China’s society is changing beyond all recognition. At the heart of the most sweeping social and economic transformation the world has seen is the rise of a powerful new – largely urban – middle class. China’s urban middle-class population alone, if considered as a country, is larger than the entire U.S. total population today. The pace of change has been extraordinary. As recently as 2000, only 4 percent of urban households in China were middle class; by 2012, that share had soared to over two-thirds. And by 2022, China’s middle class should number 630 million – that is, three-quarters of urban Chinese households and 45 percent of the entire population. The rise of the middle class is essentially an urban phenomenon. Average per capita urban income in China is roughly triple that in the countryside – and there are set to be 170 million new urbanites between now and 2022.

By 2022, we expect China’s middle class to be consuming goods and services valued at $3.4 trillion – 24 percent of GDP. This has enormous significance for U.S. businesses. It is imperative that companies get to know the new Chinese middle-class consumer in intimate detail.

How does this play out in terms of actual purchases? Consider, for example, that China is already the second largest digital camera market in the world after the United States, selling more units than in Japan, South Korea and Singapore combined. Or take flat-screen TVs. In 2012, 68 percent of upper middle-class households had one and sales of flat-screen TVs totaled 50 million units – more than the 42 million units sold that year in the U.S. and Canada. China is also already the largest retail market for laptop computers, with 27 million units sold in 2012 against 22 million in the U.S. in 2012. And soaring consumer product penetration is not limited to electronics. For example, laundry softener sales have grown by 20 percent annually for the past five years, exceeding the sales of both Germany and France.

These trends will accelerate over the next 10 years as the role of “upper middle class” consumers expands. Today, the mass middle class – with annual household incomes of between $9,000 and $16,000 – are dominant, accounting for 54 percent of all urban households; upper middle-class households, with incomes of $16,000 to $34,000, represent only 14 percent. By 2022, however, the upper middle class will become the new mainstream, accounting for 54 percent of all urban households and generating just under half of total Chinese private consumption. 

Upper middle-class consumers are more willing than their mass middle-class brethren to pay a premium for quality products, have a high level of trust in well-known brands and can afford to spend more of their income on discretionary products and services as opposed to basic necessities such as food, clothing and shelter.

They are also much more international in their outlook and open to – and even eager for – international brands. For instance, these consumers are much more likely to travel abroad. Over the past year, one in ten of the urban upper middle class made at least one trip overseas and this share is rising rapidly. This international perspective reflects a number of factors. Upper middle-class citizens are better educated and more likely to be able to speak a foreign language – 34 percent of them have a bachelor’s degree or above and 26 percent can speak and understand English.

A second “accelerator” that businesses should note is the emergence of a new generation of middle-class consumers born after the mid-1980s. While their parents lived through many years of a shortage economy and are primarily concerned about building economic security for their families, members of what we call Generation 2, or G2, were born and raised in relative material abundance. In 2020, we expect 35 percent of all consumption in China to come from these young consumers, who will be major purchasers of leisure, personal services, travel and high-end hospitality.

A third driver to watch is the increasing consumption of services in China. The service sector is expected to account for half of China’s GDP in 2022, up from 44 percent today. This partly reflects the increasing willingness of China’s upper middle classes to spend on entertainment; leisure; care services for the elderly; security services and equipment such as burglar alarms and security cameras; and education. Consumption in these sectors is growing rapidly. Take education as an example. In 2011, 37 percent of China’s upper middle class spent an average of 25 percent more on education in 2011 than in the previous year.

China’s new middle class is transforming the economy – and transforming itself. Those U.S. businesses eager to tap this market need to be armed with detailed intelligence about China’s new consumers and work hard to keep pace with their the rapidly evolving tastes and preferences. 

Dominic Barton is the Global Managing Director of McKinsey & Company. In his 27 years with the firm, Dominic has advised clients in a range of industries including banking, consumer goods, high tech and industrial.

Even as expert opinion sours on China’s economy, Chinese themselves remain highly optimistic about the state of their economy.

A new poll by Pew’s Global Attitudes Project found that 88 percent of Chinese citizens say their national economy is doing good, more than in any of the other 38 countries Pew surveyed.

80 percent of Chinese also believe their national economy will improve in the next year, which was again the highest percentage in all the countries included in the poll. Only 2 percent said they believe their economy will grow worse in the next twelve months, far less than any other country.

China also topped the list in terms of the percentage of respondents saying their country is headed in the right direction, with 85 percent of Chinese expressing this sentiment.

Less optimistically, 53 percent of Chinese said the government should first address rising prices, a larger percentage than in any other country except Pakistan, where 66 percent said the same. Over one-quarter of Chinese said that the government’s top priority should be to address the widening inequality between rich and poor. This was higher than in any other country included in the poll.

The general optimism of the Chinese people contrasts sharply with the growing pessimistic of economists and other experts. As Reuters recently reported, “In the space of five months, analysts have swung from confidently predicting a modest pick-up in the world's second-biggest economy to pondering the chance that China will miss its own 7.5 percent growth target this year.”

