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  • Author: Alastair Iain Johnston
  • Publication Date: 10-2019
  • Content Type: Journal Article
  • Journal: International Security
  • Institution: Belfer Center for Science and International Affairs, Harvard University
  • Abstract: Many scholars and policymakers in the United States accept the narrative that China is a revisionist state challenging the U.S.-dominated international liberal order. The narrative assumes that there is a singular liberal order and that it is obvious what constitutes a challenge to it. The concepts of order and challenge are, however, poorly operationalized. There are at least four plausible operationalizations of order, three of which are explicitly or implicitly embodied in the dominant narrative. These tend to assume, ahistorically, that U.S. interests and the content of the liberal order are almost identical. The fourth operationalization views order as an emergent property of the interaction of multiple state, substate, nonstate, and international actors. As a result, there are at least eight “issue-specific orders” (e.g., military, trade, information, and political development). Some of these China accepts; some it rejects; and some it is willing to live with. Given these multiple orders and varying levels of challenge, the narrative of a U.S.-dominated liberal international order being challenged by a revisionist China makes little conceptual or empirical sense. The findings point to the need to develop more generalizable ways of observing orders and compliance.
  • Topic: International Trade and Finance, Hegemony, Military Affairs, Information Age, Liberal Order
  • Political Geography: United States, China, Asia
  • Author: Jie Bai, Jiahua Liu
  • Publication Date: 12-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: It is well known that various forms of non-tariff trade barriers exist within a country. Empirically, it is difficult to measure these barriers as they can take many forms. We take advantage of a nationwide VAT rebate policy reform in China as a natural experiment to identify the existence of these intranational barriers due to local protectionism and study the impact on exports and exporting firms. As a result of shifting tax rebate burden, the reform leads to a greater incentive of the provincial governments to block the domestic flow of non-local goods to local export intermediaries. We develop an open-economy heterogenous firm model that incorporates multiple domestic regions and multiple exporting technologies, including the intermediary sector. Consistent with the model’s predictions, we find that rising local protectionism leads to a reduction in interprovincial trade, more “inward-looking” sourcing behavior of local intermediaries, and a reduction in manufacturing exports. Analysis using micro firm-level data further shows that private companies with greater baseline reliance on export intermediaries are more adversely affected.
  • Topic: International Trade and Finance, Political Economy, Reform, Tariffs
  • Political Geography: China, Asia
  • Author: Jie Bai, Panle Barwick, Shengmao Cao, Shanjun Li
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
  • Topic: International Trade and Finance, Science and Technology, Developing World
  • Political Geography: China, Asia
  • Author: Jie Bai, Ludovica Gazze, Yukun Wang
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Collective reputation implies an important externality. Among firms trading internationally, quality shocks about one firm’s products could affect the demand of other firms from the same origin country. We study this issue in the context of a large-scale scandal that affected the Chinese dairy industry in 2008. Leveraging rich firm-product level administrative data and official quality inspection reports, we find that the export revenue of contaminated firms dropped by 84% after the scandal, relative to the national industrial trend, and the spillover effect on non-contaminated firms is measured at 64% of the direct effect. Notably, firms deemed innocent by government inspections did not fare any better than noninspected firms. These findings highlight the importance of collective reputation in international trade and the challenges governments might face in signaling quality and restoring trust. Finally, we investigate potential mechanisms that could mediate the strength of the reputation spillover. We find that the spillover effects are smaller in destinations where people have better information about parties involved in the scandal. New firms are more vulnerable to the collective reputation damage than established firms. Supply chain structure matters especially in settings where firms are less vertically integrated and exhibit fragmented upstream-downstream relationships.
  • Topic: International Trade and Finance, Markets, Business , Global Political Economy, Accountability
  • Political Geography: China, Asia
  • Author: Syed Fazl-e Haider
  • Publication Date: 12-2019
  • Content Type: Journal Article
  • Journal: China Brief
  • Institution: The Jamestown Foundation
  • Abstract: The China-Pakistan Economic Corridor (CPEC), the central component of China’s Belt and Road Initiative (BRI) in South Asia, has been a source of significant attention and controversy (China Brief, January 12, 2018; China Brief, February 15). Parts of South Asia, the Middle East, Central Asia, and Europe, however, are also host to another ambitious infrastructure program: the “International North-South Transport Corridor” (INSTC), a transportation development plan first established in 2000 by Iran, Russia and India. The INSTC envisions a network to connect Indian Ocean and Persian Gulf ports and rail centers to the Caspian Sea, and then onwards through the Russian Federation to St. Petersburg and northern Europe.
  • Topic: Development, International Trade and Finance, Infrastructure, Economy
  • Political Geography: Russia, China, Iran, Middle East, India, Asia
  • Author: Leo Lin
  • Publication Date: 11-2019
  • Content Type: Journal Article
  • Journal: China Brief
  • Institution: The Jamestown Foundation
  • Abstract: Kazakhstan President Kassym-Jomart Tokayev’s recent visit to the People’s Republic of China (PRC) on September 10-12 was not merely a state visit, but also signaled a new era in bilateral relations between Kazakhstan and China. During his visit, Tokayev met top officials of the Chinese Communist Party (CCP), including CCP General Secretary Xi Jinping, Premier Li Keqiang, and Li Zhanshu, the Chairman of the Standing Committee of the National People’s Congress. Tokayev also stopped in Hangzhou, where he visited the headquarters of the Alibaba Group and spoke with founder Jack Ma, as well as the new chairman and CEO Daniel Zhang (Sina Tech, September 12). The September visit has symbolic meaning for both Xi and Tokayev as they prepare for a new stage of their partnership—in the same year as the 70th anniversary of the founding of the PRC, and the 30th anniversary of Kazakhstan’s independence.
