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1231. Xi Jinping’s Evergrande Dilemma

Author:
John Lee
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Evergrande is one of the top-two real estate developers in a still highly fragmented Chinese sector. Its main strategy is to achieve ever-increasing scale (rather than profitability) in order to move ahead of and crowd out commercial competitors. It has also amassed the largest land reserves of all Chinese developers, which were financed through massive borrowings. By 2018, Evergrande held 822 pieces of undeveloped land in 228 cities, with a planned gross floor area of 3.28 billion square feet of new homes—the equivalent of 10 percent of Germany’s entire housing stock. It paid $75 billion just for this undeveloped land. Although Evergrande’s market share is only around 4 percent, its borrowings stand out. Its current balance sheet liabilities amount to an estimated 2 percent of China’s gross domestic product (GDP), while its off-balance-sheet liabilities could be another 1 percent of China’s GDP. This makes Evergrande the most indebted property developer in the world. Burdened by this debt, struggling to meet its debt interest and repayment obligations, and viable only if property asset values and sales continue to increase, Evergrande faces possible financial collapse—an event bound to have flow-on effects for the Chinese economy. However, the unusually high global interest in Evergrande has arisen because its woes are increasingly seen as symptomatic of those faced by the broader Chinese economy, which is struggling with enormous levels of indebtedness and overreliance on the real estate sector. Debt held by nonfinancial institutions in China increased from about 115 percent of GDP in 2010 to around 160 percent of GDP currently. This is the most rapid and largest increase in a 10-year period for any major economy and makes the level of debt held by Chinese nonfinancial institutions one of the highest in the world. The real estate sector accounts for around 15 percent of GDP, while property services account for another 14 percent—the highest in any developing economy. The share of the real estate sector as a proportion of GDP was only about 4 percent in 1997 and 9 percent in 2008. Since 2008, up to a third of all domestic fixed investment has gone into real estate, and up to half of total national debt is linked to the real estate sector.
Topic:
International Relations, Foreign Policy, Debt, Economics, Markets, and Business
Political Geography:
China and Asia

1232. The Value of Cellular Technology

Author:
Urška Petrovčič and Kirti Gupta
Publication Date:
10-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Cellular technologies, such as those embodied in the third generation (3G), fourth generation (4G), and fifth generation (5G) of cellular standards, have provided the foundation for a thriving mobile ecosystem that has benefited consumers and businesses all over the world. In the past 20 years, the number of mobile connections has grown almost 10-fold, reaching an ever-growing percentage of the global population. In 2017, the number of mobile connections surpassed the number of people on the planet. In 2019, mobile technologies and services added $4.8 trillion of economic value to the global economy, and the mobile ecosystem employed (directly and indirectly) 30 million people. Although cellular technology has already transformed all facets of our society, the deployment of 5G will bring even broader and more radical changes. By connecting everything and everywhere, 5G will help us realize the full potential of connectivity and usher in the era of smart transportation, smart cities, smart factories, and smart homes. The new products and services enabled by 5G will change all aspects of our daily life, such as health care, energy, agriculture, automotive, manufacturing, and retail, among others. This will not only benefit consumers and businesses, but society as a whole. Cellular technologies are central to this revolution. Without advances in the cellular space, none of the economic and societal benefits we see in the connected world would be possible. Therefore, it is important to understand how cellular technologies are developed and deployed, and what impact they have on the economy and on society more broadly. It is also important to understand why fairly compensating cellular innovators is essential to maintain a sustainable system where new technologies can be developed and brought to consumers.
Topic:
Science and Technology, Intellectual Property/Copyright, Law, Criminal Justice, and 5G
Political Geography:
Global Focus