Similarly, long-time China watcher Bill Bishop notes, “The prospects for China’s economy look so challenging for the remainder of 2013 that increasing numbers of usually cheerleading investment bank economists are cutting their rosy growth forecast for China.”

They aren’t alone. Earlier this week the International Monetary Fund reduced its own growth estimate for the Chinese economy this year by 0.25 percent, from 8.0 percent to 7.75 percent. In making its slightly reduced outlook, the IMF said the expansion of credit to local governments, environmental issues, and income inequality were particular concerns. That being said, the IMF said the Chinese economy remained relatively strong and noted that the new Chinese government was pursuing an aggressive reform agenda to address the major challenges the country faces.

The IMF isn’t the only to express concerns over debt. Last month Fitch’s downgrade yuan-denominated debt to single-A-plus from double-A-minus, the first such download since 1997, according to the Wall Street Journal. The credit rating agency said the downgrade was made because of concerns over its growing debt problem.

Fitch’s analyst Charlene Chu has been particularly outspoken about what she perceives as the danger of China’s debt.

“There is just no way to grow out of a debt problem when credit is already twice as large as GDP and growing nearly twice as fast,” Chu said, Bloomberg reported. Bloomberg also noted that “Chinese banks are adding assets at the rate of an entire U.S. banking system in five years.” JP Morgan Chase has issued similar warnings about the shadow banking industry’s growth.

Senior Chinese leaders have also acknowledged the country faces “huge challenges” that will have to be tackled in the context of lower growth.

Not everyone agrees that Chinese debt is as dire as some are claiming. Former senior partner at Goldman Sachs Asia, Fred Hu, told South China Morning Post this week that China does not face a short-term debt issue, explaining:

"For a growing economy, debt-GDP ratio is not a fixed one. It's dynamic. Italy or Spain, why are they in trouble? It's because their economy is shrinking and they have heavy debt. I think 60 to 65 per cent is a level that China can manage comfortably."

Zachary Keck is editorial assistant at The Diplomat.

As the majority of tech enthusiasts are already aware, a new generation of gaming consoles will soon be released on the market. I bet most readers know what I’m talking about, but just in case, I’ll remind everyone that I’m referring to Sony’s PlayStation 4 and Microsoft’s recently revealed Xbox One.

Both consoles have been officially confirmed, but neither Sony nor Microsoft have revealed everything we would have liked to know about them. That said, gaming enthusiasts all around the world have started debating which one of these gaming rigs would be the best choice. Given the amount of official information (or lack thereof), deciding on a winner is not as easy as it may first sound. Nevertheless, today we’ll talk about the most important (known) PS4 and Xbox One features, in an attempt to help you decide for yourself.

Xbox One vs. PlayStation 4 – Hardware

Even though certain details about the hardware of these two next-gen gaming-consoles have been revealed, there are still several unknown specifics. Evidently, not being aware of all the details is making the task of picking a winner even more difficult.

In any case, the PlayStation 4 has been confirmed to feature an 8-core AMD “Jaguar” processor, a GPU similar to Radeon 7870, 8 GB of GDDR5 RAM, a Blue-Ray/DVD optical drive, USB 3.0, Bluetooth 2.1 connectivity, optical output, HDMI (4K support), Ethernet and WiFi connectivity. Other noteworthy PS4 features are: secondary screen support (which will work with PlayStation Vita, smartphones and tablets), Remote Play (you’ll be able to play PS4 games on your PS Vita, over Wi-Fi), and of course, motion control (the “motion sensing” DualShock 4 controller in addition to the PlayStation Move – PlayStation 4 Eye combo).

On the other side of the fence, the Microsoft Xbox One features an 8-core processor that hasn’t been fully revealed thus far. According to reports, Xbox One’s CPU will be either an AMD “Jaguar” (which is similar to the unit that’s powering the PS4), or a heavily modified AMD chip. Moving on, the console is confirmed to pack a Blu-ray/DVD optical drive, 8 GB of DDR3 RAM, a 500 GB HDD, USB 3.0 support, external storage possibilities via USB, HDMI in / out (4K), optical output, motion control via Kinect 2, and secondary screen support via SmartGlass. The One’s GPU is expected to be roughly the equivalent of a Radeon 7790 graphics card.

Xbox One vs. PlayStation 4 – Other Important Features

Even though hardware is important, when it comes to comparing two brand new consoles, there’s more to it than sheer processing power. Unfortunately, various characteristics of both consoles are still labeled as “TBA”.

What has been confirmed thus far is that the PlayStation 4 will not require an internet connection, will not be backwards compatible with PS3 titles, and that it will support live streaming, cloud storage, and cross-game chat features. The amount of storage is unknown, as well as whether or not voice commands will be supported.

The Xbox One does support voice commands and that’s been made abundantly clear during the unveiling event, when Microsoft has emphasized greatly on the console’s “Smart TV” and hands-free remote control features. As with the PS4, the One will lack backwards compatibility, but unlike Sony’s console, the Xbox will require an internet connection. Even though it’s not supposed to be an “always on” connection, it remains unclear how the system will function on the whole. Moreover, Bluetooth seems to be missing from MS’s gaming rig, while live streaming functionality is to be announced.

