Chinese bond market surge points to economic and financial problems

Nick Beams

The ongoing slowdown in the Chinese economy, the outcome of the ending of its previous growth model based on property and construction, is throwing up a set of problems in the financial system centred on the bond market.

An elderly woman passes by workers dismantling scaffolding at a shopping mall in Beijing, January 17, 2024 [AP Photo/Ng Han Guan]

The slowing of the economy suggests that government and financial authorities would like to see a lowering of interest rates to provide some economic stimulus. But instead, the People’s Bank of China (PBoC) is moving in the opposite direction, at least as far as the bond market is concerned. (The price of bonds and their yield move in the opposite direction.)

But rather than welcoming the lowering of interest rates this produces, the central bank has been moving in the opposite direction for the past several months including selling bonds in order to lower their price and push up their yields.

Earlier this month, it even went so far as to “name and shame” a group of four rural banks for buying government bonds which the Financial Times (FT) characterised as a “most unusual sin” and likened it to “punishing a child for tidying up their bedroom.”

However, this seemingly irrational behaviour does have an objective foundation. The PBoC is fearful that if banks load up on bonds, then they will suffer major losses if interest rates start to rise, and the value of their holdings falls.

This could then lead to the same kind of crisis which hit the US Silicon Valley Bank in March 2023 when, as a result of interest rate rises by the US Federal Reserve, the value of its bond holdings fell, leading to a run on the bank and forcing it under.

The crisis, which threatened to spread, was only halted through intervention by government authorities—the Treasury, the Fed and the Federal Deposit Insurance Corporation—in which they gave an implicit guarantee that uninsured depositors throughout the banking system would not lose their money. (Uninsured deposits are those greater than $US250,000.)

At the same time there is an objective reason for the rush into bonds. As the FT noted in a recent article, prices in China are falling and that increases the return to be made by holding bonds after this is taken into account.

It pointed out that while the consumer price index (CPI) has been slightly positive, the deflator for the measurement of GDP has been negative for five consecutive quarters, and given that investment is a huge share of China’s economy, the deflator is likely a more accurate measure of overall prices than the CPI.

The article said that with a gloomy economic outlook—no end in sight for the housing market downturn, domestic companies hit by weak consumption and the problems resulting from the government crackdown on high-tech companies such as Alibaba and Tencent—“it seems wholly rational for Chinese investors to flock into bonds and gold.”

The extent of this movement was outlined in a Wall Street Journal article this week. It said that according to their half-year reports, “investment gains from government bonds now make up a large chunk of profits for some smaller city-level commercial banks.”

As an example, it cited the case of the Jiangsu Kunshan Rural Commercial Bank. Its holdings of government-bond investments jumped from $2.9 billion at the end of 2022 to $5.3 billion at the end of last year.

For the average Chinese investor bonds were attractive because the property market is in a “downward spiral,” the stock market is “on track for a fourth straight yearly decline” and capital controls mean it is difficult to invest much overseas.

The government has tried to take some measures to boost the property market, but they have had little effect and are generally regarded as being insufficient, either to increase housing demand or bolster the financial position of developers.

Goldman Sachs has estimated that the stock of unsold new housing could be up to 30 times the level of average monthly sales.

There have been repeated calls from many sources for the government to undertake stimulus measures to boost the economy. But no major stimulus program is going to be undertaken because authorities fear this this will only lead to greater debt and cause problems for the financial system.

Central government debt is relatively low, coming in around 24 percent of GDP. But the debts of local government authorities, which are responsible for much of government spending, amount to at least 93 percent of GDP, and are rising.

The central government policy is the development of “high quality productive forces” and the expansion of high-tech exports to the world market.

This export drive, however, does little or nothing to boost the domestic economy. It is also running into problems because of the US imposed of tariffs against cheaper Chinese goods—electric vehicles being one of the major items. Overall while the volume of exports may be rising, the revenue is not because of the general slowdown in the world economy.

The interconnected economic and financial problems have social and political implications. The Xi Jinping regime, which represents the oligarchy that had developed with the restoration of capitalism, rests on a base of better-off sections of the middle class with which it has a kind of social contract—the repressive character of the regime is tolerated insofar as it can deliver a growing economy, with prospects for their social advancement and their children.

But with the growth of economic problems, that is coming apart and the fear of the ruling oligarchy is that through the cracks opposition from the 400 million strong working class may emerge.

These political considerations are also at work in the attempt to halt bond-buying because the fall in their yield implies a degree of economic weakness, sending out a dangerous message regarding political stability.

This week the China Dissent Monitor published by the US Freedom House organisation reported an 18 percent increase in cases of dissent for the second quarter of the year compared to 2023.

Such data, coming from a right-wing organisation, should be taken with a grain of salt. But they are in line with the trend of economic developments. According to the report, some 44 percent of dissent incidents related to labour and 21 percent involved aggrieved homeowners. This dissent has yet to threaten the regime, but it could well develop further.

As the head of the Dissent Monitor, Kevin Slaten, noted there was a certain acceptance of the authoritarian nature of the regime as a “trade-off for economic prosperity” but this could be undermined as slowing economic growth impacted more people.

