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1. The Future of the Belt and Road in Europe: How China’s Connectivity Project is Being Reconfigured across the Old Continent – and What It Means for the Euro-Atlantic Alliance

Author:
Nicola Casarini
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China’s Belt and Road Initiative (BRI) has entered the twilight zone in the old continent, following a deterioration of bilateral relations between the EU member states and China over the last years. Italy’s official exit from the BRI at the end of 2023 was a further blow to Chinese President Xi Jinping’s signature foreign policy. Yet, the BRI in Europe is being reconfigured rather than being terminated. In Western Europe, the BRI is moving away from physical infrastructure projects and investment in industrial assets – the latter being increasingly protected from Chinese takeovers by both national and EU legislation – to financial and monetary connectivity. This shift is welcomed by various European actors, including some policymakers at the national level, eurozone institutions and major banks. Concurrently, most of Eastern European countries continue to promote BRI projects and seek to attract Chinese investments, suggesting that there is a two-speed Europe when it comes to China, both in terms of geography and sectors.
Topic:
Infrastructure, Foreign Direct Investment, European Union, Belt and Road Initiative (BRI), and Currency
Political Geography:
China, Europe, Asia, and Italy

2. Digital Sovereignty: European Policies, American Dilemmas

Author:
Mathilde Velliet
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
European digital sovereignty has been made a priority by Ursula von der Leyen’s European Commission. Due to the privileged position of American companies in the European market, Brussels’ efforts towards digital sovereignty (on privacy, antitrust, data sovereignty, etc.) are closely scrutinized by American policymakers. They often view European initiatives as “protectionist” and unfairly targeting U.S. companies. However, the American vision of European digital sovereignty has evolved in recent years under the influence of two main factors. On the one hand, awareness of the problematic effects and practices of platforms has led to a consensus on the need for reform in the digital sector. On the other hand, technological competition with China has been elevated to a priority. This vision remains fraught with contradictions, along inter-party, intra-party, inter-agency, state-federal, and issue-based fault lines. Washington’s position on anti-monopolistic practices is an illuminating example, characterized by a double discourse between a desire to reform the U.S. digital sector domestically and active diplomacy to dilute these efforts at the European level. Nonetheless, several American actors – particularly in the legislative branch – are seeking to learn from the successes and flaws of European regulations for American reform projects, such as on platform regulation or privacy. The China factor reinforces the ambiguity of the U.S.’ position. It creates new opportunities for cooperation in the face of perceived common vulnerabilities (infrastructure security, inbound investments, etc.) and autocratic definitions of digital sovereignty. However, it also raises tension and misunderstanding on the American side towards European reforms that often target American companies more than Chinese ones. Lastly, while American and European companies have adapted to the need for digital sovereignty through a range of technical and commercial solutions, the temptation of a maximalist definition of European sovereignty continues to create major stumbling blocks, particularly on the cloud.
Topic:
European Union, Regulation, Cloud Computing, Digital Sovereignty, and Data Governance
Political Geography:
China, Europe, Asia, North America, and United States of America

3. South Korea and IPEF: Rationale, Objectives and the Implications for Partners and Neighbors

Author:
Jaewoo Choo
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
As a key manufacturer of high-end technology components critical to the sustainability of the Fourth Industrial Revolution, South Korea is essential in any effort to rebuild a resilient global supply chain but also to the promotion of a clean economy. South Korea can thus contribute to two of the pillars of IPEF (Indo-Pacific Economic Framework), specially to pillars II and III (supply-chain resilience and a clean economy). However, as the US executive and legislative branches intensify their hawkish approaches to China, they have not given much consideration to the possible damage they will inflict on the strategic interests of some of their allies. In particular, they have not fully considered Korean factors when legislating on bills such as the Inflation Reduction Act (IRA). This paper argues that allies such as South Korea and France must make the White House and US legislature aware of the external consequences of their decisions and behavior, and that they must cooperate within the confines of US-led strategic initiatives.
Topic:
Science and Technology, Economy, Supply Chains, and Semiconductors
Political Geography:
China, Asia, South Korea, and United States of America

4. How the War in Ukraine is Changing the Space Game

Author:
Guilhem Penent and Guillaume Schlumberger
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The war in Ukraine has become a showcase for the new commercial paradigm emerging in the space sector (New Space). As such, it seems to confirm the relevance of adaptation efforts led by the United States – more specifically the Pentagon – since the mid-2010s. Thus, it highlights ongoing transformations and announces potential disruptions in the exploitation of orbits, particularly in the fields of satellite connectivity and remote sensing. It also shapes future tensions, while the structuring of international relations around the two poles constituted by the United States and China raises questions about the consequences on the safe, sustainable, secure, and stable use of space. With these developments, Europe is faced with the challenge of remaining relevant.
Topic:
International Relations, European Union, Space, Satellite, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, Asia, and United States of America

5. Reshuffling Value Chains - South Korea as a Case Study

Author:
Françoise Nicolas
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Despite all the talks about the reshuffling of value-chains and the trend to a form of industrial “Desinicization” (or decoupling/disengagement from China), the example of South Korea does not vindicate such assertions. The expansion of Korean direct investment in neighboring countries such as China and the Association of Southeast Asian Nations (ASEAN) remains a reality and it has not changed in any fundamental way over the past two decades. South Korean companies’ decisions to locate in one country rather than another are still very much based on cost factors, even if security considerations are increasingly factored in. Similarly, reshoring, which has been high on the South Korean government’s agenda for a long time, remains a marginal phenomenon for South Korean companies, despite the incentives provided. Rather than the relocation of production (in the form of reshoring or nearshoring) South Korean companies have turned to more unexpected options, such as the development of complementarity-based partnerships or vertically-integrated production networks with commodity suppliers, as in the case of the production of rare earth-based magnets. Such a strategy is likely to become more popular in the future, as it nicely combines economic and security considerations. Without a doubt, due to the highly politicized nature of the technology involved, the semiconductor industry is the one undergoing the most significant changes. In a context of rising Sino-US rivalry, the US has ramped up pressures on China with far-reaching consequences, leading South Korean semiconductor companies (with the support of the government) to engage in a strategy combining relocation to the US and onshoring in South Korea. While the economic logic is likely to prevail in most sectors thus limiting the scope for supply chain reshuffling, the examples of the semiconductor and rare earth-based magnets suggest that important changes can still be expected in the future in industries that are deemed strategic.
Topic:
Foreign Direct Investment, Supply Chains, Value Chains, and Semiconductors
Political Geography:
China, South Korea, North America, and United States of America

6. China in the Race to Low Earth Orbit: Perspectives on the future internet constellation Guowang

Author:
Marc Julienne
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
In April 2021, the Chinese government officially, but rather quietly, established a new state-owned enterprise (SOE) named China SatNet. Its mission: build out China’s “mega-constellation” program for low Earth orbiting internet satellites, known as Guowang (“national network”). Several scattered programs had already been launched in China since 2018, and the establishment of this new SOE appears aimed at streamlining and accelerating the development and deployment of the future national constellation. China's goal is to position itself in the highly strategic sector that is space-based broadband mobile telecommunication networks, so far dominated by the American SpaceX and its Starlink constellation. These constellations promise significant commercial and military outcomes that have aroused the interest of states. In this field, Beijing lags behind SpaceX, but demonstrates a fierce determination to catch up and compete with its rivals. China has already registered a request with the International Telecommunications Union to put 12,992 satellites into orbit, or roughly 1,000 more than what has so far been authorized for Starlink. To achieve its goals, China relies on traditional aerospace and telecommunications SOEs, and now on the newcomer China SatNet. It also relies on an emerging ecosystem of companies and start-ups (GalaxySpace in particular), and encourages local governments to build production parks for the space industry and new launch centers across the country. China is thus gearing up to achieve its ambitions, but will nevertheless have to face multiple challenges, including the financing of its industry in a constrained economic context, the development of a viable business model which has not yet been proven elsewhere, and above all, the growing strategic and technological rivalry with the United States.
Topic:
Science and Technology, Internet, Space, and Satellite
Political Geography:
China and Asia

