Content Type: Working Paper / Political Geography: Asia / Publication Year: within 5 Years

101. How Malaysian Politics Shaped Chinese Real Estate Deals and Economic Development

Author:: Guanie Lim
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: Iskandar Malaysia is the oldest and by far the most prominent economic corridor in Malaysia. Located in the southernmost state of Johor, the corridor came to host several real estate developments (such as Princess Cove and Forest City) involving multinational corporations (MNCs) from China almost immediately after the Belt and Road Initiative (BRI) was launched in 2013. On one level, the infrastructure-spending spree associated with the BRI helped boost Malaysia’s economy as Chinese real estate MNCs invested in Iskandar Malaysia to grow their overseas portfolios. However, their involvement in the corridor disrupted the existing dynamics between Malaysia’s central and local governments. Although these Chinese projects offered an opening for Johor’s state government to counter Putrajaya’s dominance in the economic corridor, some swiftly became a magnet for divisive electoral campaigning and voter anger. Combined with several socioeconomic issues, the discontent generated by these Chinese real estate projects contributed to the unexpected defeat of the long-ruling United Malays National Organization (UMNO) in Malaysia’s May 2018 general election. Chinese real estate MNCs have sought to adapt to these shifting dynamics, yet it is uncertain to what degree their adaptive strategies will bear fruit amid a looming real estate crisis back in China and other related issues. Ultimately, Chinese real estate investment has been both a tool and an enabler of efforts undertaken by various Malaysian stakeholders, rather than the all-powerful China-imposed juggernaut that some commentators on Malaysia’s development over the last two decades have tended to see. Despite the allure of lucrative real estate deals, it is equally important to recognize the potential pitfalls when local politics go awry. Events in Iskandar Malaysia demonstrate that it is politically unsustainable to push real estate projects that are too expensive for most local residents to afford.
Topic:: Politics, Entrepreneurship, Risk, Economic Development, and Real Estate
Political Geography:: China, Malaysia, and Asia

102. Localization and China’s Tech Success in Indonesia

Author:: Gatra Priyandita, Dirk Van Der Kley, and Benjamin Herscovitch
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: On average, Indonesians distrust China and many Chinese firms. Yet Huawei and to a lesser extent ZTE have successfully positioned themselves as trusted cybersecurity providers to the Indonesian government and the Indonesian nation. This has been no easy feat given long-held Indonesian animosity toward China. Many Chinese companies have faced protests over concerns they were taking local jobs. Huawei and ZTE have suffered no such fate. Nor has there been a broad coalition of Indonesian voices against using Chinese technology in critical telecommunications infrastructure. In short, Indonesians care a lot more about Chinese cement plants than they do about Huawei involvement in 5G networks. Gatra Priyandita Gatra Priyandita is an analyst at the International Cyber Policy Centre at the Australian Strategic Policy Institute, where he leads a project researching cyber-enabled intellectual property theft. He is a political scientist by training and specializes in the study of foreign policy and security in Southeast Asia. He holds a PhD in political science from the Australian National University. This is a vastly different conversation to those happening in rich liberal democracies. Huawei and ZTE have been able to achieve success in Indonesia, despite a sense of ambivalence among the Indonesian political and defense establishment about Chinese intentions and growing Western scrutiny over the use of Chinese technology in broadband networks. As other papers in this series have demonstrated, Huawei and ZTE needed to localize their strategies. Like elsewhere in the world, available evidence suggests that part of Huawei’s and ZTE’s value proposition is cheaper prices (compared to those of competitors) for high-quality technology. But that is only part of the story. Huawei has positioned itself as Indonesia’s cybersecurity provider of choice by offering enormous cybersecurity and other related training programs across the country for groups ranging from senior government officials to students in rural Indonesia. Much of this training is technically focused on practical vocational skills with a hope that students one day will become customers. In addition, the company offers an attractive maintenance and upkeep package. Since the mid-2000s, Chinese information and communications technology (ICT) firms have created training centers in partnership with local Indonesian telecoms companies and universities to train the next generation of Indonesian engineers and tech specialists. Government agencies are also increasingly targets of training and capacity-building programs, with Huawei claiming that 7,000 government officials have participated in its training programs. The Indonesian government, corporations, and ordinary citizens alike have welcomed Huawei and ZTE as essential partners in their efforts to build both the infrastructure and human capital necessary to prosper in the twenty-first century’s digital economy. What Huawei and ZTE offer is knowledge transfer, not technology transfer. The technology is still being built in China by Chinese firms. Huawei’s role in training relates instead to capacity building. Indonesians will install, maintain, and use the networks. China will build the hardware. There is also evidence that China has had some rhetorical success in pushing its version of cyberspace governance. Beijing’s preferred cyberspace governance language was inserted into a memorandum of understanding between Indonesia’s National Cyber and Crypto Agency and the Cybersecurity Administration of China. However, it is difficult to see how the memorandum has influenced Indonesia’s cybersecurity governance in practice. One of the concerns often leveled by rich liberal democracies is that reliance on Chinese tech will end up aligning the political interests of countries like Indonesia with those of China. Other key worries are China’s pervasive espionage and the enduring (though as yet unrealized) risk that Chinese companies with a dominant role in an ICT ecosystem could be used by Beijing to apply coercive political pressure. Despite Indonesia’s embrace of Huawei and ZTE, political leaders in Jakarta have not simply disregarded the hard security questions posed by upgrading ICT equipment, especially when foreign suppliers are involved. Indonesian officials simply rate the need for development and cybersecurity-related capacity building higher than the risk of using Chinese ICT hardware in their critical infrastructure systems. If rich liberal democracies are concerned about this trend, then they need to offer workable alternatives that place Indonesia’s enormous digital development needs at the heart of any value proposition. It is unlikely that Indonesia will stop using Chinese hardware in its infrastructure, but alternatives could prevent overreliance.
Topic:: Foreign Policy, Science and Technology, Cybersecurity, Telecommunications, and Localization
Political Geography:: China, Indonesia, and Asia

103. Engaging China on Strategic Stability and Mutual Vulnerability

Author:: George Perkovich
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: The United States and Chinese governments, for the foreseeable future, will have the resources to keep each other’s societies vulnerable to nuclear mass destruction. If these governments are not self-destructive, they will want to keep their competition from escalating into armed conflict that could lead to nuclear war. The constructs of strategic stability and mutual vulnerability can help significantly if both governments embrace them and interpret them similarly or even if the leaders of the two countries accurately understand how they differ in their perspectives on them. Unfortunately, to date, on these issues the United States and China are like a quarrelling married couple who tried therapy for one or two appointments, found it dissatisfying, and then alternated in making excuses for not trying again, perhaps with a different therapist or format. Each says they have tried and the other doesn’t listen or understand. Both suspect that the other isn’t saying what they really feel or want; what they really feel is hostility and distrust and what they really want is to get richer and more powerful without being hassled or attacked. It would be easier if they could just go their separate ways, but the property and wealth they depend on will be lost (or at least severely diminished) if they split up or do each other harm. This paper suggests that U.S. and allied interests require persistence in inviting China to dialogue on strategic stability; to demonstrate goodwill, the United States should acknowledge mutual vulnerability as a fact and necessary policy. The need for both moves is reflected in the fact that neither government has defined what it might mean by stability or mutual vulnerability. To help test intentions and prompt harder thinking, the paper plays the role of therapist and offers definitions of both concepts—strategic stability and mutual vulnerability—so that the two sides can critique them more freely and without recrimination. These definitions are broader and deeper than usual, reflecting the growing problem of managing escalation of conventional conflict to nuclear war, the scenario that drives U.S. and Chinese concerns and military posturing. Further, broader definitions are necessary to comprehend the dangers stemming from the entanglement of conventional, cyber, and nuclear weapons and command and control systems. The paper then sketches four benefits of declaring mutual vulnerability, contrary to opponents of the idea, before discussing steps that the United States and China could subsequently take to reflect and build each other’s confidence in such a policy. Finally, if perceived U.S. requirements in the future will be greater than the arsenal needed to deter or defeat Russia or China alone, how will Russia and China be persuaded not to try to build up to balance the additional U.S. force? In other words, if the United States is in two separate but interacting arms races (and deterrence relationships), how could each opponent (China and Russia) be persuaded to negotiate limits on their arsenal lower than the total the United States would insist on possessing to deter two nuclear opponents? Answers to these questions will affect strategic stability and mutual vulnerability of all parties but will take a long time to develop. To begin the process, the paper suggests asking Chinese leaders whether their silence on Putin’s nuclear first-use threats means that China has changed its own policy on nuclear use or that it never took a no-first-use policy seriously in the first place. Is China concerned that the capabilities that the United States and its allies may develop to strengthen defenses against Russia could be used against China too, and if so, might arms control be a wiser approach? Ultimately, the paper suggests that if China and the United States can sustain a process of serious dialogue, they will keep their relationship from worsening even if they cannot formally restrain their competition. And if dialogue leads one to ask the other for deeds to demonstrate goodwill, the paper has suggested some such deeds that could be undertaken with no security hazard and only slight political risk. No one should have the illusion that happiness is in this couple’s future. All this work would be to allow a nonviolent cohabitation that is better than the alternative of destitute divorce or murder-suicide.
Topic:: Government, Nuclear Weapons, Strategic Stability, and Vulnerability
Political Geography:: China, Asia, North America, and United States of America

104. Why Brazil Sought Chinese Investments to Diversify Its Manufacturing Economy

Author:: Celo Hiratuka
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: Since the beginning of the twenty-first century, economic relations between Brazil and China have grown significantly. The main driver of this process has been China’s enormous demand for agricultural, energy, and mineral commodities. On the one hand, Brazil’s strong competitiveness in these products has helped the country consolidate its role as an important supplier to China, increasing exports and turning China into the main destination for Brazilian exports since 2009.1 On the other hand, China, by virtue of its status as the “factory of the world,” has established itself as the main supplier of manufactured products to Brazil.2 Nonetheless, Brazilian scholars, think tanks, and private manufacturing firms have raised concerns. They have done so despite the great boost in bilateral trade flows; the favorable trade balance for Brazil; and the leveraging of businesses in several Brazilian sectors such as soybeans, iron ore, and oil. These concerns are related to the excessive concentration of Brazilian exports in a few products, the environmental impacts of these exporting activities, and the effects of strong Chinese manufacturing competition on Brazil’s domestic market. These worries have become more significant when one considers the growing importance of manufacturing changes with the diffusion of Fourth Industrial Revolution technologies and the search for new renewable energy sources and environmental sustainability. For Brazil, this matter reflects a need to advance bilateral relations beyond existing export trade volumes and toward new drivers of more diversified economic growth that will help the country escape a specialization in commodities. The fortunes of the Chinese company BYD in Brazil are highly relevant to these trends. BYD is a company that has diversified from the production of batteries into different innovative industrial sectors, such as renewable energy and electric vehicles. BYD has also been expanding rapidly in international markets, and in that process it chose Brazil as an important market, where it has built factories to produce electric bus chassis, photovoltaic panels, and batteries for electric buses. BYD’s trajectory in Brazil certainly has not been smooth. On the contrary, the firm has had to adapt to market fluctuations and, above all, to changes in the Brazilian government’s economic policies, which have made the company’s experience in the country quite turbulent. Despite this, BYD survived its first years in Brazil and more recently has been showing signs of continuing to invest in the Brazilian market. Analysis of BYD’s experience in Brazil shows, on the one hand, that there are important possibilities for new economic relations with China that go beyond trade in commodities, with productive investments that can potentially help Brazil simultaneously incorporate more knowledge-intensive activities and drive positive environmental impacts by generating renewable energy and reducing carbon emissions. On the other hand, the story of BYD also shows that the transformation of these possibilities into effective benefits requires coordinated actions on the part of Brazilian policymakers to offer a long-term horizon for Chinese investments. In that spirit, Brazil must craft a long-term strategy for its economic relationship with China to increase the odds that bilateral engagement can advance in a new and more sustainable, mutually beneficial direction.
Topic:: Bilateral Relations, Economy, Investment, Manufacturing, and Engagement
Political Geography:: China, Asia, Brazil, and South America

105. What China Is Learning From West African Managerial Practices

Author:: Abdoulkadre Ado
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: Joint ventures have enabled Chinese companies to cultivate a presence in three West African countries—Ghana, Niger, and Nigeria. Investing in joint ventures has enabled Chinese cultural adaptation by emphasizing training programs in languages commonly spoken in West Africa, embracing local management styles, and assimilating some local practices. This has been especially true in three key economic sectors: free trade zone promotion and related services, transportation and aviation, and oil and gas. Chinese firms are also complementing these growing business arrangements with the use of local languages, social media outreach, and other forms of local engagement with West Africans. In doing so, Chinese organizations have responded to some of the demands of their African partners in local, state, and central government posts. It would be beneficial for African governments, businesses, and corporate managers to explore further ways to incentivize Chinese government decisionmakers and Chinese businesses to use joint ventures more often as the vehicle for their investments in Africa. To deepen the impact of such efforts, they should also encourage Chinese organizations active in West Africa, and across the continent in general, to embrace the use of local languages, especially for conducting business, and to train more Chinese expatriates to use African managerial philosophies that have proven to respect local values while being effective in African markets. Research on China’s engagement abroad and Chinese firms’ business operations in foreign countries often argues that Chinese organizations are not keen to adapt to local contexts. As a result, some analysts of China-Africa relations argue, or at least imply, that China does things as it wishes in Africa and that African countries have little agency in shaping how Chinese governmental and commercial players operate in their countries. Some analysts have even characterized African countries’ relationships with Beijing as the “Chinisation of Africa.”1 This line of thinking tends to assume that local contexts have mattered little for Chinese economic activities in Africa so far. But Chinese commercial engagement in Africa is increasingly adaptative to local contexts, conditions, and complexities. In Ghana, Niger, and Nigeria, Chinese actors are adjusting their ways of doing business to consider local realities with respect to both formal and informal institutions. For one thing, the Chinese players who are active in these three countries are acknowledging and mobilizing African practices and cultural traditions to support their own business goals and sometimes those of their local partners. The level of Chinese economic engagement tends to differ from one African country to another, with some places being more welcoming of a Chinese commercial presence than others. The specific patterns of Chinese adaptation also tend to vary between different parts of Africa. For instance, these adaptations may look different in a Francophone country like Niger than they would in a country like Nigeria. Niger is a nation where China’s adaptation differs from its adaptation in Ghana or Nigeria since language and managerial practices partly are derived from various French and British cultural traditions and colonial imprints in those three African countries.
Topic:: Business, Engagement, Management, and Adaptation
Political Geography:: Africa, China, Asia, and West Africa

106. China Is Playing by Turkey’s Media Rules

Author:: Çağdaş Üngör
Publication Date:: 11-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: Chinese players have localized their strategies to improve China’s image in Turkey in recent years. Although China and Turkey have long maintained friendly relations at the official level, Turkish people remained notably skeptical of China throughout the 2000s. Indeed, Turkey’s unfavorable public opinion has been a constant headache for China, whose propaganda outlets in the country produce little Turkish language content that actually resonates with domestic audiences. Turkey also has few explicitly pro-China voices and no sizable overseas Chinese community, which has made positive public relations into an uphill battle for Beijing. But having acknowledged these weaknesses in recent years, the Chinese regime has opted for strategies that aim at building a new synergy with local actors in the Turkish mediasphere. Beijing has adapted to the local rules of Turkish media and sought new opportunities to elevate China’s image in Turkey by leveraging its friendly ties with Ankara. The Turkish government, which exerts substantial influence over domestic media, has provided new platforms for China to realize its soft power goals within a largely polarized setting with little press freedom. In this context, Turkey’s progovernment newspapers have published “advertorials” celebrating the achievements of the Chinese Communist Party. Similarly, journalists from Turkey’s state-owned Anadolu Agency have participated in Chinese-sponsored press tours to Xinjiang, where Beijing has sought to undercut the Turkish narrative around abuses against the Uyghurs. On the other end of Turkey’s polarized ideological spectrum, China has also appealed to left-wing opposition groups through its narratives, which emphasize the country’s anti-imperialist credentials. Such messaging strategies may already have produced some results in Turkey, as the most recent opinion polls reflect a gradual increase in the number of Turkish citizens who perceive China as a potential partner.
Topic:: Media, Domestic Politics, and Soft Power
Political Geography:: China, Turkey, Middle East, and Asia

