Simon Kennedy and Matthew Simon write:  As the chattering chieftains of the global economy gather this week in Davos, Switzerland, they’re facing the darkest outlook since the financial crisis tipped the world into recession seven years ago.

The Chinese slowdown and accompanying slide in the yuan are imperiling already sluggish international growth, oil is trading at its lowest level in more than a decade, stocks have suffered their worst January ever, and the prospects for corporate earnings are the most pessimistic in years.

Economic frustrations have driven the rise of populists in the U.S. and France while sowing doubts about the longevity of German Chancellor Angela Merkel and Britain’s membership in the European Union.

China has confirmed its weakest quarter since 2009 and its slowest annual growth since 1990. The International Monetary Fund, meanwhile, cut its estimate for expansion in the world economy this year to 3.4 percent from 3.6 percent.

Meantime, the International Labor Organization predicted that global unemployment will climb this year by almost 2.3 million to 199.4 million, led by emerging markets. PriceWaterhouseCoopers LLC said only about a third of chief executive officers it polled were “very confident” about their companies’ growth prospects.

Also causing some concern is the Federal Reserve’s decision to raise interest rates last month for the first time in nine years even with tame inflation. That’s pushed up the dollar, hurting those emerging markets that boosted borrowing in greenbacks when rates were at rock-bottom.

In developed countries, there is a sense of frustration as once-robust middle classes fall ever further behind the have-lots. The charity Oxfam said on Monday that the richest 1 percent of people on Earth now control more wealth than the rest of the world’s population combined.

Political activity  in the US, the world’s largest economy, which large companies and investors have relied on to drive growth as Europe stagnates and emerging markets underperform is unnerving.

Human rights organisation Amnesty has accused Apple, Samsung and Sony, among others, of failing to do basic checks to ensure minerals used in their products are not mined by children.  In a report into cobalt mining in the Democratic Republic of the Congo, it found children as young as seven working in dangerous conditions.

Cobalt is a a vital component of lithium-ion batteries.  The firms said that they had a zero tolerance policy towards child labour.

The DRC produces at least 50% of the world’s cobalt. Miners working in the area face long-term health problems and the risk of fatal accidents, according to Amnesty.

It claimed that at least 80 miners had died underground in southern DRC between September 2014 and December 2015.

It also collected the testimonies of children who allegedly work in the mines.

Paul, a 14-year-old orphan, started mining when he was 12 and told researchers: “I would spend 24 hours down in the tunnels. I arrived in the morning and would leave the following morning … I had to relieve myself down in the tunnels … My foster mother planned to send me to school, but my foster father was against it, he exploited me by making me work in the mine.”

In response to the report, Apple said: “Underage labour is never tolerated in our supply chain and we are proud to have led the industry in pioneering new safeguards.”

Mohamed a el Erian writes:  The recent decline in China’s currency, the renminbi, which has fueled turmoil in Chinese stock markets and drove the government to suspend trading twice last week, highlights a major challenge facing the country: how to balance its domestic and international economic obligations. The approach the authorities take will have a major impact on the wellbeing of the global economy.

The 2008 global financial crisis, coupled with the disappointing recovery in the advanced economies that followed, injected a new urgency into China’s efforts to shift its growth model from one based on investment and external demand to one underpinned by domestic consumption. Navigating such a structural transition without causing a sharp decline in economic growth would be difficult for any country. The challenge is even greater for a country as large and complex as China, especially given today’s environment of sluggish global growth.

For years, China’s government sought to broaden equity ownership, thereby providing more Chinese citizens with a stake in a successful transition to a market economy. But, like the United States’ effort to expand home ownership in the years preceding the 2008 crisis, Chinese policies went too far, creating a financially unsustainable situation that implied the possibility of major price declines and dislocations.

As a result, the adjustment challenge has grown dramatically. With Chinese companies no longer able to sell a rapidly increasing volume of products abroad and support further expansion of productive capacity, the economy has lost some important growth, employment, and wage engines. The resulting economic slowdown has undermined the government’s capacity to maintain inflated asset prices and avoid pockets of credit distress.

In an effort to limit the detrimental impact of all this on citizens’ wellbeing, Chinese officials have been guiding the currency lower. A surprise devaluation last August has been followed by a number of lower daily fixes in the onshore exchange rate, all intended to make Chinese goods more attractive abroad, while accelerating import substitution at home. The renminbi has depreciated even more in the offshore market.