7. African Media Cultures and Chinese Public Relations Strategies in Kenya and Ethiopia

Author:
Hangwei Li and Yuan Wang
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Development, Media, Public Relations, and Engagement
Political Geography:
Kenya, Africa, China, and Ethiopia

8. How Indonesia Used Chinese Industrial Investments to Turn Nickel into the New Gold

Author:
Angela Tritto
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Development, Industrial Policy, Belt and Road Initiative (BRI), Investment, and Innovation
Political Geography:
China, Indonesia, and Asia

9. China’s Response to Türkiye’s Volatile Authoritarianism

Author:
Ceren Ergenç and Kenan Göçer
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
This paper investigates Türkiye’s evolving relations with China’s Belt and Road Initiative (BRI), a large-scale program of infrastructure investment and project financing proposed by Chinese President Xi Jinping in 2013. The paper digs deeply into cases from two sectors—transportation and energy—focusing on how heightened and changing local expectations among Turks for these prospective BRI projects have shaped choices and outcomes, including China’s. In so doing, it explores how these shifting Turkish perceptions affect the implementation of BRI projects in Türkiye. This paper has several goals: it seeks to understand the reasons behind these local changes, the role of the state and private sector in Türkiye in these changes, and the way China has responded so far. Of course, domestic factors are not the only ones that shape the implementation of BRI projects in Türkiye or elsewhere; regional and global trends have had an impact too.
Topic:
Foreign Policy, Infrastructure, Authoritarianism, Belt and Road Initiative (BRI), and Investment
Political Geography:
China, Turkey, Middle East, and Asia

10. Fighting Against Internal and External Threats Simultaneously: China’s Police and Satellite Cooperation with Autocratic Countries

Author:
Chisako T. Masuo
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
What direction will the Xi Jinping administration’s foreign policy take over the coming years, and how will that affect the existing international order? The Chinese Communist Party harbours a strong sense of crisis about the internal and external threats colliding to supposedly destabilise its regime, and thus aims to strengthen cooperation with developing countries in order to prevent such danger. The Xi administration is consequently strengthening police and law-enforcement cooperation inside the Shanghai Cooperation Organisation, which includes Russia. Besides, China has launched a new initiative of collaborating with Moscow on satellite systems to monitor the entire Earth, in order to accumulate big data on various issues. The current Chinese foreign policy, which pursues a cultivation of deeper relations with autocratic countries by providing them with surveillance technologies, is likely to deepen the global divide with liberal democracies.
Topic:
Security, Foreign Policy, International Order, and Satellite
Political Geography:
Russia, China, Eurasia, and Asia

11. The Cross-Border Interbank Payment System: A Case Study in Chinese Economic Leadership

Author:
Aidan Campbell
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Investigations seeking to explain the rise of China rarely investigate the many new institutions founded to increase China’s economic success and influence over global affairs. In the economic sector, some better-known projects include the Belt and Road Initiative, the Asian Infrastructure Investment Bank, and the New Development Bank. One of the newest and least understood institutions founded to promote international use of the RMB is the Cross-Border Interbank Payment System (CIPS). The purpose of this research is to examine the development, policies, and goals of CIPS in order to better understand the phenomenon of Chinese-lead international economic institutions. Novel evidence for CIPS’s intention to adopt blockchain technology and provide services for currencies other than the RMB is presented. The conclusion to this research is that CIPS is presently too small to pose a threat to the existing SWIFT network or predominance of US dollar transactions in international trade. At the same time, CIPS evidences a patient and rational strategy designed to reform international norms and patterns of trade to China’s advantage in the long term.
Topic:
Political Economy, Leadership, Economy, Belt and Road Initiative (BRI), and Banking
Political Geography:
China and Asia

12. State Capitalism, Imperialism, and China: Bringing History Back In

Author:
Isabella Weber
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
State capitalism is experiencing a great revival as a term to capture the current capitalist constellations, increasingly replacing neoliberalism. Unlike neoliberalism, however, the term state capitalism has a long history reaching back to the age of imperialism in the late 19th century. While state capitalism has been used as a pejorative term by Marxists, liberals and neoliberals alike, it has served as a programmatic label for developmentalist and neomercantilist projects in reaction to imperialism in the periphery. This paper argues that we need to bring the intellectual history of state capitalism into the ‘new state capitalism’ debate. China has played a major role in the revival of state capitalism in the social sciences, but the long history of China’s engagement with state capitalism as a concept and program dating back to the late Qing reformers has been overlooked for the most part. State capitalism is by no means new to China, from Liang Qichao, Sun Yatsen and Mao Zedong to Deng Xiaoping, the idea that China had to create a modern nation state and industrial capitalism in the name of economic progress and to get ahead in the global competition is a recurring theme. What is new is that for the first time the ambition to use state capitalism as a means to catch up with the West is bearing fruits in ways that could undermine the predominance of Western economies.
Topic:
Imperialism, Political Economy, History, Capitalism, and State Capitalism
Political Geography:
China and Asia

13. US strategy and force posture for an era of nuclear tripolarity

Author:
Keir A. Lieber and Daryl G. Press
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
The term “nuclear tripolarity” describes a world in which China has joined the United States and Russia as a leading nuclear power. As China modernizes its existing nuclear forces and deploys new weapons, it is on track to roughly double its deployed nuclear arsenal in the next few years—from approximately 350 to 700 deliverable warheads. The US Department of Defense projects that China will go further, expanding its arsenal to at least 1,500 warheads by 2035.1 At those force levels, China’s arsenal would be comparable to US and Russian deployed nuclear forces, currently capped at 1,550 by the New START Treaty.2 What are the consequences of emerging tripolarity for US nuclear strategy and force posture? If the United States retains its current approach to nuclear force planning, the growth of China’s arsenal (and the ongoing modernization of Russia’s nuclear weapons) will likely compel the United States to significantly increase its own arsenal. The easiest way to do so would be to upload one to two thousand additional warheads from US reserves onto existing delivery systems when the New START treaty expires in 2026. Unfortunately, a major increase in US forces would likely mark just another step in an intensifying arms competition among the three leading nuclear powers, since China and Russia would then feel pressure to respond.
Topic:
Defense Policy, National Security, Nuclear Weapons, Geopolitics, Deterrence, and Multipolarity
Political Geography:
Russia, China, Asia, North America, and United States of America

14. The NewSpace market: Capital, control, and commercialization

Author:
Robert Murray
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
Commercial opportunities in space-based technologies are expanding rapidly. From satellite communications and Earth observation to space tourism and asteroid mining, the potential for businesses to capitalize on these emerging technologies is vast and known as “NewSpace.”1 The NewSpace model is important for governments to understand because the dual-use nature of space, specifically its growing commercialization, will influence the types of space-based technologies that nations may leverage, and consequently, impact their national security paradigms. By capitalizing on the private sector’s agility and combining it with the essential research efforts and customer role played by the public sector, the NewSpace industry can play a critical function in addressing current and future national security challenges through public-private codevelopment. As the NewSpace industry expands, the role of government is evolving from being the primary developer and operator of space assets to facilitating their commercialization, while still prioritizing key advancements. US and allied governments can capitalize on this competitive landscape by strategically investing in areas that align with their national security objectives. However, it is crucial for them to first understand and adapt to their changing roles within this dynamic environment. Indeed, the benefits of the burgeoning NewSpace industry extend beyond the United States. International collaboration and competition in this area can lead to faster technological advancements and economic gains. The global NewSpace landscape is driving down costs, increasing access to space, and fostering innovation that can improve not only economic well-being, but also impact national security models. To that end, this memo will examine the broad state of the space market, discuss the industry drivers, and propose recommendations for US and allied policymakers as they consider future government investments in those enabling space-based activities that support wider national security ambitions.
Topic:
Defense Policy, International Trade and Finance, National Security, Science and Technology, European Union, Space, and Defense Industry
Political Geography:
Russia, China, Eurasia, Canada, Asia, and United States of America

