For more than four decades, China was the world’s great economic miracle — a once-impoverished nation that transformed itself into an industrial and technological giant. Since Deng Xiaoping’s economic reforms of 1978, China’s GDP expanded at an average annual rate of roughly 9 percent, lifting over 800 million people out of poverty and reshaping global trade, manufacturing, and finance.

But the miracle is slowing.

Today, China’s growth rate has fallen to around 5 percent — still high by Western standards, but a far cry from the breakneck pace that once defined the “Chinese century.” The global balance of power, long tilting toward Beijing, is again being recalibrated. Predictions that China would soon surpass the United States as the world’s largest economy have quietly faded from economic forecasts.

Instead, analysts now speak of a country entering a “peaking power” phase — one where economic momentum wanes even as ambitions expand.

The foundations of China’s rise are eroding. The workforce that once fueled its manufacturing boom has peaked. Official data shows the labor supply will shrink by about 7 percent between 2025 and 2050. The working-age population has been declining for nearly a decade, while the total population has already begun to contract. In 2023, India overtook China as the world’s most populous nation — a symbolic moment signaling the end of an era.

Demographic change strikes at the heart of China’s growth model. A younger, mobile workforce once drove the “world’s factory,” producing everything from smartphones to solar panels. That engine is now sputtering. Fewer young workers mean rising labor costs, reduced consumption potential, and greater fiscal strain as the government diverts resources to support an aging population.

The social mood is shifting too. The rise of the tang ping (“lie flat”) movement — young people opting out of punishing work hours and intense competition — captures a broader sense of disillusionment. Once motivated by dreams of upward mobility, many in China’s younger generation now face high unemployment and dim career prospects.

As the demographic dividend disappears, China’s once-vast productive base is contracting. The consequences extend well beyond economics. A slowing China must now find ways to sustain global influence without the relentless growth that made its rise possible.

At the heart of China’s slowdown lies a deep structural problem: an economic model that has outlived its usefulness. For decades, Beijing’s growth strategy revolved around heavy state-led investment — in factories, infrastructure, and real estate. That approach worked spectacularly in the 1980s and 1990s, when capital was scarce and demand was strong. But after years of overbuilding, the returns have sharply diminished.

China’s skyline tells the story. Across the country, “ghost cities” of empty apartments and unused industrial parks stand as monuments to overinvestment. Estimates suggest there are between 23 and 26 million unsold apartments nationwide — enough to house the population of Italy. Many are located in smaller cities already facing population decline.

Even China’s signature infrastructure project, its vast high-speed rail network, has run into trouble. The state-owned operator carries more than $800 billion in debt and posts heavy annual losses. Despite this, Beijing continues to pour money into new lines and projects, unwilling to slow the machinery that once symbolized its rise.

The costs are piling up. A decade ago, China’s total debt stood at roughly twice the size of its GDP. Today, that figure has ballooned to about 300 percent — exceptionally high for a developing economy. Local governments, responsible for much of the infrastructure building, are now buried under an estimated $9 trillion in debt, according to the International Monetary Fund.

Much of this borrowing financed projects that generate little or no economic return. The result is a dangerous cycle: unproductive spending fuels growth figures on paper, but deepens financial fragility in reality.

Adding to the strain is deflation — a persistent fall in prices that discourages both investment and consumption. Consumer demand remains weak, private firms are hesitant to expand, and households are saving more amid uncertainty. The once-vibrant property market, a cornerstone of household wealth, is in decline. The combination of deflation and debt is locking the Chinese economy in a cycle of stagnation that even massive state stimulus struggles to break.

Beijing’s leaders have long recognized these risks. For more than a decade, policymakers have spoken of the need to “rebalance” the economy — shifting away from export-led, investment-heavy growth toward one driven by domestic consumption and innovation. But meaningful reform has stalled.

Under President Xi Jinping, China has moved in the opposite direction. Instead of liberalizing markets and empowering private enterprise, Xi has reasserted state control over nearly every sector of the economy. The Communist Party now plays a direct role in corporate governance, strategic investment, and even technology policy.

Initially, Xi appeared to endorse reformist ideas — calling for a “decisive role for the market” in 2013. But as political control tightened, those ambitions faded. Crackdowns on the private tech sector, private education, and property developers sent a chilling signal to entrepreneurs and foreign investors alike.

The shift reflects Xi’s broader vision: stability and self-sufficiency over growth and openness. The emphasis is now on “national security,” “internal circulation,” and “technological sovereignty.”

To some extent, the pivot was inevitable. The global environment has grown more hostile, with Washington imposing export controls on advanced semiconductors and restricting investment in Chinese tech firms. But the inward turn also reflects Xi’s conviction that political control — not economic reform — is the key to national strength.

That trade-off carries heavy costs. Innovation thrives on openness and competition, not on top-down directives. By suppressing dissent and curbing the private sector, Beijing risks stifling the very dynamism it needs to sustain growth in a maturing economy.

China’s predicament is more than an economic story; it is a geopolitical one. History suggests that “peaking powers” — nations that sense their rise is plateauing — often become more assertive abroad as they seek to secure influence before relative decline sets in.

This dynamic worries strategists in Washington and across Asia. A China still powerful but increasingly constrained may act more aggressively to lock in gains, from Taiwan to the South China Sea.

Yet there are reasons to doubt that Beijing can sustain prolonged external pressure. Economic vitality is the foundation of military and diplomatic power, and China’s fiscal resources are tightening.

While the country continues to expand its defense budget, the pace is slowing. Its ambitious Belt and Road Initiative (BRI) — once the flagship of global influence — has lost momentum as partner nations grapple with debt and delayed projects. Chinese state banks, burdened with domestic debt and non-performing loans, have scaled back overseas lending.

The “peaking power trap” could indeed make China more dangerous in the short term. But over time, economic stagnation tends to erode both the means and the confidence to project power.

Faced with economic headwinds and geopolitical isolation, Beijing is looking outward — but on its own terms. Rather than joining Western-led systems, China is building parallel institutions: the Belt and Road Initiative, the BRICS grouping, and the Regional Comprehensive Economic Partnership (RCEP). These efforts aim to create a sphere of economic and political alignment independent of the West.

