remove “unreasonable tariffs,” abandon “irrational suppression” of China’s technology progress, and cited curbs on Chinese media and students as another issue of concern.
Wang also urged Washington to respect China’s core interests, stop interfering in Beijing’s internal affairs and stop “conniving” with separatist forces for Taiwan’s independence, saying that “The USA should stop cooperating with the separatist forces that defend Taiwan’s independence and supporting their words and actions. It should not interfere with security and sovereignty in internal affairs. “
“Over the past few years, the United States basically cut off bilateral dialog at all levels,” Wang said in prepared remarks translated into English.
“We stand ready to have candid communication with the U.S. side, and engage in dialogs aimed at solving problems,” he added.
In his speech at the Munich Security Conference on February 19, US President Joe Biden called on US allies to “prepare together for a long-term strategic competition with China”. In his speech, Biden said, “Competition with China will be tough. This is my expectation, and I take it naturally because I believe in the global system that the US and Europe have hardly established with their allies in the Indo-Pacific region in 70 years.”
Wang pointed to a recent call between Chinese President Xi Jinping and Biden as a positive step.
European Union’s New Trade Strategies
The European Union will become more assertive in trade talks and push for its international partners to include combating climate change in future deals, its trade commissioner said.
The European Commission published a new strategy document on Thursday last week, outlining what the union’s economic priorities will be in the next 10 years. With Covid-19 pandemic, the focus of the renewed trade strategies with the need for revision is “fight against climate change, digital transformation and fairer global trade with reforms to be made in the World Trade Organization”
Speaking about the new strategy, Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, said: “The challenges we face require a new strategy for EU trade policy. We need open, rules-based trade to help restore growth and job creation post-Covid-19. Equally, trade policy must fully support the green and digital transformations of our economy and lead global efforts to reform the WTO. It should also give us the tools to defend ourselves when we face unfair trade practices. We are pursuing a course that is open, strategic, and assertive, emphasizing the EU’s ability to make its own choices and shape the world around it through leadership and engagement, reflecting our strategic interests and values.”
The Union wants a series of reforms in the WTO. Together with the new president Joe Biden in the USA, the new director of the WTO, Dr. Ngozi Okonjo-Iweala, the EU emphasizes that this could create a new positive change in the organization, saying that WTO reforms should have the functions of “Mediation, monitoring and dispute resolution.’’ Responding to current challenges, the strategy prioritizes a major reform of the World Trade Organization, including global commitments on trade and climate, new rules for digital trade, reinforced rules to tackle competitive distortions, and restoring its system for binding dispute settlement.
One of the most important changes in the new strategies of the Union is that steps to combat climate will be included in future trade agreements. Aiming to facilitate and promote the trade of green products and services, the EU will also make agreements aimed at reducing fossil fuel incentives. The commitments of the Paris Agreement will be one of the main elements in the trade agreements that the union will make in the future. The agreements will force countries to act responsibly on climate, biodiversity, chemicals, and waste.
The EU, which will try to protect workers’ rights not only in the EU but also in trade partners outside the EU by combating forced labor, will work both at the WTO level and with allies such as the USA in the digital transformation. While the protection of personal data and high privacy standards continue to have an important place, the Brexit agreement with the UK is shown as one of the first examples of digital rules of the EU.
In the strategy report, which stated that more than 700 thousand EU companies sell their products outside the EU, it is emphasized that 615 thousand of them are SMEs. It is stated that trade will be carried out in a way to protect SMEs, which make up 99 percent of EU companies and 87 percent of exporting EU companies, and this requires an “open” understanding of trade.