Daily News 31.05.2022 (Monkeypox won’t turn into pandemic: WHO, 10 Pacific island nations reject China security pact, May inflation may slow to 7%: SBI report, Xi backs new HK chief to maintain ‘order’)

Daily News 31.05.2022 (Monkeypox won’t turn into pandemic: WHO, 10 Pacific island nations reject China security pact, May inflation may slow to 7%: SBI report, Xi backs new HK chief to maintain ‘order’)


1. Monkeypox won’t turn into pandemic: WHO

‘But there are still many unknowns about the virus’

The World Health Organization’s top monkeypox expert said she doesn’t expect the hundreds of cases reported to date to turn into another pandemic, but acknowledged there are still many unknowns about the disease, including how exactly it’s spreading and whether the suspension of mass smallpox immunisation decades ago may somehow be speeding its transmission.

In a public session on Monday, WHO’s Rosamund Lewis said it was critical to emphasise that the vast majority of cases being seen in dozens of countries globally are in gay, bisexual or men who have sex with men, so that scientists can further study the issue and for populations at risk to take precautions. “It’s very important to describe this because it appears to be an increase in a mode of transmission that may have been under-recognised in the past,” Dr. Lewis, WHO’s technical lead on monkeypox, said.

Still, she warned that anyone is at potential risk of the disease, regardless of their sexual orientation. Other experts have pointed out that it may be accidental that the disease was first picked up in gay and bisexual men, saying it could quickly spill over into other groups if it is not curbed. To date, the WHO said 23 countries that haven’t previously had monkeypox have reported more than 250 cases.

Dr. Lewis said it’s unknown whether monkeypox is being transmitted by sex or just the close contact between people engaging in sexual activity and described the threat to the general population as “low”.

“It is not yet known whether this virus is exploiting a new mode of transmission, but what is clear is that it continues to exploit its well-known mode of transmission, which is close, physical contact,” she said.

Monkey Pox

  • Monkeypox is a viral zoonotic disease that occurs primarily in tropical rainforest areas of Central and West Africa and is occasionally exported to other regions.
    • Monkeypox virus infection has been detected in squirrels, Gambian poached rats, dormice, and some species of monkeys.
    • Monkeypox is caused by monkeypox virus, a member of the Orthopoxvirus genus in the family Poxviridae.
  • Monkey Pox infection was first discovered in 1958 following two outbreaks of a pox-like disease in colonies of monkeys kept for research — which led to the name ‘monkeypox’.
  • Symptoms: Monkeypox typically presents clinically with fever, rash and swollen lymph nodes.
    • It causes the lymph nodes to swell (lymphadenopathy), which smallpox does not.
  • Transmission: Monkeypox virus is mostly transmitted to people from wild animals such as rodents and primates, but human-to-human transmission also occurs.
  • Human to Human Transmission: The first human case was recorded in 1970 in the Democratic Republic of the Congo (DRC) during a period of intensified effort to eliminate smallpox.
    • Monkeypox virus is transmitted from one person to another by contact with lesions, body fluids, respiratory droplets and contaminated materials such as bedding.
  • Incubation Period: The incubation period (time from infection to symptoms) for monkeypox is usually 7-14 days but can range from 5-21 days.
  • Fatality Rate: Typically, up to a tenth of people ill with monkeypox may die, with most deaths occurring in younger age groups.
  • Treatment: The clinical presentation of monkeypox resembles that of smallpox, a related orthopoxvirus infection which was declared eradicated worldwide in 1980.
    • Vaccinia vaccine used during the smallpox eradication programme was also protective against monkeypox.
    • A new third generation vaccinia vaccine has now been approved for prevention of smallpox and monkeypox. Antiviral agents are also being developed.

2. 10 Pacific island nations reject China security pact

They shouldn’t be too anxious about Beijing’s aims: Wang

Ten Pacific island nations rebuffed China’s push for a wide-ranging regional security pact on Monday, amid worries the proposal was designed to pull them into Beijing’s orbit.

Talks in Fiji between Chinese Foreign Minister Wang Yi and leaders from the small island nations failed to reach an agreement, in a high-profile diplomatic setback for Beijing.