15. United States–China semiconductor standoff: A supply chain under stress

Author:
Jeremy Mark and Dexter Tiff Roberts
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
In August 2022, the US Congress passed the CHIPS and Science Act, a law that approves subsidies and tax breaks to help jump-start the renewed production on American soil of advanced semiconductors.1 Just two months later, the Joe Biden administration issued wide-ranging restrictions on the export to China of chips and chip-making technology to undercut that country’s ability to manufacture the same class of integrated circuits.2 Taken together with a steady stream of Biden administration prohibitions on technology sales to key Chinese companies, the US initiatives represent a profound turn toward competition with China in the high-tech realm.3 They also highlight an effort to restructure the complex, multinational supply chains centered on East Asia that manufacture hundreds of billions of dollars of semiconductors a year. As such, the Biden administration has set in motion a process that could alter the business strategies—and fortunes—of homegrown and foreign-invested semiconductor companies based in China, world-leading chipmakers in Taiwan and South Korea, and suppliers around the world that provide the industry with the machinery and myriad inputs that fuel chip production. The Biden administration insists that its restrictions on sales to China are intended only to limit China’s ability to produce the cutting-edge chips that can feed into the development of weapons and other strategically important technologies—and not to cripple its semiconductor industry. But the current state of play of sanctions and support for US-based semiconductor production, including by Taiwanese and Korean chipmakers, is not the endpoint in this process. Rather, the momentum to constrain Beijing’s semiconductor program is likely to continue in the coming months, at the very least with additional restrictions on Chinese companies and government-linked entities, and unprecedented bureaucratic scrutiny of American venture-capital and equity-financing flows to China. That amounts to more bad news for corporate leaders in Asia, North America, and Europe who have spent the past generation building a globe-spanning semiconductor industry that has faced few barriers to expansion. As US restrictions mount, and sales of certain technologies to China flag, the once-unimaginable process of reorienting semiconductor supply chains will become an ever-present reality. The CHIPS and Science Act already is becoming an important factor in corporate strategy, providing incentives for Taiwanese, Korean, and American companies to make big bets on new factories in places like New York, Ohio, Texas, and Arizona—witness Taiwan Semiconductor Manufacturing Company’s (TSMC’s) recent decision to build a second factory in Phoenix.4 This paper explores the potential implications of US semiconductor policy for the global semiconductor supply chains and the competition for primacy in an industry that is constantly changing the face of the global economy and one that has implications for global security in all its dimensions. It begins by examining the policies put in place by the Biden administration, and then discusses the changes taking place across the industry, with a focus on Asia.
Topic:
Economy, Business, Supply Chains, Semiconductors, and Economic Competition
Political Geography:
China, Asia, North America, and United States of America

16. West and China Compete for Tech Influence in Arab Persian Gulf States

Author:
Sara Nowacka
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
New technologies are an increasingly important element of the Sino-American rivalry in the Persian Gulf. China has become the preferred partner in this area due to, for example, the dominant role of government (vs. private) investment in the technology sector in both China and the Gulf states. The intensification of cooperation between the Gulf Cooperation Council (GCC) and China in the field of new technologies may increase the influence of authoritarian states in setting technological standards.
Topic:
Science and Technology, Authoritarianism, Investment, Rivalry, and Gulf Cooperation Council
Political Geography:
China, Middle East, United States of America, and Gulf Nations

17. China Becoming Globally More Active in the Security Sphere

Author:
Marcin Przychodniak
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
China is expanding its potential to project power abroad. It includes legal changes, expansion of military infrastructure in other countries, and cooperation with partners in the Pacific. An example of their activity in the field of security is the operations of Chinese security companies, mainly in the Middle East and Africa. This should encourage NATO to further deepen cooperation with its members and partners, including with Pacific countries, as well as to strengthen the coordination of EU and U.S. policy towards developing countries.
Topic:
Security, NATO, Infrastructure, and Partnerships
Political Geography:
Africa, China, Middle East, Asia, and Asia-Pacific

18. Building a Coalition - the U.S. Faces Down Competition with China in the Chip Sector

Author:
Damian Wnukowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In recent months, the U.S. has intensified its international efforts to limit China’s ability to produce the most advanced chips. The result includes the introduction by Japan and the Netherlands of restrictions on the export of modern machines for chip production. In response, China is trying to attract foreign investment and develop its own potential in this sector. The U.S. actions may significantly slow the pace of China’s technological development and economic growth and limit its potential to further strengthen its military capabilities. This may make it difficult for China to support Russia with dual-use products and render possible offensive actions against Taiwan harder.
Topic:
Economy, Production, Semiconductors, and Competition
Political Geography:
China, Asia, North America, and United States of America

19. U.S. Re-Focuses Arctic Policy-The Consequences for Its Allies

Author:
Paweł Markiewicz
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The Biden administration is increasing the U.S. capabilities in countering the effects of climate change in the Arctic, an aim overlapping the rivalry with Russia and China in this region. The U.S. announced increasing investments in infrastructure projects and defence, for example, modernising the Coast Guard’s Arctic fleet. The planned measures provide an opportunity for closer American cooperation with their allies and may mark the beginning of a regional division of labour in the area of shared defence.
Topic:
Climate Change, Infrastructure, Investment, and Rivalry
Political Geography:
Russia, China, Arctic, and United States of America

20. China Adapts Policy in Response to Russia's Aggression Against Ukraine

Author:
Marcin Przychodniak
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
China perceives the Russian aggression against Ukraine as an expression of resistance to the U.S. and NATO hegemony and an important element of building a new international order that marginalises the West. Based on this, China is strengthening strategic cooperation with Russia, striving to weaken the international position of the U.S., the EU, and their partners, while testing reactions to a possible escalation of Chinese actions towards Taiwan, for example. President Xi Jinping expressed this policy course during his March visit to Russia. At the same time, China is trying to gain support from the countries of the Global South. This approach means a continuation of China’s assertive policy towards the European Union, among others.
Topic:
Foreign Policy, NATO, European Union, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, Ukraine, and Asia

21. Implications of the Incursions into U.S. and Canadian Airspace

Author:
Marcin Andrzej Piotrowski
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In the first half of February, a series of serious incidents happened in the airspace of the U.S. and Canada involving shootdowns of four objects, with at least one confirmed as a Chinese balloon, likely used for intelligence. The U.S. administration is conducting an investigation to explain the various platforms, the equipment onboard, and their mission. Because further incidents cannot be excluded, some changes in the rhetoric of the Chinese government should be expected, as well as a higher readiness of air defence networks of the powers.
Topic:
Security, Defense Policy, Territory, and Airspace
Political Geography:
China, Canada, North America, and United States of America

22. Evolution, not Revolution: Japan Revises Security Policy

Author:
Oskar Pietrewicz
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In December last year, the government of Kishida Fumio adopted three documents adapting Japan’s security policy to the deteriorating international situation. Its security and national defence strategies highlight challenges from China, Russia, and North Korea, as well as an increase in non-military threats. A third document specifies the need for a record increase in defence spending. Japan’s readiness to deepen cooperation with the U.S. and European countries and its criticism in its assessment of Russia’s aggression against Ukraine create the conditions for the further development of Japan’s cooperation with NATO and the Polish-Japanese dialogue on security.
Topic:
Security, Foreign Policy, Defense Policy, Regional Politics, and Russia-Ukraine War
Political Geography:
Russia, Japan, China, Asia, and North Korea