107. Hard Cash and Soft Power: When Chinese Firms Win EU Contracts

Author:: Allison Carragher
Publication Date:: 11-2022
Content Type:: Working Paper
Institution:: Carnegie Endowment for International Peace
Abstract:: The European Union is a committed defender of open markets. This extends to its public procurement mechanisms, which remain open to all bidders. EU policymakers have developed tools intended to defend the bloc’s interests in the face of increased economic and strategic competition from the People’s Republic of China (PRC), but few policymakers understand how the European public views the debate. As the first major EU-funded, China-built infrastructure project, the Pelješac Bridge in Croatia provides a unique opportunity to conduct a thorough analysis of European public opinion toward EU tendering policy and Chinese companies. Brussels has labelled the PRC a partner for cooperation and negotiation, an economic competitor, and a systemic rival,1 but the nuances of this policy remain difficult to ascertain. Projects and policies presented by China as “cooperation” often contain elements of economic competition or are leveraged by the PRC for strategic gain. However, this dichotomy has not filtered down to citizens. Extensive polling reveals that Croatians share very few of the concerns of EU policymakers. Furthermore, the PRC state-owned construction firm enjoys more visibility than the EU, which provided hundreds of millions of euros for the project. In terms of soft power, which is here defined as the ability of a country to shape the narrative, the Pelješac Bridge has been a resounding success for the PRC. The Croatian public has largely embraced the PRC’s preferred image of itself as a reliable and trustworthy economic partner and a benign power that does not interfere in domestic affairs. This opinion diverges from official EU policy and glosses over evidence of the PRC’s unfair economic practices, environmental and labor shortcomings, and interference in European democracies. Notably, the PRC’s soft-power gains were achieved on the EU’s own dime. It is not in the EU’s interest to bankroll the economic and soft-power ambitions of its systemic rival. As a democratic institution, the EU has a responsibility to both respond to public opinion and educate its citizenry when EU interests are at stake. In this case, the EU should recalibrate its tendering policy to be fairer and better aligned with its own economic and strategic interests. This process is currently underway, but it should also be extended to co-financing arrangements like the Team Europe approach, which combines traditional EU assistance with support from individual EU member states and international financial institutions. These policies must also be paired with renewed efforts at visibility and branding. Lastly, there is a need to collect and publish better data on the end users of EU funds in order to evaluate successes and identify future issues.
Topic:: Infrastructure, European Union, Economy, Business, Soft Power, and Strategic Competition
Political Geography:: China and Asia

108. Multidomain Deterrence and Strategic Stability in China

Author:: Lora Saalman
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: Stockholm International Peace Research Institute
Abstract:: Over the past few years, China has displayed a wide range of advances in military capabilities and infrastructure, including its test of a hypersonic glide vehicle coupled with a fractional orbital bombardment system and evidence of new intercontinental ballistic missile silos. While China and the United States remain at political odds, there are indications that China’s strategies in space, cyberspace and nuclear domains are increasingly converging with those of the USA, as well as Russia. A key question is whether this strategic convergence is a stabilizing or destabilizing phenomenon. To answer the question, this paper explores the current state of Chinese discussions on multidomain deterrence and strategic stability, with a focus on active defence and proactive defence. It then examines how these concepts are manifesting themselves in China’s postural and technological indicators, including pre-mating of nuclear warheads to delivery platforms, expanded nuclear arsenal size, possible shifts towards launch on warning, integration of dual-capable systems, and advances in machine learning and autonomy. It concludes with a discussion of what these trends mean for future strategic stability talks.
Topic:: Arms Control and Proliferation, Nuclear Weapons, Weapons of Mass Destruction, Nonproliferation, and Deterrence
Political Geography:: China and Asia

109. China’s Development Path: Government, Business, and Globalization in an Innovating Economy

Author:: Yin Yi and William Lazonick
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: We employ the “social conditions of innovative enterprise” framework to analyze the key determinants of China’s development path from the economic reforms of 1978 to the present. First, we focus on how government investments in human capabilities and physical infrastructure provided foundational support for the emergence of Chinese enterprises capable of technological learning. Second, we delve into the main modes by which Chinese firms engaged in technological learning from abroad—joint ventures with foreign multinationals, global value chains, and experienced high-tech returnees—that have contributed to industrial development in China. Third, we provide evidence on achievements in indigenous innovation—by which we mean improvements in national productive capabilities that build on learning from abroad and enable the innovating firms to engage in global competition—in the computer, automobile, communication-technology, and semiconductor-fabrication industries. Finally, we sketch out the implications of our approach for current debates on the role of innovation in China’s development path as it continues to unfold.
Topic:: Development, Economics, Globalization, Infrastructure, Hegemony, and Innovation
Political Geography:: China and Asia

110. Geopolitics is Local – Ramifications of Chinese Projects for Human Security in Serbia

Author:: Maja Bjelos and Vuk Vuksanovic
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Belgrade Centre for Security Policy
Abstract:: This report examines the Chinese presence in Serbia through a human security lens, in terms of how it impacts the quality of life and the security of local communities. China’s “no-strings attached” financing of infrastructure has become attractive for Serbia’s ruling elite after the global financial crisis of 2008. However, it took Chinese companies almost a decade to take over two state-owned giants – the Smederevo Steel Mill and the RTB Copper Smelter – and invest in the construction of a new tyre factory. To maintain social peace, employment and legitimise themselves among the constituents, the ruling elite invested a lot of effort in facilitating the arrival of Chinese capital. This effort included drafting laws that suited PRC investors, donating arable land and providing subsidies, circumventing environmental and construction standards, turning a blind eye to labour and human rights violations, and making many other concessions at the expense of citizens and the local communities. Lack of transparency and public scrutiny is common to all PRC investments. In a short period of time, the profit-oriented exploitation of natural resources by PRC investors has led to various environmental hazards that have endangered public health and human existence, causing environmental (anti-government) protests and resentment towards the Chinese. But combating environmental threats and rule of law violations associated with the Chinese projects is difficult, especially since the Serbian government is willing to quell criticism and provide such projects with full political backing. The research was conducted in three Serbian cities with large PRC investments – Smederevo, Bor and Zrenjanin – to establish the impact of these projects on local communities and how they affect human security, understood in terms of human rights and human dignity. Several forms of human security endangerment were observed in the course of the research project: environmental hazards, public health, socio-economic and human rights, rule of law, cross-cultural issues and surveillance.
Topic:: Security, Bilateral Relations, Hegemony, and Local
Political Geography:: China, Europe, Asia, and Serbia

111. The Indo-Pacific Partnership and Digital Trade Rule Setting: Policy Proposals

Author:: Lurong Cheh
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The idea of the Indo-Pacific was borne from a global trend that has (re)oriented the centre of the world’s economic gravity to the East. Accelerating digital transformation to harness gains from technology are in countries’ common interests. The launch of the Indo-Pacific Economic Framework for Prosperity tends to supplement economic benefits to the Indo-Pacific. Becoming more deeply involved in the digital economy will require Indo-Pacific members to commit to new international norms on digital trade, of which trade liberalisation of electronic transmissions, free flow of data with trust, cybersecurity, and intellectual property rights protection must be prioritised.
Topic:: Development, International Trade and Finance, Regional Cooperation, and Digital Economy
Political Geography:: Asia and Indo-Pacific

112. Women and Leadership in the ASEAN Digital Economy: Mapping the Rhetorical Landscape

Author:: Araba Sey and Sara Kingsley
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper assesses the nature of policy, media, and research representations of women’s inequality in digital leadership, reflecting on how clearly they define the issues, causes, solutions, and resource needs. Overall, women’s status in digital leadership receives patchy coverage in the media and insufficient depth of examination in academic and policy research. Existing rhetoric recognises women’s inequality as a serious problem in the ASEAN digital economy. However, the dimensions, causes, and solutions especially in terms of digital leadership are rarely clearly defined. There is a dominance of economic narratives to support the need for more women in digital leadership, which demonstrates a higher interest in women as an engine of economic growth than in equal representation as a matter of principle. A heavy dependence on global, European, or North American data highlights the need to improve the collection of gender-disaggregated data within the ASEAN economy.
Topic:: Women, Digital Economy, Feminism, and Gender
Political Geography:: Asia and ASEAN

113. Gender Security and Safety in the ASEAN Digital Economy

Author:: Araba Sey
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Gender-based cyber violence inhibits progress towards gender digital equality by discouraging women from participating in the digital economy. From the magnitude of the problem to its economic and social impacts, much remains to be understood about how women experience safety and security in the Association of Southeast Asian Nations (ASEAN) digital economy. Drawing on academic and grey literature, this paper reflects on the implications of gender-based cyber violence for digital equality and economic development. Overall, data are lacking on the prevalence, economic costs, and social impacts of gender-based cyber violence within ASEAN. Policy tends to focus more on measuring domestic and intimate partner violence, likely due to its designation as the main indicator for Sustainable Development Goal 5. Although a variety of national, regional, and global frameworks exist to address different dimensions of violence against women, cybersecurity, and workplace harassment, more work is needed to identify the scale and scope of gender-based cyber violence in the region, in order to target policy appropriately.
Topic:: Security, Women, Digital Economy, and Gender
Political Geography:: Asia and ASEAN

114. Global Value Chain Participation and Labour Productivity in Manufacturing Firms in Viet Nam: Firm-Level Panel Analysis

Author:: Upalat Korwatanasakul and Tran Thi Hue
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study describes the status of global value chains (GVCs) in Viet Nam and examines the roles of GVC participation and technology in enhancing labour productivity in manufacturing firms. The estimation method is a panel fixed-effect regression employing unique firm-level data matching the Vietnam Technology and Competitiveness Survey and Vietnam Enterprise Survey, 2009–2018. The findings show the positive effect of backward GVC participation when considering firm GVC participation status (i.e. whether they engage with backward linkages). However, when accounting for GVC participation degree (i.e. GVC participation index), the results show a stark contrast, revealing the negative effect of backward GVC participation on labour productivity. The results, therefore, partly reject the learning-to-learn hypothesis. On the other hand, regardless of GVC indicators, forward GVC participation positively impacts labour productivity, confirming the views of learning-by-exporting and learning-by-supplying. The findings also suggest the significance of research and development, digital technology, and foreign investment in enhancing labour productivity. Therefore, policies promoting forward GVC participation should be the priority, while policies to promote backward GVC participation should be well designed and accompanied by policies that ensure technology transfer and domestic technology development to avoid the trap of a subordinate role.
Topic:: Labor Policies, Manufacturing, Industry, Global Value Chains, and Labor Market
Political Geography:: Asia and Vietnam

115. Japan and the Regional Comprehensive Economic Partnership (RCEP)

Author:: Mie Oba
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper aims to clarify the role of Japan in the process leading up to the establishment of the Regional Comprehensive Economic Partnership (RCEP). While emphasising that respect for the centrality of the Association of Southeast Asian Nations (ASEAN) was a principle of RCEP, Japan played a leading role in the process of RCEP negotiations. For Japan, RCEP is one of the fruits of its strategy in East Asia/Asia-Pacific that began the mid-1990s to protect and increase the interests and advantages of Japanese business and retain Japan’s political leverage in the region. When substantial negotiations for RCEP began in 2013, its importance for Japan was secondary to other free trade agreements (FTAs) including the Trans-Pacific Partnership, China–Japan–Korea FTA, and Japan–European Union FTA. However, the Government of Japan and the business community had set a lot of economic and strategic goals in promoting RCEP. After the withdrawal of the United States (US) from the Trans-Pacific Partnership, RCEP was seen as an essential framework for establishing a rules-based regional order in the Indo-Pacific region. Although it was after India’s withdrawal from the RCEP negotiations, Japan further emphasised the importance of RCEP as the measure to sustain and foster the rule-based regional order and simultaneously pursued the conclusion of negotiations and the establishment of high-level rules, achieving some success. Ultimately, the havoc brought about by the coronavirus disease (COVID-19) pandemic and the sense of crisis in the traditional liberal international order caused by the intensifying strategic competition between the US and China, drove the conclusion of RCEP. RCEP will be increasingly important for economic order in Japan and Asia in the coming years. Ironically, as the strategic competition between the US and China escalates and leads to a surge in protectionism, the economic and strategic importance of RCEP – an FTA that incorporates China – is becoming more significant as a measure to counter unilateralism and protectionism. In addition, RCEP needs elements that address globalisation’s adverse effects and pitfalls, in areas such as the environment, labour rights, and a reduction in the disparity between the rich and poor.
Topic:: Development, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Japan and Asia

116. RCEP Services Liberalisation: Key Features and Implications

Author:: Ramonette B. Serafica and Intan Murnira Ramli
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Trade in Services Chapter of the RCEP Agreement establishes the rules for the progressive liberalisation of trade in the region and sets out regulatory disciplines to mitigate barriers to competition. Considered the most significant feature of the RCEP agreement compared to other FTAs of ASEAN is the scheduling of market access commitments using the negative list approach. Thus, an immediate challenge for members that initially adopted the positive list is the transition to the negative list scheduling approach. Furthermore, members will need to implement competitive and robust regulations in liberalising services. Developing countries, especially LDCs, might also face capacity constraints to fully take advantage of the market access given by the RCEP partners.
Topic:: International Trade and Finance, Regional Cooperation, Liberalism, and Progressivism
Political Geography:: Asia and ASEAN

117. International Production Network in the Next Generation and the Role of RCEP

Author:: Mitsuyo Ando, Fukunari Kimura, and Kenta Yamanouchi
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper attempts to discuss the potential role of RCEP from the perspective of two kinds of international division of labor, i.e., machinery international production networks (IPNs) and digital-related services trade. To consider the possible contribution of RCEP to the widening and deepening of IPNs, we first provide an overview of machinery IPNs in ASEAN and East Asia by employing international trade data, a value-added based index for global value chain (GVC) activities using international input–output tables, and a gravity equation exercise. Then, we focus on trade in two global innovator services – information and communication technology (ICT) services and other business services exports – to foresee the future of the new international division of labour and highlights some policy issues. RCEP should be an evolving, living one. In terms of liberalisation and facilitation as well as international rule-making, which cover the whole region, RCEP is expected to revise and upgrade the contents to support the dynamic international division of labour in East Asia. At the same time, RCEP may play an important role in reducing policy risks due to ad hoc trade policies based on political intension and defending the rules-based trading regime for the regional economy.
Topic:: Economics, International Trade and Finance, Labor Issues, and Digital Economy
Political Geography:: Asia and ASEAN

118. Potential Impact of RCEP and Structural Transformation on Cambodia

Author:: Shandre Mugan Thangavelu and Vutha Hing
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the potential impact of the Regional Comprehensive Economic Partnership (RCEP) on the Cambodian economy in terms of trade, output growth, and employment. It also provides quantitative (structural gravity model estimation and simulation) and qualitative trade policy evaluation in terms of exports, output, and the structural transformation of the economy in global and regional value chains. The results highlight the importance of RCEP for the pandemic and post-pandemic recovery and the structural transformation of the Cambodian economy. The paper also provides key policy recommendations to fully maximise the benefits of RCEP for Cambodia for inclusive and sustainable growth.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Global Value Chains
Political Geography:: Asia and Cambodia