China is offering to radically ramp up its activities in the South Pacific, directly challenging the influence of the United States and its allies in the strategically vital region. The proposed pact would see Beijing train Pacific island police, become involved in cybersecurity, expand political ties, conduct sensitive marine mapping and gain greater access to natural resources on land and in the water.

As an enticement, Beijing is offering millions of dollars in financial aid, the prospect of a potentially lucrative China-Pacific islands free trade agreement and access to China’s vast market.

Behind the scenes, Pacific leaders have voiced deep misgivings about the offer.

In a recent letter to fellow leaders, David Panuelo, the President of the Federated States of Micronesia, warned the offer was “disingenuous” and would “ensure Chinese influence in government” and “economic control” of key industries. A more soft-spoken rebuke came after the talks, when leaders said they could not agree to Beijing’s proposed “Common Development Vision” due to a lack of regional consensus.

“As always, we put consensus first,” co-host and Fijian Prime Minister Frank Bainimarama said, indicating that broad accord would be needed before inking any “new regional agreements”.

Papua New Guinea, Samoa and the Federated States of Micronesia were said to be among those concerned about the proposals, along with Taiwan-recognising Palau, which was not invited.

Speaking from Suva, Mr. Wang made the face-saving announcement that the 10 countries had agreed to memorandums of understanding on China’s “Belt and Road” initiative. The two sides will “continue to have ongoing and in-depth discussions and consultations to shape more consensus on cooperation”, he said, urging those worried by Beijing’s intentions not to be “too anxious and don’t be too nervous”.

Beijing’s Pacific policies

  • Beijing’s Pacific policies had been predominantly marked by economic engagement, including via the Belt and Road Initiative, rather than overt strategic considerations.
  • Chinese government succeeded in convincing two Pacific Island states, Kiribati and Solomon Islands, to switch recognition from Taipei to Beijing.
  • China’s political designs in the Pacific were revealed by a draft security agreement between China and the Solomon’s that includes provisions for stationing Chinese military and police personnel in the island state and allowing Chinese vessels to replenish supplies there.
  • Beijing has already militarised outposts in disputed areas of the South China Sea – parts of which are also claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam – and has carried out repeated incursions into waters around the disputed islands known in Japan as the Senkakus but in China as the Diaoyus.

3. May inflation may slow to 7%: SBI report

‘Recent steps to tame prices may take few months to fully impact, deficit on track’

India’s retail inflation may ease to 7% in May, from the almost eight-year high of 7.8% in April, said State Bank of India economists, who reckoned that the Centre could still meet its fiscal deficit target of 6.4% of GDP for this year thanks to conservative revenue estimates in the Union Budget.

While the full impact of the recent measures to curb runaway inflation, including the excise duty cuts on fuel products and import-export duty tweaks for steel and plastic, would be visible only in later months, the economists said in a research report that the steps could decelerate the pace of price gains by about 35 to 40 basis points. One hundred basis points are equal to one percentage point.

“Under current circumstances, consumer price inflation is expected to average at 6.5%-6.7% in 2022-23,” SBI group chief economic adviser Soumya Kanti Ghosh noted in the report. “Additionally, these measures are likely to have fiscal implication for the Centre as well [but] considering the conservative budgetary estimates, the net fiscal implication could be around 66,000 crore.”

‘Expanded subsidy bill’

The government has increased its fertilizer subsidy bill by ₹1.1 lakh crore and announced a subsidy payment of ₹200 per gas cylinder for up to 12 cylinders to about 9 crore beneficiaries of the PM Ujjwala Yojna. Customs duties on large quantities of edible oil imports have also been waived.

“These measures in total will have fiscal implication of around ₹2.5 lakh crore. However, the revenue collection for 2022-23 is expected to be higher than estimates in the Budget as they were on the conservative side,” the economists concluded.


  • Inflation is the rate at which the price of goods and services in a given economy rises.
  • Inflation occurs when prices rise as manufacturing expenses, such as raw materials and wages, rise.
  • Inflation can result from an increase in demand for products and services, as people are ready to pay more for them.

