Related Topics: U.S. China Trade War, Macro Economic Policies
United States designated China as a “currency manipulator”.
The move came immediately after the People’s Bank of China (PBoC), the Chinese central bank, let the Yuan weaken past the psychologically significant CNY7 (CNY or the Yuan is the basic unit of the Renminbi, China’s official currency) to the dollar mark.
U.S. accused China of using Yuan to gain “unfair competitive advantage” in trade, a move that could further escalate the tense trade relations between the world’s two largest economies.
Currency manipulation refers to actions taken by governments to change the value of their currencies relative to other currencies in order to bring about some desirable objective.
The typical claim is that countries manipulate their currencies in order to make their exports effectively cheaper on the world market and in turn make imports more expensive.
The US Department of the Treasury publishes a semi-annual report in which the developments in global economic and exchange rate policies are reviewed.
If a US trade partner meets three assessment criteria, the US labels it a currency manipulator.
Impact on China
The tag of a “currency manipulator” as such does not mean any penal action against China.
But it could be used by the United States as an excuse to justify other retaliatory sanctions against the country.
The U.S. could also drag China to the International Monetary Fund (IMF) although the IMF does not have the teeth to punish China.
Concerns of U.S.
U.S. believes that China has been deliberately weakening its currency (the Yuan) in order to boost exports to the U.S.
The Trump Administration, which has been trying to discourage the import of Chinese goods into the U.S. by imposing high tariffs since early last year, thinks that the inflow of Chinese goods will affect the business of local U.S. manufacturers.
The tag of a “currency manipulator” sends across the signal that economic ties between the U.S. and China are set to worsen further.
How Devaluation of Currency will help China?
Devaluing the currency is a common ploy employed by economies that face a slowdown in order to help boost demand for their goods.
A currency is devalued (or weakened) using the central bank to increase the supply of the currency in the forex market.
This allows more units of the currency to be purchased using fewer units of various other foreign currencies.
In the case of the Yuan, increasing its supply will allow more units of it to be purchased in exchange for fewer U.S. dollars.
This is a way of transferring more of the purchasing power to buy Chinese goods away from the hands of the local Chinese and into the hands of Americans.
The Chinese believe this will help boost the value of China’s exports and also kick-start growth.
Since the Chinese economy has been witnessing a general slowdown, with growth dropping to a 27-year low of 6.2% in July, it is no surprise that China has decided to depend more heavily on exports as a way to boost demand for its goods.
If the U.S. weakens the dollar to retaliate against China’s Yuan devaluation, it will enter a currency war.
The last time the world was engaged in an all-out currency war was during the Great Depression of the 1930s, when countries facing a domestic slowdown tried to boost their economies by devaluing their currencies in a retaliatory fashion.
This caused terrible uncertainty for businesses. Combined with high tariffs, this led to a steep fall in international trade.
Currency devaluation will not undo any of the negative effects of the high tariffs that have already been slapped by the U.S. and Chinese administrations.
Tariffs, which are really taxes by another name, will remain and discourage production.
Currency devaluation may temporarily boost exports by transferring more purchasing power to the hands of foreigners, but it will not boost domestic production.
RECHARGEABLE IRON ION BATTERY
Related Topics: Science & Technology, Innovation
Why in News
Indian Institute of Technology (IIT) Madras researchers have for the first time fabricated a rechargeable iron ion battery using mild steel as the anode.
Iron Ion Battery
In Iron ion battery, vanadium pentoxide is used as the cathode.
Mild steel is used as the anode.
Vanadium pentoxide was chosen as it has a layered structure with very large spacing between the layers.
Ether-based electrolyte containing dissolved iron perchlorate is used in the battery.
While lithium ions are the charge carriers in lithium ion battery, the Fe2+ ions perform that function in the case of iron ion battery.
The iron ion battery is cost-effective and the amount of energy that can be stored in the battery is also high.
With the world turning its attention to electric vehicles, the focus is on developing batteries that are cheaper.
With no lithium reserves in India and shortage of lithium reserves in the world, the stress is on developing rechargeable batteries of comparable performance using materials other than lithium.
Iron is more stable during the charging process and therefore prevents short-circuiting of the batteries.
Thus, when compared with the popular lithium metal-based batteries, iron batteries are able to cut down the cost and are safer to handle.
The researchers demonstrated the performance of an iron ion battery for up to 150 cycles of charging and discharging.
With 54% capacity retention at the end of 50 cycles of charging and discharging, the battery display good stability.
When fabricated under controlled conditions, the amount of energy that can be drawn from the iron ion battery is 220 Wh per kg, which is 55-60% of lithium ion battery’s performance.
The energy density of lithium ion battery is around 350 Wh per kg.
KAJIN SARA LAKE
Related Topics: Lakes, Tilicho lake
Why in News
Kajin Sara lake, a newly-discovered lake in Nepal is likely to set a new record of being the world’s highest lake.