Last but not least, there has been a lot of buzz about Xbox One’s methods of allowing users to lend or utilize used games. But the exact method of playing borrowed or second-hand titles is still unknown.

Xbox One vs. PlayStation 4 – Verdict

Well, not so much a verdict as a few closing words. Evidently, it’s difficult to pick a winner when you don’t have the whole picture at your disposal. Nevertheless, it’s not difficult to realize that, as expected, Sony seems to focus more on the gaming capabilities of the PS4, whereas Microsoft intends on pushing the Xbox One as an all-in-one entertainment system.

The above conclusion can be easily drawn from the fact that PS4′s RAM and GPU are more powerful and gaming-oriented. Additionally, while Sony puts a strong emphasis on its console’s social aspects within the gaming niche, Microsoft has focused (at least during the official announcement) on Xbox One’s Smart-TV capabilities and exclusive content.

In the end, it mostly comes down to your individual needs. So where do you fit in? Which one of these two consoles do you think it’s going to provide the content and experience that you are looking for?

Vlad Andrici is editor for gforgames.com and writes about technology issues.

Both Chinese Premier Li Keqiang and German Chancellor Angela Merkel have made statements over the last two days relating to the brewing EU-China trade disputes. Although apparently unrelated, another EU trade probe – this one into controversial (in some economies) telecommunications network equipment makers Huawei and ZTE – is actually addressing very similar underlying issues (implicit Chinese subsidies to its manufacturing sector). In both cases, the role of Germany, the EU’s largest economy, is set to be an important factor in how things proceed.

Merkel promised during statements to the press in Berlin after meeting with Li that Germany would work hard to make sure that “no permanent import duties” would be placed on Chinese solar panels, and that the issue would be cleared up “as quickly as possible.” Premier Li had already voiced his country’s unsurprising “firm opposition” to the two cases whilst on his way to Germany.   

Li Keqiang is facing a very trying economic situation back home that would be made all the more difficult if trade hostilities were to break out with the recently enlarged EU, China’s largest trading partner (if all EU member states are counted as one economy). Wu Hailong, China’s ambassador to the EU, wrote a sharp critique of EU trade policy towards China in the Financial Times.

It is easy to understand China’s discomfort with the EU commission’s new focus on its trade practices; China runs a significant bilateral trade surplus with the EU bloc, $121 billion in 2012, and the trend is already moving towards decline. China’s internal model involves many implicit subsidies to manufacturers, including de facto subsidies in financing as well as cheap land and other benefits. These subsidies have recently been the focus of a new book by Usha and Geroge Haley and form the core of the EU Commission’s argument. 

Whilst China is embarking on a tough internal economic shift, the Eurozone (EZ), along with other non-EZ EU states, is already years into its own crisis. Eurozone trade used to be roughly balanced externally, despite severe internal imbalances (with Germany running current account surpluses), but now, as internal demand has collapsed within the periphery EZ states, the currency bloc is moving towards an external surplus with the rest of the world.    

 Whilst Merkel’s “permanent” qualifier suggests some doubts about the short-term actions of European Trade Commissioner Karel De Gucht, the apparent lack of consensus between the EU Commission and a significant (if unknown) number of its member states’ national governments on the solar dispute with China is yet another example of the EU’s fundamental contradiction between its member governments’ national sovereignty (and interests) and the power of its supranational institutions. Germany is not alone in its opposition to the imminent tariffs on Chinese solar products, even if so far Merkel has done the most to undermine the Commission in her public statements. 

On the solar issue, China’s threats of retaliatory tariffs on products needed for PV manufacturing along, more general rumblings about trade, negotiations as well as charm (investment) offensives against key national governments looks set to undermine the commission and perhaps limit the time that tariffs will be imposed if come June, De Gucht sticks to his guns despite the mounting pressure. On the telecommunications case however, China will probably have a much tougher time. Germany, Finland and other key EU states have a significant interest in the telecommunications equipment sector, and this is before security concerns (such as those voiced in the US and elsewhere) against Huawei and ZTE are taken into consideration. 

It is set to continue being an interesting year for China-EU trade.  

What’s been going on between China and the DPRK? We’ve been hearing rumors that North Korea has been rudely rejecting high-level Chinese delegations, with China returning the favor. But if there has been some kind of tit-for-tat, it seems to be over now: Choe Ryong Hae has visited Beijing, probably in no small part responding to the Bank of China's dramatic action from earlier this month.

The closure of the Foreign Trade Bank's account at Bank of China two weeks ago was significant and disruptive, but was even more important in terms of perception and symbolism. The FTB is North Korea's most important bank: it is (ostensibly) the clearinghouse for all foreign transactions and any bank accounts held in foreign currency. FTB customers would experience some temporary disruption of cash flow and there is no doubt debate going on in Pyongyang about whether to endow some other institution with the influence the FTB held.