23. Northeast Asia Defense Transparency Index 2021–22

Author:
Chi Fang and Jade Reidy
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Military tensions are on the rise in Northeast Asia as the likes of China, North Korea, and the United States flex their combat capabilities—but this does not mean that war is imminent. This is an important insight from the latest Northeast Asia Defense Transparency Index (DTI) for the period spanning 2021 to 2022. Carried out every two years by the University of California’s Institute on Global Conflict and Cooperation, the DTI offers a detailed examination of how open or closed major regional states are in disclosing information on their defense postures, including defense budgets, publication of official annual defense reports, legislative oversight, and the nature of external military activities. The 2021–22 DTI found that there was only a marginal decline in the overall defense transparency level for Northeast Asia, with Japan showing a noteworthy improvement in its transparency performance. The concealment of defense activities is often an indicator that countries are quietly making preparations for military conflict and contributes to declining trust and confidence. The evidence from this DTI that defense transparency is relatively stable in Northeast Asia is cause for cautious optimism that the long peace that the region has enjoyed remains intact for now. Transparency though is just one indicator of the overall state of defense affairs, and the powerful underlying currents that are the main determinants of war and peace, such as threat perceptions and arms dynamics, all appear to be trending negatively.
Topic:
Defense Policy, International Security, and Transparency
Political Geography:
China, North Korea, Northeast Asia, and United States of America

24. China’s quest for innovation: progress and bottlenecks

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
As the Chinese economy continues to decelerate, the central government is investing heavily in innovation, doubling down on research and development (R&D) spending and STEM-oriented human capital. In this paper, we assess China’s progress so far, looking at the inputs to innovation (R&D and human capital) as well as intermediate targets, such as scientific research and patents. We then evaluate how China has fared with respect to the ultimate goal of commercialising this progress, by looking at the value-added of Chinese exports and the overall productivity of the economy. We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.
Topic:
Industrial Policy, European Union, Economic Growth, Innovation, and COVID-19
Political Geography:
China, Europe, and Asia

25. Global trends in countries‘ perceptions of the Belt and Road Initiative

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Drawing on global media reports, we conduct a sentiment analysis of the image of China’s Belt and Road Initiative (BRI) and the evolution of its image over time. Our main finding is that perceptions of the initiative deteriorated significantly in many geographies from 2017 to 2022. The notable exception is in sub-Saharan Africa where the BRI’s image remains positive, even if slightly less so than in the past. This is notwithstanding increases in debt levels with China, much of which now face potential restructuring. Furthermore, we find significant inter- and intra-regional differences in the average sentiment towards China’s landmark project, as well as a much worse image of the initiative in countries which, until today, are not part of the BRI. Finally, we focus on the European Union, Africa and China’s immediate neighbourhood to better understand the complexities behind the perceived benefits and challenges associated with China’s Belt and Road Initiative.
Topic:
Bilateral Relations, European Union, Geopolitics, Economy, and Trade
Political Geography:
China, Europe, and Asia

26. China's Political-Economy, Foreign and Security Policy: 2023

Author:
Center for China Analysis
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
It has now been three months since the 20th Party Congress convened in Beijing on October 15. While the Congress set Xi Jinping’s ideological, strategic, and economic direction for the next five years, much has happened since then that the Chinese leadership did not anticipate. Principal among these surprises was the spontaneous eruption in late November of public protests across multiple Chinese cities against the economic and social impact of the Chinese Communist Party’s “dynamic zero-COVID” policy. These protests resulted in an unprecedented U-turn on December 8 from China’s relentless pursuit of its three-year-long national pandemic containment strategy to the Party now seeking desperately to restore economic growth and social calm. This shift has in turn generated major public pressures on the Chinese health system as hospitals struggle to cope with surging caseloads and mortalities. All of these developments stand in stark contrast to the political, ideological, and nationalist self-confidence on display at the 20th Party Congress. In October, Xi Jinping swept the board by removing any would-be opponents from the Politburo and replacing them with long-standing personal loyalists. Xi also proclaimed China’s total victory over COVID-19, contrasting the Party’s success with the disarray its propaganda apparatus had depicted across the United States and the collective West. Despite faltering economic growth, Xi had doubled down in his embrace of a new, more Marxist approach to economic policy which prioritized planning over the market, national self-sufficiency over global economic integration, the centrality of the public sector over private enterprise, and a new approach to wealth distribution under the rubric of the Common Prosperity doctrine. At the same time, Xi’s 2022 Work Report, delivered at the Congress, abandoned Deng Xiaoping’s long-standing foreign policy framework that “peace and development are the principal themes of the time” and instead warned of growing strategic threats and the need for the military to be prepared for war. As part of a continuing series on China’s evolving political economy and foreign policy, this paper’s purpose is threefold: to examine the political and economic implications of this dramatic change in China’s COVID-19 strategy; to analyze what, if any, impact it may have on China’s current international posture; and to assess whether this represents a significant departure from the Party’s strategic direction set at the 20th Party Congress last October. The paper concludes that the Party changed course on COVID-19 for two reasons: (1) it feared that not doing so would threaten its unofficial social contract with the Chinese people based on long-term improvements in jobs and living standards; and (2) that a structural slowdown in growth could also undermine China’s long-term strategic competition against the United States. This paper also concludes that the stark nature of the December 8 policy backflip, together with the Chinese health system’s lack of preparedness for it, has dented Xi Jinping’s political armor for the medium term. This setback comes on top of internal criticism of Xi’s broader ideological assault on the Deng-Jiang-Hu historical economic growth formula that Xi has prosecuted since 2017, as well as Xi’s departure from Deng’s less confrontational foreign policy posture that characterized previous decades. Nonetheless, these policy errors remain manageable within Chinese elite politics, where Xi still controls the hard levers of power. Furthermore, many of these changes on both the economy and external policy are more likely to be short-to-medium term and therefore tactical in nature, rather than representing a strategic departure from the deep ideological direction laid out for the long-term in Xi’s October 2022 Work Report. While these changes to current economic and foreign policy settings are significant in their own right, there is no evidence to date that Xi Jinping’s ideological fundamentals have changed.
Topic:
Security, Foreign Policy, Political Economy, and COVID-19
Political Geography:
China and Asia

27. Taiwan Strait Crises: Island Seizure Contingencies

Author:
Andrew Chubb
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
Conflict across the Taiwan Strait could disrupt East Asia’s extensive trade links, sever global production chains, generate serious shocks to regional economies, upend Asia’s security architecture, and, potentially, escalate into a catastrophic superpower war. Many regional states — including U.S. allies — are beginning to seriously consider how they would respond to a potential use of force by the People’s Republic of China (PRC). But analytic attention has focused overwhelmingly on the worst-case scenario of a PRC invasion, largely ignoring more likely contingencies calculated to stay below the threshold of lethal force. It is in this “gray zone” that the PRC has made strategic advances in the East and South China Seas in recent years. This paper argues that, compared with an invasion or blockade of Taiwan’s main island, an operation to capture one or more offshore islands currently controlled by the Republic of China (ROC or Taiwan) would offer Beijing considerable advantages. In an immediate tactical sense, it would offer Beijing greater flexibility and escalation control, lower risk of civilian casualties, and less likelihood of sparking a strong Taiwanese response or U.S. intervention. Strategically, such an operation could open up an array of options for further probes, faits accomplis, information gathering, and coercive pressure on ROC forces—and, in the case of the Penghu (Pescadores) Islands, substantial opportunities for enhanced surveillance, reconnaissance, and logistical support for a future invasion of the main island. Domestically, in contrast with a bloody and potentially catastrophic all-out invasion or a blockade that would risk conflict with the United States, outlying island seizure could offer Beijing a low-risk yet highly symbolic rallying point in a period of likely economic struggles and rising social dissatisfaction. Policymakers and strategists on all sides of politics in Taiwan, the United States and elsewhere need to carefully consider how they would respond to such contingencies, in order to enable an effective international response.
Topic:
Foreign Policy, Territorial Disputes, Geopolitics, and Regional Politics
Political Geography:
China, Taiwan, and Asia