Finance capital sucking the lifeblood out of impoverished countries

Nick Beams

The International Monetary Fund has published a series of blogs showing the crippling effects of debt repayments on a wide range of lower-income and developing counties which have significantly worsened over the past four years, not least because of the impact of the COVID crisis.

International Monetary Fund annual meeting in Washington, 2022. [AP Photo/Patrick Semansky]

In a post at the beginning of this month, it noted that low-income countries have been hit the hardest by the “economic scarring of the pandemic, conflicts around the world and the abrupt rise in global interest rates.”

But there is another side to the poverty, hunger and misery this is causing. Finance capital is reaping benefits as it sucks in money like a giant vacuum cleaner.

According to the IMF, “The median low-income country is spending over twice as much on debt service to foreign creditors as a share of revenue than it did 10 years ago—roughly 14 percent at the end of 2023 from 6 percent 10 years earlier.”

For some countries the proportion is much higher, ranging up to 25 percent. At the start of this year, the World Bank reported that the total debt service for low-income countries and certain middle-income nations was estimated to be $185 billion when combined with domestic debt repayments.

“This figure is higher, on average, than their combined public spending on health, education and infrastructure,” it said.

Last December, the World Bank issued a report showing the devastating impact on developing countries of interest rate hikes, lifted to their highest levels in four decades. In 2022 they spent a record $443.5 billion to service their debts. It found that about 60 percent of all low-income countries were at high-risk debt distress or close to it.

In the previous three years, there had been 18 sovereign debt defaults in developing countries, more than the number recorded over the previous two decades.

In a report last October, the international aid agency Oxfam reported that some 57 percent of the world’s poorest countries, home to 2.4 billion people, would have to cut public spending by a combined $229 billion over the next five years.

Low- and middle-income counties would be forced to pay $500 million dollars every day to meet debt and interest payments between the present and 2029, “with the poorest countries now spending four times more repaying debts to rich creditors than on health care.”

In their reports on the debt crisis, the IMF and World Bank point to the initiatives which supposedly are aimed at alleviating it and call for them to be stepped up. In its latest blog, the IMF said that now was the time to help countries faced with liquidity challenges.

Such calls have been made in the past, but the IMF never explains why the crisis in getting worse and why its various initiatives are so limited.

In fact, as Oxfam has pointed out, rather than providing a solution to the crisis, both the IMF and the World Bank work to exacerbate it.

In a comment on the report, issued on the eve of a meeting of the two organisations last year in Marrakech, Morocco, international interim executive director Amitabh Behar said: “The World Bank and the IMF are returning to Africa for the first time in decades with the same old failed message: cut your spending, sack public service workers, and pay your debts despite the huge human costs.”

Oxfam analysis found that 27 loan programs negotiated with low-income countries, supposedly to provide a floor for debt payments, were actually a smokescreen for more austerity. This was because “for every $1 the IMF encouraged governments to spend on public services, it has told them to cut six times more than that through austerity measures.

“The IMF is forcing poorer countries into a starvation diet of spending cuts, driving up inequality and suffering,” Behar said.

However, while condemning the global institutions—they are more a financial vampire than aid agencies—he revealed the bankrupt reformist Oxfam perspective by appealing to them to “show they can genuinely change to reverse the tide of widening inequality and between countries.”

This bromide is offered not because of any lack of knowledge—all the reports of Oxfam and other such organisations make that clear—but because of their class standpoint grounded on the defence, in the final analysis, of capitalist property relations.

Oxfam has also provided some significant data on the refugee crisis that is exploited by Donald Trump to build his fascist movement, claiming that refugees are “poisoning” the blood of America.

It noted that the top ten countries, from which asylum seekers to New York City originate, pay a staggering $82 billion a year in public debt and interest payments to foreign creditors. Many of these are US banks, hedge funds and other financial institutions of which Trump, together with the Democrats, is a political representative.

Any notion that the debt and hunger crisis cannot be resolved because “there is no money” is nothing short of a big lie.

In analysis published on the eve of the G7 meeting of the major powers in June, Oxfam said that just 3 percent of G7 military spending would help solve the deepening global food and debt crisis.

Eradicating global hunger would require $31.7 billion annually, plus an additional $4 billion a year. Such spending would amount to just 2.9 percent of the total military budgets of the G7 powers.

The head of Oxfam’s inequality policy, Max Lawson, said: “Governments are finding their pockets run deep to fund war today, but when it comes to stopping starvation they are suddenly broke.”

Appealing to the major powers to divert some of their war spending to social and humanitarian needs is as futile as appealing to the institutions of global capitalism, such as the IMF and the World Bank, to change course.

This is because these drives are rooted in the objective crisis of the capitalist system as it hurtles into a breakdown. This objective fact of political and economic life must be recognised and acted on.

The same financial powers that are sucking the blood of the peoples of poorer countries are driving the attacks on the working class in the advanced countries—the never-ending offensive against social conditions and the demand that the working class pay for military spending.

Macron refuses to name New Popular Front to French government

Alex Lantier

After President Emmanuel Macron finished a round of talks with leaders of France’s parliamentary parties on Monday, he refused to select a prime minister to try to assemble a majority in parliament. Instead, the Elysée présidential palace issued a communiqué stating that Macron would not name a prime minister from the New Popular Front (NFP) led by Jean-Luc Mélenchon, which won a plurality in the July 7 elections.