Meanwhile, FTB officials would likely be going around Pyongyang assuring people that everything will be fine. And that’s probably true: though BOC was surely FTB's most significant banking relationship, it is still possible to replace it. The move was laden with symbolism, however, and is Beijing's clearest shot yet across the Pyongyang’s bow.

For Bank of China, it is very good timing. Over the last several years, it has expanded its operations in the United States significantly, moving into all sorts of markets, from mortgages to securities. By spanking North Korea, it is able to show Washington that it is a cooperative, rule-loving institution. Meanwhile, at a time when China is feeling severely frustrated with its ally, it sends the message to Pyongyang that Beijing still holds the strings.

This week we’re hearing more talk that smaller Chinese banks have quietly followed Bank of China's lead. This, even more than the Bank of China move, is potentially very significant indeed. Rather than a high-profile, headline-grabbing event, this has the potential to really disrupt North Korean businesses. If in the Chinese banking industry, the perception has been that this is what the Chinese leadership wants, we could be shifting into a new, even more risk-averse atmosphere, which will make things very difficult for North Korean traders. It is smaller banks, dotted around China's border regions, that are the true financial arteries for trade and investment in North Korea.

Ultimately, China finds itself in the same position it has been in for years: the fundamental dynamic between Beijing and Pyongyang hasn't changed. Pyongyang is constrained by Beijing's overweening economic and political power in the region. Beijing is constrained by the calculus that any collapse or regime-change scenario will be worse for its interests than the status quo. Both have the power to severely harm one another. There is of course an imbalance here, though: North Korea could end regional economic growth and cause a deep recession, perhaps destabilizing Chinese society; China could end North Korea altogether.

Enter Choe Ryong Hae, arriving in Beijing last week and dispensing rhetoric about as humble as you're likely to hear from Pyongyang. Choe was quoted as saying North Korea "is willing to accept the suggestion of the Chinese side and launch dialogue with all relevant parties." While one musn't get excited about the prospects of a return to negotiations as a means for ending the nuclear program, Choe's statements do probably mean that we (happily) won't see any more trouble on the peninsula for a while.

China’s Ministry of Foreign Affairs can be pleased with itself. Beijing can now say to Washington that it is playing the role of responsible power, reining in the DPRK. China has exercised its influence (which Western analysts tend to overstate) to the greatest degree possible. Moreover, it will feel assured that stability has been preserved for now, and can get about growing its influence (oh, and transforming North Korean society) through its laissez faire stance on trade and investment in the DPRK.

In the wake of the Choe mission, though such things are never spoken about on the record, we should keep an ear to the ground for rumors that Chinese banks are being instructed to avoid going overboard in cutting off North Korea: Beijing wants to punish a little, but not destroy its neighbor. Even if the spate of account closures or delays has ended, we're likely about to see even the most legitimate businesses heading underground, into the colorful world of 500 and 1000 euro notes, no doubt wishing that the Chinese would issue notes larger than 100 RMB.

Unfortunately, those most harmed by the disruptions in the banking system will be people dependent on foreign aid and operations doing legitimate business through the FTB. In that respect, recent developments are business as usual.

Andray Abrahamian is Executive Director of Choson Exchange, a Singaporean non-profit providing training for North Koreans in economic policy, business and law.

Fears over the global economy have re-emerged in a volatile week for Asia-Pacific financial markets. With China’s manufacturers lagging, doubts over Japan’s “Abenomics” and fears of recession in Australia, is the world economy’s growth engine starting to slow?

On Thursday, the United Nations’ Department of Economic and Social Affairs revised down its growth forecast for the world economy to just 2.3 percent in 2013, the same level as 2012, predicting only a gradual pick-up to 3.1 percent in 2014 on the strength US growth.

It had previously forecast 2.4 percent world growth this year, rising to 3.2 percent in 2014.

“Despite improved global financial conditions and reduced short-term risks, the world economy continues to expand at a subdued pace. After a marked downturn over the past two years, global economic activity is expected to slowly gain momentum in the second half of 2013 and 2014 on the back of accommodative monetary policies in developed and developing economies,” the report said.

However, it noted short-term risks concerning the “dire” eurozone economy, US fiscal adjustment and a slowdown in developing countries, with new risks emerging with the monetary expansion underway in the United States and Japan.

“Risks are still tilted to the downside and have the potential to derail, once again, the still feeble recovery of the world economy,” it warned.

In the United States, fiscal contraction is expected to weigh on demand, with the economy expected to slow to 1.9 percent in 2013 before rebounding to 2.6 percent next year, although “political gridlock and additional fiscal tightening could result in much lower-than-projected growth.”

China’s economy is expected to post 7.8 percent GDP growth in 2013 and 7.7 percent next year. However, the report said “the possibility of a slowdown to about 5 percent cannot be ruled out,” with risks including the housing bubble, shadow banking, lack of transparency in local government debt, excess capacity in many industrial sectors and challenges over restructuring.

“Without decisive policy action, a further moderation in GDP growth and rising financial risks could feed into each other to form a vicious cycle,” the report said. China’s weaker growth has already impacted on commodity markets, with exporters such as Australia feeling the effects of lower prices.

