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China: Reopening Should Drive Growth

After a year of anemic growth—by China’s standards—we expect a recovery in Chinese economic activity to gradually take place in 2023. The government…



After a year of anemic growth—by China’s standards—we expect a recovery in Chinese economic activity to gradually take place in 2023. The government has abandoned its zero-COVID policy and re-pivoted to growth, and the reopening, combined with a benign inflationary environment that gives China’s policymakers room to increase stimulus, we believe is a reason for optimism in 2023. That said, major policy questions and geopolitical risks cloud the outlook.

Note: Due to rapidly changing circumstances in China, this article has been updated since it originally appeared in our 2023 emerging markets outlook paper.

How has the Chinese economy performed in 2022?

Vivian: Consensus estimates for gross domestic product (GDP) growth in 2022 are about 3%, which would be China’s lowest in several decades, except for 2020, the first full year of the COVID outbreak. While 3% growth compares well with the developed economies, it is equivalent to a recession in China.

Exports were quite strong in the first half of 2022, driven by both the global economic recovery and the Russia-Ukraine war, which exacerbated supply shortages and led to additional demands for Chinese exports. But domestic consumption has been very weak in 2022. This is primarily due to lockdowns under zero-COVID, which are creating physical constraints on consumer activity while also severely damaging consumer and business confidence.

At the start of 2022, there were hopes that more fiscal stimulus or infrastructure spending would materialize, but it did not. Given the lockdowns, and with local governments diverting resources to manage COVID, the government likely assumed that more aggressive spending would be ineffective.

Clifford: Coming into 2022, investors did not expect the government to be so passive in dealing with falling property prices and so rigid in addressing COVID. The property market cannot make a comeback when public mobility is far below normal due to lockdowns. This has wider repercussions because property is entwined with so many other economic sectors.

A third surprise in 2022 was the deterioration in U.S.- China relations, in particular the sanctions on China’s access to high-end chip technologies. This will be a setback as China tries to advance its high-tech industries.

What is the latest on the zero-COVID policy? How does it relate to China’s Common Prosperity and growth goals, if at all?

Vivian: The Chinese government has drastically abandoned its zero-COVID policy in the past couple of months. The policy direction, intensity, and speed surprised the markets. Zero-COVID and Common Prosperity are linked, but they also conflict in some ways. The government’s strict COVID policy acknowledges the public’s desire for health and security. But there is a divergence of attitudes within China’s vast population. The elderly and less urbanized populations, in general, are much more fearful of COVID and more suspicious of vaccines than younger and more urbanized groups. This puts the Chinese government in a difficult position. It may have vast authority and power, but it also has unlimited liability for protecting the public’s health.

Meanwhile, zero-COVID has hurt growth, and the unemployment rate among younger people is more than 20%. The government cannot tolerate this either because it will lead to social unrest. So it has to solve the dilemma.

It seems increasingly clear to the Chinese government that reopening and resuming growth have become an acute priority given the anemic economic growth and increased discontent they saw among the people after prolonged lockdowns and restrictions.

In the meantime, the pandemic has evolved globally, with dramatically reduced mortality as most countries have fully reopened. And China’s initial plan to protect public health interests and maintain economic growth at the same time has not worked. I had expected China to gradually exit its zero-COVID policy in 2023 precisely due to the factors mentioned above, but was nonetheless surprised by the fast pace.

In the near term, we expect disruption to the Chinese economy as a result of surging infections and increased deaths post-reopening. Once infections subside, economic activity should resume and recover throughout 2023, similar to the reopening experiences in other countries. I believe consumption and services would benefit from reopening the most.

The policy update doesn’t contradict the broader goals for Common Prosperity; it is just that the priorities have been reset and focuses rebalanced to tilt toward managing risk while reviving growth. — Clifford Chi-wai Lau, CFA

Clifford: China’s zero-COVID policy has finally come to an end after three years of exhausting implementation. The government probably realizes it can’t afford to delay the reopening of the economy any further when economic data releases have been weak and people have been suffering from restricted mobility for too long. Apparently, there has been a shift in the government’s attitude on COVID policy such that it now sees delivering growth and prosperity to be as important as protecting lives. The policy update doesn’t contradict the broader goals for Common Prosperity; it is just that the priorities have been reset and focuses rebalanced to tilt toward managing risk while reviving growth.

What indications of future economic policy came out of the 20th Party Congress?