However, their cohesion is limited.

The BRICS expansion — adding countries such as Saudi Arabia, Egypt, and Iran — looks impressive on paper, but the bloc remains divided by competing interests and distrust. The combined GDP of the six new BRICS members is only slightly larger than that of the United Kingdom. India, China’s main rival in Asia, is unlikely to align fully with Beijing’s vision. Russia, while a partner in anti-West rhetoric, is increasingly the junior member in the relationship, dependent on Chinese markets and technology.

The Belt and Road, meanwhile, has entered a period of retrenchment. Many participating countries, from Sri Lanka to Zambia, have struggled to repay Chinese loans. Beijing has begun restructuring debts and pulling back from risky projects. The era of massive, debt-fueled infrastructure diplomacy appears to be ending.

Without a unified economic framework or shared strategic purpose, these coalitions cannot yet rival the scale, depth, or stability of Western economic networks. The dollar still dominates global finance, and the US-led alliance system continues to expand — from NATO’s outreach to the Indo-Pacific to the Quad partnership with India, Japan, and Australia.

Despite its military modernization and growing assertiveness, China’s ability to translate economic might into strategic dominance remains limited. The People’s Liberation Army has improved dramatically in capability, particularly in naval and missile forces, but it has not been tested in real combat for decades.

Global military dominance — the kind the United States wields — remains a distant goal. China’s per capita income, around $12,700, is just one-sixth that of the US. That gap matters: wealth underpins not just defense spending, but also innovation, logistics, and long-term power projection.

Moreover, China’s global image has taken a hit. The once-powerful narrative that authoritarian rule could deliver prosperity and efficiency has lost luster. For many in the Global South, Beijing now represents a more complicated model — one burdened by debt, demographic decline, and political rigidity.

Western democracies, though often chaotic, have shown a remarkable capacity to adapt. The United States, once written off as a declining power, has reasserted leadership in technology, energy, and defense. Its economy, driven by innovation and immigration, remains resilient. The contrast with China’s stagnation has not gone unnoticed in global capitals.

China’s leaders face a fundamental question: can an authoritarian system sustain economic vitality in the absence of reform?

So far, the answer looks uncertain. The social contract that underpinned China’s rise — rapid growth in exchange for political control — is fraying. Citizens expect better living standards and opportunities; the state demands obedience and sacrifice.

The risk is not an immediate collapse, but a long stagnation — Japan’s “lost decades” on a much larger scale, but without Japan’s political openness or global goodwill.

In theory, China could still chart a new path: strengthening private enterprise, loosening capital controls, and encouraging innovation through openness. But these steps would require political compromises Xi Jinping seems unwilling to make. The priority remains control, not growth.

The implications of China’s slowdown are global.

For decades, the world’s economic geography was defined by China’s rise — from commodity demand in Africa and Latin America to manufacturing in Southeast Asia. As that engine cools, the ripple effects are profound.

Southeast Asian economies that once rode the wave of Chinese demand are feeling the drag. Export orders are shrinking. Supply chains are realigning toward India, Vietnam, and Mexico as multinational firms diversify away from Chinese dependence.

Geopolitically, Washington’s relative position is strengthening. The United States, backed by alliances and innovation ecosystems, remains the central node in global power. Its ability to attract talent, capital, and technology gives it resilience that China’s closed system lacks.

For Europe, China’s slowdown is both a relief and a concern — easing fears of Chinese dominance but exposing dependence on its market. For the Global South, the shift marks the end of easy Chinese financing and the return of Western engagement as Washington seeks to counter Beijing’s influence.

The global balance of power is not static; it is being reshaped once again. The era of Chinese hypergrowth has ended, and with it, the assumption that economic size alone guarantees strategic supremacy.

China’s transformation since 1978 remains one of the most extraordinary in modern history. It built a middle class the size of Europe’s, revolutionized manufacturing, and lifted living standards on an unprecedented scale. But the same model that produced this success has now become its constraint.

As growth slows, debt rises, and demographics shift, Beijing faces a future far more complex than the triumphalist narratives of the past suggested. Its leaders must manage decline without admitting it — a political challenge as daunting as the economic one.

Lockheed Martin has intensified its campaign to secure one of the most consequential fighter aircraft deals in Philippine military history — the sale of the F-16 Block 70 “Viper” — with a proposal that goes far beyond traditional arms sales.

This isn’t just about supplying the Philippine Air Force (PAF) with jets. The defence giant is anchoring its offer on a sweeping industrial–academic partnership aimed at transforming the nation’s defence technology ecosystem, weaving together aerospace manufacturing, advanced research, workforce training, and economic growth.

The centrepiece is a proposed “strategic partnership” with Southern Methodist University (SMU) in the United States. This arrangement would bring together local industry, universities, and government agencies to raise the Philippines’ technological game in modelling and simulation, robotics, artificial intelligence (AI), and aerospace manufacturing.

Lockheed Martin promises to fund high-tech business incubators, build a state-of-the-art research and development (R&D) laboratory, and create training centres that could serve as the backbone of a self-reliant defence posture (SRDP) — a longstanding goal of the Philippine Department of National Defense (DND).

“We are committed to investing in the development of new capabilities and intellectual property in close collaboration with leading universities and companies in the Philippines,” said Jess Koloini, Lockheed Martin’s F-16 Business Development lead.

“This partnership will not only support the SRDP but also create a lasting impact on the Filipino workforce, driving economic growth and prosperity.”

The proposal arrives at a critical moment. Manila is urgently seeking to modernise its air combat capabilities amid escalating tensions in the West Philippine Sea, where Chinese coast guard and maritime militia vessels have repeatedly confronted Philippine assets.

In April 2025, the U.S. State Department formally notified Congress of its intent to authorise the sale: 16 single-seat F-16C Block 70/72 fighters and four twin-seat F-16D variants, the most advanced Fighting Falcons currently in production.