Macron’s trampling on the election results has exposed the intractable crisis of French democracy and his own deep ties to neo-fascism. His refusal to allow the election winners to try to assemble a majority in parliament has left France without a government for nearly two months. To explain this position, however, the Elysée stated that the NFP is unacceptable to legislators from the far-right National Rally (RN) and Macron’s own Ensemble coalition, pledging that they would band together to bring down any government the NFP formed:

A government based only on the program and the parties proposed by the alliance with the most legislators, the New Popular Front, would be immediately censured by all the other groups represented in the National Assembly. Such a government would thus immediately have a majority of over 350 deputies against it, effectively blocking it from acting. Given the views of the political leaders that were consulted, the institutional stability of our country therefore compels us not to take this option.

Macron’s pledge to work with the RN to block an NFP government is setting into motion an explosive confrontation with the working class. Macron is despised among workers for ruling against the people, after pushing through pension cuts last year, sending riot police to assault mass protests and strikes against the cuts. Fully 91 percent of French people reject Macron’s cuts, and a similar proportion oppose his call to send French troops to Ukraine for war with Russia.

The constant diversion of social wealth by the capitalist class towards imperialist war and massive bank bailouts in the face of deep popular opposition, above all, in the working class, is leading to a breakdown of democratic forms of rule.

Outgoing Prime Minister Gabriel Attal’s caretaker government has reportedly begun preparing an austerity budget to freeze social spending. Since caretaker governments traditionally cannot take budgetary decisions, this only underscores the illegitimacy of the Macron regime. It will provoke bitter opposition in the working class against austerity, global imperialist war, and French and NATO backing for the Israeli regime’s genocide in Gaza.

A debate is raging in the French ruling class over what coalition government to assemble to try to suppress and politically strangle this opposition. In the run-up to the July 7 elections, Macron carried out extensive discussions with the far-right RN to prepare for the installation of a far-right government. However, the elections led not to a victory of the RN but of the NFP, as millions of workers, particularly in the major cities, voted for the NFP to block the neo-fascists.

The Elysée communiqué issued an appeal to Mélenchon’s allies in the NFP—primarily, the big business Socialist Party (PS) and its traditional allies, the Stalinist French Communist Party (PCF) and the Greens. It called upon them to split the NFP, abandon Mélenchon and join the parties of Macron’s coalition in a governmental alliance backed by the traditional right. Imploring the PS, PCF and Greens to “cooperate with other political forces,” the communiqué stated:

Discussions with the LIOT group and the EPR, MoDem, Horizons, Radicals and UDI sketched a path towards a coalition and possible collaboration between different political sensibilities. These groups have made clear they are open to supporting a government led by a personality that would not come from their own ranks.

But for now, the PS and its allies have rejected Macron’s appeal and denounced his refusal to let the entire NFP form a government. The PS attacked Macron’s “intolerable” policy as a “coup” and “the rejection of a left-wing government, because he rejects and has contempt for its program.” Green Party leader Marine Tondelier denounced Macron’s “dangerous democratic irresponsibility” as a “shame,” pledging to “keep fighting for the will of the French people: three-quarters of them want to break with the Macron regime.”

PCF National Secretary Fabien Roussel said he would only meet publicly with Macron “to build a broad government led by Lucie Castets,” the 37-year-old Finance Ministry bureaucrat Mélenchon has approved as the NFP’s proposed prime minister.

Mélenchon for his part repeated the threats made by his France Unbowed (LFI) party to present a motion in the National Assembly to impeach Macron. “The popular and political response must be rapid and firm,” he tweeted, pledging: “The motion for impeachment will be presented.”

Tuesday, the Union of University Students (UE) and the National High School Students Union (UNL) called for nationwide protests “against Emmanuel Macron’s autocracy.” Shortly afterwards, LFI issued a call to join the UE-UNL protests. For now, the PS has not issued a statement of support or a call for participation in the UE-UNL protests, however, which are called for September 7.

A powerful movement must be built among the youth and, above all, to mobilize the working class to bring down Macron’s police-state dictatorship. The military aggression abroad and class war at home waged by Macron in France and the governments of all his NATO allies must be stopped. A critical warning must however be addressed to the workers and youth: This cannot be done on a national perspective of building a capitalist government led by the NFP and, in particular, by the PS, a bourgeois party deeply hostile to socialism and the working class.

For all of the proclamations of unbridgeable differences between various political parties that are supposedly blocking the formation of a government, the differences of policy separating these different parties are in fact relatively minor. The NFP has endorsed in its program calls to send troops to Ukraine and to build up the military police and intelligence services at home. On the basic agenda of imperialist war at home and class war abroad, the PS and Mélenchon do not represent a fundamentally different policy than Macron.

Moreover, despite Mélenchon’s threats to impeach Macron, and Macron’s insistence that he will not accept a NFP government, the basic form of the government they are proposing is also similar.

The NFP has 193 of the 577 seats in the National Assembly. Under these conditions, Mélenchon’s threatened impeachment motion is set to fail, as have repeated censure motions LFI submitted against Macron earlier in his presidency. Moreover, whatever government the NFP might form, even if it included LFI and Mélenchon, would depend on reaching an agreement with Macron and the raft of small, right-wing parties allied to him—as Macron is currently proposing.