In Japan, Prime Minister Shinzo Abe’s reflationary policies are expected to boost GDP by 1.3 percent in 2013 and 1.6 percent next year – up from the UN’s earlier forecasts - although such measures “create heightened medium-term uncertainties regarding the sustainability of public debt”.

The BRIC economies are not expected to deliver either, with the UN noting a “significant deceleration in GDP growth in the past two years” in countries including Brazil and India.

Koo: It’s a matter of time

The success of Abenomics in driving the yen lower and stocks higher has surprised analysts, with the Nikkei Stock Average’s 40 percent gain in 2013 making it the standout performer among major markets.

However, this week’s market gyrations have given ammunition to critics, who have warned of a future debt crisis.

On Thursday, the Nikkei plunged 7.3 percent after Chinese manufacturing contracted for the first time in seven months, and amid concerns of an early end to the US Federal Reserve’s quantitative easing policy. The Bank of Japan (BOJ) intervened to smooth the bond market after yields spiked, with the yield on 10-year bonds reaching 1 percent, its highest level in more than a year.

Nomura Research Institute’s chief economist Richard Koo has written of Japan’s post-bubble “balance sheet recession,” however in his latest research note he suggested a “time inconsistency problem” for policymakers.

“The fact that the BOJ has also reversed the traditional order of things and is trying to spark an economic recovery by generating inflation has increased the possibility that higher long-term rates driven by inflation concerns will emerge sooner than higher long-term rates rooted in a recovery in the real economy,” Koo warned.

Abenomics’ nascent recovery could be snuffed out when it has only barely begun, he said.

Meanwhile, Australia’s sharemarket has posted its biggest weekly fall in more than a year. Leading economist Ross Garnaut has warned of “deep recession” without an “immense adjustment” through a radically lower exchange rate.

According to the UN, the solution lies in greater international policy coordination to “mitigate negative policy spillovers, curb protectionism, promote cooperation in reforming the international financial system, and ensure sufficient resource flows to developing economies.”

More evidence perhaps, that engineering a smooth global rebound was never going to be easy.  

There is a paradox when it comes to the relations between countries in Latin America and the Asia-Pacific. Although both regions have a long history of cultural, diplomatic, and economic engagement, Asia-Latin American ties have tended to be subdued – at least when compared to the pivotal relationship the United States has with other states across the Pacific.

Of course, no one should expect “superpower pivot” from countries in Latin America and the Caribbean (LAC), a region that is still developing politically and economically. However, given the prominence of international trade in a globalized economy and the rise of Asia as a source of global demand, LAC countries have been keen to take advantage of these trends for the benefit of their own economic development. A recent manifestation of these desires is the Pacific Alliance, a new trade bloc in Latin America that has been watched closely in the region and abroad.

The Pacific Alliance (PA) was formally established last June by its current members-- Chile, Colombia, Mexico, and Peru. The PA’s mission is to deepen commercial and economic integration among its members, who are required to be democracies that respect human rights. Furthermore, Pacific Alliance members (or those countries that aspire to join) are required to have trade agreements with all other members.  The four LAC countries that currently make up the PA, all of which have expansive Pacific Ocean coastlines, together account for over a third of Latin America’s GDP and 55 percent of total LAC exports, meaning the PA rivals the economic size of the Association of Southeast Asian Nations (ASEAN), which was US$2 trillion in 2012.

The PA has two unique and significant characteristics that have added to the fanfare surrounding the new bloc. First, given the fact that the organization seeks to build upon its members’ current trade agreements, one of its core objectives is to serve as an institutional bridge between Latin America and the Asia-Pacific. The effort to deepen economic ties with Asia meshes well with the fact that a number of the PA’s members already have free trade agreements with several Asia-Pacific countries, including China, Japan, and South Korea. Prospective members will further this trend if they join the PA. For example, Costa Rica has trade agreements with both China and Singapore and is expected to become a member in the wake of the Pacific Alliance summit that took place on Thursday in Cali, Colombia.

The other key factor of the Pacific Alliance is that all of its members are considered to be the most economically dynamic and market-oriented countries in Latin America. Historically, the region has been home to a fierce economic debate between neoliberalism and statism. Seeking a “third way” between these two models, LAC countries have opted to forge their own development strategy, best characterized by the “Brazil Model.”

PA’s emergence on the scene is also well-timed as Latin America’s traditional dominant economic bloc—known as Mercosur and consisting of Argentina, Brazil, Paraguay, Uruguay, and most recently Venezuela—has stumbled in recent years over political squabbles and protectionist policies. As Mercosur loses its shine and its members increasingly look inward, the Pacific Alliance is seeking to go in the opposite direction with big strides in liberalization and outward engagement. PA members have already slashed tariffs by 90 percent, boosted investment, and removed a significant amount of visa requirements for their citizens. Their private sector has also played a big role by joining three of their stock exchanges into a single bourse – with Mexico’s soon to join. This week’s PA summit was meant to enhance these actions with more steps towards “integration to allow free circulation of goods, services, capital and people.”