Vivian: One new theme was national security—not only regarding U.S.-China tensions and geopolitical risk but also embracing food safety, energy safety, supply chain safety, cybersecurity, and even ideological security. Other than that, the key messages were similar to what the government under President Xi Jinping has promoted in the past. One exception is that policymakers seem to be putting more emphasis on high-quality growth—focusing on the quality and sustainability of growth versus the magnitude of growth.

I do not foresee major changes in monetary policy, which has been moderately accommodative for the past two years. — Clifford Chi-wai Lau, CFA

The Western media portrayed the new party leadership alignment as Xi surrounding himself with loyalists, but that is too simplistic. Several people added to the standing committee of the Chinese Communist Party Politburo, the seven-person inner circle that leads policymaking, are all from China’s southern provinces, which are the wealthiest and most pro-growth parts of China. These new members have solid track records of successfully leading economic growth in various towns, cities, and provinces in these areas, including Zhejiang, Fujian, Guangdong, and Shanghai.

The Central Economic Work Conference (CEWC), held in mid-December and convened by the new Central Committee of the 20th Party Congress, stated “unwavering” support for private companies and laid out the growth agenda for 2023. This largely reflects the unchanged pro-growth and pro-market stance of the new leadership of the party, although the market remains skeptical. The next key meeting for the economic policy is the State Council’s reporting to the National People’s Congress and the Chinese People’s Political Consultative Conference in March 2023, when the new premier and leadership team of the State Council will be confirmed. It’s important to wait and see the new leadership’s further economic policies and subsequent execution to properly assess and reassess the China investment case.

Clifford: It is likely a good thing from an economic perspective that the congress is over. These events are preceded by months of lobbying and political wrangling, which means the political agenda was prioritized in 2022 at the expense of economic policy.

I do not foresee major changes in monetary policy, which has been moderately accommodative for the past two years. For now, China does not face high inflation like Europe and the United States, so China can keep interest rates low and stimulate growth, which gives it a competitive edge relative to the rest of the world.

What is your projection for China’s GDP growth in 2023?

Vivian: The consensus GDP growth forecast for 2023 is about 5%, which factors in certain benefits of reopening. There could be upside to the forecast if the economy and consumption recover much faster and stronger post-reopening, combined with more effective property market policies, as well as monetary and fiscal stimulus. I believe the improved regulatory backdrop for the internet industry and continued growth of domestic technology substitution and energy transition trends should also help drive upside to GDP growth in 2023.

Exports drove growth in 2022, especially in the first half, when both demand and commodity prices were strong. We are unlikely to see accelerated export growth in 2023 amid a global economic slowdown and coming off a tough comparison year, so the Chinese economy will have to rely more on domestic consumption and demand.

The consensus GDP growth forecast for 2023 is about 5%, which factors in certain benefits of reopening. — Vivian Lin Thurston, CFA, Partner

The collapse in consumption in 2022 was due to both an inability to consume (because of lockdowns and closures) and unwillingness to consume because of a collapse of confidence. Essentially, people were hoarding money. China’s household savings rate jumped to 40% in 2022, well above its historical level of 25% to 30%. The excessive savings mean that pent-up demand could be strong as the country continues reopening. I believe this should provide strong support for consumption recovery and GDP growth in 2023, with potential upside.

Clifford: With the end of China’s zero-COVID policy and both domestic and international travel now fully enabled, I believe China’s economy will gradually return to its full growth potential as things continue to normalize. 2023, however, is set to be a challenging year on the global front, as global growth is slowing, inflation remains high, and the war in Europe is prolonged. Chinese and Asian exports have already been trending down in recent quarters, so export growth should be less of a contributor for China’s economy this year. However, the strong expected rebound in consumption due to pent-up demand could nevertheless act as an effective tailwind for China to deliver above-average growth this year.

How did China’s debt markets perform in 2022, and what are your expectations for 2023?

Clifford: On an unhedged basis, Chinese government bonds, based on the J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified, have returned –6.36% in 2022 year-to-date through December 13, 2022. While negative, this is significantly better than the broader J.P. Morgan GBI-EM, which is down 13.21% year-to-date.

The offshore renminbi has fallen 8.92% against the U.S. dollar in 2022, so on a hedged basis, stripping out currency effects, year-to-date performance in Chinese government bonds has been positive. The benign inflation environment and easier monetary policy helped push yields lower and enhance returns. China was definitely an outlier among government bond markets in 2022.