The timing coincided with a high-profile visit by U.S. Secretary of Defense Pete Hegseth, who pledged to “restore deterrence in the Indo-Pacific” in the face of “the growing threat posed by Communist China.” The linkage between advanced fighter sales and capacity-building investments reflects a shift in U.S. defence export strategy — embedding weapons deals within broader economic and national development agendas to secure long-term alliances.

The proposed F-16 package is designed to provide the PAF with a turnkey multirole capability:

• Engines & Airframes: 24 General Electric F110 afterburning turbofan engines, ensuring both operational thrust and redundancy.

• Radar & Sensors: 22 AN/APG-83 AESA radars offering high-resolution targeting, advanced tracking, and electronic warfare resilience.

• Air-to-Air Weapons: 112 AIM-120C-8 AMRAAMs for beyond-visual-range engagements; 40 AIM-9X Block II Sidewinders for close-range agility.

• Air-to-Ground Arsenal: 36 GBU-39/B Small Diameter Bombs for precision strikes; 60 MK-82 (500 lb) and 60 MK-84 (2,000 lb) general-purpose bombs for heavier strikes.

• Targeting Systems: 12 AN/AAQ-33 Sniper pods for GPS- and laser-guided weapon deployment in all weather conditions.

• Interoperability Gear: 24 MIDS-JTRS terminals for secure, jam-resistant data links.

• Survivability Systems: The AN/ALQ-254 Viper Shield EW suite to counter advanced radar-guided threats.

The acquisition would also include Infrared Search and Track (IRST) sensors, Air Combat Maneuvering Instrumentation (ACMI) pods, AGM-65 Maverick launchers, full logistics support, and ground crew training — ensuring that the fleet remains mission-ready for decades.

The Philippines has historically been a consumer of foreign defence equipment rather than a participant in their development. Lockheed Martin’s package aims to change that.

• Local MRO Facilities: The company is exploring setting up maintenance, repair, and overhaul sites to service not only the F-16 fleet but potentially other allied aircraft in the region.

• Workforce Development: Training programs could produce hundreds of aerospace engineers, technicians, and software specialists within the next decade.

• Supply Chain Integration: Selected Philippine companies could become certified suppliers for Lockheed Martin, opening the door to global export opportunities.

The tie-in with Southern Methodist University is particularly notable — integrating Philippine universities into U.S. defence research networks could position the country as a niche developer of AI-driven avionics and unmanned systems support.

The PAF’s current frontline fighter is the KAI FA-50PH, a Korean-made light combat aircraft derived from the T-50 trainer and loosely based on the F-16’s aerodynamic design. The FA-50’s similarities to the F-16 — cockpit layout, flight characteristics, and maintenance philosophy — would smooth the transition for PAF pilots to the Block 70 Viper.

Once operational, the F-16 would expand the PAF’s mission set:

• Advanced Maritime Patrols over the West Philippine Sea.

• Suppression of Enemy Air Defences (SEAD) using AGM-88 HARM missiles.

• Deep Strike Missions into contested territory.

• Precision Close Air Support (CAS) in both conventional and counter-insurgency roles.

For a nation of over 7,000 islands, the combination of range, payload, and sensor power is critical — especially as Chinese forces continue to employ grey-zone tactics like water-cannoning Philippine resupply missions to Second Thomas Shoal.

Philippine Ambassador to the U.S. Jose Manuel Romualdez has confirmed that Manila is looking at a long-term loan arrangement to finance the acquisition. This mirrors the structure used in the PAF’s UH-60 Black Hawk deal, where deliveries were phased to reduce budgetary strain.

The first F-16s could arrive as early as 2026, with the rest delivered by 2027 — an unusually rapid turnaround given fighter production backlogs.

“All of the jets being offered to us by the United States are brand new,” Romualdez noted.
“Washington has been presenting this block to us for quite some time, and now it’s finally moving forward.”

Lockheed Martin is not alone in the race. Sweden’s Saab Group is offering the JAS 39 Gripen E/F — a fighter with comparable multirole capabilities but lower operating costs.

In June 2024, Manila and Stockholm signed an agreement facilitating defence material procurement, setting the stage for a potential purchase of 12–14 Gripens. The Swedish offer would give the PAF the Meteor beyond-visual-range missile, the ES-05 Raven AESA radar with a swivelling swashplate, and the Skyward-G IRST — all within a platform designed for dispersed operations on short, rugged airstrips.

The Gripen’s first deliveries could align closely with the F-16’s, placing the decision squarely in the realm of strategic preference rather than delivery speed.

 F-16 Block 70 vs JAS 39 Gripen E/F

Both aircraft offer AESA radar, IRST, helmet-mounted cueing, and robust multirole capability. The F-16 brings heavier payload and deeper U.S. interoperability, while the Gripen offers better combat radius and potentially lower long-term costs.

Whichever fighter Manila chooses will define its defence alignment for decades.

• An F-16 Purchase would anchor the Philippines firmly within the U.S. and allied Pacific defence network, easing joint operations with Japan, Australia, and the U.S. Navy and Air Force.

• A Gripen Purchase would tilt towards a European-led model of defence collaboration, potentially increasing flexibility in arms sourcing but reducing direct integration with U.S. combat networks.

With Chinese harassment of Philippine resupply missions intensifying, the symbolism of choosing an American platform versus a Swedish one cannot be overstated.

A Philippine F-16 Block 70 fleet could:

• Serve as a deterrent not just against China but also any regional actor contemplating coercion.

• Allow for integrated patrols with U.S., Japanese, and Australian forces.

• Open opportunities for joint training exercises with other F-16 operators like Singapore, Taiwan, and South Korea.

Conversely, if the Gripen is chosen, Manila could become a launch customer in Southeast Asia for Saab’s latest model, potentially attracting regional interest from countries seeking non-U.S. options.

Lockheed Martin’s bet is that by tying its offer to education, industry, and innovation, it can tip the scales in its favour. If the plan succeeds, the Philippines could see:

• The emergence of local AI-driven avionics research.

• An export-capable aerospace supply chain.

• A steady pipeline of skilled engineers and technicians.