This move has attracted attention from small and large states like; nearby and across the Atlantic. Costa Rica’s Trade Minister, Anabel González, said that the PA could be “a stepping-stone for small countries… to integrate faster into other multilateral agreements, such as the Trans-Pacific Partnership (TPP).” With Spain serving as an observer member of the Pacific Alliance, Chilean President Sebastian Piñera said that “The Pacific Alliance may become a great platform for Europe to project itself towards the Asia-Pacific region.” Indeed, other observer nations already include Australia, Canada, Japan, and New Zealand.

Despite the PA’s pragmatism and outreach to the Asia-Pacific, there will still be a number of obstacles for the nascent group to overcome. Although the member countries have enjoyed steady economic growth in recent years, they continue to struggle with inadequate infrastructure and a deficit in educational opportunities. Furthermore, they all have a degree of dependence on commodity exports which are vulnerable to disruption and exacerbate tension regarding the environmental impact of Latin America’s mining boom. 

Even if member states of the Pacific Alliance overcome their domestic challenges, they still must contend with politics beyond their borders. Latin America already has an “alphabet soup” of regional organizations, most of which have failed to meet any initial promise they held, and merely devolved into talking shops. Although the PA has had an ambitious start, it is possible that it might run into the same problems faced by Mercosur or even the Trans-Pacific Partnership (TPP) as it expands and evolves.  On the other hand, the Pacific Alliance may instead succeed in its own right and even give momentum to the TPP and other integration initiatives.

Latin American governments and organizations have long sought enhanced economic ties with countries in the Asia-Pacific for the opportunities that the other side of the Pacific has to offer.  As LAC countries have dithered and struggled on their own, especially when it comes to China, the PA’s unique and multilateral approach may be the answer that Latin America has been looking for. Should the Pacific Alliance succeed, it may prove to be a pivotal bridge linking Asia and the Americas for decades to come.

Sebastian Sarmiento-Saher is an editorial assistant at The Diplomat.

In the world of console gaming there are two main contenders that have been going toe-to-toe for years: Sony and Microsoft. Both the PlayStation and the Xbox series have enjoyed great success, their market shares are similar, and with each new generation of hardware both companies try to outdo each other in what seems a never-ending battle.

Things get heated when a new generation of consoles is heading towards the finish line, and the competition is fierce. If either one of the two giants makes a wrong move, it risks losing market influence for years to come.

It’s no mystery that Sony has already unveiled most of the details surrounding the PlayStation 4, with the console having been made official back in February. A bit late to the party, Microsoft lifted the veil off its next Xbox just a few days ago. Does it have what it takes to compete with the PS4? Let’s find out.

Xbox One – What We Know

It’s probably already obvious, but just to be clear, Microsoft’s upcoming game-console is called “Xbox One”, not NextBox, Xbox 720 / Durango / Infinity or any other moniker that surfaced over the past few weeks.

During the launch event, Microsoft answered some of the questions that have been bugging the gaming community for a while now. One of those questions concerns the console’s hardware specs.

According to the software giant, the Xbox One will pack an 8-core AMD processor, 8 GB of DDR3 RAM, a 500 GB HDD, Blu-ray drive, HDMI In/Out, USB 3.0 support and Wi-Fi. True, not much has been unveiled. Fortunately, there is a bit of extra information in the form of rumors/leaks, suggesting that Xbox One’s CPU is a 64-bit x86 AMD Jaguar clocked at 1.6 GHz. The GPU on the other hand is rumored to be something similar to the Radeon HD 7790.

But getting back to what has been clearly explained by Microsoft, the Xbox One is pretty obviously an all-around multimedia console. A strong emphasis has been placed on the fact that the console features voice commands that can be used to switch between channels or check the TV guide.

On a related note, Microsoft has also revealed that a new TV series is in the works, based on the successful Halo video game series. The show is to be produced by Steven Spielberg. Additionally, MS has also teamed up with the NFL to offer exclusive NFL-related content, as well the ability to chat with other fans, access highlights, view statistics and more.

A handful of games have also been confirmed for a launch on the Xbox One: Call of Duty: Ghosts, FIFA 14, Quantum Break and Forza Motorosport 5.

Last but not least, a new Kinect will be bundled with the new console and a new controller will also be part of the package. Though the new controller seems to be more ergonomic than the current model, it doesn’t have the rich functionality of Sony’s DualShock 4 and it also lacks a touchpad.

Xbox One – What’s Still Rather Unclear

Though many questions have been answered during the unveiling of the Xbox One, a fair number of new ones were raised after the event. One of the most burning has been whether or not the console requires an internet connection to function properly. Another is whether there will be any restrictions for used games, and lastly, enthusiasts have also been eager to find out if the console is backwards compatible with Xbox 360 titles.

The answer to the last question is “no”. The One is not backwards compatible. Unfortunately, the other two questions are still shrouded in mystery.