Looking forward, interest rates in China are moving opposite to global interest rates, which makes the Chinese government bond market currently one of the most expensive. Two years ago, the Chinese 10-year bond offered 175 basis points of pickup over 10-year U.S. Treasurys, but now that relationship has inverted—so the Chinese bond market has lost its competitive edge as global interest rates jumped.

I do not expect Chinese interest rates to rise much in 2023—unless consumer spending comes in too strong or unexpectedly high food prices make inflation a real threat.

We see value in having some exposure to the Chinese government bond market because of the resilience of the underlying economy, but we do not believe it warrants an overweight position. I believe the technicals of investing in China’s lower-return fixed-income market, such as Chinese government bonds or onshore credits, are likely to weaken as the broader reopening of China could inspire reallocation from fixed income to stocks.

I believe other markets are more likely to deliver better returns, especially if central banks around the world start pivoting away from rate hiking.

How did Chinese equity markets fare in 2022? What opportunities do you see for quality growth investors in 2023?

Vivian: Even though Chinese interest rates declined in 2022, China’s equity market returns resembled what you would expect to see in a rising-rate environment. Higher-valuation, growth-oriented sectors dramatically underperformed lower-valuation, lower-quality stocks.

In addition, valuations for Chinese quality growth companies contracted dramatically in 2022, and consumption and economic activity overall were hurt by ongoing COVID lockdowns and property issues. This made for a very challenging environment for investors focused on quality growth.

Looking ahead to 2023, we are focusing on reopening as a key theme. Beneficiaries could be consumer, internet, and digital economy companies.

We have exposure to quality growth companies in the consumer space—the leading liquor company, the leading duty-free company, the leading ingredients company, the leading cosmetics company, and so on. We believe they have the potential to benefit strongly as the reopening plays out.

We also have substantial exposure to internet companies. These are out of favor among global investors, but we take a long-term view. Valuations now appear attractive, in our view, and regulatory measures affecting these companies have been stabilizing.

Clamping down on China has become a bipartisan effort in the United States. This creates a risk factor for investors that has little to do with fundamentals. — Vivian Lin Thurston, CFA, Partner

Another longer-term structural story we like is energy transition, including electric vehicle batteries, solar panels, and companies related to these industries. These higher-valuation segments underperformed traditional energy companies in 2022, but we remain bullish on the long-term opportunities related to the transition to a lower-carbon economy.

We pay close attention to fundamental corporate earnings, which are already in recovery after earnings expectations came down dramatically year-to-date. If you combine earnings recovery with attractive valuations and a stabilizing regulatory environment, plus reopening and policy support, we believe 2023 may be a good year for quality growth investors.

How does the geopolitical environment affect China’s investment landscape?

Vivian: Clamping down on China has become a bipartisan effort in the United States. This creates a risk factor for investors that has little to do with fundamentals. If you look at restrictions on semiconductor sales to China, for example, China could deal with the problem technically and practically over time, but it raises bigger concerns about the investability of Chinese equities. A U.S.-based investor must ask whether the U.S. government may eventually put China-based tech companies on the restricted entity list.

Clifford: In the bond market, we are dealing with the same investability issue. Several Chinese companies deemed to have close connections to the military have suddenly been put on the restricted list. You cannot research this kind of risk, because you do not know the rationale behind it and it is hard to anticipate. It also raises the question of whether these restrictions will extend to the sovereign side. If we talk about tail risks in Chinese investment, this is a big one.

Final Takes?

Vivian: Growth-oriented, higher-valuation companies underperformed in 2022 despite China’s accommodative monetary environment. If you combine earnings recovery with attractive valuations and a stabilizing regulatory environment, plus gradual reopening and continued policy support, we believe 2023 may be a good year for quality growth investors.

Clifford: Being able to manage down the risk from this abrupt end of China’s zero-COVID policy is the key now. If it proves a success, the economy could surprise to the upside. While we believe a strong return in domestic consumption looks a lot more promising as we start 2023, better-than-expected export performance is also possible as the prospects for a global economic soft landing improve.

Vivian Lin Thurston, CFA, partner, is a portfolio manager on William Blair’s global equity team.

Clifford Lau, CFA, is a portfolio manager on William Blair’s emerging markets debt team

Want more insights on the economy and investment landscape? Subscribe to our blog.

The J.P. Morgan GBI-EM tracks the performance of bonds issued by emerging market governments and denominated in the local currency of the issuer, and is broader than the similar J.P. Morgan GBI-EM Global Diversified. (Index information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The indices are used with permission. The indices may not be copied, used, or distributed without J.P. Morgan’s prior written approval. Copyright 2022, JPMorgan Chase & Co. All rights reserved.)