28. The Transition From an Intensity to an Absolute Emissions Cap in China’s National Emissions Trading System

Author:
Duan Maosheng
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
The unique characteristics of China's economic development and electricity marketization have resulted in the implementation of a bottom-up intensity-based emissions cap in China’s national emissions trading system (ETS) in its early stages. However, the efficacy of the bottom-up cap-setting approach remains controversial, particularly with regard to achieving emission reduction goals and cost-effectiveness. In response to China's "dual carbon" targets and updated Nationally Determined Contributions (NDC), China’s national ETS shall gradually shift towards a real cap-and-trade system, with a transition period when a hybrid system, which has an absolute control cap beside the intensity cap, is implemented. The Transition from an Intensity to an Absolute Emissions Cap in China’s National Emissions Trading System examines the cap-setting approaches used in ETSs in China, the underlying reasons for choosing intensity caps in China, and major issues related to the transition from an intensity cap to an absolute cap in China’s national ETS.
Topic:
Climate Change, Economy, Trade, and Carbon Emissions
Political Geography:
China and Asia

29. Economic and Environmental Impacts of China’s New Nationwide CO2 Emissions Trading System

Author:
Lawrence Goulder, Xianling Long, Chenfei Qu, and Da Zhang
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
China’s National Emissions Trading System (ETS) has already become the world’s largest ETS and is expected to contribute substantially toward meeting China’s pledge to peak its carbon emissions before 2030 and achieve carbon neutrality before 2060. The new system is based on a tradable performance standard (TPS), a rate-based system under which each covered facility receives from the government in each compliance period a certain number of emissions allowances based on its output and the government’s assigned “benchmark” ratio of emissions per unit of output. Economic and Environmental Impacts of China’s New Nationwide CO2 Emissions Trading System describes the results from a multi-sector multi-period general equilibrium model designed to assess the potential economic, energy mix, and emissions impacts of different future policy options under China’s National ETS over the period 2020–2035, by sector and province and in the aggregate
Topic:
Environment, Economy, Trade, and Carbon Emissions
Political Geography:
China and Asia

30. China, climate change and the energy transition

Author:
Professor Xu Yi-Chong
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
This report surveys China’s enormous energy transition to renewables. It begins by sketching the energy challenges China faces and its climate-change-related energy policies, in the context of the global geopolitics of the energy transformation. Next the report focuses on conventional energy sources (oil and natural gas), followed by electricity, and energy technologies. Although the report is intended primarily to survey developments to date, it concludes with some brief observations about the considerable energy challenges China faces in the years ahead.
Topic:
Security, Climate Change, Development, Energy Policy, and Energy Transition
Political Geography:
China and Asia

31. NATO’s 2022 Strategic Concept. Analysis and implications for Austria

Author:
Loïc Simonet
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Austrian Institute for International Affairs (OIIP)
Abstract:
Adopted at the Madrid Summit in June 2022, the long-overdue NATO’s new Strategic Concept provides a clear set of guidelines for the Atlantic Alliance in a mid-term perspective. The war in Ukraine has provided the Allies with a powerful catalyst to reconsider NATO’s identity, core missions, as well as their vision of Russia and China. NATO’s new deterrence and defence-centric approach has already entailed a major shift in our security architecture, especially on Europe’s eastern flank. Without undermining its historical neutrality, Austria might reinterpret it in light of NATO’s “reset” and use this opportunity to reinvigorate its partnership with the Alliance.
Topic:
Security, Defense Policy, NATO, Partnerships, and Deterrence
Political Geography:
Russia, China, Asia, and Balkans

32. Digital China: The Strategy and Its Geopolitical Implications

Author:
David Dorman and John Hemmings
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Pacific Forum
Abstract:
Over the past few years, there has been growing concern inside the United States, Europe, and in the Indo-Pacific on the strategic direction behind China’s technology policies. Beginning with the debate over 5G and Huawei, this debate has covered Artificial Intelligence (AI), quantum teachnology, and semi-conductors – a foundational technology. And despite a large number of policies in place – Made in China: 2025, Cyber Super Power, and the New Generation AI Development Plan – few in the West have known China’s overall digital grand strategy. In the first installment of a three-part research project, Dr. Dorman and Dr. Hemmings lay out the rise of China’s overall digital grand strategy, Xi’s role in it, and how it has been organized to fulfil Party objectives. The report tracks the rise of the strategy over the past 10 years, the acceleration of that rise during the Covid-19 pandemic, and the current state of the strategy. In particular, it finds Digital China has been supported and designed by General Secretary Xi Jinping himself, and is a bid to make China more competitive vis a vis the West through the digital transformation of rules, institutions, and infrastructure at the national level. Over the past few years, the strategy has risen to become the “overall” strategy for digital development in the eyes of the Chinese Communist Party leadership, bigger than the Digital Silk Road, deeper than the Belt and Road Initiative, more far reaching than 5G or AI, more important than Made in China: 2025, and wider than Cyber Great Power. A renewed Digital China seeks to challenge a hegemonic global system anchored to a previous age. A successful Digital China has profound implications for China’s developmental path, great power competition, and for the norms that will undergird the international system for decades to come. The Party leadership has re-written Marxist economic theory in its bid to incorporate “data” as the basis of its digital economy and in order to foster a Chinese “Digital Marxism”. Digital China seeks to whet the “sharp weapon” of innovation to facilitate its great power rise and challenge to the West. Beijing is testing whether innovative thinking can be created through the digital transformation of tools, talent, and learning. The US and its allies have begun to effect strategic counter-effect to the myriad of PRC technology policies, there is almost zero understanding or public discussion of this digital grand strategy. Whether inattention, mistranslation, or obfuscation, Digital China has been mostly missed by the West over the past decade.
Topic:
Science and Technology, Cybersecurity, Innovation, and Artificial Intelligence
Political Geography:
China, Asia, and Indo-Pacific

33. Understanding Alignment Decisions in Southeast Asia: A Review of U.S.-China Competition in the Philippines

Author:
William Piekos
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Pacific Forum
Abstract:
The United States and China are engaged in an ongoing struggle for the alignment commitments of Southeast Asian governments, employing a variety of measures to entice, cajole, and threaten states to alter their policy behavior. Caught between this competition, countries in Southeast Asia weigh their alignment options in search of the strategy viewed by the ruling regime as most likely to ameliorate risk and increase its prospects for survival. While nonalignment through hedging is a sought-after option, most often smaller states align with the major power that offers inducements (over coercion), as the material and diplomatic benefits bolster regimes’ claim to performance-based legitimacy and its domestic stability and security. A review of the Philippines’ geopolitical positioning during the Benigno Aquino III (2010–2016) and Rodrigo Duterte (2016–2022) administrations reveals that inducements and coercion have played a significant role in the country’s alignment decisions. During the Aquino administration, coercive measures taken by China in the South China Sea and continued security and diplomatic inducements from the United States underscore the respective approaches of Beijing and Washington. The candidacy and election of Duterte, however, switched this dynamic, and the new president courted and received promises of Chinese economic assistance to support his domestic growth strategy and downplayed U.S. ties in pursuit of a more independent foreign policy. In the end, continued Chinese provocations in the South China Sea and domestic security challenges led Duterte to call upon U.S. assistance once again, and Duterte was unable to initiate a full reconsideration of Manila’s position. Still, his strategic flirtation with China underscores the importance of performance-based legitimacy and the impact of inducements and coercion in shaping the foreign policy choices of smaller states. The findings of this study suggest that Washington’s focus on great power competition and sanctions handicaps U.S. foreign policy in Southeast Asia and beyond. The Philippines’ leaders focused on securing their domestic political prospects and legitimacy; criticism and coercive measures were largely ineffective for the United States or China in gaining influence over policy decisions. Washington should more often consider the promise and provision of inducements—while remaining sensitive to human rights concerns, governance issues, and liberal norms—to support the needs of Southeast Asian states, incentivize more transparent behavior, and increase the likelihood that these states will support U.S. interests in the future.
Topic:
Foreign Policy, Geopolitics, Strategic Competition, and Regional Politics
Political Geography:
China, Asia, Philippines, North America, Southeast Asia, and United States of America