Several tech blogs such as The Verge and Kotaku have attempted to shed some light on these matters by interviewing Microsoft representatives, but that made things even more confusing.

Nothing is set in stone at this point, but judging from most of these interviews, the Xbox One will require an internet connection to take advantage of cloud services, among other features. However, the connection doesn’t need to be maintained permanently, although Microsoft hasn’t yet revealed how often the One needs to be connected to the internet in order to perform its “duties”. Reports have suggested that it could be a “once a day” cycle, but again, nothing is official.

Another bugbear is that, according to certain ambiguous answers, game discs will be tied to one Xbox profile. In other words, if you want to play a certain game on a second console, you will be able to do so assuming that you’ve logged into your Live profile. Rumors have suggested that it’s possible for “tied” games to be played by others (such as lending them to a friend), though a certain fee might be involved.

Unfortunately, no exact release date or price tag have been revealed, but an October Xbox One release date has been speculated.

All in all, there’s a lot more to know about the Xbox One before a clear conclusion can be reached regarding its potential, and how it compares to the PlayStation 4. So far though, Microsoft seems to have disappointed some gaming enthusiasts with the lack of clear answers on a handful of burning questions.

What do you think? Are you pleased or disappointed by the information shared by Microsoft thus far? Let us know in the comments section.

Vlad Andrici is editor for gforgames.com and writes about technology issues.

As some of you might know, recent reports have suggested that Samsung is nowhere near done with its 2013 smartphone lineup. The Diplomat has already covered stories regarding several such devices, including the Galaxy S4 Active, the “Mini” version of the Galaxy S4, as well as the rather elusive, camera-centric Galaxy Zoom.

Nevertheless, Samsung’s highly anticipated smartphone for the reminder of the year is still the Samsung Galaxy Note 3. The Note series has been a tremendous success and it’s pretty obvious that the South Korean manufacturer is planning on launching a third iteration, sometime in late Q3 / early Q4 2013. The biggest question though, is whether the upcoming “phablet” is going to be more of the same (with updated hardware specs but closely following the same formula), or if the manufacturer will truly innovate. So this time around, we look at the latest rumors about the handset’s build quality and display technology, aspects which could end up determining its success.

Samsung Galaxy Note 3 – Flexible Display

During the past few months, plenty of rumors have suggested that the Note 3 will feature a flexible / unbreakable screen. But let’s not forget that this kind of speculation is not actually fresh. Speculation about smartphones featuring flexible displays had started to surface a long time ago, immediately after Samsung and other manufacturers showcased this type of technology at various tech events.

The Galaxy S3 was rumored to debut a flexible screen, and when said display technology failed to materialize, it was Galaxy S4′s turn. It did not happen, and despite suggestions from various sources, the more recent leaks are indicating that the Note 3 will not feature a flexible display either.

Sam Mobile has recently reported on Oled-Displays.net’s findings, “confirming” that Samsung is now readying for the launch of its first 6-inch smartphone, which will be none other than the aforementioned phablet. Good news indeed, but the bad news is that, according to these sources, Samsung has run into several issues with mass producing its flexible displays. That said, the first 6-inch Samsung smartphone is now expected to arrive with a regular AMOLED panel.

On a side note, LG has also allegedly encountered similar issues, thus the chances of being able to purchase a handset boasting a flexible display by the end of the year, regardless of its brand, are slim to none.

Samsung Galaxy Note 3 – Premium Build, Or Not?

The second most impressive (speculated) characteristic of the Note 3 was that the device could actually distance itself from its roots by employing premium build materials.

Initial reports were suggesting that, with HTC One’s premium design highly acclaimed by consumers and critics alike, Samsung has started feeling the pressure and might have decided to change its “cheap plastic” design philosophy with the upcoming phablet.

Several rumors have previously indicated that the South Korean company is working on various Note 3 prototypes, one of which was said to deliver a brand new design and a metal case.

Unfortunately, just like the flexible screen, the idea of a premium design has taken a hit as well.

Sam Mobile has recently reported that, according to their sources, Samsung has decided not to stray too far away from its usual design language. Allegedly, even though the manufacturer has experimented with various designs and build materials for the Note 3, the handset in question will eventually end up being very similar to the Samsung Galaxy S4 – at least in terms of looks. Based on these reports, the main reason behind this decision is that the manufacturer would not be able to build enough metal cases in time for the handset’s release. Delaying the handset could have also been an option, but Samsung decided otherwise.

On the brighter side of things, these latest reports have also “reconfirmed” that the Note 3 should arrive with a powerful Octa-Core processor (made from two separate quad-core units, running at 1.9 GHz and 1.6 GHz respectively). The handset will allegedly also pack a 13 MP rear-facing camera as well as a 2 MP front-facing sensor. Additionally, the Note 3 is expected to take advantage of the latest version of the Android OS, and evidently, an updated TouchWiz user interface.

In the end, we need to remember that nothing is set in stone at this point. Nevertheless, it would be quite a disappointment if Samsung won’t be able to use the launch of the highly-expected Note 3 in order to bring forth some much needed innovation.