Emerging Markets 2023 Outlook Series

Part 1 | Outlook 2023: Better Than Feared
Part 2 | Emerging Markets Equities: Positioned for a Rebound?
Part 3 | Emerging Markets Debt: Clearer Skies Ahead?
Part 4 | China: Zero-COVID Remains Key Growth Variable

The post China: Reopening Should Drive Growth appeared first on William Blair.

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Tesla rival Polestar reveals lineup of its new electric vehicles

The Sweden-based electric vehicle maker completes key testing before launching production of its new SUV.



Tesla's Model Y crossover, the best-selling vehicle globally, is the standard that electric vehicle makers strive to compete with. The Austin, Texas, automaker sold about 267,200 Model Y vehicles in the first three months of the year and continued leading the pack well into the second quarter.

It's no wonder that the Model Y is leading all vehicles in sales as it retails for about $39,390 after tax credits and estimated gas savings. Ford  (F) - Get Free Report hopes to compete with the Model Y about a year from now when it rolls out the new Ford Explorer SUV that is expected to start at $49,150.

Related: Honda unveils surprising electric vehicles to compete with Tesla

Plenty of competition in electric SUV space

Mercedes-Benz (MBG) however, has a Tesla rival model with its EQB all-electric compact sports utility vehicle with an estimated 245 mile range on a charge with 70.5 kWh battery capacity, 0-60 mph acceleration in 8 seconds and the lowest price of its EVs at a $52,750 manufacturers suggested retail price.

Tesla's Model X SUV has a starting price of about $88,490, while the Model X full-size SUV starts at $98,490 with a range of 348 miles. BMW's  (BMWYY) - Get Free Report xDrive50 SUV has a starting price of about $87,000, a range up to 311 miles and accelerates 0-60 miles per hour in 4.4 seconds.

Polestar  (PSNY) - Get Free Report plans to have a lineup of five EVs by 2026. The latest model that will begin production in the first quarter of 2024 is the Polestar 3 electric SUV, which is completing its development. The vehicle just finished two weeks of testing in extreme hot weather of up to 122 degrees in the desert of the United Arab Emirates to fine tune its climate system. The testing was completed in urban cities and the deserts around Dubai and Abu Dhabi.

“The Polestar 3 development and testing program is progressing well, and I expect production to start in Q1 2024. Polestar 3 is at the start of its journey and customers can now visit our retail locations around the world to see its great proportions and sit in its exclusive and innovative interior,” Polestar CEO Thomas Ingenlath said in a statement.

Polestar 3 prototype is set for production in the first quarter of 2024.


Polestar plans 4 new electric vehicles

Polestar 3, which will compete with Tesla's Model X, Model Y, BMW's iX xDrive50 and Mercedes-Benz, has a starting manufacturer's suggested retail price of $83,000, a range up to 300 miles and a charging time of 30 minutes. The company has further plans for the Polestar 4, an SUV coupé that will launch in phases in late 2023 and 2024, as well as a Polestar 5 electric four-door GT and a Polestar 6 electric roadster that the company says "are coming soon." 

The Swedish automaker's lone all-electric model on the market today is the Polestar 2 fastback, which has a manufacturer's suggested retail price of $49,900, a range up to 320 miles and a charging time of 28 minutes. The vehicle accelerates from 0-60 miles per hour in 4.1 seconds. Polestar 2 was unveiled in 2019 and delivered in Europe in July 2020 and the U.S. in December 2020.

Polestar 1, the company's first vehicle, was a plug-in hybrid that went into production in 2019 and was discontinued in late 2021, according to the Polestar website.

The Gothenburg, Sweden, company was established in 1996 and was sold to Geely affiliate Volvo in 2015.

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Fauci And The CIA: A New Explanation Emerges

Fauci And The CIA: A New Explanation Emerges

Authored by Jeffrey A. Tucker via Brownstone Institute,

Jeremy Farrar’s book from August 2021…



Fauci And The CIA: A New Explanation Emerges

Authored by Jeffrey A. Tucker via Brownstone Institute,

Jeremy Farrar’s book from August 2021 is relatively more candid than most accounts of the initial decision to lock down in the US and UK. “It’s hard to come off nocturnal calls about the possibility of a lab leak and go back to bed,” he wrote of the clandestine phone calls he was getting from January 27-31, 2020. They had already alerted the FBI and MI5. 