For Washington, it would mean not only securing a lucrative arms deal but also deepening one of its oldest treaty alliances at a time when the Indo-Pacific’s strategic environment is rapidly deteriorating.

The PAF’s choice between the F-16 Viper and the Gripen is more than a procurement decision — it is a strategic fork in the road that will shape the Philippines’ defence posture, industrial capacity, and geopolitical identity for decades.

If Lockheed Martin’s vision materialises, the country could move from being a passive defence consumer to an active player in the global aerospace ecosystem — with a fleet of brand-new Vipers as the sharp edge of its airpower.

RIYADH: Saudi Arabia’s corporate venture capital arms are playing a pivotal role in driving innovation and advancing economic diversification by aligning their investment strategies with both national and corporate objectives.

Between 2020 and the third quarter of 2024, corporate investors accounted for 27 percent of the 1,361 unique investors in the Middle East and North Africa region, deploying approximately $380 million, according to a report by MAGNiTT.

Saudi Arabia saw the highest ratio, with CVC’s making up 30 percent of local unique investors.

Funds such as Aramco Ventures and stc’s tali ventures exemplify this dual-purpose approach. By leveraging their resources and expertise, these CVCs are fostering startups that align with the Kingdom’s Vision 2030 agenda while simultaneously advancing the strategic and operational goals of their parent companies.

According to Stephane Ulcakar, associate director and head of corporate and government financial services at Arthur D. Little, these funds stand out due to their scale and strategic scope.

“Aramco Ventures recently secured an additional $4 billion in funding, raising its total capital to $7 billion,” Ulcakar noted in an interview with Arab News, adding that stc has also collaborated with global players like SoftBank and the Saudi Public Investment Fund to broaden its reach.

This alignment extends to specific investment sectors. In an interview with Arab News, Arjun Singh, partner and global head of fintech at ADL, explained: “These arms — and their affiliated funds — are not just looking for the next big thing but also for startups that can integrate seamlessly into their parent companies’ operations.”

Stc’s tali ventures prioritizes fintech, artificial intelligence, and blockchain, reflecting both the nation’s and its parent company’s ambitions to champion Saudi Arabia’s digital economy.

Similarly, Aramco’s Wa’ed Ventures focuses on startups that advance the Kingdom’s digital transformation while complementing Aramco’s strategic objectives.

Beyond funding, Saudi CVCs bring a distinct set of advantages to startups by leveraging industry expertise, supply chain networks, and expansive ecosystems.

Ulcakar highlighted the role of national initiatives such as the PIF’s National Development Strategy in addressing supply chain gaps and reshaping logistics.

Startups backed by these CVCs gain access to infrastructure and pilot programs within large ecosystems, which help refine their offerings.

“Certain well-known national players have partnered with startups to integrate advanced technologies into their supply chain operations, testing solutions like automation and predictive analytics,” Ulcakar stated.

Singh emphasized how this approach accelerates innovation, particularly in regulated industries like fintech and healthcare.

“Startups backed by corporate investors show stronger performance, as these partnerships can significantly accelerate regulatory approval processes and market entry,” he said.

Saudi National Bank’s venture capital arm is an example of an organization enabling fintech startups to scale efficiently by offering regulatory navigation support and access to a large customer base, he added.

“The Saudi VC market is undoubtedly burgeoning, with abundant demand for bankable capital and distinct funding and technical advantages brought by various players on the supply side,” Ulcakar said.

The market’s maturation is evident, with funding reaching $987 million in 2022, and CVCs accounting for 32 percent of all deals — a significant rise from less than 15 percent in 2018.

This growth is not limited to Aramco and stc — banks including SNB Capital, Riyad Bank and SAB are emerging as key players, further diversifying the funding landscape.

Additionally, Saudi Venture Capital continues to act as a catalyst for the ecosystem, having deployed over SR3.4 billion ($905.7 million) through direct and indirect investments.

This has propelled Saudi Arabia to capture the highest share of total VC funding in the MENA region, reaching 54 percent in the first half of 2024, up from 38 percent during the same period in 2023.

The Kingdom’s VC ecosystem is marked by a collaborative dynamic between corporate and traditional VCs.

Singh highlighted that “87 percent of CVC-backed deals in 2022-23 included traditional VC participation.”

This high rate of co-investment reflects a complementary relationship, where both types of investors contribute to building a more sophisticated, institutionalized ecosystem.

Singh noted that this coordinated evolution spans multiple sectors and is essential to creating a sustainable innovation landscape aligned with Saudi Arabia’s Vision 2030.

Looking ahead, the key question is how this ecosystem will consolidate further, potentially positioning the Kingdom as a global private capital hub.

“The diversity of approaches — from direct CVC arms to partnerships with established VC firms — demonstrates the market’s growing maturity and suggests a sustainable growth trajectory,” Ulcakar stated.

This progress is a critical component of the Kingdom’s strategy to establish itself as a leader in technology and innovation.

In sectors such as energy and logistics, Saudi Arabia’s CVCs are playing a pivotal role in driving innovation.

Ulcakar explained that the Kingdom is leveraging its global footprint to balance present needs with future aspirations.

Investments in fossil fuel infrastructure, for example, are complemented by efforts to localize electric vehicle technologies and pioneer nuclear fusion projects. These investments often blend incremental improvements with disruptive technologies, creating a dual pathway for transformation.

CVC arms are distinctive in their dual mandate to achieve financial returns while pursuing strategic objectives for their parent companies.

This dual focus shapes their investment and risk management philosophies, setting them apart from independent venture capital firms.

Singh said: “Unlike traditional VCs, which prioritize financial exits and short-term gains, Saudi CVCs often adopt a longer-term, patient capital strategy.”

This approach allows them to align their investments with their parent companies’ strategic goals, even if such opportunities involve higher initial risks or extended timelines.

For instance, Aramco Ventures invests in clean energy and carbon capture technologies, aligning with the parent company’s energy transition and sustainability goals.

These investments represent long-term bets with strategic implications, demonstrating a willingness to prioritize alignment with corporate objectives over immediate financial returns.