1233. Genocide in Xinjiang: Centering Uyghur Human Rights in US Policies Toward China

Author:
Nury Turkel
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Acts of genocide are currently underway against the Uyghur people in the Xinjiang Uyghur Autonomous Region of northwestern China, also known as East Turkistan. As part of a campaign of persecution and cultural eradication, Chinese authorities have, according to former detainees and prisoners, subjected millions of Uyghurs and other minorities to rape, torture, forced labor, arbitrary detention, involuntary abortion and sterilization in state-run facilities, and the separation of around half a million Uyghur children from their families. Although both Republicans and Democrats in the United States have acknowledged these horrifying acts as genocide, the rest of the world has been slow to follow, whether because they find the evidence to be inconclusive or because they are reluctant to antagonize China. Regardless, now that the Biden administration is on record declaring the actions of the Chinese government to be genocide, the United States has a legal and moral obligation to do what it can to end the mass atrocities that the Chinese Communist Party (CCP) is committing against the Uyghur people. While both the Trump and Biden administrations and Congress have already taken steps to address this human rights disaster, more can and should be done to defend the Uyghur people, address their humanitarian needs, promote accountability, and ensure that individuals and entities within the United States—including private businesses—are not complicit in the abuses underway. A strong response to the ongoing genocidal campaign would send a powerful message to Beijing that America will not tolerate efforts to destroy ethno-religious groups, either as a whole or in part. Conversely, failure to act would render the Convention on the Prevention and Punishment of the Crime of Genocide (which the United States ratified in 1988) and its implementing legislation null and void. Through the three Cs—competition, confrontation, and cooperation—the Biden administration can act in coordination with US friends and allies abroad to end these atrocities. The Biden administration is now on record as recognizing this repressive campaign as genocide, a move that must trigger a response toward Beijing that departs from business as usual. Although China’s significant global influence supports the assumption that effective levers to influence its behavior with respect to human rights issues are lacking, international attention and pressure have already caused Beijing to backpedal to a certain degree. This attention and pressure resulted from US-led efforts to rally international support coupled with US legislative and executive responses, including sanctions, visa restrictions, and trade restrictions. This policy memo outlines the nine areas of action that, performed in coordination with complementary actions of partners and allies, could alleviate the Uyghur human rights crisis, pressure China to reverse course, and ensure that the West and corporate America are not complicit in genocide.
Topic:
Foreign Policy, Genocide, Human Rights, and Religion
Political Geography:
China, Asia, United States of America, and Xinjiang

1234. Transatlantic Paralysis: The US-EU Trade Policy Stalemate and the European Union’s Democratic Deficit

Author:
Thomas J. Duesterberg
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
What is often labeled the democratic deficit in governance of the European Union (EU) is not a a flaw or bug in its architecture, it is a design feature. From its earliest days in the Second World War’s chaotic aftermath, European integration “was essentially an elite project, pursued at a distance from the daily concerns of the national populations in Western Europe.” Also formed as a response to the economic disintegration following the Depression and World War Two, the General Agreement on Tariffs and Trade (GATT) was similarly removed from national or populist politics. It too was an elite, top-down initiative designed to embed nations in a system of international rules largely articulated by technical experts, enforced by a form of international courts, and far removed from national and populist politics. Many of the intellectual proponents of both supranational institutions, from the Austrian School of economics, the ordoliberals emerging in early-20th century Germany, to the London School of Economics indeed shared a distrust of American-style democracy, let alone the various parliamentary democracies whose failure led to the disasters of the 1930s and 1940s. Over the last fifty years, the institutions put in place after World War II have been perfected and have, to a certain extent, ossified. Many of the difficulties in achieving greater US-EU economic coordination in the 21st century have their origins in the institutional design and the subsequent early implementation of early European Community rules during the post-war period. A brief overview of the history of European integration, and the political thinking behind it, helps explain the current paralysis in contemporary transatlantic cooperation, including in a joint approach to the challenge of Chinese mercantilism and its growing international reach.
Topic:
Economics, Governance, Democracy, Trade, and Transatlantic Relations
Political Geography:
Europe, North America, and United States of America

