Insights | Series II | No. 9 | July 2015

Calling for Peace

By Shehzad H. Qazi | Foreign Policy | June 29, 2015 | 2 pages

The war of words between India and Pakistan escalated again recently, making headlines around the world and ultimately prompting an intervention by Secretary of State John Kerry last week. In May, Pakistan’smilitary top brass and defense minister accused Indian intelligence agency RAW of instigating terrorism within Pakistan. Matters heated up further when India’s defense minister publiclyendorsed a policy of using militant proxies to counter Pakistan sponsoring anti-Indian jihadi groups, and climaxed when Prime Minister Modi lashed out against Pakistan during a historic visit to Bangladesh, blaming it of promoting terrorism and creating “nuisances” for India. With this backdrop, India’s hot pursuit of rebels into Myanmar was widely seen as an aggressive message to Pakistan to rethink harboring militants and elicited a tough response from Islamabad.

This bout is the latest in a string of events that have characterized deteriorating relations between India and Pakistan since last year when foreign secretary-level talks were cancelled. But the hardline positions taken by decision makers in both countries are in sharp contrast to the desires of their people, who for years have widely supported establishing better relations and engagement across a variety of mechanisms to foster peace.

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China’s Economy Is Recovering

By Leland R. Miller and Craig Charney | The Wall Street Journal | July 15, 2015 | 1 pages

After several disappointing quarters, there are signs of improvement—just not for the official reasons.

China released second-quarter statistics Wednesday that showed the economy growing at 7%, the same real rate as the first quarter but with stronger nominal growth. That result, higher than expected and coming just after a stock-market panic, surprised some commentators and even aroused suspicion that the government cooked the numbers for political reasons. While official data is indeed unreliable, our firm’s latest research confirms that the Chinese economy is improving after several disappointing quarters—just not for the reasons given by Beijing.

The China Beige Book (CBB), a private survey of more than 2,000 Chinese firms each quarter, frequently anticipates the official story. We documented the 2012 property rebound, the 2013 interbank credit crunch and the 2014 slowdown in capital expenditure before any of them showed up in official statistics.

The modest but broad-based improvement in the Chinese economy that we tracked in the second quarter may seem at odds with the headlines of carnage in the country’s financial markets. But stock prices in China have almost nothing to do with the economy’s fundamentals. Our data show sales revenue, capital expenditure, new domestic orders, hiring, wages and profits were all better in the second quarter, making the improvement unmistakable—albeit not outstanding in any one category.

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