  • Topic: Security, International Trade and Finance, Science and Technology, Treaties and Agreements, Bilateral Relations
  • Political Geography: Russia, China, Central Asia, Kazakhstan
  • Author: Dario Cristiani
  • Publication Date: 04-2019
  • Content Type: Journal Article
  • Journal: China Brief
  • Institution: The Jamestown Foundation
  • Abstract: In March 2019, Italy and the People’s Republic of China (PRC) signed a broad and comprehensive, albeit not legally binding, Memorandum of Understanding (MoU) for Italy to join the Chinese-led Belt and Road Initiative (BRI). This has triggered a significant debate—in Brussels as well as in Washington—about whether this decision signalled an Italian shift away from its historical pro-European and pro-Atlantic position, to a more nuanced position open to deepening strategic ties with China. The MoU is not definite proof of such a shift, and the Italian government has denied any strategic change. However, Italy is the first major European country, and the first Group of Seven (G7) member, to formalize its participation with the BRI project. As such, this development is particularly remarkable.
  • Topic: Diplomacy, International Trade and Finance, Bilateral Relations, European Union, Economy
  • Political Geography: China, Europe, Asia, Italy
  • Author: Sudha Ramachandran
  • Publication Date: 01-2019
  • Content Type: Journal Article
  • Journal: China Brief
  • Institution: The Jamestown Foundation
  • Abstract: South Asian governments are becoming increasingly discontent with Belt and Road Initiative projects. In August, Pakistan’s new government expressed interest in reviewing the CPEC contracts that they perceive to be over-priced, unnecessary, or excessively in the favor of PRC companies (Dawn, September 11). Similar sentiments have been expressed by the new Maldivian government, which is reviewing BRI contracts signed during the rule of former President Abdulla Yameen (Economic Times, November 26). Such actions raise questions as to whether South Asian states might scale down or even cancel BRI projects.
  • Topic: Development, International Trade and Finance, Treaties and Agreements, Infrastructure, Soft Power
  • Political Geography: Pakistan, Afghanistan, Bangladesh, China, South Asia, India, Sri Lanka, Bhutan, Maldives
  • Author: Umar Farooq, Asma Shakir Khawaja
  • Publication Date: 07-2019
  • Content Type: Journal Article
  • Journal: South Asian Studies
  • Institution: Department of Political Science, University of the Punjab
  • Abstract: The article is intended to find out the geopolitical implications, regional constraints and benefits of China-Pakistan Economic Corridor. Researcher reviewed both published research articles and books to find out geopolitical implication, regional constraints and benefits of China-Pakistan Economic Corridor. For this purpose, researcher also reviewed newspapers articles and published reports by government and non-governmental stakeholders working on CPEC. Review of the articles and reports indicated that CPEC had enormous benefits not only for China and Pakistan but also for the whole region. But different internal and external stakeholders are not in favor of successful completion of this project. Extremism, sense of deprivation, lack of political consensus, political instability are some of the internal constraints. On the other hand, Afghanistan, India, Iran, UAE and USA are posing constraints to halt the successful completion of CPEC.
  • Topic: Economics, International Trade and Finance, Regional Cooperation, Violent Extremism, Geopolitics
  • Political Geography: Pakistan, Afghanistan, China, Iran, South Asia, India, Asia, Punjab, United Arab Emirates, United States of America
  • Author: Kanwal Hayat, Rehana Saeed Hashmi
  • Publication Date: 07-2019
  • Content Type: Journal Article
  • Journal: South Asian Studies
  • Institution: Department of Political Science, University of the Punjab
  • Abstract: China claims South China Sea as its sovereign domain where it possesses the right to intervene militarily and economically. However, USA considers South China Sea as a common global passage where rule of law and freedom of navigation should prevail.These diverging viewpoints coexist in a wobbly peace environment where both US and China want their own version of international law to be applied and have occasionally resorted to minor armed conflicts over this issue. Every state claiming authority over South China Sea is willing to use coercion in order to get what they want, however, the extent of how far they are willing to go is not clear. This is resulting in a show of gunboat diplomacy involving maritime force of influential states that strives to manipulate the policy makers of the relevant nations (Costlow, 2012). The paper will focus on the situation in the South China Sea. South China Sea is not only claimed by China but various other Asian nations. Does this territorial strife possess the power to turn the region into a war zone? Being one of the most active trade routes in the world having complicated geography and the diverging regional and international interests makes it very sensitive area. China being the emerging economic giant gives competition to the USA in many spheres. Although America has no territorial claim in the South China Sea, it has strategic and economic interests. Where China wants a complete hegemonic control of the area, USA wants to find a way where free unchecked trade could be the future for all.Accompanied with numerous other South Asian nations claiming various portions of the region, a constant tension exists in the region.
  • Topic: Conflict Prevention, Economics, International Trade and Finance, Sovereignty, Territorial Disputes, Hegemony, Conflict
  • Political Geography: China, Asia, North America, United States of America, Oceans