1235. Winning the Geo-Tech Battle and Building the Quad Alliance in the Indo-Pacific

Author:
Eric B. Brown, John Lee, and Thomas J. Duesterberg
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Under Xi Jinping, the People’s Republic of China (PRC) has established as its paramount geopolitical objective the replacement of the free and open, rules-based order in Asia with an alternative world order, one that is to be dominated by the interests and values of the Chinese Communist Party (CCP). This decision presents a danger to the entire world, not just to any one state or group of states. For, as US Secretary of State Antony Blinken said at the March 2021 US-PRC meeting in Alaska, the alternative to a rules-based order “is a world in which might makes right and winners take all, and that would be a far more violent and unstable world for all of us.” In furtherance of its objectives, the PRC is in the midst of a large military build-up, but there is much more. For today’s CCP, political power grows not only from the “barrel of the gun,” as Mao Zedong once put it, but also from cutting-edge technologies. Thus, while Beijing pours billions into artificial intelligence and surveillance tech to impose its new “digital totalitarianism” inside the PRC, from Hong Kong to Xinjiang, it is also using its growing technological prowess to press its larger geopolitical agenda in the Indo-Pacific and beyond. It is weaponizing technology and connectivity, along with trade, finance, and other policy instruments to try to rule the key technologies and industries of the future, as well as to improve its strategic positioning and acquire political power over other countries—for instance, through its bid to dominate other nations’ most sensitive data networks, or via the export of its suite of “social stability” technologies, i.e., the “techno-tyrant’s toolkit.” In all this, the CCP’s intent is to entrench its power and Leninist norms and practices to the extent it can do so beyond the PRC’s borders, and to make other nations, or at the least their ruling elites, beholden to it. So in addition to the PRC’s militarily destabilizing activities in the West Pacific and incursions into India’s Himalayas, there is also a “geo-technological front.” If Xi’s CCP succeeds at enmeshing other countries in its expanding “PRC sphere of technological influence,” it could unlock and be able to exploit decisive military, economic, diplomatic, and ideological advantages.
Topic:
International Relations, Security, Economics, and Alliance
Political Geography:
China, South Asia, East Asia, and Asia-Pacific

1236. The Chinese Communist Party’s Economic Challenge to the Free World

Author:
Miles M. Yu
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
The Chinese economy and the philosophical roots of China’s system have greater implications for the United States economy than many assume. The one critical fact to understand about the People’s Republic of China is that it is a communist dictatorship ruled by a Marxist-Leninist party. The Party is dedicated to maintaining and strengthening its monopoly on all powers in the world’s most populous country and to mounting the most serious challenge to the free world since the Cold War. This policy memo will examine the Chinese economy’s distinct traits, how it operates, and why it thrives under a monopolistic government that exploits and challenges the global free market system, along with possible policy recommendations for the United States and its allies. Unlike most other communist countries, China has been afforded the benefits of a global free-market system and enjoys largely open access to international trade, capital markets, and advanced technologies. The paradox of a communist nation fully participating in a largely capitalist system has enriched and strengthened the Chinese Communist Party (CCP), to the point where Beijing poses a mortal threat to the United States and to the international free market economic system that has enabled the rise of the communist state. The West played a role in creating the current state of play. But too many conversations in the United States focus only on our own strategic thinking. In his historic speech at the Richard Nixon Library in July 2020, former Secretary of State Mike Pompeo aptly described the situation and how we got here: “Our policies—and those of other free nations—resurrected China’s failing economy, only to see Beijing bite the international hands that were feeding it.” As President Richard Nixon admitted in his later years, his initiative to open up China in 1972 might have created a Frankenstein.
Topic:
Foreign Policy, Communism, Economics, and Chinese Communist Party (CCP)
Political Geography:
China, Asia, and United States of America

1237. The Atrocities Against Uyghurs and Other Minorities in Xinjiang

Author:
Nury Turkel
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
This memo is adapted from Nury Turkel’s testimony before the US House of Representative’s Committee on Foreign Affairs’ hearing on May 6, 2021, “The Atrocities Against Uyghurs and Other Minorities in Xinjiang.” He testified on behalf of the Uyghur Human Rights Project.
Topic:
Human Rights, Politics, Religion, Repression, Uyghurs, and Freedom
Political Geography:
China and Asia