119. The Implications of the Regional Comprehensive Economic Partnership (RCEP) for Asian Regional Architecture

Author:: Shiro Armstrong and Peter Drysdale
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: East Asia’s Regional Comprehensive Economic Partnership (RCEP) came into force in 2022 as the world’s largest free trade agreement. RCEP was concluded, signed and brought into force in the face of major international uncertainty and is a significant boost to the global trading system. RCEP brings Australia, China, Japan, South Korea and New Zealand into the same agreement with the ten member ASEAN group at its centre. It keeps markets open and updates trade and investment rules in East Asia, a major centre of global economic activity, at a time of rising protectionism when the WTO itself is under threat. The agreement builds on ASEAN’s free trade agreements and strengthens ASEAN centrality. One of the pillars of RCEP is an economic cooperation agenda which has its antecedents in ASEAN’s approach to bringing along its least developed members and builds on the experience of capacity building in APEC and technical cooperation under the ASEAN Australia-New Zealand Free Trade Agreement. There is an opportunity to create a framework that facilitates deeper economic cooperation that involves experience-sharing, extending RCEP’s rules and membership at the same time as strengthening political cooperation. The paper suggests some areas that might be best suited to cooperation — that is confidence and trust building instead of or before negotiation — and discusses how non-members such as India may be engaged and the membership expanded. Options such as multilateralising provisions and becoming a platform for policy convergence and coordinating unilateral reforms are canvassed.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Architecture
Political Geography:: Asia and ASEAN

120. Restrictiveness of RCEP Rules of Origin: Implications for Global Value Chains in East Asia

Author:: Archanun Kohpaiboon and Juthatip Jongwanich
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This chapter aims to examine the restrictiveness of rules of origin (RoO) in the Regional Comprehensive Economic Partnership (RCEP) and other key multilateral free trade agreements (FTAs) in East Asia with a view to facilitating the operations of existing global value chains (GVCs). The analysis begins with dissecting PSRs in the RoO Chapter in these FTAs and quantifying them. The key finding is that product-specific rules in RCEP are the most flexible compared to the other multilateral FTAs and more facilitative to GVC operations. This is driven by RCEP-specific features, such as high intra-member trade and the member coverage. The main policy inference is that a full cumulation clause is needed in RCEP to allow a regional value content alternative to be in full effect. Harmonisation in RoO provision across these multilateral FTAs remains a challenge for ongoing negotiation. Monitoring the dynamics of RoO as well as the FTA utilisation is needed so that these multilateral FTAs could be a true stepping stone for trade liberalisation in the broader World Trade Organization multilateral trading system.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Global Value Chains
Political Geography:: Asia and ASEAN

121. Centrality and Community: ASEAN in the Regional Comprehensive Economic Partnership

Author:: Soo Yeon Kim
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the Association of Southeast Asian Nations’ (ASEAN) role in the formation of the Regional Comprehensive Economic Partnership (RCEP) agreement. The RCEP project proceeded as trade governance has shifted from the multilateral trade regime under the World Trade Organization to free trade agreements and where the geopolitics of Asia has cast a shadow on the progress of regional integration efforts. The analysis in this paper focuses on ASEAN centrality, both as a concept and practice, in influencing the launch and progress of RCEP. Conceptually, ASEAN centrality is about the capacity of the 10-member group to help launch negotiations for the RCEP agreement and to shape its provisions for governing trade. In practice, the RCEP agreement consolidates and significantly unravels the numerous overlapping trade agreements between ASEAN, 38 in all between individual ASEAN members and its five RCEP partners, Australia, China, Japan, the Republic of Korea, and New Zealand. The paper also examines the relationship between the ASEAN Economic Community (AEC) and RCEP. RCEP provides for further tariff liberalisation between ASEAN members and its five RCEP partners and thus expands the zone of preferential treatment for goods exported from ASEAN and other RCEP members. RCEP also consolidates rules of origin requirements under one agreement, providing for diagonal cumulation and common rules of cumulation for agreement partners. The RCEP provisions can greatly facilitate production and trade along regional supply chains, thus accelerating the progress of the AEC as a single market and production base. Moving forwards, RCEP and ASEAN’s place in it, is likely to be shaped by challenges and opportunities from the Comprehensive and Progressive Transpacific Partnership and the Biden administration’s Indo-Pacific Economic Framework (IPEF) initiative. The ASEAN members with overlapping membership in the IPEF and RCEP will be pivotal in determining areas of cooperation. Regional integration will thus continue to be shaped by ASEAN centrality, and its progress will shape the ASEAN community.
Topic:: Diplomacy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Asia and ASEAN

122. Regional Comprehensive Economic Partnership: Economic Backgrounds of ASEAN and Its Dialogue Partners

Author:: Keita Oikawa, Fusanori Iwasaki, and Shujiro Urata
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: We overview the economic backgrounds of the countries participating in the Regional Comprehensive Economic Partnership (RCEP) negotiations and two Association of Southeast Asian Nations (ASEAN) Dialogue Partners – the United States (US) and the European Union (EU) – to understand their economic relationships before the signing of the RCEP and their economic interests in the RCEP. We discover that the 16 countries participating in RCEP negotiations vary in terms of economic size, income level, growth pattern, share of trade in the economy, and foreign direct investment (FDI) flows. Additionally, both lower- and higher-income ASEAN Member States (AMS) have received a large amount of FDI, in contrast to Japan and the Republic of Korea (henceforth, Korea), which have seen more FDI outflows from their countries than inflows. In terms of bilateral FDI inflows and outflows, as a centre for regional FDI, Singapore attracts FDI from developed countries (including the US and the EU) and reinvests it in India and other AMS. As an FDI hub, Singapore promotes liberalised regional markets to attract advanced country investors. By examining bilateral trade relationships, we find that as the centre of manufacturing in the world, ASEAN and China have participated in international production networks that also include Japan and Korea since 2000. Japan and Korea have maintained competitiveness in intermediate goods in the region’s production networks, while China notably exports final products to the US and the EU. Amongst the 16 countries participating in RCEP negotiations, India has not had a significant presence in the production networks. Indeed, India has expanded its bilateral trade deficit with China, which probably caused India to withdraw from RCEP negotiations to protect its manufacturing industry. Simulation results of the impacts of the RCEP, using a computable general equilibrium (CGE) model (Global Trade Analysis Project model), show that the countries participating in RCEP negotiations – particularly the less developed AMS – would gain greatly from lowering services trade costs and investment liberalisation. India would also gain significantly from the RCEP. In contrast, countries not participating in RCEP negotiations (the US and the EU) would experience small negative impacts of the RCEP through trade diversion effects.
Topic:: Diplomacy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Asia and ASEAN

123. Regional Comprehensive Economic Partnership, ASEAN’s Agency, and the Role of ASEAN Members in Shaping the Regional Economic Order

Author:: Huong Le Thu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Regional Comprehensive Economic Partnership (RCEP) – a mega free trade agreement comprising 15 countries – the 10 Association of Southeast Asian Nations (ASEAN) Member States and the dialogue partners (China, Japan, the Republic of Korea, Australia, and New Zealand) was finalised in November 2020. This paper looks at the process of the RCEP negotiations as an example of an ASEAN exercising agency. This paper also argues that RCEP asserts the agency of smaller powers within the trade network – ASEAN and its member states – particularly the more active role of individual members, including Viet Nam and Singapore amongst the most diplomatically supportive of the deal. The circumstances under which RCEP came to life is not trivial. Under Viet Nam’s ASEAN chair in 2020, and amidst the global pandemic, RCEP was finalised. RCEP’s political and geo-economic significance arguably can overtake its economic role. In the time of great power competition where China becomes one of the key economic centres of the world, and the United States (US) competes with a vision of Indo-Pacific, the region’s middle and smaller powers are anxious about becoming ‘collateral damage’, particularly in the process of US–China ‘decoupling’. The ASEAN countries have emphasised the reluctance to ‘choose a side’. RCEP shows that they can show agency in carrying out trade liberalisation at the time when the global leader of the US in this field is missing. A mega-trade deal can be successfully led by smaller, and even developing, economies.
Topic:: Economics, Regional Cooperation, Social Order, and Strategic Interests
Political Geography:: Asia and ASEAN

124. Trade Facilitation in RCEP Countries

Author:: Weixiang Wang and Shandre Mugan Thangavelu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The trade facilitation under the Regional Comprehensive Economic Partnership (RCEP) is critical for regional trade and economic cooperation amongst the 15 member countries. This chapter examines the trade facilitation under RCEP using the available datasets on the trade facilitation index and compares the current trends in trade facilitation across RCEP countries in terms of four dimensions: the World Trade Organization’s Trade Facilitation Agreement, digital trade streamlining, ease of doing business, and trade logistics performance. The study finds that RCEP countries have improved significantly in trade facilitation measures, but they vary across the countries. For example, China should further enhance its performance in cross-border paperless trade, whilst the Association of Southeast Asian Nations countries should improve their performance in the documentary compliance of trade, the infrastructure of trade, and trade logistics performance.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Regionalism
Political Geography:: Asia and ASEAN

125. Opportunities and Challenges for ASEAN and East Asia from the Regional Comprehensive Economic Partnership on E-Commerce

Author:: Jane Kelsey
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Regional Comprehensive Economic Partnership (RCEP) is a microcosm of the current tensions in negotiations on digital trade involving parties that have divergent positions on the digital economy, data, and regulation, including within the Association of Southeast Asian Nations (ASEAN) itself. It adopts a prudent approach that recognises the state parties need flexibility and policy space at the national and regional levels to develop of policy and regulation in the rapidly changing digital ecosystem and seeks to advance their collective interests through dialogue and cooperation. This paper contrasts that approach with the disciplinary nature of binding legal obligations that are enforceable by other states and their investors, as in the Trans-Pacific Partnership Agreement and similar recent treaties. The analysis of key differences focuses on matters of particular importance to ASEAN, such as local content and government procurement, data rules and flexibilities, financial data, source codes, and transparency. RCEP’s cautious approach enables ASEAN members to deepen their national and regional understanding of the opportunities and challenges these agreements present, whilst developing and implementing their own digital development strategies. Yet those good efforts may be undermined through the binding and enforceable trade in services rules.
Topic:: Economics, Regional Cooperation, Digital Economy, and Economic Cooperation
Political Geography:: Asia and ASEAN

126. Traditional Services Trade in the Regional Comprehensive Economic Partnership

Author:: Zhang Yan and Shandre Mugan Thangavelu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Traditional services trade (TST), including tourism and transport services, is the basic and key component of services trade in the Regional Comprehensive Economic Partnership (RCEP). The implementation of RCEP will provide a platform for further liberalisation in TST, thus effectively promoting the growth of the whole service trade and the development of the travel and transportation industry. In this paper we will first show the trade pattern of TST in RCEP. Then, the commitments by each RCEP member will be thoroughly analysed, and the Hoekman index will be constructed to measure the liberalisation levels for the RCEP members. In the last section, we outline some impacts of the COVID-19 pandemic on TST and propose policy implications for RCEP in the post pandemic era.
Topic:: Economics, Tourism, Services, and Transportation
Political Geography:: Asia and ASEAN

127. The Investment Chapter in the Regional Comprehensive Economic Partnership: Enhanced Rules without Enforcement Mechanism

Author:: Henry Gao
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the legal rules in the investment chapter in the Regional Comprehensive Economic Partnership (RCEP). It starts with an overview and summary of the main provisions in the chapter, followed by an assessment of the rules by comparing established free trade agreements (FTAs), especially the Comprehensive and Progressive Trans-Pacific Partnership. In particular, it notes that the chapter, whilst largely following the established approaches to investment in other FTAs, also includes important twists to the common rules to favour the host states. The last part discusses the conspicuous absence of an investor–state dispute settlement mechanism, its pros and cons, and wider implications on regional integration, then concludes with some thoughts on future developments.
Topic:: Economics, Regional Cooperation, Economic Cooperation, and Strategic Interests
Political Geography:: Asia and ASEAN

128. How Preferential are RCEP Tariffs?

Author:: Kazunobu Hayakawa
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study discusses the extent to which the tariffs provided in the Regional Comprehensive Economic Partnership (RCEP) are preferential. RCEP does not necessarily adopt a common concession rule in tariffs, and the speed and depth of tariff reduction/elimination also differ by country. We show that RCEP tariffs become the best choice in trading some specific products with some specific countries in some specific years. Furthermore, there are some specific cases where the use of RCEP tariffs becomes beneficial even if RCEP tariffs are not lower. Therefore, we demonstrate that RCEP tariffs are beneficial in specific types of supply chains. In short, this study aims to enhance our comprehensive understanding of how preferential RCEP tariffs are compared with other types of available tariffs.
Topic:: Diplomacy, Regional Cooperation, Tariffs, and Economic Cooperation
Political Geography:: Asia and ASEAN

129. The Regional Comprehensive Economic Partnership Agreement and Europe: Impact and Implications

Author:: Haans Gunther Hilpert
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: In the first 2 decades of the millennium, European Union (EU) trade policy underwent historic changes, amongst them an explicit pivot to Asia. Along with continued firm support of the rules-based World Trade Organization (WTO)-centred multilateral trading system, important new directions in the EU’s trade policy included a turn to competitive bilateralism, a strong focus on values, an ambition to protect and to promote European trade standards as well as the politicisation of trade policy. Asia’s outwards looking economic growth, the increasing trade interdependence in Asia as well as the various bilateral and multilateral trade agreements in the region, notably amongst them the Regional Comprehensive Economic Partnership (RCEP), attracted the EU’s attention, and have helped cause and drive these changes. There was no particular Asian influence on the EU’s own regionalisation, however. Meanwhile, trade and investment relations between Europe and Asia have intensified greatly over this period. But the EU has been slow and late to formulate a comprehensive strategy for the Indo-Pacific region. In spite of some notable successes, the EU’s trade policy remains fragmented with differentiated approaches for each trading partner. Opinions on the RCEP’s relevance and importance for Europe are divided. RCEP sceptics point to the overall shallow nature of the agreement. RCEP optimists emphasise the future potential of trade and investment integration within the newly established RCEP economic area and warn of the discriminatory effects for Europe’s economy and businesses. So, Europe’s business will have to invest in the new RCEP free trade zone to overcome trade diversion risks and to benefit from the RCEP market integration. More worrying from Europe’s perspective is RCEP’s potentially negative policy impacts: a relative loss in the EU’s trading power, the risk of Europe being sidelined in the make-up of future trade rules, and RCEP’s future impact on rules based multilateralism and the WTO. The EU has various trade policy options with regard to the Indo-Pacific trade area and RCEP in particular. The most promising options include the conclusion of free trade agreements with as many RCEP member countries as possible, with the Association of Southeast Asian Nations as a group (as a region-to-region agreement), with other trading partners (from the Indo-Pacific or from other world regions), or with the Comprehensive and Progressive Agreement for Transpacific Partnership area.
Topic:: Diplomacy, Economics, Regional Cooperation, and Economic Cooperation
Political Geography:: Asia and ASEAN

130. The Story of RCEP: History, Negotiations, Structure, and Future Directions

Author:: Aladdin D. Rillo, Anna Maria Rosario D. Robeniol, and Salvador Buban
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper is about the story of the Regional Comprehensive Economic Partnership (RCEP), including the history, dynamics of negotiations, and structure of this multilateral framework. Issues related to ASEAN centrality, sensitivities of negotiations, and other challenges are also highlighted and analysed. Nearly a decade in the making, RCEP represents a significant achievement for the region. As an ASEAN-led process, RCEP supports not only the region’s market integration but as well as ASEAN’s economic relations with the rest of the world, particularly with the 5 RCEP FTA Partners. Beyond the impact of RCEP in supporting the multilateral trading system, it is also intended to address the current challenges in the region, including the COVID-19 pandemic crisis. Thus, the narrative of RCEP provides a comprehensive overview of, and considers the potential implications for, trade in the region; for economic integration, and for the future of trade policy.
Topic:: Diplomacy, Economics, Regional Cooperation, Regionalism, and Economic Cooperation
Political Geography:: Asia and ASEAN