“I’d never had trouble sleeping before, something that comes from spending a career working as a doctor in critical care and medicine. But the situation with this new virus and the dark question marks over its origins felt emotionally overwhelming. None of us knew what was going to happen but things had already escalated into an international emergency. On top of that, just a few of us – Eddie [Holmes], Kristian [Anderson], Tony [Fauci] and I – were now privy to sensitive information that, if proved to be true, might set off a whole series of events that would be far bigger than any of us. It felt as if a storm was gathering, of forces beyond anything I had experienced and over which none of us had any control.”

At that point in the trajectory of events, intelligence services on both sides of the Atlantic had been put on notice. Anthony Fauci also received confirmation that money from the National Institutes of Health had been channeled to the offending lab in Wuhan, which meant that his career was on the line. Working at a furious pace, the famed “Proximal Origin” paper was produced in record time. It concluded that there was no lab leak. 

In a remarkable series of revelations this week, we’ve learned that the CIA was involved in trying to make payments to those authors (thank you whistleblower), plus it appears that Fauci made visits to the CIA’s headquarters, most likely around the same time. 

Suddenly we get some possible clarity in what has otherwise been a very blurry picture. The anomaly that has heretofore cried out for explanation is how it is that Fauci changed his mind so dramatically and precisely on the merit of lockdowns for the virus. One day he was counseling calm because this was flu-like, and the next day he was drumming up awareness of the coming lockdown. That day was February 27, 2020, the same day that the New York Times joined with alarmist propaganda from its lead virus reporter Donald G. McNeil

On February 26, Fauci was writing: “Do not let the fear of the unknown… distort your evaluation of the risk of the pandemic to you relative to the risks that you face every day… do not yield to unreasonable fear.”

The next day, February 27, Fauci wrote actress Morgan Fairchild – likely the most high-profile influencer he knew from the firmament – that “be prepared to mitigate an outbreak in this country by measures that include social distancing, teleworking, temporary closure of schools, etc.”

To be sure, twenty-plus days had passed between the time Fauci alerted intelligence and when he decided to become the voice for lockdowns. We don’t know the exact date of the meetings with the CIA. But generally until now, most of February 2020 has been a blur in terms of the timeline. Something was going on but we hadn’t known just what. 

Let’s distinguish between a proximate and distal cause of the lockdowns.

The proximate cause is the fear of a lab leak and an aping of the Wuhan strategy of keeping everyone in their homes to stop the spread. They might have believed this would work, based on the legend of how SARS-1 was controlled. The CIA had dealings with Wuhan and so did Fauci. They both had an interest in denying the lab leak and stopping the spread. The WHO gave them cover. 

The distal reasons are more complicated. What stands out here is the possibility of a quid pro quo. The CIA pays scientists to say there was no lab leak and otherwise instructs its kept media sources (New York Times) to call the lab leak a conspiracy theory of the far right. Every measure would be deployed to keep Fauci off the hot seat for his funding of the Wuhan lab. But this cooperation would need to come at a price. Fauci would need to participate in a real-life version of the germ games (Event 201 and Crimson Contagion). 

It would be the biggest role of Fauci’s long career. He would need to throw out his principles and medical knowledge of, for example, natural immunity and standard epidemiology concerning the spread of viruses and mitigation strategies. The old pandemic playbook would need to be shredded in favor of lockdown theory as invented in 2005 and then tried in Wuhan. The WHO could be relied upon to say that this strategy worked. 

Fauci would need to be on TV daily to somehow persuade Americans to give up their precious rights and liberties. This would need to go on for a long time, maybe all the way to the election, however implausible this sounds. He would need to push the vaccine for which he had already made a deal with Moderna in late January. 

Above all else, he would need to convince Trump to go along. That was the hardest part. They considered Trump’s weaknesses. He was a germaphobe so that’s good. He hated Chinese imports so it was merely a matter of describing the virus this way. But he also has a well-known weakness for deferring to highly competent and articulate professional women. That’s where the highly reliable Deborah Birx comes in: Fauci would be her wingman to convince Trump to green-light the lockdowns. 

What does the CIA get out of this? The vast intelligence community would have to be put in charge of the pandemic response as the rule maker, the lead agency. Its outposts such as CISA would handle labor-related issues and use its contacts in social media to curate the public mind. This would allow the intelligence community finally to crack down on information flows that had begun 20 years earlier that they had heretofore failed to manage. 

