- Arvind's Newsletter
- Posts
- Arvind’s Newsletter
1. In a surprise move, the group of producers said they would cut more than one million barrels a day of output, adding to a reduction of two million barrels a day agreed to in October by the Saudi-led OPEC and another group of producers led by Russia reported the Wall Street Journal.
According to people familiar with the decision, it was negotiated primarily between the Saudis and Russia to get ahead of a global slowdown and raise prices to fund Saudi Arabia’s ambitious domestic projects and replenish Russia’s reserves. Oil prices jumped sharply following the move, which hit a market that had been widely seen as tightly balanced between supply and demand. The U.S. National Security Council said the White House doesn’t view production cuts as a good idea at the moment given the market uncertainty.Japan, meanwhile, said it would start buying Russian oil above the $60-a-barrel price cap imposed by Western nations. The oil purchases are small, but show a weakening in the international consensus behind the sanctions, The Wall Street Journal said. Clearly this not good news for India.
2.Is China back in business after nearly three years of self-imposed isolation and amid rising geopolitical tensions with the West?
That’s the million dollar question on the minds of foreign thought leaders and CEOs of multinationals, including Apple’s Tim Cook, who converged on Beijing and Hainan last week on a fact-finding mission to assess China’s future direction after its sudden reopening in December last year and the election of a new cabinet in March. Excerpts from FT report:
“This week, just as China’s entrepreneurs were beginning to look like an endangered species, one of the most powerful regulators abruptly changed its tune. From now on, decreed the Cyberspace Administration of China, the “legitimate rights” of the corporate class would be respected. No one would be allowed to bad mouth the country’s bosses anymore.
Worried about a sharp deceleration of growth caused by tight Covid restrictions last year, President Xi Jinping has launched a charm offensive to convince domestic and foreign capital that the world’s second-largest economy is reopening for business reports the Financial Times
Xi’s number two, Li Qiang, who used to hobnob with the likes of Ma and Tesla’s Elon Musk in his old job as Shanghai party boss, sounded a pro-business clarion call at the annual meeting of parliament in March. Since then, the message has quickly been passed down through the bureaucracy. The southern province of Hainan, thousands of kilometres from Beijing, issued a missive last Friday ordering local officials to desist from detaining and prosecuting private sector entrepreneurs — where possible.
For Beijing, the stakes are high. On the tech front, China needs to muster its most innovative companies if it is to compete in areas such as artificial intelligence with the US, with Washington also trying to restrict Beijing’s access to cutting-edge semiconductors.
Although few have any illusions that the Communist party will back off its desire for deeper control over business, the wider economy needs sustained foreign investment to help boost productivity and create jobs for the millions of university graduates entering the workforce each year.“
Since the FT report is under a paywall I have included another similar report by Wang Xiangwei publishes in South China Morning Post.
3.The United Nations is debating whether to permit deep-sea mining. The electrification of the economy has increased demand for minerals such as copper and manganese. Supply chains generally come through China. But large quantities can be found on the deep ocean floor and mining bosses want permission to get it. There is a tension between decarbonization and environmental protection: Deep-sea mining could be very damaging to marine ecosystems, but demand is growing for raw materials. The EU plans to phase out petrol cars by 2035 and demand for lithium for batteries is set to surge fivefold. Europe, which produces no battery-grade lithium, is reliant on China and faces shortages.
4.Despite several large firms predicting that remote work would be a permanent option, if not the only one for their employees moving forward, something is shifting: a hybrid situation, it turns out, is winning.
5.Indian Government may consider 0.3% fee to maintain UPI payment system (if it agrees to recommendation of study by IIT Mumbai.)
The government may consider a 0.3 per cent uniform digital payment facilitation fee to fund the infrastructure required for such transactions and also to ensure financial viability of the UPI payment system, suggested a study by IIT Bombay.
The facilitation fee of 0.3 per cent can generate around Rs 5,000 crore in 2023-24, said the study titled 'Charges for PPI-based UPI payments--The Deception'.
The study, which analyses the impact of the decision of the National Payments Corporation of India (NPCI) to introduce interchange fee on payments through mobile wallets, argued that the payments received by merchants should remain 'unpolluted' whether they are from UPI directly or through prepaid e-wallets.
The NPCI, with effect from April 1, 2023 introduced an interchange fee of 1.1 per cent on transaction amount for usage of prepaid payment instruments for making payments through UPI to merchants. These will apply on prepaid wallet-based UPI merchant transactions.