131. Comparison of the Regional Comprehensive Economic Partnership (RCEP) and Other Free Trade Agreements (FTAs)

Author:: Innwon Park
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study evaluates the desirability of RCEP by comparing it with other mega-lateral FTAs. Evaluating the member-specific scale effects of the FTAs, we find that RCEP will generate significantly larger gains compared with the CPTPP. Evaluation of the provision-specific depth effects of RCEP suggests the possibility of positive gains but these gains may not be significant compared with those derived from the CPTPP. The existing CGE model analyses reveal that RCEP will generate greater gains than the CPTPP. RCEP will be more desirable for China, Japan, and the Republic of Korea and the estimated gains for ASEAN will notably increase as the model explicitly specifies the diagonal ROO cumulation scheme. Considering the sequence of implementing FTAs, we find that the CPTPP will generate greater gains for dual members, but the marginal gains enjoyed by RCEP members will not be substantial.
Topic:: Diplomacy, International Trade and Finance, Regional Cooperation, Free Trade, and Economic Cooperation
Political Geography:: Asia and ASEAN

132. The Post COVID-19 and RCEP: Pandemic Recovery in East Asia

Author:: Shandre Mugan Thangavelu, Shujiro Urata, and Dionisius Narjoko
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The paper examines the impact of the Regional Comprehensive Economic Partnership (RCEP) on the COVID-19 pandemic recovery of the East Asian countries. Recent studies highlight the positive gains from the RCEP agreement for all 15 of its member countries (Itakura, 2022, Petri and Plummer, 2020; Park, 2022). However, the recovery will be not even across East Asia. The East Asian countries of China, Japan, and the Republic of Korea (CJK) are likely to have the largest gains, as these countries dominate the regional global value chain (GVC) activities. The ASEAN least developed countries of Cambodia, the Lao People’s Democratic Republic (Lao PDR), and Myanmar also experience positive gains from RCEP, but need to undertake deeper structural reforms to fully benefit from the agreement. The RCEP framework has elements that will be crucial for the post-pandemic recovery and regional transformation: (i) accelerating and enhancing GVC activities through the single rule-of-origin framework for the 15 RCEP member countries and CJK (China, Japan, and Korea) effects; (ii) services liberalisation and digital transformation in the key services trade of e-commerce, financial, professional, and telecommunications services; (iii) economic cooperation amongst the 15 RCEP member countries to address key contingency issues such as mass vaccination and health infrastructure, protocols for the movement of people, and trade capacity building for ASEAN least developed countries; and (iv) the ‘living’ nature of the RCEP agreement will be able to create a wider regional integration agenda to address key contemporary issues such as environment and climate change, skills development, green transformation, and developing digital and smart urban centres. ASEAN centrality, as highlighted by the RCEP framework, is critical for the post-pandemic recovery and structural transformation of the region.
Topic:: Regional Cooperation, Recovery, Pandemic, and COVID-19
Political Geography:: Asia and ASEAN

133. Australia’s Interests in East Asia’s Regional Comprehensive Economic Partnership

Author:: Shiro Armstrong
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Regional Comprehensive Economic Partnership (RCEP) agreement was seen as important for Australia economically and politically from its inception. RCEP economies account for roughly two-thirds of Australia’s total trade and being part of an Association of Southeast Asian Nations (ASEAN)-led initiative that progressed broader East Asian economic integration was consistent with the structure of Australia’s trade interests and with Australia’s support for the multilateral trading system. Australia has a track record of pursuing regional cooperation that supports multilateral trade and for supporting regional integration that is outward oriented. RCEP became more important economically, politically, and strategically throughout its negotiations. It furthered East Asian economic integration that avoided fragmentation but also to entrench the ASEAN Economic Community project. Concluding RCEP took on greater importance and urgency as a ballast against the rising protectionism globally in the latter half of 2010. The ASEAN–Australia–New Zealand Free Trade Area (AANZFTA) included an economic cooperation agenda focused on capacity building that was seen as a success for its members and shaped Australia’s approach and support towards economic cooperation being a pillar of RCEP. Negotiations for RCEP were chaired and led by Indonesia and ASEAN. Australia played a proactive role in pushing for high standards – credible market access commitments and new rules – in negotiations. Australia was one of the RCEP member countries that was also negotiating the Trans-Pacific Partnership (TPP) in parallel. The interest in the TPP was to keep the United States productively engaged in the region and to further rule-making and liberalisation amongst the TPP members. Having overlapping membership between the TPP and RCEP would mean that there was less chance of significant divergence or inconsistencies between them, although the approach differed. The deterioration of Australia’s economic and political relationship with China makes the RCEP framework potentially more important for facilitating the rebuilding of trust and confidence.
Topic:: Diplomacy, International Trade and Finance, Regional Cooperation, and Economic Cooperation
Political Geography:: Asia, Australia, and ASEAN

134. China and the Regional Comprehensive Economic Partnership: An Economic and Political Perspective

Author:: Zhang Yunling
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper studies China’s policies and participation in East Asian economic integration and cooperation. The progress of the Regional Comprehensive Economic Partnership (RCEP) is remarkable in the time when global as well as regional economies are facing so many challenges. China as the largest economy in East Asia plays a key role in sustaining regional dynamism. China is active and constructive in initiating the Association of Southeast Asian Nations (ASEAN+1) free trade agreements (FTAs) and an integrated framework of FTAs in East Asia. As RCEP was initiated by ASEAN and supported strongly by China it is essential to keep East Asian economic dynamism: the conclusion of the RCEP negotiations and the implementation has great effects. China’s gains from RCEP are not just economic, but also political. Whilst this paper focuses on economic gains for China, it also analyses the political gains for China, for example, against ‘decoupling’ and political division, which is harmful to East Asian integration and cooperation. The novel coronavirus disease (COVID-19) pandemic is still ongoing, so the timely enforcement of RCEP is important as it gives confidence to the region to keep the region open and to work together to make East Asia dynamic in facing the challenges. Some challenges for East Asia are (i) how to rebuild the supply chains that are either weakened or broken by the pandemic; (ii) how to overcome the new barriers created by government policies in the name of ‘national security’ both in trade and investment areas; and (iii) how to overcome the new divisions created by the United States’ policy under its comprehensive strategic competition with China that leads to the exclusive arrangements in East Asia. East Asian economic integration and cooperation are based on two basic principles: openness and inclusiveness. As a region with great diversity, it is crucial to provide opportunities for all parties with difference. China will continue its open policy and actively participate in multilateral and regional arrangements, and as the largest economy in East Asia it serves as a key pillar to be a centre of the global economy. China will take RCEP as an essential framework to enhance its interest and role in East Asia, as well as in the Asia-Pacific against a politically oriented Indo-Pacific initiative.
Topic:: Regional Cooperation, Geopolitics, Regionalism, and Economic Cooperation
Political Geography:: China, Asia, and ASEAN

135. Heyday of Asian Regionalism? The Implications of the Regional Comprehensive Economic Partnership for the United States

Author:: Mireya Solís
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper analyses the implications of the entry into force of the Regional Comprehensive Economic Partnership (RCEP) for the United States (US). Traditionally, trade policy has been central to the United States’ aim to position itself as a Pacific power and architect of the evolving regional economic architecture. Over the years, however, US trade strategy has evolved in distinct ways: from an emphasis on bilateral trade negotiations and open regionalism (in the Asia-Pacific Economic Cooperation [APEC] forum) to the pursuit of a high-standard transregional trade agreement (in the Trans-Pacific Partnership [TPP]); and more recently under the Trump administration the pursuit of unilateralism and the resort to tariffs as a form of leverage vis-à-vis competitors (China) and partners (allies in Europe and Asia) alike. When the RCEP negotiations launched, there was little concern in US policymaking circles that the emerging trade grouping in Asia could be disadvantageous for the US given that the TPP project was an effective vehicle to advance the US vision for quality economic integration and to cement its position in the dynamic Asian region. However, the US withdrawal from the TPP and the successful conclusion of the RCEP talks (even with the absence of India) have changed that calculus. This paper identifies three main implications of RCEP for the United States at this juncture: growing marginalisation from intra-Asian trade, diminished rulemaking capabilities as alternative standards disseminate widely in the region, and lessened diplomatic clout as the United States struggles to incorporate trade liberalisation into its Asia policy. A fourth possible consequence – a renewed interest in joining the Comprehensive and Progressive for Trans-Pacific Partnership – has not materialised. Instead, the Biden administration is developing an Indo-Pacific Economic Framework that will not include market access negotiations but will focus instead on issues such as supply chain resilience, infrastructure, and the digital economy. The ability of the United States to offer a compelling plan of economic engagement with the region is in question, raising the spectre of marginalisation whilst Asian regionalism makes strides.
Topic:: Diplomacy, Regional Cooperation, Regionalism, and Economic Cooperation
Political Geography:: Asia, North America, United States of America, and ASEAN

136. Changes in Trade and Investment Policies in Thailand and the Implications for Medium-term Growth

Author:: Archanun Kohpaiboon and Juthatip Jongwanich
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: his paper addresses the noticeable changes in trade and investment policies in Thailand in the new millennium and assesses their impact. These changes began with trade policy changes from the World Trade Organization to free trade agreement (FTA)-induced liberalisation, followed by changes in investment policies, all of which are to boost firms’ productivity and medium-term growth. Our results suggest that the policy changes are yet to produce the output the government expects. The signed FTAs’ impact on trade has been limited so far and has occurred selectively on certain product lines, as did the FTA-induced direct investment. Similarly, changes in investment policies had the impact of enticing direct investment but this varied across investors’ nationalities. The impact on firm productivity is also limited and found only for investment promotion policies. Our analysis highlights the role of traditional tools, i.e. trade openness, research and development, and skills upgrading, in fostering firm productivity. Whilst FTAs and investment promotion could be used as a catalyst for firms to enhance productivity, other supporting factors are also needed.
Topic:: International Trade and Finance, Regional Cooperation, Investment, Free Trade, and Economic Cooperation
Political Geography:: Asia and ASEAN

137. What Determines Interfirm Trade Credit? Empirical Evidence from the ASEAN

Author:: Sasidaran Gopalan and Ketan Reddy
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper empirically examines the link between the heterogeneity of firms and their probability of obtaining interfirm trade credit in Asia, with a specific focus on the Association of Southeast Asian Nations (ASEAN) bloc of economies. In doing so, the paper investigates the following three issues: to what extent firm size plays a role in obtaining trade credit, to what degree a firm’s integration into global value chains affects its probability of obtaining trade credit, and the impact of agglomeration on firms’ likelihood of obtaining trade credit.
Topic:: International Trade and Finance, Trade, Global Value Chains, and Credit
Political Geography:: Asia and ASEAN

138. Prediction Errors of Macroeconomic Indicators and Economic Shocks for ASEAN Member States, 1990‒2021

Author:: Masahito Ambashi, Fusanori Iwasaki, and Keita Oikawa
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: In this study, economic shocks on six selected Association of Southeast Asian Nations (ASEAN) Member States (i.e. Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam) are analysed in three dimensions: global, domestic, and uncertainty. Annual actual and prediction values from 1990–2021 macroeconomic indicators – from international organisations such as the Asian Development Bank – were collected, and macroeconomic shocks were calculated based on prediction errors (i.e. actual values minus prediction values). The first finding is that if prediction errors of the real gross domestic product (GDP) growth rates are negative, on average, the countries were significantly subjected to negative economic shocks that were not anticipated. Second, according to a correlation analysis of the actual values and prediction errors of real GDP growth rates, economic fluctuations and shocks are highly synchronised within the countries as well as with the world, as previous literature has indicated. Finally, by conducting regression analyses regarding the prediction error of real GDP growth rates separately for each country, (i) variations of the global real GDP growth rate are positively associated with countries’ economic shocks; (ii) the previous estimates have different quantitative significance amongst the countries; (iii) residual variations approximate country-specific, domestic shocks; and (iv) global and country-level uncertainty indices are correlated with negative economic shocks in some countries. Based on this dataset, the effect of the COVID-19 pandemic is also reviewed, and economic and historical backgrounds are examined that caused past economic shocks to these ASEAN Member States.
Topic:: Economics, Regional Cooperation, Macroeconomics, and Economic Cooperation
Political Geography:: Asia and ASEAN

139. COVID-19, Telework Patterns Within a City, and Changes in Urban Structure – Preliminary Findings

Author:: Ikumo Isono and Kazuhiro Nara
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: With the coronavirus disease (COVID-19, the spread of teleworking means that people do not necessarily have to live near their place of work. Will the role of cities change in this case? Teleworking patterns within a city matter. According to data from the Tokyo metropolitan area, people who live in a particular part of the city or work in the city centre are more likely to telework. Areas with a higher proportion of managers and professionals have higher rates of telework. Those who can telework may move from central Tokyo to other parts of the country, but the destination is mainly the outskirts of Tokyo. In the suburban areas, there was a positive correlation between the rate of increase in the number of migrants from the 23 wards of Tokyo and the teleworking rate. It is reasonable to assume that areas offering a good living environment are unevenly distributed, that the telework rate is high in these areas, and that the number of migrants is increasing in these areas. The government’s story that more people will move to rural areas as a result of widespread telework may not be so simple.
Topic:: Labor Policies, Pandemic, COVID-19, and Remote Work
Political Geography:: Japan and Asia

140. Entry Mode Choice and Performance of Foreign Direct Investment Firms in Emerging Economies: Micro-evidence from Viet Nam

Author:: Linh Bui, Huyen Hoang, and Hang Bui
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Does the right entry mode choice help foreign direct investment (FDI) firms to perform efficiently in emerging economies? This study attempts to answer this question by examining the impact of the entry mode choice made by FDI firms on their post-entry performance in emerging markets. Using a dataset derived from specific firms for the period 2002–2016, this study accounts for the selection biases and inherent differences of FDI firms that affect their selection of entry strategies. The study found that, with regard to the manufacturing sector, the ownership type with a wholly owned subsidiary (WOS) had negative impacts on either the technical efficiency or the total factor productivity (TFP) of firms. Conversely, regarding all sectors in the economy, the WOS is likely to have a positive role on technical efficiency and TFP. It is also interesting to see that for firms with an equity joint venture (EJV) type, the higher proportion of capital contribution from domestic firms might lead to lower technical efficiency and TFP. It implies that the higher degree of management and control by the domestic firms compared with foreign firms would have negative impacts on the EJV firms’ performance.
Topic:: Economics, Foreign Aid, Foreign Direct Investment, and Emerging Powers
Political Geography:: Asia and Vietnam

141. Projecting Infrastructure Needs and the Financing Mechanism: A Review of Estimations by ADB, McKinsey, and the OECD

Author:: Fauziah Zen and Michael Regan
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: How much does a country, a region, and the world need to spend on infrastructure development to fulfil demand? This question has been asked frequently because governments try to see it as a reference for budget allocation and evaluation of development progress. Since infrastructure consists of a wide range of types, qualities, and sizes, it is difficult to come up with a number that represents these variants. Several widely cited attempts have been made to provide estimations of infrastructure needs. This paper aims to assess the features, scope, methods, and suggested financing mechanism of the projections made by the Asian Development Bank (2017), the Organisation for Economic Co-operation and Development (2017), and the McKinsey Global Institute (2016). It is not meant to focus on the limitations of these projections, but to understand the process used to put these estimates together and the extent to which they provide comparative information.
Topic:: Development, Economics, Emerging Markets, and Infrastructure
Political Geography:: Asia and ASEAN

142. Implicit Subsidies for Infrastructure and Their Implications for Contingent Liabilities in Selected East Asian Countries