The CIA would hobble and hamstring the US president, whom they hated. And importantly, there was his China problem. He had wrecked relations through his tariff wars. So far as they were concerned, this was treason because he did it all on his own. This man was completely out of control. He needed to be put in his place. To convince the president to destroy the US economy with his own hand would be the ultimate coup de grace for the CIA. 

A lockdown would restart trade with China. It did in fact achieve that. 

How would Fauci and the CIA convince Trump to lock down and restart trade with China? By exploiting these weaknesses and others too: his vulnerability to flattery, his desire for presidential aggrandizement, and his longing for Xi-like powers over all to turn off and then turn on a whole country. Then they would push Trump to buy the much-needed personal protective equipment from China. 

They finally got their way: somewhere between March 10 or possibly as late as March 14, Trump gave the go ahead. The press conference of March 16, especially those magical 70 seconds in which Fauci read the words mandating lockdowns because Birx turned out to be too squeamish, was the great turning point. A few days later, Trump was on the phone with Xi asking for equipment. 

In addition, such a lockdown would greatly please the digital tech industry, which would experience a huge boost in demand, plus large corporations like Amazon and WalMart, which would stay open as their competitors were closed. Finally, it would be a massive subsidy to pharma and especially the mRNA platform technology itself, which would enjoy the credit for ending the pandemic. 

If this whole scenario is true, it means that all along Fauci was merely playing a role, a front man for much deeper interests and priorities in the CIA-led intelligence community. This broad outline makes sense of why Fauci changed his mind on lockdowns, including the timing of the change. There are still many more details to know, but these new fragments of new information take our understanding in a new and more coherent direction. 

Jeffrey A. Tucker is Founder and President of the Brownstone Institute. He is also Senior Economics Columnist for Epoch Times, author of 10 books, including Liberty or Lockdown, and thousands of articles in the scholarly and popular press. He speaks widely on topics of economics, technology, social philosophy, and culture.

Tyler Durden Thu, 09/28/2023 - 17:40

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North Korea Enshrines “Permanent” Nuclear Power Status In Constitution

North Korea Enshrines "Permanent" Nuclear Power Status In Constitution

On Thursday North Korean state media quoted leader Kim Jong Un as saying…



North Korea Enshrines "Permanent" Nuclear Power Status In Constitution

On Thursday North Korean state media quoted leader Kim Jong Un as saying more advanced atomic weapons are needed to counter the threat from the United States.

This signals the death knell for Washington's long stated policy goal of denuclearization of the Korean peninsula, given that the remarks came as Kim enshrined the DPRK's status as a permanent nuclear power in its constitution.

North Korea's "nuclear force-building policy has been made permanent as the basic law of the state, which no one is allowed to flout," Kim told the State People's Assembly, according to state-run KCNA.


Starting last year he declared the north as an "irreversible" nuclear weapons state, and has in the last couple months ramped up ballistic missile tests in response to intermittent, ongoing joint US military drills with the south. This has already been a record year in terms of the number of Pyongyang's missile tests.

The north's rubber-stamp parliament, which met Tuesday and Wednesday, has approved the nuclear update to the constitution. Kim described that this was necessary as the United States has "maximized its nuclear war threats to our Republic by resuming the large-scale nuclear war joint drills with clear aggressive nature and putting the deployment of its strategic nuclear assets near the Korean peninsula on a permanent basis."

In July, the nuclear-armed USS Kentucky Navy ballistic missile submarine made a port call in South Korea, which marked a first in decades. It has stayed there since, enraging Pyongyang.

Kim in his Thursday address also blasted growing defense cooperation between Washington, Seoul and Tokyo as the "worst actual threat," saying that as a result "it is very important for the DPRK to accelerate the modernization of nuclear weapons in order to hold the definite edge of strategic deterrence."

A similar message was delivered in New York on Tuesday by Kim Song, North Korea's representative at the UN, who said in an address to the UN General Assembly that the region is close to the "brink of a nuclear war"

"Owing to the reckless and continued hysteria of nuclear showdown on the part of the US and its following forces, the year 2023 has been recorded as an extremely dangerous year that the military security situation in and around the Korean peninsula was driven closer to the brink of a nuclear war," he said.

"Due to [Seoul’s] sycophantic and humiliating policy of depending on outside forces, the Korean peninsula is in a hair-trigger situation with imminent danger of nuclear war," the ambassador continued. He further blasted the US for attempting to erect an "Asian NATO" that will bring a "new Cold War structure to northeast Asia."

Tyler Durden Thu, 09/28/2023 - 17:20

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