Similarly, tali ventures focuses on digital innovation while reinforcing stc’s leadership in telecommunications and digital services.

By investing in startups, tali ventures not only targets financial returns but also strengthens stc’s digital payments ecosystem, creating synergies that benefit the parent company’s broader ambitions.

Singh highlighted this dual approach as a key differentiator, noting that these capabilities enable Saudi Arabia CVCs to pursue opportunities that might otherwise be deemed too risky by independent VCs.

Ulcakar emphasized the nuanced nature of this approach. “The ability to generate both financial and strategic returns represents a unique advantage and a complex challenge in this growth market. There is no one-size-fits-all answer,” he said.

Ulcakar also noted that Saudi Arabia is one of the few growth markets that has successfully financed its own development, with investor preferences gradually evolving.

“We observe a gradual shift toward prioritizing financial returns over strategic ones, aligning with the Kingdom’s evolving investment goals,” he added.

RIYADH: With a new president and a fresh cabinet, Lebanon stands at a pivotal moment. Can this government reverse economic collapse and restore trust?

The financial crisis, ongoing since 2019, has caused an $80 billion banking sector deficit, while debt restructuring remains stalled by political disputes.

The national currency has seen a 90 percent drop in value since 2019, and an International Monetary Fund delegation in May found Lebanon’s economic reforms insufficient to warrant financial aid, leading to an overreliance on foreign reserves. 

Nawaf Salam, appointed prime minister in January, used his first speech after securing the role to pledge to “rescue, reform and rebuild” Lebanon, alongside the leadership of President Joseph Aoun.

Both are facing mounting pressure to enact deep structural reforms, Fadi Nicholas Nassar, senior fellow at the Middle East Institute and director of the Institute for Social Justice and Conflict Resolution at the Lebanese American University told Arab News: “The country is emerging from financial collapse, the lingering trauma of the Beirut port blast, and over a year of war, yet time is not on its side. Trust, though quickly lost, is not so easily restored.” 

Jassem Ajaka, a Lebanese economist and professor, argues that full transparency and an independent audit of Lebanon’s financial sector and public finances are fundamental first steps. “We have not had such an audit since 2003, which is unacceptable. Without this, it is impossible to fairly distribute losses,” he told Arab News.

“Lebanon’s ability to secure economic aid and investments is deeply tied to the shifting geopolitical landscape,” said Ralph Baydoun, founder and director of research and strategic communications firm InflueAnswers. 

Baydoun explained that Lebanon must implement decisive reforms to regain international trust and reintegrate into the global financial system. 

Key priorities include robust anti-money laundering measures to escape the Financial Action Task Force blacklist grey list, an independent audit of the Banque du Liban and commercial banks for transparency, and a clear framework for distributing financial losses. 

He further added that the country needs a sustainable economic growth strategy focused on key sectors like technology, services, and exports.

One early positive sign came when Salam vowed to end sectarian quotas in financial appointments, a longstanding governance issue.

The financial burden on depositors

Lebanese banks had placed the majority of their funds with the central bank, whose financial engineering schemes propped up government spending and an unsustainable currency peg. Disagreements over how to distribute financial losses have fueled political deadlock.

Ajaka suggested deep restructuring of the banking sector, including mergers based on economic benefits and asset sales where necessary. “This restructuring should prioritize both depositors’ interests and the Lebanese economy. However, we must first determine the financial status of each bank before deciding the best course of action,” he said.

Depositors continue to bear losses while those responsible remain unpunished, Farida said. In 2023, the adviser proposed an alternative recovery roadmap outlining a phased approach to restoring depositors’ savings while holding financial elites accountable for the economic collapse. 

The plan prioritizes an immediate payout to small depositors, funded by a comprehensive audit of bank reserves and the recovery of excessive interest payments and illicitly transferred funds. Larger deposits would be gradually restored through a combination of bank bail-ins and legal actions against those responsible for mismanaging Lebanon’s banking sector. 

Lebanon’s ability to secure economic aid and investments is deeply tied to the shifting geopolitical landscape.

Ralph Baydoun, founder and director of InflueAnswers

Commenting on the reduction in the potential payouts for depositors, Farida said: “The more time we wait, the less this number is. I expect this number to be going down with time. Unless there is a complete audit, we can’t really tell the exact number.”

Unlike past government proposals, Farida’s plan rejects the use of public assets to cover banking losses, aiming instead to shield state resources from further depletion. However, with deposit values eroding daily, he warns that delays in implementation will make full recovery increasingly difficult.

The Depositors’ Union welcomed reform pledges but stressed accountability, rejecting any plan shifting banking losses to public assets. It called for fair restructuring that prioritizes depositors’ rights and holds banks accountable.

“Accountability is the key for any reform plan. There cannot be a regain of the trust in the system, in the public sector or in banking sector, if the ones who were responsible for this crisis were not held accountable,” Mohammad Farida, the economic adviser to the Depositors’ Union in Lebanon, told Arab News.

One of the greatest obstacles to reform was Hezbollah’s influence over the state. The group’s political and military entrenchment continued for years to deter international investment and prevented Lebanon from fully reintegrating into the regional economy. 

The damage cannot be undone by words alone. Only material deliverables can restore trust — locally, regionally, and globally.

Fadi Nicholas Nassar, senior fellow at the Middle East Institute

For Lebanon to emerge from its crisis, Nassar argued, major structural changes are needed. “Restoring full sovereignty means dismantling Hezbollah, not just managing around it. Governance must shift from patronage to competence, with ministries staffed by professionals, not cronies. Basic services like electricity cannot remain luxuries,” he said.

Baydoun argued that Hezbollah is now in a more precarious position than in previous years due to financial strains from war and a decline in Iranian support. 

He explained to Arab News that Lebanon’s ties with Iran and Hezbollah have long restricted Western and Gulf financial support. 

Baydoun highlighted that the diminishing influence of Iran’s regional network and the weakening of the Assad regime in Syria have created an opportunity for Lebanon to move closer to Western spheres of influence and regain donor confidence.