Author:: Astrid Dita and Sandy Maulana
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: A government's investment decision for infrastructure development is a form of budget commitment which results in direct liabilities and possible contingent liabilities. The latter is often overlooked when the project preparation is weak where potential risks are insufficiently identified and mitigated and its impact on budget sustainability may worsen in the absence of sound surveillance. Infrastructure projects may thus lead to unmitigated fiscal risk without proper investment decision-making and monitoring framework particularly in the presence of less-than-mature fiscal systems and low public investment management capacity (e.g. as demonstrated by the inability to develop sound project business cases or distinguish project financing from funding issues).
Topic:: Development, Infrastructure, Governance, and Investment
Political Geography:: Asia and ASEAN

143. COVID-19, Long-Term Care, and Migration in Asia

Author:: Azusa Sato and Helen Dempster
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: Countries throughout Asia are experiencing rapidly aging populations and increasing life expectancy, leading to a large and growing demand for long-term care (LTC) services. Despite the shift to providing care within communities and at home, governments are struggling to provide enough LTC to meet demand. A large part of the constraint is the lack of available workers. While many countries in the region have migration schemes to bring in LTC workers, they are insufficient. At the same time, the COVID-19 pandemic has had an outsized impact on older people throughout the region, and has exposed deficiencies in the structure of migrant care labor. This report explores the impact of these three dynamics—LTC, migration, and COVID-19—on the current and future LTC workforce in the Asian region. It showcases 11 countries of origin and destination, including the demand for and supply of LTC, how it is financed and resourced, and where and how migrant workers are sourced. It puts forward recommendations for how governments throughout Asia can ethically and sustainably increase LTC worker migration; improve wages, working conditions, and recruitment processes within the sector; and learn lessons from COVID-19.
Topic:: Migration, Labor Issues, Pandemic, and COVID-19
Political Geography:: Asia

144. Beyond India’s Lockdown: PMGKY Benefits During the COVID-19 Crisis and the State of Digital Payments

Author:: Alan Gelb, Anurodh Giri, Anit Mukherjee, Ritesh Rautela, Mitul Thapliyal, and Brian Webster
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: India imposed a lock-down in response to the COVID-19 pandemic in March 2020 and began a gradual re-opening in June. A telephonic survey in April examined the early effectiveness of information and the massive PMGKY social protection program (Policy Paper 217). This paper analyzes a second-round survey, conducted six months later. Logistical and information constraints had relaxed, and incomes and jobs had begun to stabilize for some. There were not strong indications of differential access to benefits by income or location, but constraints to providing public employment had tightened in the face of increased demand, resulting in greater job rationing. Men made more use of digital channels, with a clear smartphone ownership hierarchy between men and women; this divide carried over into the growing autonomous use of digital payments which is conditioned on access to smartphones. Survey results confirm strong local agglomeration effects in digital payments, mirroring the general pattern with higher use in states hosting India’s major technology hubs. At the same time, trust-based concerns reduced the use of assisted digital cash-outs through agents.
Topic:: Economics, Pandemic, COVID-19, and Digitalization
Political Geography:: India and Asia

145. East Asian Cities: Past Development and Onrushing Challenges

Author:: Shahid Yusuf
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: The East Asian export-led development model has served as a beacon for decades. For the many urbanized and rapidly urbanizing countries, the East Asian experience with and response to emerging challenges can be equally instructive. High-income East Asian economies are at or approaching peak urbanization. China is likely to catch up within the next three decades. Since the 1950s, urbanization was accelerated by industrialization, which provided a plenitude of jobs directly and indirectly. It generated the resources that helped build urban infrastructure and housing, financed essential services, and created modern, urban livability. However, East Asian cities, like cities in other high- and middle-income countries, face new challenges. Services are displacing manufacturing as growth drivers and providers of jobs; the absorption of digital technologies, urban greening, and control of pollution/carbon emissions is more urgent; climate change is necessitating the upgrading of services and infrastructure to enhance resilience; climate change will also compel a managed withdrawal from some urban locations; and both services and physical facilities must adapt to meet the needs of aging populations. Responding to these challenges calls for strategic long-range planning, technological advances, implementation capacity, and resource mobilization. By 2050, 70 percent of the global population will live in cities. Therefore, how East Asians tackle these challenges can inform and guide policymakers in developed and developing countries alike.
Topic:: Development, Infrastructure, Urbanization, and Urban
Political Geography:: East Asia and Asia

146. Building a Quad-South Korea Partnership for Climate Action

Author:: Kristi Govella
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Climate change is a pressing global problem that requires action at the local, national, and international levels. While most policy has logically focused on creating international pacts to address and mitigate climate change, interest in regional or minilateral cooperation among smaller groups of countries has also grown in recent years. When the Quadrilateral Security Dialogue—more commonly known as the Quad—convened its first leader-level summit in March 2021, its member countries Australia, India, Japan, and the United States identified climate change as a priority for the grouping and for the Indo-Pacific. They established a Quad Climate Working Group to strengthen implementation of the Paris Agreement and to cooperate on climate mitigation, adaptation, resilience, technology, capacity building, and finance.1 Since then, the Quad has continued to expand its climate activities. In September 2021, the grouping added the formation of a green-shipping network and the establishment of a clean-hydrogen partnership to its goals.2 In May 2022, the four partners took the additional step of launching the Quad Climate Change Adaptation and Mitigation Package (Q-CHAMP).3 Why have the Quad countries decided to include climate change on their agenda? They share serious concerns about climate change, which poses a significant threat to themselves and to the Indo-Pacific as a whole. In recent years, climate change has risen in prominence on the domestic political agendas of the four Quad partners, and there are gains to be achieved through coordination and cooperation of their separate national efforts. At a time when many countries feel that international institutions simply are not working quickly or effectively enough, minilateral initiatives such as the Quad have gained appeal as a more flexible way to facilitate joint action.
Topic:: Foreign Policy, Climate Change, Partnerships, Quad Alliance, and Defense Cooperation
Political Geography:: Asia, South Korea, United States of America, and Indo-Pacific

147. Embedding Human Rights in European and US China Policy

Author:: Malin Oud
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Europe and the United States share an interest in promoting human rights in China but often struggle to affect change in this regard. Because of ineffective approaches and low political commitment, human rights are a marginalized issue in transatlantic China policy and an afterthought to commercial interests. European and US policymakers have attempted to compartmentalize their approach to China, keeping human rights separate from commercial and other interests. This does little to advance human rights, and it only seems to encourage more assertive and coercive behavior by China. During the last few years, the Western assumption that trade and foreign capital would transform China into a more open and democratic society has been replaced by a disillusioned realization that its rise as a superpower is reshaping the international order. Under President Xi Jinping, China has evolved from its previous position as rule-taker and status quo-keeper at the UN to become an assertive rule-maker and international norm entrepreneur. Its vulnerability to external pressure has declined while its power to exert pressure and economic coercion on others has increased. China no longer presents its political and economic model merely as different from but as superior to that of the liberal democracies in the West. For several years now, European and US policymakers have declared an “end of naivety” in relation to China. After years of debating how to make the EU more resilient and robust, Russia’s invasion of Ukraine has “given birth to geopolitical Europe,” in the words of its chief diplomat, Josep Borrell. It remains to be seen whether this moment of clarity will translate into a more principled defense of human rights and investment in democratic resilience. For this to happen, there needs to be a broader reckoning with how Western countries for decades mishandled the authoritarian challenge to the international order, often because they were pursuing stronger economic ties with the same governments they now see as systemic rivals.
Topic:: Foreign Policy, Economics, Human Rights, Business, and Trade
Political Geography:: China, Asia, North America, and United States of America

148. Next-generation Perspectives on Taiwan

Author:: Bonnie S. Glaser
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Over the past few years, Taiwan has received a surge of international attention. As the coronavirus pandemic began to spread worldwide in 2020, Taiwan emerged as a success story with relatively low numbers of cases and deaths. In the global battle against the virus, it provided medical supplies, medicine, and technology to countries in need, cooperated on vaccine research and development, and shared its best practices. The pandemic’s impact on global semiconductor supply chains also led to heightened interest in Taiwan, which dominates the foundry market, or the outsourcing of semiconductor manufacturing. The island is home to the Taiwan Semiconductor Manufacturing Company, which produces more than 90 percent of global output of the most advanced semiconductors and is gearing up to launch next-generation three-nanometer chips this year. Another reason for increased attention to Taiwan stems from international awareness of China’s growing diplomatic and military pressure on the island. Since President Tsai Ing-wen assumed office in 2016, Beijing has poached eight of Taiwan’s diplomatic allies and blocked it from participating in international organizations, including the World Health Organization. The Chinese military flew nearly 1,000 warplanes in Taiwan’s air-defense identification zone in 2021. China has also stepped up its use of disinformation, United Front tactics, and other measures to widen splits within Taiwan’s political system and induce pessimism among its people about their future to achieve its goal of taking over the island. With the upswing of global interest in Taiwan, there is a pressing need for greater knowledge about the many factors that make it so crucial to the world. The Taiwan-US Policy Program (TUPP) was launched in 2017 to provide future leaders a deeper understanding of Taiwan and its relations with the United States through meetings with officials and experts in Washington, followed by a visit to Taiwan to gain first-hand exposure to its politics, culture, and history. Experiencing Taiwan influences how these future leaders approach their work, their writing, and their overall worldview. It imbues them with an appreciation for Taiwan’s experience and commitment to the principles of democracy and human rights that undergird the existing international order. It also reinforces the importance of maintaining robust bilateral relations and strengthening international support for the preservation of peace and stability in the Taiwan Strait. After a two-year hiatus due to the coronavirus pandemic, TUPP resumed in January 2022 for a virtual session. Although holding virtual meetings with officials and experts from Taiwan and the United States was not ideal, the program was nonetheless successful in achieving its goals. Each participant gained insights into Taiwan and its role in their respective fields. This year’s cohort also included for the first time a few experts from Europe, expanding the program’s reach. Over time, TUPP seeks to create a body of global experts with knowledge about Taiwan and support for sustaining and expanding its ties to the world. Hopefully, TUPP will contribute to ensuring that Taiwan remains peaceful and prosperous. The contributions here, written by nine of the eleven members of the 2022 TUPP delegation, underscore the importance of deeper study and understanding of Taiwan. I sincerely hope that they stimulate even greater global interest in Taiwan and its future.
Topic:: Foreign Policy, European Union, COVID-19, and Defense Cooperation
Political Geography:: China, Taiwan, Asia, and United States of America

149. Expanding Engagement among South Korea and the Quad Countries in the Indo-Pacific

Author:: Kristi Govella, Garima Mohan, and Bonnie S. Glaser
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Since its revival in 2017, the quadrilateral dialogue among Australia, India, Japan, and the United States known as the “Quad” has become a stronger, more institutionalized grouping with a broad and growing agenda. As a leading economy, a vibrant democracy, and a key US strategic ally, South Korea stands out as one of the most promising potential partners for the Quad. With a new administration in office in Seoul, the time is ripe for South Korea to expand its engagement with the Quad countries in the Indo-Pacific. Even without formally expanding the membership of the Quad, which is currently not under consideration by its members, there are pragmatic and effective ways for these five countries to pursue their shared interests and values through a flexible set of mechanisms across a wide variety of crucial issues. After a brief review of the debates about the Quad in South Korea, this paper presents a framework for the country to consult, coordinate, and cooperate with Quad members through distinct institutional pathways: bilateral mechanisms, sub-Quad minilateral mechanisms, issue-specific engagement to achieve a specific functional goal, and more formal Quad Plus engagement on a broad strategic level. The paper offers the following recommendations for South Korea and the Quad countries to deepen their engagement in eight areas that correspond with Quad working groups and activities: critical and emerging technologies, infrastructure, health, climate change, education and people-to-people exchange, maritime safety and security, cybersecurity, and outer space.
Topic:: Foreign Policy, Quad Alliance, and Defense Cooperation
Political Geography:: Asia, South Korea, and Indo-Pacific

150. Six Lessons from a Decade of Asia Strategy Simulations

Author:: Zack Cooper
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: How can the United States and its allies and partners succeed in the Indo-Pacific and better prepare for long-term competition in the region? Since the US rebalance to Asia began, the German Marshall Fund of the United States has brought together rising experts from Asia, Europe, and the United States to examine this question through a series of workshops and simulations conducted via the Young Strategists Forum (YSF). The discussions that have taken place during these sessions suggest six lessons about effective long-term strategies for the Indo-Pacific. First, trying to maintain the status quo is neither realistic nor strategic. Established powers tend to describe their objectives in terms of maintaining the status quo. This aim is not just unrealistic, but often deprives them of the ability to adjust the existing order in potentially beneficial ways. US leaders must present a vision of the future that is defined by looking forward not backward. Second, the United States needs to calibrate its responses to near-term crises with an eye to mobilizing the largest possible balancing coalition in the long run. In the simulations, US teams often miss short-term opportunities that could yield long-term benefits. Thinking strategically sometimes means allowing other countries to recognize that they face a serious threat today and cannot simply rely on the United States to solve problems. Third, overreaching by China presents opportunities for the United States. Over the last decade, China’s growth in power has been accompanied by increased assertiveness, in YSF simulations and in real life. China’s behavior creates opportunities for US and other leaders to create and expand coalitions that can push back against it. Fourth, acknowledging the reality of impending multipolarity in the Indo-Pacific can benefit the United States. US experts, including participants in YSF simulations, often tend to see the competition in the Indo-Pacific as largely bipolar between the United States and China. Regional actors, however, typically regard the Indo-Pacific as increasingly multipolar. By championing the rise of new power centers, the United States can foster a regional order that is broadly supportive of its interests yet less dependent on US guarantees. Fifth, focusing on “swinging” states as well as “swung” states pays dividends for the United States. Over the last five years, the United States has done an impressive job of bringing together those countries that are most willing to push back against China. But the region’s “swinging” states—those that have not yet made a clear alignment decision—deserve more attention. Quick wins with these actors are unlikely, but sustained engagement today can set the stage for realignment tomorrow. Finally, building robust coalitions requires US leadership. Many of the lessons we have learned over the last decade have to do with the importance of recognizing that other countries have greater capacity for independent action than is often acknowledged by US observers. That does not mean that US leadership is unimportant—in fact, YSF simulations suggest that it is critical if other states are to join coalitions to push back against China. The United States often labels its various allies as “lynchpins” or “keystones” in the region, but the fact remains that the most effective regional groupings are still reliant on its coordinating role, especially when it comes to China.
Topic:: Foreign Policy, Strategic Planning, Simulation, and Defense Cooperation
Political Geography:: China, Asia, and United States of America

151. The Future of the Quad and the Emerging Architecture in the Indo-Pacific

Author:: Garima Mohan and Kristi Govella
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: The Quadrilateral grouping of Australia, India, Japan, and the United States (the Quad) has come a long way from its origins, establishing itself as a crucial pillar of the Indo-Pacific regional architecture and significantly shifting in tone and focus from its early iterations. Since its revival in 2017, the Quad has been elevated to a leader-level dialogue, it has begun issuing joint statements, and it has developed a new working-group structure to facilitate cooperation. It has also significantly broadened and deepened its agenda to include vaccines, climate change, critical and emerging technologies, infrastructure, cyber, and space. These recent changes to the Quad raise several questions about its future trajectory. What are the drivers of engagement, the domestic support, and the bureaucratic capacity in the four countries to continue investing in the Quad? How well does the Quad’s new working-group structure function, and will the working groups be able to deliver tangible results? How has the Quad’s agenda evolved, and will it return to its initial focus on security challenges? Are the Quad countries open to cooperation with additional countries and, if so, what form will this take? This paper analyzes these questions drawing on recent publications, official statements, and interviews with key experts and policymakers in the four countries. In doing so, it offers five key takeaways into the Quad as an evolving part of the Indo-Pacific architecture, as well as a vehicle for achieving the goals of its four member countries.
Topic:: Foreign Policy, Quad Alliance, and Defense Cooperation
Political Geography:: Japan, India, Asia, Australia, United States of America, and Indo-Pacific