34. Time to say goodbye? The impact of environmental regulation on foreign divestment

Author:
Haiou Mao, Holger Görg, and Guopei Fang
Publication Date:
09-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We look at divestments by foreign firms – a topic that has received comparatively little attention in the literature – and investigate how changes in the regulatory environment in the host country may impact on such divestment decisions. We use the implementation of China’s Two Control Zone (TCZ) policy as a “quasi-natural experiment”, using detailed firm level combined with city level data for the empirical analysis. Our results show that the implementation of TCZ policy has led to higher probabilities of divestments by foreign firms in targeted TCZ cities and industries. The mechanism behind this seems to be a TCZ-induced increase in discharge fees and efforts to reduce SO2 emissions. Allowing for heterogeneity of effects, we find that the effect is particularly strong for firms from source countries with less stringent environmental regulation, and those using less advanced technology. We furthermore show that firms using intermediates from polluting industries also experience a higher probability of divestment.
Topic:
Climate Change, Environment, Foreign Direct Investment, Regulation, Business, and Divestment
Political Geography:
China and Asia

35. China as an International Lender of Last Resort

Author:
Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent.
Topic:
Debt, Emerging Markets, International Trade and Finance, Financial Crisis, Belt and Road Initiative (BRI), and Sovereign Debt
Political Geography:
Africa, China, and Asia

36. Enhancing small state preparedness: Risks of foreign ownership, supply disruptions and technological dependencies

Author:
Mikael Mattlin, Shaun Breslin, Elina Sinkkonen, Liisa Kauppila, and Annika Björkdahl
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
The post-Cold War liberalist view, according to which interdependences supported a virtuous cycle of mutual gains, has given way to a realist-tinged view that regards economic interdependence as a cause of insecurity and an element in conflicts. In this new environment of increasing great power competition and technological decoupling, all states are not created equal. Major states such as the United States and China can be system shapers, whereas small states tend to be system takers. Unlike smaller states, they have a greater ability to use their investment leverage, supply chain dominance and control of core technologies. For smaller states with open economies, such as Finland and Sweden, these capabilities of major powers create vulnerabilities in the form of security risks of foreign ownership, supply disruptions and critical technological dependencies. The report explores how small states can mitigate such risks. A series of innovative Delphi backcasting exercises in Finland and Sweden brought together 113 sectoral experts and generalists to ponder ways to prevent dystopian scenarios from unfolding. The target years of the scenarios extended from 2027 to 2035, encouraging ideas on both short- and longer-term solutions. Instead of aiming for a consensus of expert views, the process sought to produce a variety of effective means and measures that a small state could choose to adopt. The exercise consisted of nine scenarios, presented as comic art. The narratives on the risks of foreign ownership focused on 1) acquisitions of gaming companies gathering personal data, 2) transfers of real estate ownership in Lapland and 3) venture capital investments in emerging technology start-ups. The scenarios on supply disruptions dealt with 4) discriminatory practices limiting access to antibiotics, 5) political retaliation limiting access to water treatment components and 6) sanctions on wind power materials, components and minerals. As for high technology dependencies, the cases included 7) the maintenance of military technology, 8) the cybersecurity of health technology and 9) the supply of chemicals for research and development activities. According to the report, small states have the least leeway in navigating the risk environments created by technological dependencies, whereas the toolkits to tackle the potential dangers of foreign ownership and supply disruptions are more extensive. Although different issues and insecurities require different bespoke solutions, all the risk categories call for active mitigation efforts. Most of the suggested Finnish and Swedish expert solutions can be clustered into three alternative approaches: protectionist/interventionist, liberal and technologically oriented. Protectionist/interventionist solutions would expand the state’s powers in controlling, guiding and limiting economic activities. Key suggestions included: covering acquisitions and greenfield investments in national foreign direct investment screening screening real estate acquisitions with a wide range of countries of origin imposing country-specific limitations to real estate acquisitions screening venture capital investments in emerging technologies initiating a national security act to limit foreign control rapidly imposing country- and company-specific limitations to bids in critical industries increasing tariffs supporting domestic or EU-level production through subsidies and industrial policy friendshoring the production of critical goods expanding the scope of supply stockpiling in pharmaceuticals and water treatment components The more liberal approach towards national preparedness would focus on solving the challenges primarily through carrots instead of sticks – to avoid limiting entrepreneurial freedoms and interfering with the dynamics of the capitalist market economy. The proposed solutions included: initiating value debates to guide individuals’ choices when accepting investments formulating a national innovation strategy to boost domestic companies’ operating conditions in emerging technology fields teaching “technology literacy” to guide the use of foreign-owned products engaging all stakeholders in making decisions on foreign ownership diversifying the sources of critical goods such as antibiotics enhancing awareness of risks and making “plan Bs” in supply chain management deepening the EU’s single market to offer genuine scalability opportunities for start-ups The third, more technologically oriented approach would rely on new innovations or technical solutions to enhance small state preparedness. Key ideas included: innovating new medicines to replace antibiotics prioritising non-conventional technologies such as small modular reactors (SMRs) enhancing domestic capacity to produce key components with 3D printing researching alternative materials to replace critical chemicals developing the recycling, recovery and transportation of critical chemicals adopting geofencing and coding solutions to enhance cybersecurity designating emerging technologies as focus areas in higher education increasing the adaptability of technical solutions through standardisation These three approaches prioritise different key solutions for enhancing small state preparedness. However, they represent generic policy preferences rather than ready-made policy recommendations. Ideally, states can formulate their own pick-and-mix toolkit by combining elements from the different approaches. The complementary nature of some of the expert views was also suggested by the fact that many – even most – respondents argued for diversification as a solution to various challenges. For example, and regardless of the chosen strategy, tendering rules could be improved by placing quality over price, taking geopolitical risks into account and allowing multiple winners in contrast to the currently dominant winner-takes-it-all logic, which leads to overly concentrated supply chains. Moreover, at least minor legislative tightenings were widely proposed to be made on foreign ownership – especially with regard to that of nationals of authoritarian states. These changes were, however, typically proposed to be complemented with such balancing acts as long-term leases and incentives to develop and acquire domestic products and companies. Ultimately, by highlighting alternative approaches to small state preparedness, this report seeks to encourage democratic discussion on a broader political choice: what type of state and economy do we want in the future? It is not only their identity that guides what states do; adopted policies and means also shape state identities over time.
Topic:
Security, Science and Technology, Supply, and Geoeconomics
Political Geography:
China, Finland, Asia, Sweden, and United States of America

37. Made in Europe: An EU Green Industrial Plan to respond to the challenge of US and Chinese protectionism

Author:
Alekos Kritikos and George Pagoulatos
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The EU needs to urgently formulate a response to US and Chinese protectionism. US decarbonization legislation poses a threat of deindustrialization for Europe. Europe needs a plan to support EU green, industrial and technological competitiveness, while protecting European cohesion and the single market, and promoting European strategic autonomy. Relaxing EU state aid rules must be an inevitable first component of Europe’s response. But this would overwhelmingly benefit the stronger economies of Germany and France, undermining EU cohesion and the integrity of the single market. Thus, the second component of EU response must be a European Sovereignty Fund, of a size commensurate to the magnitude of the challenge. The new Fund must support value chain categories that include as many EU member states as possible. SURE, extended to encompass the energy crisis and green transition, should be an integral part of the mix, and so should promoting technological skills and reskilling for the “Clean Tech Economy”. Investment funding should seek to contribute to vertical integration, including as many stages in the supply chain as possible. It should contribute to the return of specific supply chains and production units from third countries to the EU and seek to include the EU’s weakest economies. Subsidies should rise if the investment is cross-border in nature and carry a bonus if made in an EU region with a low GDP per capita compared to the EU average. Funding could also promote European strategic autonomy by including cross-border partnerships of EU member states in the defence technology industry. It should involve new funding rather than simply recycling money from existing programmes, and certainly avoid deploying undisbursed resources from the Recovery & Resilience Fund.
Topic:
European Union, Investment, Industry, Protectionism, and Strategic Autonomy
Political Geography:
China, Europe, and United States of America