Indeed, by offering to back a PS-led government in which LFI would have no ministers, Mélenchon has signaled that he is open to a compromise on the issue most clearly separating Macron from the NFP: whether Mélenchon and his party would participate in the government.

As COVID-19 infection numbers top 1 million a day, the CDC promotes a campaign against public health

Benjamin Mateus & Patrick Martin

With the toll of new COVID-19 infections regularly topping 1 million a day and weekly deaths creeping toward the 1,000 mark, the Centers for Disease Control and Prevention (CDC) has launched a campaign aimed not at protecting the public from this ongoing pandemic, now in its fifth year, but at washing its hands of responsibility.

CDC Director Dr. Mandy Cohen held a press conference August 23 to review the state of the COVID-19 pandemic and encourage the public to get their winter COVID-19, RSV and flu vaccines once they are made available. While bluntly acknowledging that “COVID is with us,” she tried unconvincingly to assure reporters and viewers that “we have the tools to protect ourselves.” She then added, as a way of shifting the blame, “We just need to use them!”

Dr. Mandy Cohen, director of the U.S. Centers for Disease Control and Prevention since July 10, 2023 [AP Photo/Bryan Anderson]

Dr. Cohen was silent on who was responsible for the failure of most Americans to get booster shots or otherwise protect themselves from a disease, which can be fatal for many and cause lifelong debilitation for many more.

She could have named the Democratic administration of Joe Biden and Kamala Harris, which ended the COVID-19 emergency more than a year ago and treats the pandemic as a thing of the past. She could have named Republican presidential candidate Donald Trump, the promoter of quack remedies like ivermectin and bleach, who recently welcomed into his campaign the anti-vaxxer and enemy of science and public health, Robert F. Kennedy Jr.

And if she had been equipped with a mirror—and a conscience—she could have pointed to herself and other top CDC officials, who have collaborated in the anti-scientific rampage to shut down both mitigation efforts and even elementary data collection on cases of illness, hospitalization and death.

Most importantly (and therefore least likely) she could have acknowledged that within the framework of the capitalist system, the profits of giant banks and corporations are far more important than the lives of human beings. That is the meaning of the incessant claims that schools, factories, public transportation and facilities must be kept open, to save “the economy,” despite the inevitable spread of the infection as a result.

Dr. Cohen, like her predecessors and colleagues at the top of the public health establishment, puts political pressures above science and medicine. The nearly hour-long briefing was simply political theater, where a panel of experts attempted to place the public health agency in the best light despite acknowledging the monumental number of daily infections that have seen hospitalizations and fatalities climb.

Meanwhile, schools across multiple states have announced closures—affecting thousands—just as the new academic year has begun, in response to mass infections among faculty and students.

So far this year, more than 26,000 Americans have died from acute COVID-19 complications, and more than 800 per week are being killed by a preventable infection, a figure 20 percent higher than last year this time. At the current rate, it is expected that between 50,000 to 60,000 Americans will die from COVID-19 in 2024, a rate two to three times higher than fatalities from flu. However, these do not take into consideration excess deaths, and given the complete dismantling of the reporting systems, these figures are known undercounts.

Such figures could only appear low in comparison to the colossal death toll of the first three years of the pandemic, when 352,000 died in 2020, 464,000 in 2021 and 260,000 in 2022. In 2023, 76,000 COVID-19 deaths were recorded. All these numbers are underestimates, as excess mortality figures are considerably higher. The cumulative death toll from COVID-19 is likely well over 1.4 million in the United States and approaching 30 million worldwide.

Neither did the panel address any concerns over the fact that millions continue to suffer from Long COVID, which has taken a significant toll on the health of Americans and the world over. It bears mentioning that a recent study noted that 410 million people across the world have had Long COVID with a $1 trillion impact on global GDP. Yet, no treatment for this condition exists. Without health insurance and means, issues of brain fog, chronic fatigue and sleep disturbances become part of one’s physiognomy.  

Much about Dr. Cohen’s characterization of the ongoing COVID-19 pandemic is deeply flawed and should have been taken up by the press, who remained silent on the matter. First and foremost, her claim, in response to a direct question that COVID-19 “is endemic,” is completely misleading.

An infection is endemic when it is contained, not spreading uncontrolled and not causing significant impact on the society. COVID-19 is none of these. It remains a pandemic, with new waves of infections where millions are being infected daily by a virus whose mutation far outstrips the efforts of public health agencies and pharmaceutical companies to provide vaccines, medicines and mitigation practices. It continues to cause large-scale social disruption, economic loss and general hardship. 

The opposition of both capitalist parties to any significant effort to fight the pandemic was on display last week. The Democratic National Convention, like its Republican counterpart in July, was a massive superspreader event, with thousands of delegates and media personnel congregating in an enclosed arena, where there was continuous cheering, shouting and singing. There are already anecdotal reports of widespread sickness in state delegations returning from Chicago.

As for the Republicans, Trump staged his appearance with Robert F. Kennedy Jr. on Friday afternoon, beaming as Kennedy announced he was folding up his independent presidential campaign and endorsing the ex-president and would-be dictator. Kennedy said he was working with Trump on staffing agencies like the CDC, NIH, FDA and USDA from the standpoint of ending the “chronic disease crisis.” By this he means, of course, ending efforts to fight diseases and letting children, the elderly, and the entire American population suffer the consequences.