1238. A Just Response to Beijing’s COVID-19 Abuses

Author:
David Asher, Miles M. Yu, David Feith, Matthew Zweig, and Thomas DiNanno
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Nearly 18 months after word of a deadly new virus began leaking out of Wuhan, China, the Chinese government’s response remains fundamentally hostile to international cooperation and transparency. Despite hundreds of offers of assistance, polite diplomatic entreaties, and demands for access to data by governments and health authorities across the globe, the world still knows far too little about COVID-19’s origin. As in a Dali painting, the clocks have melted but time has not stood still. China’s initial silencing and censoring of its doctors and scientists, followed by misinformation about COVID-19’s dangers—especially denials concerning the virus’s ability to be spread human-to-human, invisibly and asymptomatically—helped cost the world trillions of dollars and millions of lives. Whether one believes COVID-19 originated in a zoonotic host, a bat cave, a frozen food shipment, or a Wuhan lab’s dangerous “dual-use” research supporting undeclared bioweapons programs, the world needs answers from the Chinese Communist Party. These are answers Beijing won’t provide unless it faces a high price for refusing. For the good of public health and international security, the Biden administration and the Congress can unite in a coordinated, long-term response.
Topic:
Security, Health, Research, Transparency, Public Health, and COVID-19
Political Geography:
China and Asia

1239. How IP Rights Keep Markets Free

Author:
Jonathan M. Barnett
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
It is elementary that secure protection of property rights is a necessary precondition for efficient markets that drive economic growth. Yet this principle is not always recognized in the case of markets for intangible goods. Rather, intellectual property rights are often characterized as a monopoly franchise that stands at odds with free-market competition. Following this view, IP rights at best provide a justifiable means to incentivize innovation but are prone to abuse by incumbents seeking to block entrants. This standard narrative overlooks an inconvenient fact. As I show in a new book, Innovators, Firms, and Markets: The Organizational Logic of Intellectual Property, incumbents and other large firms in US technology markets have regularly advocated against stronger forms of patent protection and, in certain industries, have resisted patent protection entirely. This lobbying strategy poses a puzzle: Why would dominant firms resist the opportunity to operate under the umbrella of a legal monopoly? This policy memo analyzes the counterintuitive IP policy preferences of large technology firms and, in resolving this apparent anomaly, shows that patents tend to enhance competitive intensity by enabling idea-rich but capital-poor innovators to challenge idea-poor but capital-rich incumbents. Contrary to widespread assumptions, IP rights are far closer to the familiar property rights that support tangible goods markets rather than the monopoly grant to which they are often (and misleadingly) analogized. These insights, which are based on over a century’s worth of US innovation history, raise significant concerns about the IP-skeptical trajectory that policymakers have pursued since the mid-2000s.
Topic:
Markets, Intellectual Property/Copyright, Law, and Criminal Justice
Political Geography:
Global Focus

1240. A Strategic US Approach to India’s COVID-19 Crisis

Author:
Husain Haqqani and Aparna Pande
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
The recent surge of COVID-19 in South Asia challenges India’s traditional ability to aid its smaller neighbors, a change that could, in turn, affect India’s influence in its competition with China. Unless India can recover from this surge with the help of allies like the United States, the pandemic could impact the Indo-Pacific’s geopolitical balance. In the past, India has often acted as a first responder across South Asia, helping other countries recover from natural disasters, and it initially occupied this role during the first months of the coronavirus pandemic, when it helped several South Asian and Indian Ocean region countries cope with the effects of the disease. India’s role as ‘first responder’ has been a key factor in its geopolitical power and in maintaining its role as a leader in the region. However, the resurgence of COVID-19 has jolted India at a time when democratic countries, including the United States, view India as critical to balancing China’s deepening influence cross Asia. South Asia, a region holding 23 percent of the world’s population, now accounts for over 11 percent of global COVID-19 cases and 6 percent of COVID-related deaths. The world’s largest democracy and second-most populous country, India alone currently accounts for over 84 percent of South Asia’s cases and deaths. For most of 2020, it appeared that India, thanks partly to a lockdown, had managed to avert a huge health crisis. During this time, India supported its immediate South Asian neighbors by supplying personal protective equipment and medications. However, the latest COVID-19 surge has created a crisis that has strained the Indian health infrastructure’s ability to meet. With more resources being diverted towards domestic ends, India’s ability to maintain friends and influence other countries has diminished, also potentially shrinking its sphere of influence. The US must therefore go beyond dealing with its own health crisis and also support India in dealing with its crisis. Instead of allowing China to consolidate its positions in Pakistan, Sri Lanka, Bangladesh, Nepal, and the Maldives, helping India restore its ability to provide assistance would be in the best interests of the United States and its allies.
Topic:
International Relations, Health Care Policy, Geopolitics, and COVID-19
Political Geography:
South Asia, India, Asia, and United States of America