Types of Inflation

Inflation can be divided into two types, they are demand-pull inflation and cost-push inflation.

Demand-Pull Inflation:

  • The major cause of demand-pull inflation is a rise in aggregate demand. The increase in aggregate demand is primarily due to an increase in government spending (Expansionary Fiscal Policy) or an increase in household and business spending.
  • For instance, if the government is spending money in a system with limited resources, it can result in demand-pull inflation.
  • Inflation that occurs due to expansionary monetary policy and fiscal stimulus are examples of demand-pull inflation.

Cost-Push Inflation:

  • There is a condition in an economy where inflation is fueled by increases in the cost of producing goods and services, rather than by increases in aggregate demand.
  • Demand remains generally consistent even as supply falls due to global policies, conflict, or natural disasters, gasoline prices rise. This results in cost-push inflation.
  • Inflation that occurs due to rising oil prices and increased raw materials prices due to the breakdown of the supply chain during the COVID Pandemic is an example of cost-push inflation.

Causes of Inflation

Demand-Pull Inflation

Various variables might cause an increase in aggregate demand. Some of them are:

  • Increase in Government Spending (Fiscal Stimulus): This will increase the money supply in the economy and will increase the aggregate demand and in turn cause inflation. The ways in which the government can increase its spending are:
    • Schemes like Universal Basic Income (UBI), etc
    • Increased financial assistance under PM-KISAN
    • Wages under the MGNREGA are increasing
  • Population Pressure: Increase in population will increase the demand for goods and services. This would in turn create inflation.
  • Increase in Net exports: If the essential items are exported from the country at an accelerated rate then the demand for these goods will increase in the economy given their poor availability. This will in turn result in inflation.
    • For instance, If Indian farmers export large quantities of food grains, onions, and other items, demand will not be met, resulting in demand-pull food inflation.
  • Monetary Stimulus: When the central bank takes up monetary stimulus, the money supply in the economy is increased causing inflation. The other implications of the monetary stimulus also cause inflation by
    • The availability of surplus money increases Household consumption.
    • If the RBI has adopted a low-cost money policy, lower-cost credit will be available. As a result, people’s willingness to spend rises resulting in inflation.
  • Policy Decisions: Policy decisions that enable accessibility of funds to the public and increased money supply will result in increased aggregate demand.
    • The seventh pay commission put additional money in the hands of the public sector employees.
    • Private investment is on the rise which is due to liberalized FDI regulations that will, in turn, increase the money flow in the economy.
    • Increasing forex reserves increase the money supply in the economy due to the RBI buying dollars.

Cost-Push Inflation

The fundamental cause of cost-push inflation is rising production costs. The following reasons can cause production costs to rise.

  • Employees salaries being raised: The increase in salaries of the employees will have a bearing on the final cost of the product. Therefore increased cost of production will result in cost-push inflation.
    • Wages have grown as a result of the 7th pay commission.
    • The management of a manufacturing firm is compelled by a labor union to raise worker wages.
  • Raw material prices increasing: Raw material cost is a very important parameter in determining the cost of production of a product. Therefore any increase in raw material prices causes inflation.
    • spike in crude oil prices (for a variety of causes) might increase input costs.
    • Floods, hunger, and other natural disasters reduce agricultural output.
  • Firms profit margins: A firm’s profit margin is added as a part of the cost of production. Any increase in the profit margin of the firm will increase the cost of the product and cause inflation.
    • When businesses opt to enhance their profit margin, the cost of goods and services rises. It usually occurs when a single company is the primary source of goods (monopoly)
  • Import prices: If the raw and the production is dependent on imports then any import price rise results in cost-push inflation.
    • Increases in the price of imported inputs might lead to an increase in the overall price of goods.
    • Devaluation of currency increases the import costs.
  • Increase in Indirect taxes: An increase in indirect taxes will cause inflation.
    • After the introduction of GST, many products and services earlier charged 12% of tax were brought into the 18% tax bracket increasing their prices.
Demand-Pull InflationCost-Push Inflation 
Fiscal Stimulus Population Pressure Increase in Net Exports Monetary Stimulus Policy DecisionsEmployees salaries being raised Raw material prices increasing Firms profit margins Import prices Increase in indirect taxes

Measures to control inflation

  • In the case of demand-pull inflation all the control measures revolve around reducing the demand, this can be done by either reducing the money supply or increasing prices by taxation.
  • In the case of cost-push inflation, the control measures revolve around increasing the supply to meet the demand in the market and reducing the prices by providing subsidies and technological expertise.
  • In all cases, the inflation control measures can be divided into Monetary Measures, Fiscal Measures, and Administrative Measures.