China’s currency devaluations are consistent with a broader trend among both emerging and advanced economies in recent years. Soon after the global financial crisis, the US relied heavily on expansionary monetary policy, characterized by near-zero interest rates and large-scale asset purchases, which weakened the dollar, thereby boosting exports. More recently, the European Central Bank has adopted a similar approach, guiding the euro downward in an effort to boost domestic activity.

But in pursuing its domestic objectives, China risks inadvertently amplifying global financial instability. Specifically, markets worry that renminbi devaluation could “steal” growth from other countries, including those that have far more foreign debt and far less robust financial cushions than China, which maintains ample international reserves.

This concern speaks to the even more challenging balancing act that China must perform as it seeks to play the role in global economic governance that its economic weight warrants. After all, China is now the world’s second-largest economy (and, by some non-market measures, the largest).

And, indeed, China has lately been showing greater interest in gradually internationalizing its financial system. Notably, it recently succeeded in persuading the International Monetary Fund to add the renminbi to the basket of currencies that determines the value of the Special Drawing Right, the unit the IMF uses in dealing with its 188 member countries.

That step – which places the renminbi on par with the major global currencies (the US dollar, the euro, the British pound, and the Japanese yen) – will enhance public- and private-sector acceptance of China’s currency in the international monetary system. At the same time, it created the expectation – though not the obligation – that China will refrain from aggravating global financial instability.

There will come a time when China’s domestic and international responsibilities will again be relatively well aligned. But that time is not now; and, given the country’s tricky ongoing structural transition, it probably will not come anytime soon.

Francis Fukuyama writes:  As 2016 begins, an historic contest is underway over competing development models – that is, strategies to promote economic growth – between China, on the one hand, and the US and other Western countries on the other.

Most Westerners are aware that growth has slowed substantially in China, from over 10% per year in recent decades to below 7% today (and possibly lower). The country’s leaders are seeking to accelerate the shift from an export-oriented, environmentally damaging growth model based on heavy manufacturing to one based on domestic consumption and services.

President Xi Jinping’s One Belt component consists of rail links from western China through Central Asia and thence to Europe, the Middle East, and South Asia. The strangely named One Road component consists of ports and facilities to increase seaborne traffic from East Asia and connect these countries to the One Belt, giving them a way to move their goods overland, rather than across two oceans, as they currently do.

The China-led Asian Infrastructure Investment Bank (AIIB), which the US earlier this year refused to join, is designed, in part, to finance One Belt, One Road. But the project’s investment requirements will dwarf the resources of the proposed new institution.

Indeed, One Belt, One Road represents a striking departure in Chinese policy. For the first time, China is seeking to export its development model to other countries. One belt’s purpose is to develop industrial capacity and consumer demand in countries outside of China. Rather than extracting raw materials, China is seeking to shift its heavy industry to less developed countries, making them richer and encouraging demand for Chinese products.

China’s development model is different from the one currently fashionable in the West. It is based on massive state-led investments in infrastructure – roads, ports, electricity, railways, and airports – that facilitate industrial development. American economists abjure this build-it-and-they-will-come path, owing to concerns about corruption and self-dealing when the state is so heavily involved. In recent years, by contrast, US and European development strategy has focused on large investments in public health, women’s empowerment, support for global civil society, and anti-corruption measures.

China’s infrastructure-based strategy has worked remarkably well in China itself, and was an important component of the strategies pursued by other East Asian countries, from Japan to South Korea to Singapore.

The big question for the future of global politics is straightforward: Whose model will prevail? If One Belt, One Road meets Chinese planners’ expectations, the whole of Eurasia, from Indonesia to Poland will be transformed in the coming generation.

There are important reasons to question whether One Belt, One Road will succeed. Infrastructure-led growth has worked well in China up to now because the Chinese government could control the political environment. This will not be the case abroad, where instability, conflict, and corruption will interfere with Chinese plans.

Indeed, China has already found itself confronting angry stakeholders, nationalistic legislators, and fickle friends in places like Ecuador and Venezuela, where it already has massive investments. The strategy of massive infrastructure development may have reached a limit inside China, and it may not work in foreign countries, but it is still critical to global growth.

The US used to build massive dams and road networks back in the 1950s and 1960s, until such projects fell out of fashion. Today, the US has relatively little to offer developing countries in this regard. President Barack Obama’s Power Africa initiative is a good one, but it has been slow to get off the ground; efforts to build the Fort Liberté port in Haiti have been a fiasco.