38. Peninsula Plus: Enhancing U.S.–South Korea Alliance Cooperation on China, Multilateralism, and Military and Security Technologies

Author:
Jacob Stokes and Joshua Fitt
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Center for a New American Security (CNAS)
Abstract:
The United States–Republic of Korea (ROK or South Korea) alliance has entered a critical phase. In 2023, the two countries will commemorate the 70th anniversary of signing their bilateral mutual defense treaty. This year also marks the first full year under national leaders President Joe Biden and President Yoon Suk Yeol. After several challenging years in the two countries’ relationship, ties are improving. Better alliance relations have, unfortunately, coincided with a deterioration in the regional and global security environment, specifically due to threats from North Korea, China, and Russia. This report examines the U.S.-ROK alliance as it adapts to the new regional context by exploring how the United States and South Korea can sustain and deepen their relationship in three vital policy areas: coordination on China, alignment in minilateral and multilateral settings, and defense technology collaboration. Perhaps the biggest shift in alliance priorities in recent years has been the growing importance of the China challenge. During Chinese Communist Party General Secretary Xi Jinping’s decade in power, Beijing has adopted a more muscular foreign policy. Both the United States and South Korea have reshaped their approaches toward China in response. ROK concerns about China have grown as Beijing shields Pyongyang and acts aggressively elsewhere in the region, including toward Taiwan. But South Korea’s approach to China will continue to differ from that of the United States. The allies have divergent preferences regarding the speed, manner, and degree of partial decoupling with China. Moreover, South Korea’s deep trade ties with China will continue to make it vulnerable to Chinese political and economic coercion.
Topic:
Security, Science and Technology, Alliance, Multilateralism, Cooperation, and Military
Political Geography:
China, Asia, South Korea, and United States of America

39. The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam

Author:
Duc Anh Dang and Ngoc Anh Tran
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The trade war between the United States (US) and China has affected their bilateral trade as well as that with other countries. This study investigates how Vietnamese firms performed during the COVID-19 pandemic under the shadow of this trade war. The change in the log of Vietnamese exports to the US from 2017 to 2020 is used to measure the impact of the trade war, and the change in the log of Chinese exports to the US is then used as an instrument for the Vietnamese export change during the same period. It is found that firms that faced more trade war exposure increased their investment, profit, and value added, which may be due to the market exit of unproductive firms. Moreover, the trade war impact is more pronounced for large firms. Foreign-invested firms gained less from trade war exposure. The pandemic weakened the trade war effect on firm performances; however, it exacerbated the trade tension effect on foreign-trade firms.
Topic:
Bilateral Relations, Investment, Trade, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

40. China-US Competition in the Balkans Impact, regional responses, and larger implications

Author:
Ivan Lidarev
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
This strategic update from Sotirov Visiting Fellow Dr Ivan Lidarev analyses the competition between China and the US in the Balkans, striving to answer three broad research questions about its impact on the region. The paper analyses how the China-US competition has shaped the strategic framework in which Balkan states operate; how Balkan nations have responded strategically to this competition; and what the long-term implications of the regional US-China competition are.
Topic:
Foreign Policy, Strategic Competition, and Strategic Interests
Political Geography:
China, Eastern Europe, Balkans, and United States of America

41. China’s Semiconductors Reflections on Sources and Solutions to an Expensive Problem

Author:
Jonathan Liebenau
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
The semiconductor industry has been a renewed topic of political debate for over three years. Due to recent US sanctions on the most advanced semiconductors, the industry has quickly become another flashpoint in the competition between the US and China to dominate the 21st century’s strategic technologies. In this Strategic Update, Dr Jonathan Liebenau explains the development of the semiconductor industry in the context of China’s rise to become an increasingly capable technology power. China’s sustained efforts in industrial policy to cultivate a domestic innovation system coincided with Western firms’ offshoring strategies since the 1990s, transforming China into a large producer and consumer of semiconductors. While Taiwan and the West retained cutting edge chip design capabilities, Chinese firms such as Huawei and Hikvision have become competitive providers of mobile phones, surveillance equipment and related infrastructure services. Despite Washington and its partners’ conviction to constrain in China’s technological prowess, industrial policy initiatives such as the CHIPS Act will face an uphill battle when it comes to bringing manufacturing capacity back to Western economies. In this context, the UK must combine short term incentives with a longer-term strategic vision to remain competitive in one of the 21st century’s key strategic arenas.
Topic:
Science and Technology, Sanctions, Strategic Competition, Production, and Semiconductors
Political Geography:
China, Asia, North America, and United States of America

42. China’s smart cities and the future of geopolitics

Author:
Valentin Weber
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
In this latest Strategic Update, Valentin Weber explores Chinese scientific research and industry application of smart cities, with ‘city brains’. The geostrategic implications for these complex Chinese smart city construction projects outside of China – particularly surrounding surveillance and artificial intelligence – and a potential future ‘world digital brain’ must be considered by policymakers, even if we are far away from an eventual bifurcation of the global internet.
Topic:
Science and Technology, Geopolitics, Surveillance, Artificial Intelligence, and Smart Cities
Political Geography:
China and Asia

43. Countering United Front Work: Taiwan’s Political Warfare System

Author:
Mariah Thornton
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
This strategic update introduces the challenges posed by China’s united front work, which has significantly expanded due to unprecedented institutional elevation and support under Xi Jinping. Mariah argues that Taiwan—a country that has effectively resisted China’s united front activities for several decades—can serve as an instructive case for other democratic countries in institutionalising counter-interference operations. The briefing initially explores the origins of Taiwan’s political warfare system, its evolution from the martial law era to democratisation in the 1990s, and how this history informs the institution’s modern structure and operations. The information presented in this report was compiled during a period of fieldwork in Taiwan from late September to early November 2022, in which she interviewed dozens of political warfare officers as well as Taiwanese defence and security experts–a majority of whom have chosen to remain anonymous. In the conclusion, Mariah offers broad policy recommendations based on these findings that may be applicable to other countries experiencing united front work activities and or seeking to institutionalise counter-interference operations.
Topic:
Security, Defense Policy, Politics, Public Opinion, Propaganda, and Regional Security
Political Geography:
China, Taiwan, and Asia

44. China’s Global Strategy as Science Fiction

Author:
William A. Callahan
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
Xi Jinping is leading China in a new direction, but how are we to understand his global strategy? For most countries, to understand domestic and international politics we would analyse authoritative sources – leaders’ speeches, official documents and statistics, elite interviews and essays, and public opinion surveys. In the 2000s these methods worked well to probe Chinese politics. But since civil society and independent thought have been severely restricted under Xi, it’s necessary to go beyond such “factual” sources. To understand China’s global strategy, it’s best to read fiction, especially Chinese science fiction. This essay critically analyses Liu Cixin’s novels, The Wandering Earth and the Three Body Problem trilogy, to probe how Chinese sci-fi pushes us to think creatively about key topics: the relation of humans and technology, the relation of science and politics, and the relations between political communities, i.e. are we doomed to existential struggle, or can we engage with difference in creative and productive ways?
Topic:
Foreign Policy, Science and Technology, Grand Strategy, Novels, and Science Fiction
Political Geography:
China and Asia