4. Xi backs new HK chief to maintain ‘order’

Chinese President praises John Lee for making contributions to safeguarding national security

China’s President Xi Jinping on Monday backed Hong Kong’s new leader John Lee, a long-time security official, to maintain order and stability in the Chinese Special Administrative Region (SAR) as he prepares to take office on July 1.

Mr. Lee on Monday made his first trip to Beijing following his appointment on May 8 by an election committee, to succeed Carrie Lam as Hong Kong’s fifth Chief Executive. He received his official appointment letter from second-ranked leader and Premier Li Keqiang in the Chinese capital on Monday.

Mr. Xi told him in a separate meeting that Hong Kong “achieved a major transition from chaos to order”, appearing to refer to the 2019 protests.

As a top security official at the time, Mr. Lee, who served for decades in the Hong Kong police force, played a key role during a turbulent year that saw the protests often descending into clashes between the police and protesters.

The Chinese leader praised Mr. Lee for “making contributions to safeguarding national security and Hong Kong’s prosperity and stability in various roles”.

He also defended the new electoral system under which Mr. Lee was chosen as “playing a decisive role in implementing the principle of ‘patriots administering Hong Kong’”.

Following the protests, Beijing passed a new national security law that brought the closure of several pro-democracy opposition groups as well as of several independent media outlets. Beijing also overhauled Hong Kong’s electoral system under the principle of “patriots” governing Hong Kong. The share of directly elected representatives in the legislature has also been reduced.

Mr. Xi said the system was “in line with the ‘one country, two systems’ principle and suited to Hong Kong’s realities and needs for development” and would be “upheld for a long time to come”.

The pressing challenge that Mr. Lee faces as he takes over on July 1, the 25th anniversary of the former British colony’s return to China, is shoring up Hong Kong’s status as the region’s financial centre. The SAR dealt with a crippling COVID-19 wave at the start of the year but has since returned to some normalcy. The government is facing calls from the business community to ease travel restrictions, such as the mandatory seven-day quarantine for arrivals and flight bans if a certain number of passengers tests positive.

The economy contracted by 6.5% in 2020 and recovered to grow 6.4% in 2021. It also faces a challenge of retaining talent amid a recent exodus of professionals who have either returned home or moved to West Asia or Singapore, mostly because of the travel restrictions resulting in family separations.

Some companies have also expressed concern over the impact of the national security legislation. Two U.K. judges serving on the Court of Final Appeal resigned citing the law and what they saw as the erosion of the judicial independence that made Hong Kong a unique enclave within China under the “one country, two systems” model.

One Country Two Systems approach

As per the policy, the Hong Kong and Macau Special Administrative Regions, both former colonies, can have different economic and political systems from that of mainland China, while being part of the People’s Republic of China.

It was proposed by Deng Xiaoping with an aim to unify China and Taiwan.

On December 19, 1984, China and the U.K. signed the Sino-British Joint Declaration in Beijing, which set the terms for the autonomy and the legal, economic and governmental systems for Hong Kong post 1997.

Similarly, on March 26, 1987, China and Portugal signed the Joint Declaration on the Question of Macau in which China made similar promises for the region of Macau after it was handed over to Beijing.

The present status:

Hong Kong returned to Chinese control on July 1, 1997, and Macau’s sovereignty was transferred on December 20, 1999.

Both regions became Special Administrative Regions of China. The regions would have their own currencies, economic and legal systems, but defence and diplomacy would be decided by Beijing.

Their mini-Constitutions would remain valid for 50 years — till 2047 for Hong Kong and 2049 for Macau. It is unclear what will happen after this term.

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