Fundamentally, all large epidemics and pandemics are serious social issues that require broad-scale infection control in place to disrupt and prevent disease. And with respect to COVID-19 and all future pandemics, these require an international collaborative perspective.

In 2024 so far, 179 million people were infected in the United States, a total that is eventually expected to surpass 2023, when more than 248 million Americans, or three-quarters of the population, caught COVID-19. SARS-CoV-2 wastewater levels throughout the pandemic suggest that there have been more than 1.1 billion infections in the United States, between three and four for every person in the country.

This begs the question how are those most vulnerable, such as the elderly, immunocompromised, and those with chronic disabling medical conditions, which represent a significant portion of the population, to protect themselves from perpetual mass infection?

For the CDC director to present public health efforts as a matter of individual, personal choice is a gross falsification of reality. The policy of mass infection has been forced on the population. 

As for having the tools to protect themselves, what is being offered are simply vaccines and more vaccines as a means to prevent COVID-19. As the WSWS recently noted, “Despite the limitations, the uptake of the vaccines is vital for the health of the population. The shots have a strong, proven safety record and do prevent severe disease and potentially reduce the risk of Long COVID, as studies have indicated. However, they do not prevent infections and the immunity they offer is short-lived given the constant mutation of the virus.”

The vaccines by Pfizer and Moderna carry a cost of $120 to $130 per shot. In some regions, these can be as high as $160 or even $200. However, the rescinding in March of $4.3 billion from the Department of Health and Human Services in COVID-19 supplemental funding means access to free vaccines for the 26 million uninsured and tens of millions more underinsured, essentially all from working class families, will only mean that the vaccination campaign will simply languish as it did last year when only 7 million Americans accepted the boosters within six weeks of their delivery to pharmacies. 

As for other tools in their toolbox, Cohen refers to anti-viral treatments like Paxlovid, which are regularly being denied to patients by their physicians or when they actually are given a prescription, face the daunting price tag of $1,300 to $2,400 per course because their insurance denies them coverage. Meanwhile, repurposed medications like Metformin, a drug that treats diabetes, which has shown anti-viral properties and shown in randomized trials to reduce COVID-19 viral loads and decrease risk of Long COVID, remain unmentioned. In particular, this raises the question of why there are so few tools in the toolbox, and why some are being removed, such as the ability to wear N95 masks in public.

The arrest of an 18-year-old New York man in Nassau County on Tuesday who was wearing a black ski mask utilizing the recently passed mask-ban legislation will only embolden police departments and threaten the public who face possible detentions and arrest simply on charges of police suspicion. 

At the Democratic National Convention, guidance was issued forbidding mask wearing by attendees unless “it was necessary due to a disability” and this at the discretion of security.

One fifth of world’s youth not in employment, education or training

Jean Shaoul

According to the latest Global Employment Trends for Youth (GET for Youth) report, published by the UN’s International Labour Organisation (ILO), a massive 256 million (20.4 percent of the world’s 1.2 billion youth population) were not in employment, education or training (NEET).

The NEET rate for young men was 13.1 percent, while the rate for young women was twice as high at 28.1 percent, meaning that two out of three NEETs are young women. NEET status is also a much more permanent situation for young women than for young men. It is higher in rural areas than in urban areas and in low-income countries than in high-income countries.

Global Employment Trends for Youth (GET for Youth) report, published by the UN’s International Labour Organisation [Photo: International Labour Organization]

The International Labour Organisation (ILO) tries to paint the best picture it can of the grim future for the youth, pointing to a general recovery in youth unemployment following the height of the COVID-19 pandemic—a measure that ignores the widespread casual labour and hawking that forms the “employment” of most people in low-income countries. But this recovery was not universal. The youth unemployment rate in 2023 in the Arab States, East Asia and South-East Asia and the Pacific was higher than in 2019. Furthermore, while youth unemployment had continued rising in the Arab States, this increase was a reversal for the Asian sub-regions that had previously seen economic growth and jobs for youth.

The reality for most youth around the world, if they do find work, is one of having to scratch a living rather than having a secure job and decent work. That so many their just share of the distribution of the world’s wealth created by the international working class and condemned to a life of grinding poverty, is a searing indictment of the capitalist system of production for private profit that has attained an unprecedented level of global integration.

The ILO cannot help but note somewhat lamely, “With uncertain times ahead, the well-being of youth is a growing concern.” It points out that due to the COVID-19 pandemic few countries had met their Sustainable Development Goal (SDG) target 8.6 that called on countries to “By 2020, substantially reduce the proportion of youth not in employment, education or training.”

The NEET rate of 20.4 percent in 2023 was only marginally better than 2015’s rate of 21.3 percent, with progress stalling even before the pandemic. Moreover, the global figure masks enormous regional variations. While NEET rates have improved in some regions, several regions that already had some of the world’s highest rates are showing a regressive trend—the Arab States (33.2 percent NEET), North Africa (31.2 percent), South Asia (25 percent) and Sub-Saharan Africa (20 percent).