News in Detail
The Kajin Sara lake in Manang district was discovered about a few months ago by a team of mountaineers.
As per the measurement of the lake taken by the team, it is located at an altitude of 5,200 metres.
It is estimated to be 1,500-metre-long and 600-metre-wide.
The lake would be the world’s highest lake if its altitude of 5000-plus metres is officially verified.
Currently, Tilicho Lake, which is situated at an altitude of 4,919 metres in Nepal, holds the title of the world’s highest lake.
The Tilicho lake, is 4 km long, 1.2 km wide and around 200 metres deep
Learn the Basics
A lake is a large body of natural water accumulated in a depression.
Lake basins are formed due to endogenous geological processes like tectonism and volcanism and exogenous activities like landslides, glaciation, solution, river and wind action.
Lakes occupy about 1.8 % of the earth s surface.
Related Topics: Science and Technology, Reusable Launch Vehicle, RLV-TD
The RLV-T5 reusable rocket produced by China’s private rocket company LinkSpace successfully conducted its 3rd test flight in NW China’s Qinghai.
The Beijing-based company aims to launch its next-generation RLV-T16 next year that will be capable of reaching an altitude of up to 150 kilometres.
The RLV-T5 previously hovered 20 metres and 40 metres above the ground in two tests in March and April respectively.
Reusable Launch Vehicle
It is a launch system that is capable of launching a payload into space more than once.
This contrasts with expendable launch systems, where each launch vehicle is launched once and then discarded.
Development of Reusable Launch Vehicles is a technical challenge and it involves the development of many cutting edge technologies.
A series of technology demonstration missions would be required to validate these technologies.
ISRO’s RLV-TD is a series of technology demonstration missions that has been considered as a first step towards realising a Two Stage To Orbit (TSTO) fully re-usable vehicle.
Technology demonstration (TD) project by ISRO is to test different parameters related from the launch to landing of a Reusable launch Vehicle.
The main objectives of the RLV- TD are to reduce the cost of launch by increasing reusability and to increase reliability by achieving a Two Stage To Orbit (TSTO) capability.
It is India’s first unmanned test launch vehicle and is dubbed as India’s own space shuttle.
CERTIFICATION OF SEEDS
Related Topics: Seeds Act 1966, ICAR
Why in News
Union Government is planning to mandate uniform certification by pushing through a replacement to the Seeds Act, 1966, in the winter session of Parliament, and also by barcoding all seeds to ensure their traceability.
Need for Amendment
More than half of all seeds sold in India are not certified by any proper testing agency, and are often of poor quality.
Currently, about 30% of seeds are what the farmer himself saves from his crop.
45% comes through the ICAR system and have gone through the mandated certification process.
The other 55% are sold by private companies, most of which are not certified, called as ‘truthful label seeds’,that is, they are simply self-certified by the company.
Government wants to remove that category with the new law and mandate certification through a proper lab process for all seeds.
If a seed fails at the germination, flowering or seed-setting process, the company which sold it must be held liable and made to provide compensation.
The existing legislation was enacted over half a century ago.
Technology has changed, farmers’ expectations have changed, even the very definition of a seed has changed.
Planting materials such as cuttings, grafting and tissue culture — all that must also be brought under the ambit of the law
The main aim of the new legislation is to bring uniformity to the process of quality regulation.
The 1966 Act starts with these words: “An Act to provide for regulating the quality of certain seeds for sale…” The new Bill removes the word “certain”, and aims to regulate the quality of all seeds sold in the country, as well as exported and imported seeds.
The new Bill will also raise the stakes by increasing penalties for non-compliance.
Currently, the fine ranges from ₹500 to ₹5,000 and centre intend to raise that to a maximum of ₹5 lakh.
The Centre also hopes to roll out a software to barcode seeds in order to ensure transparency and traceability.
The software system will be able to track seeds through the testing, certification and manufacturing process.
The amendment will also hold companies accountable for the quality of the seeds they sell.
FACTS OF THE DAY
- The Rajasthan government released Biofuel Rules-2019 on the eve of the World Biofuel Day. Deputy Chief Minister Sachin Pilot said that Rajasthan is the first state in the country to bring the policy for biofuel after the notification of the Centre.
- Uttar Pradesh’s “Vriksharopan Mahakumbh” drive has created world record after planting more than 22 crore saplings. The drive was launched on the occasion of 77th anniversary of Quit India Movement.
- Sourabh Verma claimed men’s singles title in final over Loh Kean Yewof Singapore in summit clash at Hyderabad Open BWF Tour Super 100 tournament held at Gachibowli Indoor Stadium in Hyderabad.
- Padma Bhushan awardee Anupam Kher’s autobiography “Lessons Life Taught Me, Unknowingly” was released at a special event organised at the Consulate General of India in New York.