Do you consider this to be a missed opportunity? Or do you think that the Note 3 will be a success regardless of its build quality and display type, as long as the internal hardware is up to date? What are your personal expectations from this particular device, and what would make you want to own one? The comments section below is at your disposal.

Vlad Andrici is editor for gforgames.com and writes about technology issues.

Mongolia, rich with coal, gold, and copper has been riding high on the global natural resource boom. The country’s proximity to China makes its resources even more attractive. Over the past decade, mining sector development has led to significant foreign investment and growth in government spending, provided a boost to household incomes, and has moved much of the country beyond its nomadic herding past. In 2012, Mongolia was one of the world’s hottest economies, clocking GDP growth of 12.3 percent. However, political risks emerging over the past year put this positive frontier market story at risk.

Short-Term Risks: The Mining Sector

Amidst the hustle and bustle of the capital, Ulan Bator, trouble is brewing. In June of 2012, the Democratic Party of Mongolia came to power as part of a coalition after years of rule by the Mongolian Peoples Party. The new government has taken a more aggressive stance regarding FDI and is ratcheting up criticism of the country’s largest investor, Rio Tinto and its management of the $13 billion Oyu Tolgoi copper and gold mine (commonly abbreviated OT), which has been in development for close to two decades.

The government is refusing to support Rio Tinto’s efforts to raise an additional $4.5 billion to finance the second stage of OT that is seen as key to the long-term economic viability of the ore body. Lawmakers in Mongolia’s parliament are seeking to secure a greater share of the wealth extracted by quadrupling royalties from the current 5% to 20%. Meanwhile, the country’s president has accused Rio Tinto of mismanagement and wants to secure a greater say in the mine’s operations. The government’s moves come as gold and copper prices have been tumbling on global markets, adding to the pressure on OT.

Thus far Rio Tinto has refused to renegotiate its agreement with the government, but support is seen as essential to raising stage two funding and for successful operation of the mine. Rio Tinto and the government made an initial effort to resolve the dispute in February, but failed.  Following those conversations, Rio Tinto CEO Sam Walsh went so far as to state he had serious concerns regarding “recent political signals within Mongolia calling into question some aspects of the investment agreement” between the company and the government.

Meanwhile there are problems elsewhere at Tavan Tolgoi (TT), a massive coking coal deposit near the Chinese border and the most important mining operation in the country besides OT. Development has been delayed several times for financial reasons, as the government-owned operator, Erdenes Tavan Tolgoi, is reported to have presold coal to the Aluminum Corp of China at a price below the cost of production. It is also rumored that that deal was rushed in order to underwrite pre-election cash handouts to the population by the previous government, which according to Batsuur Yaichil, the head of Erdenes, cost the firm $669 million in 2012. Erdenes has since asked the government for a $500 million dollar bailout. An IPO expected to raise cash for the firm in 2012 has been put off until at least 2014.

Longer-Term Risks: Fiscal Sustainability

The situations at OT and TT point to larger, long-term risks associated with the populist ruling coalition’s questionable fiscal management. Since coming to power, the government has issued $1.5 billion dollars in sovereign bonds, introduced a draft mining law that would dramatically change the regulatory environment and raise royalty rates, fired TT’s previous top executive, and halted coal shipments to China.

The parliament also voted in a 2013 budget heavy on spending and backed by poor revenue assumptions. The budget increases expenditures and net lending by 18% bringing it to a projected to 42% of GDP. This comes after spending almost tripled between 2009 and 2012.

Making matters worse, current policies have lead to double-digit inflation. Thus far, inflation has not reached the record high levels of 2008, when it peaked at 33.7%, but inflation in 2012 was approximately 15%, driven by skyrocketing food prices, which according to the World Bank are undermining the real income and spending power of the population, a third of which still lives below the poverty line.

Several issues complicate Mongolia’s future further. The first is $1.5 billion in sovereign debt issued in 2012, representing almost 12% of GDP. During the lending roadshow the government suggested that the proceeds would be used to finance infrastructure projects, which are sorely needed to sustain growth and lift the population out of poverty, but the recent handouts to the population suggest short-term priorities have intervened.

A second complicating factor is the revenue assumptions made by the government. The government currently projects corporate income taxes to swell by $320 million, approximately half of which is expected to come from a renegotiated investment agreement with Rio Tinto. The source of the other half of new corporate income taxes is not explained.

Perhaps more worrisome are poor assumptions regarding the major trends in global commodity prices and volumes. The copper price assumptions made in late 2012, during the budget drafting process, were approximately 5% above the forecasted averages for 2013. Making matters worse the price of copper, along with gold and coal, has continued to fall in 2013 as demand in China has eased. To mitigate exposure to commodity price volatility, the government established a stabilization fund but it is woefully underfunded, amounting to only 2% of GDP for one year.

If ongoing negotiations with Rio Tinto are not resolved equitably the smooth start of operations at OT, slated for this summer, appears in peril. Additionally, should Rio Tinto and the Government fail to settle their dispute further fresh foreign investment will likely dry up.