The economic crisis deepened as the humanitarian situation worsened. The World Bank estimated Hezbollah-Israel war damages at $8.5 billion, with the economy shrinking 10 percent in 2024 — its fifth year of contraction, totaling over 34 percent of the gross domestic product. Over 875,000 were displaced, and key sectors faced billions in losses.

“The estimated $10 billion required for reconstruction in Lebanon will likely come from international donors, primarily the GCC (Gulf Cooperation Council), rather than from Iran,” Baydoun added.

On Jan. 29, President Aoun reaffirmed Lebanon’s commitment to reforms, stating that the new government’s priority is drafting necessary legislation. In a meeting with World Bank official Osman Dion, Aoun said: “The first task of the new government is to immediately begin drafting the necessary legislation for this purpose.” 

Accountability is the key for any reform plan. There cannot be a regain of the trust in the system, in the public sector or in banking sector, if the ones who were responsible for this crisis were not held accountable.

Mohammad Farida, economic adviser to the Depositors’ Union in Lebanon

Nassar said that Lebanon’s new government has only one way to prove its legitimacy – by delivering results. 

“The damage cannot be undone by words alone. Only material deliverables can restore trust — locally, regionally, and globally,” he said.

Moody’s has projected that economic activity could begin to recover later this year, contingent on political stability and the implementation of reforms. Yet, Lebanon’s road to recovery is far from guaranteed. International donors — including the Gulf ones — remain skeptical, demanding real action rather than political rhetoric.

“Attracting foreign direct investments requires two key conditions: Lebanon must implement ceasefire agreements with Israel and establish an independent judiciary to combat corruption,” Ajaka stated. He added that Lebanon’s high return on investment potential could make it a key regional player if these conditions are met.

Saudi Arabia’s Foreign Minister Faisal bin Farhan underscored this sentiment during a visit to the country on Jan. 23, saying: “We will need to see real action, real reform, and a commitment to a Lebanon that is looking to the future, not to the past.”

Baydoun explained that Lebanon’s exclusion from key regional trade routes, including China’s Belt and Road Initiative and the Iraq-Syria-Turkiye-Europe corridor, stems from both political instability and shifting regional alliances. 

To avoid further marginalization, he noted, Lebanon must actively lobby for integration and position itself as a strategic trade hub. The Beirut Port explosion accelerated its economic sidelining, making its reconstruction — aligned with regional trade networks— a priority. “If Lebanon does not proactively position itself as an indispensable part of one of these networks, it risks permanent exclusion from the evolving global supply chain,” Baydoun added.

The energy sector and economic recovery

Addressing the financial crisis, energy policy expert and Middle East and North Africa director of the Natural Resource Governance Institute, Laury Haytayan, said: “There is a need to encourage the private sector to invest in the renewable energy sector to go beyond the individual initiatives.”

Lebanon’s offshore gas has often been seen as an economic game-changer, but Haytayan warned against unrealistic expectations, saying that the nation lacks active hydrocarbon discoveries, making energy wealth an unreliable recovery catalyst.

The energy expert dismissed the notion of using the country’s underdeveloped oil and gas sector as a bargaining chip in negotiations with international stakeholders, while stressing the need to restructure Lebanon’s electricity sector rather than relying on oil and gas for short-term recovery. 

Haytayan urged regulatory reforms, including appointing the long-awaited electricity regulator and enforcing the 23-year-old electricity law mandating Electricite Du Liban’s unbundling and private sector involvement. She questioned whether the new minister would push for privatization, a move which Ajaka argued is crucial for state-owned enterprises, particularly in the electricity sector. 

“Lebanon has spent over $50 billion on electricity with no results. Justice must investigate these expenditures,” he said, citing the UK’s deregulation success as a potential model for Lebanon.

Looking at regional energy developments, Haytayan was clear that Lebanon cannot be measured against leading Gulf states, saying: “There is no country in the Middle East and North Africa that could be compared to Saudi Arabia and the UAE when it comes to technical and financial capacities.”

Baydoun argued that the Gulf’s dominance in energy does not hinder Lebanon’s potential but rather offers a strategic advantage. While the GCC exports to Asia, Lebanon — if it begins oil and gas production — could target European markets, avoiding direct competition. He added that Lebanon should leverage the GCC for technical expertise and investment.

The economic adviser to the Depositors’ Union adviser Farida said the primary challenge in implementing reforms and resolving Lebanon’s economic crisis lies in the need for legislative updates, including new laws requiring parliamentary approval, stressing that any plan must first gain parliamentary backing to have a real chance of success.

He said: “It’s still premature to judge whether this administration will be able to actually produce a new comprehensive plan for the financial gap in the banking sector and the overall crisis in the public sector and the administration.”

ABU DHABI: In a dynamic landscape where innovation is paramount, Abu Dhabi is staking its claim. As the emirate navigates the shifting tides of the knowledge economy, the video game industry is emerging as a transformative force, proving to be a powerful catalyst for progress and innovation.

With the potential to redefine entertainment, education, and technology, gaming presents a unique opportunity for Abu Dhabi to thrive in an increasingly interconnected and digitized world.

To put it bluntly, gaming is the future and Abu Dhabi has a major role to play in making this future a reality. By staying ahead of the curve, we will attract global talent to the emirate whilst creating new career paths for aspiring local talent to realize their dreams.

Next phase of the knowledge economy

As the global gaming industry became mainstream, Abu Dhabi was right there beside it. This growth dates to Ubisoft’s arrival in the UAE capital in 2010. As data began to show the speed at which the Middle East’s gaming market was growing, more companies took advantage of this growth by settling in Abu Dhabi.

The industry is now thriving and growing at pace, with highly skilled jobs being created that encompass the latest trends in game development technology such as AI, machine learning and game analytics.

Each year, we push the boundaries of learning and development even further. We have started 2025 strong by hosting Global Game Jam, the world’s largest game jam event, which takes place simultaneously around the globe. One of the locations this year was Berklee in Manarat Al Saadiyat hosted by Abu Dhabi Gaming, where game developers and enthusiast had 48 hours to develop and showcase their projects in a safe and welcoming environment.