152. "Best and Bosom Friends" Putin, Xi and the Challenge to the West

Author:: Michael Cox
Publication Date:: 11-2022
Content Type:: Working Paper
Institution:: LSE IDEAS
Abstract:: In this latest Strategic Update, LSE IDEAS co-founder Professor Michael Cox highlights China as a significant player in the current tragedy occurring within Ukraine. Prof Cox traces the relationship between the People’s Republic and the USSR, through to the latter’s collapse into the Russian Federation, their formation of a strategic partnership against a unipolar post-Cold War order, and the rise in power of Xi Jinping alongside two international crises caused by Russian aggression in Ukraine. This Update finds that, whilst there are limits to their shared interests, China is politically committed to its Russian partner, and this status-quo leaves us in a more dangerous world.
Topic:: Foreign Policy, Partnerships, Xi Jinping, Vladimir Putin, and Russia-Ukraine War
Political Geography:: Russia, China, and Asia

153. China’s Digital Silk Road in Indonesia: Progress and implications

Author:: Zulfikar Rakhmat
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: LSE IDEAS
Abstract:: This Strategic Update discusses the progress of China’s Digital Silk Road in Indonesia, a major destination, in both its hard and soft aspects, as well as the potential impact of its implementation. Chinese companies are offering a response to Indonesia’s needs, but concerns exist, especially surrounding security and surveillance, that Indonesia’s increasing reliance on China could also further erode its democracy.
Topic:: Security, Foreign Policy, Economy, Surveillance, and Belt and Road Initiative (BRI)
Political Geography:: China, Indonesia, Asia, and Indo-Pacific

154. What Putin’s War in Ukraine Means for the Future of China-Russia Relations

Author:: Björn Alexander Düben
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: LSE IDEAS
Abstract:: Björn Alexander Düben analyses China’s reaction to, and motivation in implicitly supporting, Russia’s invasion of Ukraine, even as Putin’s strategic blunder becomes increasingly difficult to deal with. The author finds that, as long as Putin remains in power, long-term alignment since 2014 and a shared authoritarian world-view will cement closer ties between the PRC and Russian Federation; this at the cost of the latter devolving to a client-state dependent on China to keep its economy afloat, whilst the PRC’s cautious state banks further diminish Russian hopes of financial cooperation in order to avoid secondary sanctions from the West.
Topic:: Bilateral Relations, Sanctions, Authoritarianism, Economy, Vladimir Putin, and Russia-Ukraine War
Political Geography:: Russia, China, Ukraine, and Asia

155. Decoding China’s “Common Prosperity” Drive

Author:: Xin Sun
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: LSE IDEAS
Abstract:: The term “common prosperity” has quickly risen to prominence in Chinese domestic politics amid an intense regulatory crackdown on China’s leading tech companies. However, this new policy agenda offers no clear road map or explicit policy instructions, giving way to various interpretations which while insightful do not depict the complete picture. In this strategic update, Xin Sun argues that the fundamental purpose of common prosperity is to support a new political order that keeps significant power in the hands of Xi and his closest allies and bolsters the supreme leader’s political survival in the coming decades.
Topic:: Regulation, Business, Domestic Policy, and Prosperity
Political Geography:: China and Asia

156. The private sector advances in China: The evolving ownership structures of the largest companies in the Xi Jinping era

Author:: Tianlei Huang and Nicolas Véron
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: This paper documents recent structural changes in China’s corporate landscape, based on company-level data, providing a complementary perspective to that of official Chinese statistics. We classify China’s largest companies by revenue since 2004 (based on Fortune Global 500 rankings), and largest listed companies by market capitalization since 2010, into state and private-sector categories, using a conservative definition of the private sector. Among the largest companies by revenue, the private sector was nonexistent in the mid-2000s but has grown steadily in the past decade, even though the state sector still dominates. The aggregate revenue of private-sector companies has grown from zero in Fortune’s ranking in 2005 (based on 2004 revenue) to $104 billion in the 2011 ranking, or merely 3.8 percent of the $2.78 trillion in aggregate revenue for all Chinese companies in the ranking, and to $1.7 trillion in the latest 2021 ranking (based on 2020 revenue), or 19 percent of the Chinese companies’ aggregate revenue. As for market value of the largest listed firms, the private sector’s share in the top 100 listed Chinese companies was only 8 percent at end-2010 but crossed the 50 percent threshold in 2020 and retreated slightly in 2021 to 48 percent, following that year’s regulatory crackdown on several private-sector-dominated industries. These findings do not support a narrative of broad-based rollback in recent years of previous private-sector expansion.
Topic:: Economy, Private Sector, Corporations, and Business Management
Political Geography:: China and Asia

157. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:: David Steinberg and Yeling Tan
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:: Economics, Political Economy, Public Opinion, Trade, and Protectionism
Political Geography:: China, Asia, North America, and United States of America

158. Defying United Nations Sanctions: Three Reasons for African Engagement with North Korea

Author:: Tycho van der Hoog
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: The United Nations (UN) sanctions against North Korea are weakened by structural evasion techniques and weak enforcement. The African continent is a crucial node in the global illicit networks of North Korea. This paper examines three motives for African states to cooperate with North Korea, with a particular focus on the context of southern Africa: historical affinity (reciprocity), the practical issue of maintenance dependency (necessity), and the presence of weak enforcement regimes (opportunity). Based on a deep reading of UN Panel of Experts reports, academic literature and policy papers, novel archival material, and an interview with a defected North Korean diplomat, this paper argues that solutions to strengthen the sanctions regime can be successful only if they are grounded in African initiatives.
Topic:: Security, Economics, United Nations, and Sanctions
Political Geography:: Africa, Asia, and North Korea

159. Debunking the Korean Peninsula "Arms Race": What's Behind South Korea's Military Force Development?

Author:: Markus Garlauskas and Axel Catellier
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: Following a record number of North Korean missile launches, as well as tests by South Korea, assertions have been widely and uncritically made that Seoul is participating in an inter-Korean arms race. This paper challenges that paradigm by arguing that South Korea’s military acquisitions, displays, and testing of new weapons are better explained as proactive efforts to build military capabilities to support national security priorities in a broader context, rather than reactions to the threat from North Korea. While North Korea’s reasons for weapons testing are well-documented, South Korea’s military buildup in recent years has received far less attention. This paper examines drivers behind South Korea’s military investments and makes recommendations for how the Republic of Korea (ROK)-United States alliance could incorporate these capabilities into alliance military operations beyond simply deterring or defeating North Korea. To do so, it examines how broader drivers affect ROK strategic thinking, the demands this puts on the ROK military, and how those demands translate to specific defense acquisitions. With the start of a new ROK presidential administration, it is an opportune time for Seoul and Washington to coordinate approaches on capabilities development in ways that would benefit both countries in the years to come.
Topic:: Security, Armed Forces, Arms Race, and Military
Political Geography:: Asia, South Korea, and North Korea

160. Inter-Korean Reconciliation and the Role of the U.S.: Facilitator or Spoiler?

Author:: Gabriela Bernal
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: Although the Korean Peninsula has been divided for over 70 years, North and South have not been able to make lasting progress in terms of reconciliation. While there are multiple factors directly influencing the extent to which inter-Korean relations can progress, this paper focuses on the role of the United States. When it comes to inter-Korean reconciliation efforts, is the U.S. more of a facilitator or a spoiler? By looking at three case studies spanning three South Korean administrations—Roh Tae-woo, Roh Moo-hyun and Moon Jae-in—this paper attempts to find patterns and lessons related to Washington’s role in the complex inter-Korean reconciliation process. The cases reveal that the U.S. has played the role of both facilitator and spoiler in each case, and that whatever role the U.S. plays depends on its own relationship with North Korea at that time. The U.S. is most likely to play a facilitating role when the administrations in Washington and Seoul are both willing to engage diplomatically with Pyongyang, when progress is being made in denuclearization talks, when the geopolitical environment is conducive towards diplomacy and engagement with North Korea, and when the U.S. adopts a reciprocal negotiating strategy. The paper concludes by considering the conditions necessary to achieve inter-Korean reconciliation and to establish long-term peace on the peninsula. Key factors include the need for trust-building and reciprocity between the U.S. and North Korea, and adopting a more holistic approach that goes beyond the nuclear problem and aims to establish a lasting relationship between Washington and Pyongyang.
Topic:: International Relations, Security, Foreign Policy, Bilateral Relations, and Reconciliation
Political Geography:: Asia, South Korea, North Korea, and United States of America

161. South Korea's Critical Moment in Digital Currency Policymaking: Between Regulating Cryptocurrencies and Launching a Central Bank Digital Currency (CBDC)

Author:: June Park
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: Why is South Korea pilot-testing its Central Bank Digital Currency (CBDC), and what made it shift from non-issuance to consideration? This paper investigates the Bank of Korea (BOK)’s CBDC-related developments amid the geopolitical contest between the U.S. and China. It examines the Moon Jae-in administration’s defiance of decentralized finance (DeFi) and the BOK’s sudden shift from non-issuance to potential issuance, which led to expedited research, development, and pilot-testing of CBDCs. As in the case of the digital yuan, the BOK envisions a hybrid architecture for the digital won, wherein central banks and associated partner institutions are CBDC distributors, though they are distinguished by placing the digital won on distributed ledger technology rather than by centrally controlling it. However, South Korea’s previously rash decision to forego DeFi under an undemocratic process has deprived the country of the time and opportunity to develop new innovations as a leading country in the digital frontier. By sticking only to digitalizing centralized finance, the country now aims to be in “standby” mode for its CBDC launch if and when required, so as not to fall behind in digital financial architecture. This paper scrutinizes the South Korean government’s moves on crypto and CBDCs and argues that 1) the Moon administration has shown incapability in addressing DeFi amid the crypto boom and bust, and 2) the BOK’s shift from non-issuance to potential issuance of the digital won is driven by its interest to uphold central bank independence amid swaying geopolitics between the U.S. and China and an unpredictable upcoming presidential election in South Korea.
Topic:: Economics, Elections, Finance, Cryptocurrencies, and Digital Currency
Political Geography:: China, Asia, South Korea, North America, and United States of America

162. South Korea's Public Diplomacy during the COVID-19 Pandemic: Seeking Status as an Authority in Global Governance

Author:: Kadir Ayhan
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: The COVID-19 pandemic caught almost all countries unprepared. Some countries, including South Korea (hereafter Korea), managed to deal with the pandemic relatively more successfully than others and had a proactive global posture from early on, including providing aid, and public diplomacy campaigns. In this paper, I explore Korea’s COVID-19-related public diplomacy activities and its aims. I analyze Korea’s COVID-19 humanitarian aid trends, its policy documents, and the tweets related to the pandemic posted by the country’s official public diplomacy account. I find that the pandemic catalyzed what Korea had already been aiming to do, which is improve its global status to be among top authorities across various issue-areas. Due to the nature of the pandemic, Korea’s public diplomacy has been themed around international cooperation and solidarity. I suggest that Korea should hold onto its international cooperation emphasis on public diplomacy, to form the basis for its status-seeking as an authority in global governance in the post-pandemic era.
Topic:: International Relations, Diplomacy, Domestic Policy, COVID-19, and Health Crisis
Political Geography:: Asia, South Korea, and Global Focus

163. Elementary education in India versus China: Guidelines for NEP implementation

Author:: Naveen Kumar and Vinitha Varghese
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: This paper documents the state of elementary education in India and China since the 1960s, key lessons for India from China’s shift in focus from ‘quantity’ to ‘quality’, and evidencebased guidelines for effective implementation of India’s New Education Policy 2020 (NEP 2020). The divergent policy focus has led to differential trajectories for elementary education in the two emerging economies, with China being decades ahead in improving literacy rates. China’s adoption of the New Curriculum Reform 20 years before India’s NEP 2020 has put China on the path to achieving equitable development of ‘quality’ compulsory schooling. India’s NEP 2020 has components that have the potential to improve quality, equity, and efficiency of the education system. This paper makes the following recommendations for effective implementation of some of the NEP 2020 components: (1) an additional worker should be recruited at every preschool centre; (2) more resources should be allocated towards implementation, evaluation, and needed recalibration of the management of school clusters; (3) teacher recruitment, training, and rewards should be revamped; (4) standardized tests should be protected from data corruption, fudging, or grade inflation; and (5) a national-level road map and regular evaluations have to be introduced to ensure participation of socio-economically disadvantaged groups in education.
Topic:: Education, Literacy, and Schools
Political Geography:: China, South Asia, India, and Asia

164. Taxless fiscal states: Lessons from 19th-century America and 21st-century China

Author:: Yuen Yuen Ang
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: How do modern fiscal states arise? Perhaps the most dominant explanation, based on the European experience, is that democratic institutions that limited the extractive power of states—exemplified by the 1688 Glorious Revolution in England—paved the way for the rise of fiscal capacity and subsequent prosperity. Revisionist accounts, however, reveal that this dominant narrative is flawed. In fact, numerous factors converged to enable the rise of European fiscal states, and in England, debt and land were particularly salient factors. Building off this literature, I bring attention to the role of ‘taxless public financing’ (i.e. financing public infrastructure through means other than taxation) in the making of fiscal states in two seldom compared cases: 19th-century America and 21st-century China. Both countries relied heavily on taxless financing to launch an infrastructure boom that spurred rapid growth along with massive corruption and financial risks.
Topic:: History, Finance, Tax Systems, and Land
Political Geography:: China, Asia, North America, and United States of America

165. The private sector advances in China: The evolving ownership structures of the largest companies in the Xi Jinping era

Author:: Nicolas Véron and Tianlei Huang
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: This paper documents recent structural changes in China’s corporate landscape, based on company level data, providing a complementary perspective to that of official Chinese statistics. We classify China’s largest companies by revenue since 2004 (based on Fortune Global 500 rankings), and largest listed companies by market capitalisation since 2010, into state and private-sector categories, using a conservative definition of the private sector. Among the largest companies by revenue, the private sector was non-existent in the mid-2000s but has grown steadily in the past decade, even though the state sector still dominates. The aggregate revenue of private-sector companies grew from zero in Fortune’s ranking in 2005 (based on 2004 revenue) to $104 billion in the 2011 ranking, or merely 3.8 percent of the $2.78 trillion in aggregate revenue for all Chinese companies in the ranking, and to $1.7 trillion in the latest 2021 ranking (based on 2020 revenue), or 19 percent of the Chinese companies’ aggregate revenue. As for market value of the largest listed firms, the private sector’s share in the top 100 listed Chinese companies was only 8 percent at end-2010 but crossed the 50 percent threshold in 2020 and retreated slightly in 2021 to 48 percent, following that year’s regulatory crackdown on several private-sector-dominated industries. These findings do not support a narrative of broad based rollback in recent years of previous private-sector expansion.
Topic:: Business, Private Sector, and Corporations
Political Geography:: China and Asia

166. Assessing the economic, societal and cultural impact of YouTube in India

Author:: Oxford Economics
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Oxford Economics
Abstract:: Recent research by Oxford Economics suggests YouTube contributed 6,800 Cr to the Indian economy in 2020 and supported 6,83,900 jobs. But its impact goes further, bringing a rich array of economic, cultural and societal benefits to India. YouTube generates substantial revenue for creators, artists, and media companies, who in turn support a broad ecosystem of employees and businesses in India. Creators deliver a wealth of educational tools and materials, which are valued by students, parents, and teachers alike.
Topic:: Economics, Mass Media, Social Media, and YouTube
Political Geography:: India and Asia

