Thursday, November 26, 2015

Biggest-ever overhaul of China military; Portugal seems to be going the Greece way; India gold demand may fall to 8-year low

1 Biggest-ever overhaul of China military (Kor Kian Beng in Straits Times) China has launched its biggest-ever set of military reforms, including the establishment of a new joint operational command, to turn the People's Liberation Army (PLA) into a more combat-ready force. The long-anticipated reforms come as tensions simmer over territorial disputes with neighbours and to address the strategic rivalry with the US and Japan.

China unveiled them at the end of a three-day, closed-door meeting chaired by President Xi Jinping and attended by 200 military officials. Other key reforms on target for implementation by 2020 include the rezoning of the existing seven military regions into new strategic zones; strengthening the Central Military Commission (CMC) command structure over the PLA; and reorganising the military headquarters.

The imposition of strict discipline on the army, another reform pledge, will see the PLA setting up a new disciplinary structure and a new legal and political committee to weed out graft and legal violations. But details were scant on most reform pledges except on a promise by Mr Xi at a military parade in September to downsize the 2.3-million strong PLA by 300,000 troops.

Retired PLA colonel Yue Gang said the latest reforms constitute the biggest military overhaul since the 1950s, shortly after the Communist Party took power in 1949. "The reform shakes the very foundations of China's Soviet Union- style military system, and transferring to a US-style joint command structure will transform China's PLA into a specialised armed force that could pack more of a punch in the world," he said.


2 Portugal seems to going the Greece way (San Francisco Chronicle) An anti-austerity alliance including radical leftist parties takes power. A shaky economy and huge debts menace the national economy. The rest of Europe watches with a wary eye. Sound familiar? It's not Greece, but another eurozone country: Portugal.

A nation that just months ago was hailed as an example of how to follow through with budget austerity measures has become a new source of concern in Europe. A left-wing coalition has unseated a center-right government that introduced the deep spending cuts and steep tax hikes demanded since 2011 by creditors during Portugal's 78 billion-euro ($82.6 billion) bailout.

The developments echo what happened in Greece, whose radical leaders this year almost crashed the nation out of the eurozone. Led by the moderate Socialist Party, which took office Thursday, Portugal's new administration will be backed in Parliament by the Communist Party and the radical Left Bloc and Green Party.

Their rise and rhetoric bring to mind the radical Syriza party in Greece and its dramatic clashes this year with its eurozone creditors. Syriza initially refused to agree to more budget cuts and the creditors responded by almost pushing Greece out of the euro. The new government in Lisbon — the country's second-largest ever, with 17 ministers and 41 deputy ministers — is taking up a similar battle cry, vowing to "turn the page" on austerity, which Germany has championed for years to reduce high debts despite the economic hardship it can create.

Greece and Portugal each represent less than 2 percent of the eurozone's gross domestic product, but their troubles can re-ignite market fears about the bloc's financial well-being. The people of Portugal and Greece have both been hit hard by years of budget cutbacks.

Portugal's government debt, like Greece's, is still very high. At 130 percent of gross domestic product it is the third-highest in the European Union, and the three main ratings agencies still classify Portuguese bonds as junk. Both countries, like the rest of the European Union, must submit their spending plans to officials in Brussels for approval.


3 India gold demand may hit 8-year low (Rajendra Jadhav in DNA) India's gold buying in the key December quarter is likely to fall to the lowest level in eight years, hurt by poor investment demand and back-to-back droughts that have slashed earnings for the country's millions of farmers. The sluggish demand could halve imports by the world's second-biggest gold consumer in US dollar terms in the final quarter, a retailer and two bank dealers said.

December quarter demand could fall to 150 to 175 tonnes, said Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation, from 201.6 tonnes a year ago and a five-year average for the quarter of 231 tonnes, according to World Gold Council data. The December quarter usually accounts for about a third of India's gold sales as it takes in the start of the wedding season as well as festivals like Dhanteras and Diwali, when buying gold is considered auspicious.

Two-thirds of demand comes from rural areas, where jewellery is a traditional store of wealth, but weak monsoon rainfall this year has eroded farmers’ earnings and their purchasing capacity. A weak rupee has also kept local gold prices relatively strong compared with a slump in US dollar-denominated gold, further denting demand, while investment buying has stalled as investors see little chance of a quick price recovery.

The Indian rupee has fallen over 5% this year, restricting the drop in local gold prices to 5.5 percent, compared with a 9.3% drop in US dollar denominated gold. India's gold imports, which account for nearly all of its demand for the precious metal, could fall to around $5.7 billion in the December quarter, Bamalwa said.


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