The unemployed in the youth NEET rate include both the unemployed and those outside the labour force (OLF)—neither working nor looking for work (the OLF inactive NEET status). It is the OLF inactive that represents the largest share of youth unemployment and is particularly pronounced among young women.

The ILO expects the youth NEET rate to remain at 20.4 percent in 2024 and 2025 and to increase in three sub-regions where they have been relatively low: East Asia, Eastern Europe and North America. In South Asia, where rates were already among the world’s highest, youth NEET rates are expected to rise to 26.6 percent in 2025, with only slight improvements for the Arab States and North Africa.

Surveys show that many young people are anxious about the economy and their job prospects, amid fears about losing their jobs, job stability, a lower standard of living than their parents, the lack of opportunities and a decline in the general level of happiness, in the regions marked by grinding poverty, savage worker exploitation and gaping social inequality.

There are 1.2 billion young people aged 15 to 24 years, accounting for 16 percent of the 8 billion global population. By 2030—the target date for the SDG Target 8.6—the number of youths is expected to approach 1.3 billion. Young people will form an ever-larger proportion of the world’s workforce, currently around 3 billion that rose from 1.2 billion in 1980 as part of the transition from “farm to factory.”

The largest population of youth (60 percent) is concentrated in Asia and the Pacific. Around 90 percent live in low-income countries where they make up a large proportion of the population. By 2025, one third of global youth will be in Sub-Saharan Africa.

Africa has the youngest population worldwide, with 60 percent of its 1.25 billion population under the age of 24, 40 percent under the age of 15 and less than three percent above 65, a savage index of the low life expectancy. In 2023, in sub-Saharan Africa around three in four working young adults were in precarious forms of work; one in three earned less than the median wage; and more than one in two eked out an existence in the agricultural sector.

These conditions testify to the powder keg that is Africa and indeed vast parts of the world. As the ILO says, “How African countries will create decent jobs for so many labour market entrants is a matter of global concern.”

The United Nations says, “As youth are increasingly demanding more just, equitable and progressive opportunities and solutions in their societies, the need to address the multifaceted challenges faced by young people (such as access to education, health, employment and gender equality) have become more pressing than ever.”

The concerns of these institutions set up by US imperialism and its European allies in the wake of World War II to regulate international affairs in their interests is not with the atrocious conditions that young people are forced to endure. Rather, they fear the threat this poses to the stability of capitalist rule as the authorities lose control over the sprawling slums and shanty towns to be seen across the “developing world.”

Youth-led protests have broken out in several African countries over recent months calling for political change. For weeks, young people in Kenya took to the streets in protests against the rampant corruption and high taxes levied by President William Ruto’s regime. In Uganda, mass protests against the soaring cost of living, poverty and government corruption in July were violently suppressed by police after President Yoweri Museveni warned that those thinking of such protests “were playing with fire.”

Protesters block the busy Nairobi -Mombasa highway in the Mlolongo area, Nairobi, Kenya., July 2, 2024 [AP Photo/Brian Inganga]

Earlier this month, young people hit the streets across Nigeria to protest the soaring cost of living, the removal of the electricity subsidy, high unemployment and the rampant corruption of President Bola Tinubu’s government. Former Nigerian President Olusegun Obasanjo warned that Africa was staring at the abyss. Speaking in an interview with CNN affiliate Citizen TV, he said, “All over Africa, we are… sitting on a keg of gunpowder,” adding, “There’s virtually no exception (country) in Africa where the youth are not angry. They are unemployed… unempowered and they see nothing other than hopelessness.” Obasanjo warned that “if no adequate attention is paid to the needs of the youth in Africa… it will be very ugly for all of us.”

As he was speaking, mass protests by students in Bangladesh over job quotas and rising social inequality prompted the military to bundle long-time Prime Minister Sheikh Hasina out of the country in a bid to stabilise bourgeois rule.

38 Amazonian indigenous leaders murdered in Peru from 2013 to 2024

Cesar Uco

Between 2013 and 2024, 38 leaders of Amazonian indigenous peoples in Peru were assassinated by mafias associated with illegal mining, logging and drug trafficking. Organizations advocating for the rights of indigenous peoples have reported similar widespread atrocities in Colombia, Ecuador, Bolivia and Brazil.

The Awajún people living in Peru's Cenepa River basin protest the contamination caused by illegal gold mining [Photo by Andina / CC BY 4.0]

Last month Mariano Ikasama, the leader of the Amazonian Kakataibo community, who was known for his work as a human rights defender, was found dead with signs of torture in the Ucayali region after being missing for 23 days.

The Peruvian newspaper La República reported the April 19, 2024 shooting of Victorio Dariquebe, the 61-year old park ranger of the Amarakaeri Communal Reserve in the Madre de Dios region in southeastern Peru, which borders Brazil and Bolivia.

The assassination of Amazonian leaders in Peru has been accompanied by the recent killing of three non-indigenous environmental activists, who were targeted for their work in protecting Amazonian forests and natural reserves against illegal gold mining in rivers and deforestation.

Indigenous peoples are waging a struggle to preserve the largest ecosystem on the planet: the basin of the mighty Amazon River, estimated at some 5.5 million km2 – with 750,000 km2 in Peru.