167. Climate change and food prices in Southeast Asia

Author:: Oxford Economics
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Oxford Economics
Abstract:: Southeast Asia’s climate has become warmer, wetter and more unpredictable over the past decade. Our bespoke analysis finds that these changes in weather conditions have had a significant impact on the cost of food production in levels terms and in increased food price volatility. Specifically, a 1% increase in temperature versus a year ago is found to increase food production costs by 0.5-0.8% across Southeast Asian economies, and extreme heat events in Thailand and Vietnam in recent years have driven price spikes of 5-6%. Climate futures in which temperatures rise fastest and weather volatility increases most have the potential to generate ever-faster food price growth and greater price spikes. More stable food prices are, therefore, one key incentive for governments in the region to do their part to help the world transition toward net zero. But the sector’s intensive use of energy and logistics to produce and distribute food will mean the shift to low-carbon energy could also have major cost implications for the sector. So while prices may be more stable in a net-zero world, they will nevertheless face pressures from the transition. Fortunately, the government can explore a range of policy options to ease the cost of transition and mitigate the impact of food price volatility. These policy options encompass agricultural policy, energy efficiency, social policy, and trade and investment policies. Together with Food Industry Asia, Oxford Economics looks forward to developing this debate in the months and years ahead, building on the foundations presented in this report.
Topic:: Climate Change, Food Security, Weather, and Price
Political Geography:: Asia and Southeast Asia

168. Off Track – The role of China’s CRRC in the Global Railcar Market

Author:: Oxford Economics
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: Oxford Economics
Abstract:: With $35 billion in total revenue in 2021, CRRC, the Chinese state-owned railroad rolling stock manufacturer, is the largest player in the $71 billion global railroad rolling stock industry. Like other Chinese state-owned enterprises (SOEs), CRRC is the beneficiary of both implicit and explicit government subsidies. According to its annual reports, CRRC received $271 million in explicit Chinese government subsidies in 2020, and nearly $1.3 billion total between 2015 and 2020. Implicit government subsidies to SOEs like CRRC are harder to quantify and come in a variety of forms. For example, an SOE may obtain production inputs, such as financing or land, at below market-rate prices. It may also sell its outputs at above market-rate prices, a possibility that is particularly relevant to rail manufacturing, where much of the output is sold to government entities. Estimates by other researchers show that explicit government subsidies represent only about a quarter of the total government subsidies that Chinese SOEs receive. Since the 1990s, China has pursued a policy towards SOEs of “grasping the large, letting go of the small,” investing in national champions to dominate their respective industries. Under the management of the State-owned Assets Supervision and Administration Commission (SASAC) since 2003, SOEs have been encouraged to “go big and go global” through domestic consolidation and expansion, as well as through foreign mergers and acquisitions. The effect of these policies, which are fundamentally mercantilist in nature, has been for these national champion SOEs like CRRC to capture their domestic markets, using the economic rents so generated to finance global expansion. Between 2006 and 2018, SOEs’ share of the assets of the largest global firms has increased from approximately 6% to 20%, with Chinese SOEs accounting for essentially all of this increase. While SASAC has targeted specific industries for its national champion, the overall trend in recent years has been towards continued government divestment from legacy SOEs. SOEs’ share of national industrial employment fell from 60% in 1998 to 38% in 2003 to 20% in 2010. Thus, as reflected in planning documents, the selection of industries for the fostering of national champions is anything but random and reflects the strategic interests of the Chinese government. In the case of rail, the government’s strategic interest is transparent and is laid out in the Belt and Road Initiative (BRI)—China seeks to dominate an integrated global rail transportation network based on Chinese technical standards. China expects to obtain significant financial and geopolitical benefits from this outcome and may be willing to absorb losses on individual foreign rail projects in order to break into foreign markets.
Topic:: Infrastructure, Hegemony, Railways, and Air Travel
Political Geography:: China and Asia

169. Gendering the Indo-Pacific Dialogue: Opportunities for India and Australia

Author:: Priyanka Bhide
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: International Women's Development Agency (IWDA)
Abstract:: Viewing the confluence of the Indian Ocean and Pacific Ocean as a distinctive and interdependent strategic and economic space is fundamentally changing the way both India and Australia think about and examine their relationship with the broader region.i The Indo-Pacific as a strategic construct has grown in prominence in global geopolitical discourse, especially over the last five years. The EU, USA, and several countries in Europe have in place or are developing their own strategies for engagement in the Indo-Pacific region. The European Union collectively advocates for a ‘Free and Open Indo- Pacific’, designed to foster a ‘rules-based international order, a level playing field, as well as an open and fair environment for trade and investment, tackling climate change and supporting connectivity.’ii For France, the Indo-Pacific is at the heart of its vision for a stable multipolar order, and the Indo-Pacific is listed as a ‘priority and essential partner’.iii Germany too is making an active contribution to shaping the international order in the Indo-Pacific, so that it is ‘based on rules and international cooperation, not on the law of the strong.’iv The significance of the construct is varied for countries that are part of the region. The scope of the conversation in the Indo-Pacific is widening, with more diverse and varied perspectives being brought to the forefront. In this paper, against the backdrop of global Feminist Foreign Policy conversations, we focus on how Australia and India view the Indo-Pacific; marking the shifts in both countries’ approaches, along with bringing in important aspects of their bilateral relationship, highlighting how the Indo-Pacific has grown in significance to become a foreign policy priority, how both India and Australia have incorporated a gender lens in their actions, and what could be the avenues for Australia and India to apply such a lens in their collaborations.
Topic:: Foreign Policy, Regional Cooperation, Strategic Interests, and Gender
Political Geography:: India, Asia, and Australia

170. China’s increased presence in Latin America: Win-win relations or a new dependency? A state of the art

Author:: Daniel Agramont Lechín
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
Abstract:: The rise of the Popular Republic of China (PRC) is one of the most significant events in contemporary international relations. However, at the global level, the “reemergence of China as a major global power has led to a considerable debate over the likely consequences for the rest of the world” (Jenkins, 2010: 810). China’s growing power raises questions as to the meaning of its superpower status as a nation, and the impact of its newfound influence in not only the Asia-Pacific region, but also the Global South (Dessein, 2015). In the specific case of Latin America and the Caribbean (LAC), the debate centers on the potential disadvantages that China’s vast supply of financial resources might bring for the region. Accordingly, the current paper is intended to examine the debate that has arisen in recent literature around the impact of China’s increased economic presence on Latin America –with win-win relations on the one hand and new dependency on the other.
Topic:: International Relations, Economics, Investment, and Dependency
Political Geography:: China, Asia, and Latin America

171. Proceed with Caution: Israeli Research Collaboration with China

Author:: Casey Babb
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Institute for National Security Studies (INSS)
Abstract:: For Israel, warming relations with China has, in large part, been driven by pragmatic and enticing economic prospects, with policies focused on seizing the economic opportunity. For Xi and the Chinese Communist Party, the rationale for strengthening relations with Israel has been equally pragmatic, if of a different nature. China has long sought access to Israel’s vaunted innovation and technology sector – one of the most advanced in the world. For these reasons, China-Israel relations have accelerated dramatically, in areas ranging from trade in goods, to investment deals, to diplomatic relations, and beyond. However, over the last few years, and partly in response to mounting US pressure on Israel to reconsider its relations with China, there has been a noticeable cooling of economic activity between the two countries. That being said, if Israel wants to solidify its relationship with the US while limiting the gateways China could conceivably use to access or acquire the country’s technology and innovation in certain dual-use domains, it must also ensure the country’s research, intellectual property, and expert knowledge in these areas is sufficiently protected.
Topic:: Security, Science and Technology, Bilateral Relations, Intellectual Property/Copyright, Innovation, and Strategic Interests
Political Geography:: China, Middle East, Israel, and Asia

172. Normalization between Turkey and Israel: Will it Last?

Author:: Gallia Lindenstrauss and Remi Daniel
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Institute for National Security Studies (INSS)
Abstract:: The decision by Turkey and Israel to normalize their relations stems from several processes that brought the Turkish side to push for normalization and the Israeli side to respond affirmatively. Yet alongside the serious motivations of the two sides to continue this process, there are issues that could become obstacles. Among them are the developments between Israel and the Palestinians, Turkey-US relations, the dynamics of Turkey's integration in processes related to the Abraham Accords, and the nature of future Israeli plans regarding gas exports. Nonetheless, coping with challenges related to these issues will be easier with senior diplomatic representation present in both countries.
Topic:: Diplomacy, Bilateral Relations, Normalization, and Strategic Interests
Political Geography:: Europe, Turkey, Middle East, Israel, and Asia

173. China below the Radar: Israel-US Strategic Dialogue on Technology

Author:: Assaf Orion and Shira Efron
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: Institute for National Security Studies (INSS)
Abstract:: The statements issued by President Biden during his visit to the Middle East include little mention of China. However, close reading reveals that between the lines, China is quite present in the agreements reached by the President and Israel and Saudi Arabia. The dialogue on technology cooperation announced by Jerusalem and Washington, which is related directly to the Great Power competition, signals a new stage in partnership between the countries: Israel alongside the United States, even if not against China
Topic:: Diplomacy, Science and Technology, Bilateral Relations, and Rivalry
Political Geography:: China, Middle East, Israel, Asia, North America, and United States of America

174. The Race to Electric Vehicles: Technology, US-China Rivalry, and Big Money

Author:: Ariel Sobelman
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Institute for National Security Studies (INSS)
Abstract:: In recent years Israel has become a leading player in auto tech, and China is interested in Israeli developments in a field that is expected to assume a significant role in the rivalry between Washington and Beijing. Therefore, it is important for Israel to define a national strategy on the issue, in order to avoid unnecessary involvement in the inter-bloc clash
Topic:: Green Technology, Innovation, Rivalry, and Electric Vehicles
Political Geography:: China, Asia, North America, and United States of America

175. After the Russian “Ruse,” China Looks for New Friends

Author:: Galia Lavi
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Institute for National Security Studies (INSS)
Abstract:: With the Russian invasion of Ukraine, it would seem that Beijing and Moscow should be a united front against the West. But in actuality, China has been surprised by the scale of the Russian aggression and is now rethinking its position in the geopolitical arena. How will this affect the Middle East?
Topic:: Foreign Policy, Military Strategy, Conflict, and Strategic Interests
Political Geography:: Russia, China, Europe, and Asia

176. Introducing Third Way’s US-China Digital World Order Initiative

Author:: Valerie Shen and Jayson Browder
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Third Way
Abstract:: If it wasn’t clear three months ago, it is clear now: the next global era will be defined by democracy versus autocracy. In this competition, a new and decisive divide pits America’s approach of “digital democracy” against China’s approach of “digital autocracy.” This great divide places the US and allies on one side and China's unfettered access to sensitive data on the other. China’s digital authoritarianism has been described as "one giant QAnon" and is ubiquitous among the 1.4 billion inhabitants of the country. Moreover, one of the greatest threats to American national security interests is if China prevails in exporting and normalizing its model of digital supremacy. China’s global network of surveillance systems is antithetical to liberal democratic values, as it monitors, punishes, and conditions citizens, as well as influences them through automated disinformation campaigns. China’s ambition for global digital supremacy is real and supported by aggressive diplomatic efforts and massive financial investments. The effort by the United States and like nations to maintain a peaceful and prosperous world order will require a level of sophistication and commitment unrivaled in our history. China is not only an adversary. It is sometimes a partner whose massive economy is deeply entwined with that of the US and other friendly nations. This is not the zero-sum game of the Cold War conflict, and the hope is that it never becomes so. Will liberal democracies strengthen and proliferate or weaken and dwindle in the 21st century? The Chinese state intends to shape the global digital order in its image by redrawing technological norms and standards. Ultimately, the US-China national security competition may hinge on who sets the digital world order.
Topic:: Science and Technology, Authoritarianism, Democracy, Digital Economy, Innovation, and Rivalry
Political Geography:: China, Asia, North America, and United States of America

177. Hidden Defaults

Author:: Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: China’s lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China’s loans, also the associated defaults remain “hidden”, as missed payments and restructuring details are not disclosed. We construct an encompassing dataset of sovereign debt restructurings with Chinese lenders and find that these credit events are surprisingly frequent, exceeding the number of sovereign bond or Paris Club restructurings. Chinese lenders follow a resolution approach reminiscent of 1980s Western lenders; they seldom provide deep debt relief with face value reduction. If history is any guide, multi-year debt workouts with serial restructurings lie in store.
Topic:: Development, International Cooperation, Finance, Bonds, and Influence
Political Geography:: China and Asia

178. Place-based policies and agglomeration economies: Firm-level evidence from Special Economic Zones in India

Author:: Holger Görg and Alina Mulyukova
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct and spillover effects of the program. We combine geocoded firm-level data and geocoded SEZs using a concentric ring approach, thus creating a novel dataset of firms with their assigned SEZ status. To overcome the selection bias we employ inverse probability weighting with time-varying covariates in a difference-in-differences framework. Our analysis yields that conditional on controlling for initial selection, SEZs induced no further productivity gains for within SEZ firms, on average. This effect is predominantly driven by relatively less productive firms, whereas more productive firms experienced significant productivity gains. However, SEZs created negative externalities for firms in the vicinity which attenuate with distance. Neighbouring domestic firms, large firms, manufacturing firms and non-importer firms are the main losers of the program. Evidence points at the diversion of inputs from non-SEZ to SEZ-firms as a potential mechanism.
Topic:: Economics, Business, Special Economic Zones, and Geography
Political Geography:: India and Asia

179. Cutting through the Value Chain: The Long-Run Effects of Decoupling the East from the West

Author:: Gabriel Felbermayr, Alexander Sandkamp, and Hendrik Mahlkow
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: With ever-increasing political tensions between China and Russia on one side and the EU and the US on the other, it only seems a matter of time until protectionist policies cause a decoupling of global value chains. This paper uses a computable general equilibrium trade model calibrated with the latest version of the GTAP database to simulate the effect of doubling non-tariff barriers - both unilateral and reciprocal - between the two blocks on trade and welfare. Imposing trade barriers almost completely eliminates bilateral imports. In addition, changes in price levels lead to higher imports and lower exports of the imposing country group from and to the rest of the world. The targeted country group increases exports to the rest of the world and reduces imports. Welfare falls in all countries involved, suggesting that governments should strive to cooperate rather than turning away from each other. By imposing a trade war on Russia, the political West could inflict severe damage on the Russian economy because of the latter’s smaller relative size.
Topic:: International Cooperation, International Trade and Finance, European Union, Conflict, Trade Wars, Protectionism, and Rivalry
Political Geography:: Russia, China, Europe, Asia, North America, and United States of America

180. Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance

Author:: Lukas Wellner, Brad Parks, Axel Dreher, Andreas Fuchs, and Austin M. Strange
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006–2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries.
Topic:: Development, Bilateral Relations, Foreign Aid, and Influence
Political Geography:: China and Asia

181. Who Lends to Africa and How? Introducing the Africa Debt Database

Author:: David Mihalyi and Christoph Trebesch
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Africa’s sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets and instead releases information on individual loans and bonds, in particular on the financial terms of each instrument. Taken together, we cover nearly 7000 loans and bonds between 2000 and 2020, with a total volume of 644 billion USD. Using this data, we study Africa’s record lending boom of the 2010s in detail. The debt boom was mainly driven by large sovereign bond issuances in London and New York, as well as growing lending by Chinese state-owned banks. The micro data also reveal a large variation in lending terms across countries, time, and creditors. Sovereign external bonds have interest rates of 6 percent, on average, Chinese banks charge 2-4 percent, and multilateral organizations just 1 percent. Strikingly, many governments in Africa simultaneously borrow large amounts from both private and official creditors, at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as cheap concessional loans can be used to pay the high interest to private or Chinese creditors.
Topic:: Economics, Foreign Aid, Credit, and Influence
Political Geography:: Africa, China, and Asia

182. Who wins and who loses from state subsidies?

Author:: Sourafel Girma, Holger Görg, and Ignat Stepanok
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms.
Topic:: Governance, Business, Subsidies, and Competition
Political Geography:: China and Asia