Every initiative matters, as Abu Dhabi leads the way in driving forward the growth of the knowledge-based economy.

With revenues forecast to rise from $455 billion in 2024 to $625 billion by 2028, the global gaming industry continues to grow at a healthy rate, with the UAE and its legions of tech-savvy gamers now accounting for 30 percent of revenue in the MENA region.

Recognizing the creative potential of the gaming industry at the Department of Culture and Tourism – Abu Dhabi (DCT Abu Dhabi), we’ve actively pursued strategies to leverage its power. This involved adopting a comprehensive approach with three key pillars: developing the local talent pipeline and creating a second home for the global talent pool; bringing a healthy mix of game developers to Abu Dhabi and supporting the local home-grown development studios; engaging with the esports and gaming community across the globe.

We can point to immense progress on all three of the strategy’s pillars.

Talent development

Establishing a robust talent development pipeline stands as one of our top priorities, and we are making significant strides in this regard. Our initial move involved forging more than a decade-long partnership with Unity Technologies to enhance the skill set of our workforce. With its Middle East and Africa headquarters based in Abu Dhabi, San Francisco’s Unity is a leader in the industry, powering 80 percent of mobile games globally. Undertaking Unity training enhances employability prospects significantly and helps keep early-career talent in Abu Dhabi.

Bringing game developers to Abu Dhabi

Abu Dhabi is now home to more than 80 video game companies, the largest such community in the region. These companies and organizations, such as MY.Games, Sperasoft and Ninjas In Pyjamas, are drawn to Abu Dhabi by its reputation for delivering results. Last year, leading esports company NIP Group entered into a five-year term gaming subsidy agreement with DCT Abu Dhabi, with an aim to elevate its presence in the region.

Facilitating this growth is Abu Dhabi Gaming, serving as a vital connector within our community. Through initiatives like internship events, Abu Dhabi Gaming matches students with companies, streamlining the process for founders who can conduct multiple interviews in a single evening.

In the words of the late Steve Jobs, “Real artists ship.”, as in, deliver their products. Innovation has the potential to yield incredible results, but action is essential to realize its full potential – and Abu Dhabi Gaming is our channel for action in gaming.

Esports

Esports events pack arenas and have huge global viewership – over 540 million people worldwide by the latest estimates. At the local level, these big-tent events activate the gaming community by creating occasions that draw gamers together – which then paves the way for the success of further community gatherings such as Gaming4Good and the Yas Gaming Festival.

Increasingly, Abu Dhabi-based esports teams are making their mark on the global stage. Take, for example, Nigma Galaxy, a mainly Arab Dota 2 team that clinched a world championship title ahead of setting up their HQ in Abu Dhabi. With a support team comprising of a psychologist, strategist and analysts, they exemplify the professionalism in esports. Additionally, local talent like Amjad Al Shalabi, also known as AngryBird, emerged victorious at the 2023 EVO (Street Fighter) world championship in Las Vegas. We are also seeing a surge in the number of esports academies across the emirate to bring rising local stars to the forefront of competitive gaming.

Recognizing the growth opportunities the emirate has to offer, more teams are establishing themselves in Abu Dhabi: the emirate is poised to become a leading regional hub for esports, fostering heightened competition levels as teams train local gamers, and a burgeoning fan base as tournaments highlight local venues.

The future is ours

DCT Abu Dhabi’s vision is for Abu Dhabi Gaming to be a key player on the global stage. We believe it is important to tell more stories about the region through gaming, akin to how Dynasty Warriors presents Chinese imperial history. This is starting to happen. For instance, Ubisoft’s team collaborated with multiple museums and historians covering Islamic art, architecture and history to ensure the authenticity of Assassin’s Creed Mirage’s portrayal of medieval Baghdad, highlighting its historical significance as a center of science and mathematics during that period.

In years to come we will witness more local success stories in game development. These energies are bubbling up at companies like Kashkool Games. Founded by three Emirati brothers, they have been working on their game called Sheba: A New Dawn for years and are now under the umbrella of Abu Dhabi Gaming. The game was successfully published last year, and they are already working on their second title with an increased focus in showcasing Emirati culture and preserving heritage.

AI is also an essential consideration as we move forward. AI and machine learning can transform games so that every time you play, the game is different. The monster around the corner this time won’t be the same monster as last time. Speech can be crafted so that every interaction is unique for every player. Developing games using AI technology is a skillset that needs to be leveraged and one for which the demand is only going to grow.

The opportunity in front of us is endless. Here in Abu Dhabi we are harnessing the power of creation, welcoming the dreamers and creating a world class ecosystem for the gaming industry.

Australia’s economic strategy is entering a new chapter with the Future Made in Australia Act (FMiA), an industrial policy designed to bolster the nation’s role in global supply chains, especially in critical minerals, renewable energy, and advanced manufacturing. This approach diverges from decades of neoliberal policy and embraces a mission-oriented framework that echoes recent global trends toward economic interventionism.

As the global economy navigates geopolitical tension, technological advancements, and supply chain instability, Australia’s shift signifies a commitment to economic resilience and sustainable growth. However, the success of the FMiA depends on navigating complex challenges, including market limitations, geopolitical pressures, and the balancing act of targeted state support with broad economic inclusivity.

Industrial policies have a rich history in supporting economic development. In countries like Japan, South Korea, Taiwan, and, more recently, China, targeted state investments have helped accelerate progress in specific sectors. The governments in these countries directed substantial investments toward technological advancements, infrastructure, and exports, driving their economies to rapidly catch up with the developed world.

In response to geopolitical tensions, particularly with China, leading industrialized nations such as the United States, European Union, and United Kingdom are moving toward a similar interventionist approach. The United States’ Inflation Reduction Act (IRA), for instance, allocates significant subsidies and investments to reshore manufacturing and reduce dependency on foreign suppliers. The European Union’s Critical Raw Materials Act prioritizes securing essential resources for the green energy transition, while the United Kingdom’s post-Brexit policies focus on revitalizing its industrial competitiveness.