In Peru, there are 2,439 indigenous communities associated with 109 federations and nine organizations under the Interethnic Association for the Development of the Rainforest of Peru (Aidesep), as well as the autonomous territories of Awajún, Ese Eja Nation, and Shipibos. These communities safeguard over 18 million hectares of critical forest land.

In June, the Awajún attempted to block illegal mining in the Amazonas department by blocking the Comainas River with a cordon of canoes. Known as Defenders of Diversity, they are committed to protecting their land and resources. Their website says:

Over the past few decades, … large-scale projects like infrastructure development, extractive industries, and the cultivation of coffee and palm oil have been causing significant damage to the Amazon region. … This has resulted in the destruction of native flora and fauna, as well as the traditional ways of life that have adapted to this environment and lived in harmony with it. … The survival of these communities, along with the knowledge and practices they have developed over hundreds of years, is crucial in the fight against climate change.

In the department of Madre de Dios, where Victorio Dariquebe was murdered, the Andean Amazon Mining Project (MAAP) reports that gold mining in the region is harming local fauna, flora, and indigenous communities.

The MAAP report highlights deforestation, river contamination, and adverse effects on public health. MAAP estimates that 23,881 hectares were deforested in Madre de Dios between 2021 and September 2023.

Aidesep, explains the profound significance of the Amazon basin for global ecological balance:

“Given their vast extension, Peruvian forests constitute an important carbon reserve on a global scale. Forests generate climate resilience and ensure the provision of fundamental ecosystem services, such as water, and resources for food sustainability.”

It is clear, therefore, that the attack on the Amazonian peoples’ way of life and the destruction of their habitat has much wider repercussions.

Indigenous leaders have declared a state of emergency, accusing the Peruvian government of neglecting their requests for a study on the Amazon region’s environmental quality. They also hold the government responsible for the serious crimes committed against their communities.

A rare instance of justice occurred on September 1, 2014, when four out of the five defendants accused of killing four Asháninka leaders in Ucayali were sentenced to 28 years and three months in prison. The case shed considerable light on the severity of unpunished crimes in the region.

Peru is a country where 13.1 percent of children under five years of age suffer from chronic malnutrition in general and 42.4 percent are affected by anemia. These 2023 figures for the country as a whole would without a doubt be much higher among children in indigenous communities in the Amazon.

Poverty and oppression, particularly of children in indigenous communities, is extreme. They have high school dropout rates, and are exploited by mafias who force them to work for low wages in gold mines along the rivers.

Girls in these communities face sexual abuse and forced prostitution, resulting in high incidence of rape cases and HIV transmission. The Peruvian Minister of Education Moran Quero has crassly attributed the rape of 500 Awajún girls to “cultural practice.”

The Peruvian government engages in little more than handwringing when it comes to oppression of these communities, because it defends the powerful capitalist interests that profit off of the illegal mining, logging and drug trafficking that plague the Amazon region.

Former Brazilian President Jair Bolsonaro did not even bother to hide his initiatives to uproot indigenous communities in the Amazon. According to Sage Journals Home:

Under the ultraconservative Bolsonaro government, the State has been taken over by elites with rural and extractive capital who plan on exploiting the Amazon rain forest at any cost and see indigenous peoples as an obstacle to their goal. The military also has a noteworthy position in this offensive, which strikes at the heart of what are considered human rights.

The organization Acampamento Terra Livre (ATL 2020) referred to Bolsonaro’s policies as one “without indigenous people,” that is, genocide.

Bolsonaro’s successor, Workers Party (PT) President Luiz Inácio Lula da Silva, announced with great fanfare his intention to pursue a new policy in the Amazon region dedicated to protecting the environment and the indigenous populations. While his government has managed to reduce the rate of deforestation by half, the area controlled by illegal mining actually increased by seven percent last year.

With environmental and indigenous agencies confronting scant resources, the Amazonas mission has largely been delegated to the Brazilian military, which has a long record of oppressing indigenous populations. This includes the massacre of nearly 10,000 indigenous people in the Amazonas region under the military dictatorship that ruled Brazil from 1964 to 1985.

Franco-Russian billionaire Pavel Durov, founder of Telegram app, arrested in Paris

Alex Lantier

On Saturday, French border guards and military police arrested 39-year-old Franco-Russian billionaire Pavel Durov, the founder of the Telegram encrypted messaging app, in transit at Le Bourget Airport in Paris. Durov was jailed as a flight risk and charged with 12 crimes involving narcotics trade, child pornography, organized crime and providing unauthorized cryptographic services.

Telegram co-founder Pavel Durov on Aug. 1, 2017. (AP Photo/Tatan Syuflana, File) [AP Photo]

French President Emmanuel Macron took to Twitter yesterday to defend the arrest, warning against “false information” on Durov’s arrest. He claimed, “The arrest of the president of Telegram on French soil took place as part of an ongoing judicial investigation. It is in no way a political decision. It is up to the judges to rule on the matter.”

In reality, the arrest and jailing of Durov is transparently politically motivated, reactionary and lacks any substantial legal foundation. It aims to assist the NATO powers in their war with Russia in Ukraine and pave the way for escalated attacks on democratic rights, including Internet privacy and freedom of information, in the countries where Telegram’s 900 million users are located. These include above all countries in the former Soviet Union, the Middle East and India.