The US should have become a founding member of the AIIB; it could yet join and move China toward greater compliance with international environmental, safety, and labor standards.

Liqun Jin writes:  The recent historic launch of the Asian Infrastructure Investment Bank has been highly anticipated – and rightly so. With the start of operations, the AIIB joined the family of multilateral financial institutions in supporting broad-based economic and social development in Asia. Sound and sustainable infrastructure investment will lead to better development outcomes, improve the lives and livelihoods of Asia’s citizens, and generate positive spillover effects in other parts of the world.

The role and importance of Asia in the international arena have increased, yet the region faces severe infrastructure gaps and thorny bottlenecks. Asia’s infrastructure investment needs have grown exponentially, and the AIIB’s resources, quite simply, will increase the pool of multilateral resources available to help meet them.

The AIIB’s founding members have a clear management vision: We will set a clear and high bar for organizational performance and governance, by upholding openness, transparency, accountability, and independence as its core institutional principles.

In drafting the AIIB’s Articles of Agreement and policy framework, we have worked with a diverse group of international experts to draw lessons from the existing multilateral institutions and from successful private-sector companies. We have held extensive rounds of technical discussions with our shareholders to ensure that the Bank reflects its owners’ goals and aspirations in both its lending activities and internal operations.

AIIB’s unique ownership and shareholding structures reflect the institution’s regional character and provide members with a greater voice in policy direction and decision-making.

AIIB’s specialized geographic and sectoral mandate will enable it to offer niche skills, focused expertise, and concentrated market knowledge, and its organizational structure, staffing flexibility, and efficient decision-making processes will position it to respond with agility to client demand and emerging needs.

AIIB will leverage and mobilize public and private financing, including from institutional investors, and help clients to enhance project “bankability” by promoting transparency, efficiency, and adherence to accepted standards – including environmental and social standards – thereby reducing risk.

AIIB’s reputation and credibility will depend on the caliber of its staff. Our operations will be lean, clean, and green. That means keeping a check on bureaucracy and maintaining a relatively flat organizational structure; managing costs and using modern technology effectively; and avoiding duplication and overlap of functions. The AIIB will build its professional staff gradually, supplementing in-house expertise with specialized consultant skills. Staff positions will be carefully defined to avoid both underemployment and future redundancies.

The AIIB subscribes to the principles of sustainable development in the identification, preparation, and implementation of projects. The management of environmental and social risks and impacts is central to successful development outcomes. We will support our clients in managing these risks appropriately through knowledge, experience, and resources.

Developing energy alternatives an entrepreneurial opportunity, but financing remains elusive.

The need for more innovation in energy was one of the strongest points of agreement at the Paris talks. Some have suggested that the most important news to come out of the conference was not the final accord, signed with great fanfare by the governments of 195 countries, but the commitments made by governments and wealthy individuals to research and develop technologies that can help the climate.  Energy innovation is a concept that has become almost universally popular — among all from the most traditional of oil companies to the most radical of environmental groups.  For all the rising enthusiasm, though, investing in innovation remains a hazardous and uncertain business in energy, as in other industries.  

industry executives predict that in ten years’ time photovoltaic (PV) solar could be competitive without subsidy even in cold and grey northern Europe, through continued improvements in the existing technologies.

The Nigerian economy has in recent times been battered on all sides. Its major source of income, crude, has lost almost 100 per cent of its value in a little over a year and is not seen to improve soon. The country’s economy has been downgraded by many rating agencies and some have gone as far as removing it from their watch list entirely.

The naira, the official currency of Nigeria, has not been spared the bashing. It has become one of the worst performing currencies on the African continent while the nation’s external reserves meant to be a buffer in stormy times has neared the red alert stage.

These are some of the major challenges the President Muhammadu Buhari-led government has been confronted with since it took the reins of power on May 29, 2015.

Efforts so far put in place by the government have not proved useful in pulling back the economy from the brinks as well as saving the naira from a free fall.

Although the discussions the IMF boss had with President Buhari, the Senate leadership and other stakeholders during the visit appeared harmless on the surface as reported in the media, there was palpable apprehension among stakeholders, many of which are still trying to unravel the real intent of the visit.  Impact of Lagarde Visit on Nigeria