The COVID-19 pandemic revealed vulnerabilities in global supply chains, prompting these governments to move away from the Washington Consensus that prioritized trade liberalization and minimal state intervention. In this evolving landscape, industrial policy has re-emerged as a tool for economic security and technological independence, with the FMiA positioning Australia as an important player in this global trend.

Unlike other countries with recent protectionist measures, the FMiA stops short of implementing tariffs or heavy trade restrictions. Instead, the policy emphasizes the importance of reducing Australia’s dependence on commodity exports by fostering high-value industries and reinforcing domestic manufacturing, especially in green energy.

1. Strengthening Critical Mineral Production and Processing: Given its vast reserves of minerals essential to renewable energy, such as lithium and rare earth elements, Australia aims to position itself as a leading supplier in this sector.
2. Promoting Renewable Energy Manufacturing: To support its own energy transition, Australia plans to build out manufacturing capacities for green technologies, reducing reliance on imported components.
3. Encouraging Advanced Manufacturing: By investing in technological innovation and high-value-added production, the FMiA aims to foster a competitive edge for Australia in global supply chains.

The shift toward a mission-oriented industrial policy signifies a departure from Australia’s historical approach, which was largely rooted in liberal economic reforms of the 1980s and 1990s. These reforms enabled the country’s natural resource wealth to drive exports, particularly to China, while reducing the state’s role in determining specific industry priorities. The FMiA, however, reflects a new era, where the government is poised to play a more active role in guiding Australia’s economic trajectory.

While the FMiA’s ambitions are clear, its potential pitfalls have drawn criticism. Critics argue that mission-oriented policies, though well-intentioned, can sometimes produce unintended consequences. Australia’s comparatively high production costs and limited labor pool pose challenges to competing with countries that have already developed robust advanced manufacturing sectors.

1. Sectoral Bias and Comparative Advantage Concerns: The FMiA targets sectors that, although strategically important, may not align with Australia’s traditional economic strengths. Relying heavily on government subsidies to develop these sectors could risk distorting the market, particularly if sectors with a comparative advantage, such as agriculture or traditional mining, are neglected.
2. Risk of Industrial Subsidy Competition: Australia’s relatively small economy could find itself caught in a subsidy “arms race” with larger economies like the United States and China. With each pouring billions into strategic sectors, Australia may feel pressured to match the pace, which could result in budgetary strains and reduced funding for other critical areas such as education or healthcare.
3. Dependence on Export Markets: Unlike the U.S. or EU, Australia’s limited domestic market requires it to rely heavily on exports. As a major supplier of mineral resources, Australia currently depends on external partners, especially China, for processing and downstream manufacturing. The FMiA’s focus on building domestic capacity for mineral processing, therefore, faces significant structural and geopolitical challenges.
4. Geopolitical Pressures in Mineral Processing: The FMiA’s ambition to expand domestic mineral processing capabilities brings Australia’s alignment with the United States into focus. However, U.S. policies, including stipulations in the IRA that limit Chinese equity in qualifying projects, complicate Australia’s aspirations. This underscores the challenge of aligning with a U.S.-led economic strategy without compromising ties with China, Australia’s largest trade partner.

Australia’s place as a mineral-rich upstream supplier to global markets places it in a challenging position. China currently dominates the global processing of critical minerals, giving it a stronghold in the supply chains of green technology. Despite Australia’s wealth of mineral resources, developing downstream processing facilities within its borders would involve substantial investment and face high labor costs, as well as a continued reliance on foreign machinery and technology.

To compete effectively in mineral processing, Australia must overcome its dependency on imported equipment and heavy machinery from countries such as the United States, Germany, and Japan. While the country has made strides in mining technology innovation, mineral processing capabilities remain limited and often cost-prohibitive.

Further complicating the FMiA’s goals, emerging economies within the BRICS+6 (Brazil, Russia, India, China, South Africa, and others) are actively developing their own supply chains, capitalizing on mineral resources and the advanced processing capabilities of countries like China. Australia’s ability to establish itself as a processing hub is thus complicated not only by cost but by growing competition from other mineral-rich nations aiming to capture value-added stages of production.

The FMiA also raises concerns about potential regional disparities within Australia. States and territories rich in natural resources are likely to benefit more from the policy, as they can tap into subsidies for mining and manufacturing sectors. Conversely, regions without such resources or established industries may see limited benefit, exacerbating economic inequalities across the country.

To create a more balanced industrial landscape, Australia’s policymakers are considering a dual approach that includes both vertical and horizontal strategies:

• Vertical Programs: These sector-specific programs aim to support industries that are critical to national interests, such as critical minerals, advanced manufacturing, and renewable energy.
• Horizontal Programs: These broader initiatives support overall economic growth by enhancing infrastructure, fostering innovation, and improving workforce skills across all regions. Investment in education and training, especially in emerging technologies like artificial intelligence, robotics, and automation, can help build a future-ready workforce, particularly in regions outside of resource-rich states.

This approach underscores the importance of inclusivity within the FMiA’s mission-oriented framework. A more holistic policy that includes regional investments and support for small and medium enterprises will be essential to ensuring that the benefits of industrial transformation are distributed equitably across the nation.

As Australia positions itself within global supply chains, fostering strategic international partnerships becomes paramount. These partnerships could provide access to advanced technologies, collaborative research, and export markets, helping Australia establish a competitive edge in high-value industries.

For instance, collaborations with key allies such as the United States, Japan, and European nations could enhance Australia’s access to emerging technologies and reduce its reliance on any single market, including China. Expanding partnerships with countries that share similar objectives in the green transition could yield mutual benefits, especially in renewable energy technologies and mineral processing.

The FMiA’s emphasis on innovation and sustainability also aligns with broader global efforts to achieve climate goals. By prioritizing renewable energy manufacturing and critical mineral supply chains, Australia’s industrial policy supports both economic resilience and environmental objectives. Integrating sustainable practices within industrial expansion can also bolster Australia’s standing as a leader in eco-friendly manufacturing, positioning it favorably in international markets that are increasingly focused on green credentials.