In particular, officials of NATO governments and of the far-right Ukrainian regime have repeatedly called to ban the app, which is very popular in Ukraine, accusing it of being a conduit for “Russian propaganda” that cuts across their war against Russia.

Durov is a Russian citizen who left Russia in 2014 to live in Dubai and acquired French citizenship after coming into conflict with the Kremlin over his refusal to hand over information from the VKontakte social network to Russian state authorities. He was arrested on Saturday at Le Bourget Airport in the company of his bodyguard and his assistant, Julia Vavilova, who were both left free.

The 12 charges he faces stem from an initial investigation secretly launched against Durov by the French Office on violence against minors (Ofmin). None of the charges target Durov’s own conduct but instead involve the argument that Durov is personally responsible for alleged criminal activity by others using the Telegram app. This concocted legal argument has led to what Le Monde confessed was a “world premiere” in terms of the arrest of executives of major social media.

Immediately after the arrest, a French police investigator gloated to TF1 news: “[Durov] screwed up tonight. We don’t know why. … Was he just transiting through France? Anyway, now we have him in the bag.”

Another said Durov would not be allowed to leave jail even after the initial investigative detention ends tomorrow: “Pavel Durov will end up in provisional detention, that is certain. On his platform, he allowed people to commit an incalculable number of crimes and misdemeanors which he did not try to moderate or cooperate with us about.”

The coverage in both Russian and pro-NATO media makes clear, however, that the arrest is bound up with NATO’s prosecution of the war with Russia and attempts to limit popular opposition to the war, both in Ukraine and internationally.

Russian media are publicly worrying that the arrest and detention of Durov could have a devastating impact on the operations of Russian forces in Ukraine, who extensively use Telegram. “Telegram might become a tool of Nato, if Pavel Durov is forced to obey the French intelligence services,” Moskovsky Komsomolets declared. “Telegram chats contain a huge amount of vitally important, strategic information. … If Telegram crashes, how is [our army] going to fight?”

University of Maastricht Professor Marielle Wijermars commented to France24: “Telegram is widely used in the army and the political establishment for communications; and it is evident that many Russian officials must fear that France will pressure Telegram’s boss to get access to their communications.”

Telegram has also emerged from the outset of the NATO-Russia war in Ukraine in 2022 as a source of information and footage of the war, unfiltered by NATO and Ukrainian media, notably on the massive losses of Ukrainian troops and NATO equipment. The availability of this information, refuting false official narratives of the Ukrainian army’s supposed victories against Russia, soon attracted the hostility of NATO governments and pro-NATO media.

“As the war in Ukraine rages, the messaging app Telegram has emerged as the go-to place for unfiltered live war updates,” US National Public Radio noted in 2022, complaining that it risked inciting opposition to the NATO war. “Telegram, which does little policing of its content, has also become a hub for Russian propaganda and misinformation. Many pro-Kremlin channels have become popular ...”

Particularly this year, amid mounting opposition in the Ukrainian population to the war, officials of the far-right regime in Kiev demanded that Telegram be silenced. Ukrainian officials did not ultimately dare take this step, since fully 72 percent of the Ukrainian population uses the app. However, they repeatedly made clear that they viewed it as a posing a critical internal political threat, particularly if Durov did not agree to censor Russian sources on Telegram.

Ukrainian military intelligence official Andriy Yusov told German state broadcaster Deutsche Welle (DW) that Telegram is a threat to “information and not only information security” of Ukraine. Ukrainian officials repeatedly complained that Telegram’s anonymity and privacy meant that their intelligence services, who are infamous for their brutal suppression of political dissent, could not identify and track down the identity of people posting materials they disliked.

Ukrainian parliamentarian Yaroslav Yurchyshyn told DW that he could support a ban on Telegram “if the cooperation with Telegram won’t work,” because “the price of such holes in information security, which allow Russian propaganda to penetrate into Ukrainian information products easily, is very high in our country. A matter of life and death for our citizens.”

It is not concocted allegations of supposed complicity in child pornography, but the NATO powers’ war against Russian forces in Ukraine and their attempt to censor news of that war to limit opposition in Ukraine and in the NATO countries, that drove Durov’s arrest. The arrest targets not only opposition to war in Ukraine but also in the NATO imperialist countries. Macron’s call to send troops to Ukraine to wage war with Russia is also massively unpopular, facing nearly 90 percent opposition in both Western Europe and the United States.

French and NATO officials also intend for the arrest of a Russian billionaire to undermine support for the war and for Russian President Vladimir Putin’s regime in Russia’s ruling capitalist oligarchy that emerged from the Stalinist dissolution of the Soviet Union in 1991. Recently, Ukraine invaded Russia near Kursk—signaling that, despite the NATO-backed Ukrainian regime’s military reversals, NATO intends to escalate the conflict and compel a Russian surrender.

By arresting Durov, France and its NATO imperialist allies are warning Russia’s corrupt ruling elites that their overseas assets and their lives will not be safe until they fall in line with NATO policy and its plans for the dismemberment and looting of Russia.

This makes clear the utterly reactionary political forces behind the arrest of Durov and the further assault on Internet freedoms that it is setting into motion.