183. A Primer on the 2022 National Security Strategy

Author:: Peter Juul and Heba Malik
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Center for American Progress - CAP
Abstract:: The 2022 National Security Strategy introduces new ideas on navigating strategic competition with China and Russia, investing at home, and a renewed focus on the fight against climate change.
Topic:: Security, Climate Change, National Security, Rivalry, and Strategic Interests
Political Geography:: Russia, China, Europe, Asia, North America, and United States of America

184. Black Mirror Statecraft: Combating PRC Hostile Social Manipulation and Sharp Power in an Era of Great Power Competition

Author:: Jonathan Lushenko
Publication Date:: 02-2022
Content Type:: Working Paper
Institution:: Council on International Policy (CIP)
Abstract:: The Netflix television hit Black Mirror postulates a world in which personal mobile devices and other forms of interconnected infosphere technology produce alarming and increasingly animalistic human behavior. In the episode titled “Nosedive,” the main protagonist struggles to boost her social credit score – an algorithmic rating of all daily social interactions – to enhance her socio-economic status, earn special privileges, and sustain access to basic human resources through mostly contrived and inauthentic behavior. At first, this Twilight Zone-type plot seems unbelievable until realizing that a social credit system now exists in the People’s Republic of China (PRC).
Topic:: Science and Technology, Communications, Governance, and Public Opinion
Political Geography:: China and Asia

185. Arresting Nuclear Adventurism: China, Article VI, and the NPT

Author:: Henry Sokolski and Andrea Beck
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Nonproliferation Policy Education Center
Abstract:: Given the current crisis in Ukraine, it’s tempting to consider focusing on Chinese compliance with the Nuclear Nonproliferation Treaty (NPT) to be an academic indulgence. Giving into this inclination, however, would be a mistake. As dangerous as Russia currently is, China will be more threatening in the long run. As we are learning with Russia’s violation of the 1994 Budapest Memorandum, enforcing binding understandings is critical lest violators run roughshod over law and good order. This is true with Russia’s behavior in Ukraine. It is no less so with China’s nuclear weapons buildup and its repeated refusal to join in good faith negotiations to limit its nuclear weapons activities, which is required by Article VI of the NPT. This buildup and refusal clearly flies in the face of China’s legal NPT obligations. The question is what might bring Beijing back into compliance. To get the answers, NPEC held a battery of workshops last fall, followed by a week-long diplomatic simulation. The game participants included U.S., Japanese, and Australian former and current officials and staff as well as outside experts. The group concluded that Beijing is unlikely to comply willingly with the NPT anytime soon, but that U.S. and international security would still be best served by spotlighting Beijing’s nuclear adventurism and suggesting diplomatic off-ramps to arrest its nuclear buildup.
Topic:: Arms Control and Proliferation, Diplomacy, Military Strategy, Peace, and Nonproliferation Treaty (NPT)
Political Geography:: Russia, China, Europe, Ukraine, and Asia

186. Not all political relation shocks are alike: Assessing the impacts of US-China tensions on the oil market

Author:: Yifei Cai, Valérie Mignon, and Jamel Saadaoui
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper assesses the effects of US-China political tensions on the oil market. Relying on a quantitative measure of these relationships, we investigate how their dynamics impact oil demand, supply, and prices over various periods, starting from 1971 to 2019. To this end, we estimate a structural vector autoregressive model as well as local projections and show that political tensions between the two countries pull down oil demand and raise supply at medium- and long-run horizons. Overall, our findings show that conflicting relationships between these two major players in the oil market may have crucial impacts, such as the development of new strategic partnerships.
Topic:: Security, Oil, Conflict, Rivalry, and Energy Crisis
Political Geography:: China, Asia, North America, and United States of America

187. The Belt and Road Initiative as Ten Policy Commandments: Review of Xi’s Kazakhstan and Indonesia Launch Speeches

Author:: Lauren A. Johnson
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: China Studies Centre, The University of Sydney
Abstract:: In 2019 Foreign Policy described China’s Belt and Road Initiative (BRI) as “the most talked about and least defined buzzword of this decade”. Given that confusion and the importance of leader political speeches in China, especially those of current President Xi Jinping, it is surprising that the BRI literature has little in-depth analysed the two launch speeches of 2013. This article seeks to fill that gap with study of those speeches and focus on the five cooperationoriented areas announced in each. In comparative context those ten pillars appear not to be descended from New Era Chinese heaven but rather demonstrate substantive thematic overlap with the ten pillars of what was once relatively mainstream macroeconomic development policy, the Washington Consensus. Yet, in the case of the BRI there is a relative implicit implementation emphasis also. In forward context of contemporary global political economy tensions, the need to recover from the COVID-19 pandemic, the G7’s Build Back Better and the European Union’s Global Gateway ambitions also, this article may offer a timely fresh and comparative lens on the BRI.
Topic:: Development, International Cooperation, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
Political Geography:: China, Asia, and Global Focus

188. Europe’s Area of Maritime Interest in Northeast Asia

Author:: Philip Shetler-Jones
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Participation in the monitoring of UN sanctions on North Korea is Europe’s most prominent operational contribution to Indo-Pacific security, but is also characterised by a fragmented, bilateral approach that contradicts the trajectory of recent European policies that strive for a more meaningful and coordinated investment in this area. A coordinated European presence in the region built around the sanctions monitoring task is within reach, and steps taken to achieve it would dramatically enhance the policy coherence and impact of European action on Northeast Asian security.
Topic:: Security, Foreign Policy, Military Affairs, European Union, and Maritime
Political Geography:: Europe, Asia, and North Korea

189. Japan and the War in Ukraine

Author:: Eyal Ben-Ari
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: Two weeks after the war began, Japan announced that its new National Security Strategy scheduled to be published this year would recategorize Russia from “partner” to “security challenge,” thus placing it alongside China and North Korea.
Topic:: Security, Defense Policy, Military Strategy, and Conflict
Political Geography:: Russia, Japan, China, Europe, and Asia

190. Biden, Israel, and China: Making a Difficult Threesome Work

Author:: Steven R. David
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: It is wrong to expect Israel, a middle-level economy, to decouple from China when far wealthier countries (including the United States) show no signs of following suit. Israeli companies should not be subject to restrictions not placed on companies elsewhere, including the United States itself.
Topic:: Diplomacy, International Trade and Finance, Hegemony, and Conflict
Political Geography:: China, Middle East, Israel, Asia, North America, and United States of America

191. Ukraine War Distracts US from China, Legitimizes Nuclear Bombs

Author:: Efraim Inbar
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: Russia’s invasion of Ukraine is distracting the US from the Chinese threat and erodes the nuclear taboo.
Topic:: Security, Defense Policy, Conflict, Rivalry, and Russia-Ukraine War
Political Geography:: Russia, China, Europe, Ukraine, Asia, North America, and United States of America

192. Porosity of Tajik-Afghan Border Making Beijing’s Involvement in Region More Ominous

Author:: Paul A. Goble
Publication Date:: 02-2021
Content Type:: Working Paper
Institution:: The Jamestown Foundation
Abstract:: In most parts of the world, the lines on maps separating countries are true borders. That is, they are controlled by the governments on one or both sides. But in some places, they remain the quasi-open frontiers they were in the past or have reemerged as such because of recent political changes; those borders are highly porous zones, where people and goods can move more or less freely in one or both directions without much regard to the powers that be. Such situations invite outside involvement that can ramp up quickly and disturb preexisting international arrangements. One poignant example is the adjoining border area shared by Tajikistan and Afghanistan. In recent years, that frontier has attracted attention because of the danger that Islamist militants from Afghanistan could cross it to move north into Tajikistan and beyond. But another danger is emerging: China is establishing increasing control over Tajikistan and, thus, is putting itself in a position to project power southward from Tajikistan into Afghanistan. If Beijing does so, that could fundamentally change the security situation and geopolitical balance in Central and South Asia as a whole.
Topic:: Foreign Policy, Territorial Disputes, and Borders
Political Geography:: Afghanistan, China, South Asia, Central Asia, Asia, and Tajikistan

193. Confrontation, Cooperation or Isolation? What will China’s Foreign Policy Look Like During Biden’s Presidency

Author:: Branimir Vidmarovic
Publication Date:: 01-2021
Content Type:: Working Paper
Institution:: Institute for Development and International Relations (IRMO)
Abstract:: As the globally difficult 2020 came to an end, China is entering a challenging and perilous period unlike any other in its long history. COVID-19 pandemic, widely believed to have originated in Chinese Wuhan, severely damaged China’s international image, especially among Western democracies. At the beginning of the millennium, Chinese policymakers reached a conclusion that favorable political and security environment presented China with a ‘strategic window of opportunity’ for the next 15 to 20 years, during which the country should strive to achieve its economic, social and security development goals. It was believed that at some point, the West would become wary and agitated by China’s rise – which would in turn lead to a shift towards less favorable conditions.
Topic:: Foreign Policy, International Cooperation, Hegemony, and Isolation
Political Geography:: China and Asia

194. The Belt and Road Initiative and the Internationalisation of China's Scientific Power: The Case of Italy

Author:: Lorenzo Mariani
Publication Date:: 09-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: What are the elements and the impact of the inclusion of scientific cooperation within the 2019 Memorandum of Understanding (MoU) in support of the Belt and Road Initiative between Italy and China? Like many other developed countries, Italy has played a role in contributing to China’s growth as a science and technology (S&T) power. Most S&T bilateral collaborations are decade-long and predate the MoU, suggesting that the importance of the latter is largely symbolic. Nonetheless, the MoU of March 2019 has reinforced the process of centralisation of S&T collaborations as well as a public debate that has grown to include matters regarding 5G technology and public procurement involving Chinese technology. Paper prepared in the framework of the IAI project “When Italy Embraces the BRI”.
Topic:: International Relations, Foreign Policy, Science and Technology, and Research
Political Geography:: Asia and Italy

195. One Belt One Voice: Chinese Media in Italy

Author:: Francesca Ghiretti and Lorenzo Mariani
Publication Date:: 10-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Chinese media are the voice of the Chinese Communist Party at home and abroad. It is no surprise therefore that collaborations between Chinese and foreign media have been attracting more international attention. One issue that has not been yet explored is the nature and implications of the inclusion of two important Italian media actors such as Rai (the state-run broadcasting company) and Ansa (Italy’s main press agency) in the Memorandum of Understanding signed by Italy in support of the Belt and Road Initiative in 2019. These deals fit in a broader picture of an Italian media environment that is being increasingly targeted by Chinese media. However, the impact that such an effort has had on the Italian public opinion has been very limited so far and the Italian media landscape keeps offering free and varied information. Paper prepared in the framework of the IAI project “When Italy Embraces the BRI”.
Topic:: Foreign Policy, Mass Media, Public Opinion, and Belt and Road Initiative (BRI)
Political Geography:: China, Europe, Asia, and Italy

196. Silk Road Academic Connections: China–Italy Cooperation in Higher Education and Its Implications for the West

Author:: Nicola Casarini
Publication Date:: 10-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Cooperation in higher education and research is a positive aspect of the broader Italy–China relationship as it contributes to the advancement of the scientific and cultural environment in both countries. China has invested considerable sums to promote cooperation and exchanges with the Italian academy, including through the establishment of a dozen Confucius Institutes and a number of Confucius Classrooms. Italian universities have set up academic partnerships with Chinese entities on almost every subject. These have improved Italy’s research outlook, but have also posed inevitable risks of self-censorship and kowtowing to Chinese wishes. Moreover, there has been a surge of academic sponsorships by Chinese firms, in particular ICT companies such as ZTE and Huawei, which raise further concerns for Italy’s security interests and cooperation with its Western allies.
Topic:: Foreign Policy, Education, Science and Technology, Higher Education, and Research and Development
Political Geography:: China, Europe, Asia, and Italy

197. China in Italy: Risk Assessment and Preventive Solutions

Author:: Beatrice Gallelli and Lorenzo Mariani
Publication Date:: 12-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Italy’s 2019 decision to sign a Memorandum of Understanding with China in support of the Belt and Road Initiative sparked a heated debate at home and abroad. The possibility of Italy upgrading its trade and investment relations with China through the shortcut of a political endorsement of President Xi Jinping’s flagship foreign-policy initiative was framed as either a heaven-sent opportunity or a serious strategic threat. Two years on, most of the concerns pointed out in the debate, especially regarding infrastructures, have proven unsubstantiated (although the economic opportunities for which the Italian Government wished have also failed to materialise). However, cooperation initiatives between Italian and Chinese entities in sectors often overlooked in the mainstream debate, such as media and academic partnerships, do present risks. The creation of an interagency China Information and Coordination Unit would help to prevent – or, at least, to minimise – such risks. Paper prepared in the framework of the IAI project “When Italy Embraces the BRI”.
Topic:: Foreign Policy, Education, Science and Technology, Mass Media, Foreign Direct Investment, and Trade
Political Geography:: China, Europe, Asia, and Italy

198. Technological Competition: Can the EU Compete with China?

Author:: Francesca Ghiretti
Publication Date:: 04-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: The debate on technological development and the unfolding fourth technological revolution tends to neglect the role of the EU, relegating it to follower status. The leadership positions are occupied by the US and China, who compete with one another for technological supremacy. Yet, despite lagging behind in some areas, the EU is better placed than is often assumed and still stands a chance of guaranteeing the delivery of a technological revolution that is not only environmentally but also socially sustainable. This is critical in proposing a model of technological development alternative to that of China, in particular, and especially in such sectors as artificial intelligence, supercomputing and digital skills. Study produced as part of the project “La geopolitica del digitale”, March 2021.
Topic:: Politics, Science and Technology, European Union, Institutions, Strategic Competition, and Digital Policy
Political Geography:: China, Europe, and Asia

199. The Belt and Road Initiative in Italy: The Ports of Genoa and Trieste

Author:: Francesca Ghiretti
Publication Date:: 05-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: In March 2019, Italy signed a Memorandum of Understanding (MoU) with the People’s Republic of China (PRC) in support of PRC President Xi Jinping’s flagship infrastructure and connectivity project, the Belt and Road Initiative. The MoU was accompanied by a series of commercial agreements, including two between the ports of Genoa and Trieste and the state-owned enterprise China Communications Construction Company (CCCC). The European Union and the United States expressed concerns about the agreements as they feared that CCCC would eventually obtain a controlling share of the ports, not unlike that recently secured by the China Ocean Shipping Company (COSCO) with Greece’s Port of Piraeus. However, existing legal constraints, an open international and national debate, and the vague nature of the agreements concerned have so far kept these fears from materialising. Paper prepared in the framework of the IAI project “When Italy embraces the BRI”.
Topic:: Foreign Policy, Infrastructure, Belt and Road Initiative (BRI), and Trade
Political Geography:: China, Europe, Asia, and Italy

200. China's Belt and Road Initiative in Italy: An Analysis of Financial Cooperation

Author:: Nicola Bilotta
Publication Date:: 05-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Financial cooperation is essential to boosting bilateral economic ties, providing firms with more effective instruments to operate in foreign markets. It should come as no surprise, then, that financial cooperation was a pillar of the 2019 Memorandum of Understanding (MoU) reached between Italy and China in support of the latter’s Belt and Road Initiative (BRI). However, a preliminary analysis of BRI-related commercial agreements between Italian financial institutions and their Chinese counterparts shows that they have not resulted in any ground-breaking development. These Memoranda have apparently just added a “BRI” badge to pre-existing trends of collaboration. The BRI-related MoUs in the field of financial cooperation do not, for the time being at least, justify concerns that China may gain an economic foothold in Italy large enough to win it much political influence. A more realistic risk is that these MoUs may undermine a common European approach to China, weakening the negotiating stance of the European Union’s. Paper prepared in the framework of the IAI project “When Italy embraces the BRI”.
Topic:: Foreign Policy, Political Economy, Governance, Finance, and Belt and Road Initiative (BRI)
Political Geography:: China, Europe, Asia, and Italy

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