45. China’s Provinces as Global Actors: Evidence from China-Africa Relations

Author:
Charlotte Lenz
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
With the launch in the early 2000s of China’s ‘Going Global’ Strategy, Chinese provinces became one group of actors participating in China’s South-South relations. In this Strategic Update, Charlotte Lenz investigates the role of Chinese provinces as foreign policy actors and explains their internationalisation strategies, challenging the prevalent perception of China as a unitary actor on the world stage. Drawing on evidence from Africa-China relations, the report identifies two strategies employed by Chinese provinces in pursuit of their foreign policy interests: (1) Formal and informal “twinning” as a collaborative model between central and local actors, wherein central actors design policies and provincial governments execute projects; (2) and “clustering” according to a sectoral logic of investment and diplomacy in which a certain Chinese province engages a certain foreign country. Despite ongoing bureaucratic centralisation under Xi Jinping, provinces continue to pursue their own internationalisation strategies to help meet local economic and employment targets. Understanding their agency, interests and limitations is thus key to deriving a better understanding of China’s evolving global presence.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, Investment, and Internationalization
Political Geography:
Africa, China, and Asia

46. China’s Grand Vision and the Persian Gulf

Author:
Anoushiravan Ehteshami
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China’s engagement with Asian regions beyond its geographical periphery has grown exponentially since the 1990s and this is nowhere more evident than in West Asia and the Persian Gulf subregion. While energy drove China’s early interactions with the Gulf states, within two decades after the Cold War the relationships had evolved into much tighter networks of partnerships. China’s relations with the Gulf states, however, has not been uniform and the case studies of the United Arab Emirates and Iran highlight the complexities of China’s strategy in this subregion and the ways in which it actively pursues its diverse set of interests.
Topic:
International Relations, Foreign Policy, Partnerships, and Strategic Interests
Political Geography:
China, Iran, Middle East, and Gulf Nations

47. The Internationalisation of the Chinese Renminbi and China’s Digital Currency Plans

Author:
Lorenzo Bencivelli and Michele Savini Zangrandi
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China has made major reforms to boost the international standing of its currency. The global presence of the renminbi remains contained, however. This is due to China’s economic structure (a persistent current account surplus and a partially closed financial account) and the government’s grip on the economy. China is also a Central Bank Digital Currency (CBDC) forerunner. The digital yuan (e-cny) is already active in a large scale trial. Many claim that the e-cny could provide a major boost to the internationalisation of the renminbi. However, the internationalisation of the renminbi would require major economic reforms that cannot be bypassed by the deployment of new technologies. The e-cny is therefore unlikely to boost the renminbi’s international presence. Yet, its underlying technology could be exported to other countries wishing to deploy their own-currency CBDCs. Much like with telecommunication equipment, this scenario would put China in the position of being a provider of a critical infrastructure. In the longer run, the export of e-cny technology might also facilitate the creation alternative payment networks, though this scenario is not very likely.
Topic:
Political Economy, Governance, Finance, Currency, and Digital Policy
Political Geography:
China and Asia

48. Reinventing Soft Power: The Strong Impact of China’s Soft Power “Shortcomings” on the Global South

Author:
Tanina Zappone
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
After being introduced into the Chinese academic debate in the 1990s, the notion of soft power has undergone such a process of “Sinicisation” that some scholars now wonder if the original concept has been gradually “reinvented” in China. Given worsening opinions about the PRC in the US and Europe over the last years, many analysts have stressed the weakness of China’s soft power, pointing to its state-centred approach and lack of an attractive set of values to be emulated as the main shortcomings. However, China’s growing influence in the Global South shows that these analyses have misevaluated the real goals and motivations of China’s soft power. The Russia-Ukraine war provides telling examples of the successful dynamics of China’s “defensive” or “negative” version of soft power and suggests it has significant impact in the least industrialised countries.
Topic:
Foreign Policy, Development, and Soft Power
Political Geography:
Russia, China, Ukraine, Asia, and Global South

49. China and the Global South: Many Initiatives, One Narrative

Author:
Marina Rudyak
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Since its 2013 launch, the China-led Belt and Road Initiative (BRI) has stirred heated debates. Despite Beijing framing it as win-win cooperation, concerns mounted over BRI’s risks for involved countries, especially in the Global South. China’s narrative merely signals a search for an effective communication strategy and international discourse power, while its understanding of development remains constant. Developing countries play a crucial role in China’s pursuit of global status. Firstly, it positions itself as the advocate for developing nations, promoting “diverse paths to modernisation” and “true multilateralism”. Secondly, China aims to redefine major power by prioritising development and security over liberal democracy.
Topic:
Foreign Policy, Development, Infrastructure, Multilateralism, Belt and Road Initiative (BRI), and Modernization
Political Geography:
China, Asia, and Global South

50. China’s Changing COVID-19 Policies: Market and Public Health

Author:
Zhun Xu
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
After the outbreak of COVID-19 in early 2020, China took fast and decisive measures to successfully contain the spread of the virus within its borders. While the rest of the world saw huge human and social costs in the pandemic, the Chinese mainland for about two years was largely free from COVID. The zero-COVID model, however, met great challenges by early 2022. Despite some efforts to save the zero-COVID model, in November 2022, the Chinese government abruptly abandoned its signature COVID controls during the pandemic and switched to the opposite. This article reviews the evolution of the Chinese COVID policies and places the dramatic turns in the context of the changing Chinese political economy. The findings show that the shifting class interests and actions were an important force behind China’s retreat from zero- COVID.
Topic:
Markets, Political Economy, Public Health, and COVID-19
Political Geography:
China and Asia

51. Partnerships for Policy Transfer: How Brazil and China Engage in Triangular Cooperation with the United Nations

Author:
Laura Trajber Waisbich and Sebastian Haug
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This paper offers a comparative analysis of Brazilian and Chinese partnerships with the United Nations (UN) as a mechanism and channel for policy transfer. In international policy travel flows, China and Brazil currently hold privileged places as hubs from which development-related policies travel and through which they circulate. Both countries have invested in systematising their development experience and transferring development policies within their regions and beyond – often through triangular cooperation, i.e. South–South cooperation supported by third actors such as UN entities. So far, however, this variegated engagement has remained under the radar of scholarly attention. To address this gap, we examine 35 policy transfer partnerships – 17 for Brazil and 18 for China – forged with different parts of the UN system over the last two decades. In order to offer a first systematic account of partnership trajectories, we provide an overview of partnership types (namely projects, programmes and policy centres) and transfer dimensions (including the policies themselves, transfer agents and governance arrangements). Our comparative mapping presents an evolving landscape: while Brazil was first in institutionalising robust policy transfer partnerships with numerous UN entities and then slowed down, China started more cautiously but has significantly expanded its collaboration with the UN system since 2015. The partnerships analysed cover a substantial range of sectors, with a particular focus – for both Brazil and China – on agricultural policies. While Brazilian partnerships with the UN primarily engage with linkages between agriculture and social protection, however, China–UN partnerships focus more on productivity and market linkages. As the first comprehensive mapping and comparative analysis of Brazilian and Chinese policy transfer partnerships with the UN, this paper contributes to a better understanding of (triangular) cooperation schemes between international organisations and their member states, as well as debates about how policies deemed as successful travel around the globe.
Topic:
Development, International Cooperation, United Nations, and Partnerships
Political Geography:
China, Asia, Brazil, and South America

52. How Does Urban Rail Development in China and India Enable Technological Upgrading?

Author:
Emmanuel Theodore Asimeng and Tilman Altenburg
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The socioeconomic wellbeing of urban areas depends on a well-functioning transportation system that makes it easier for people to access goods and services. Whereas most urban areas in emerging economies are expanding in size and human population, high motorisation and inadequate public transport services have resulted in congestion, traffic accidents and increasing transport-related greenhouse gas (GHG) emissions. Urban rail development can help address the current transportation problem because trains can move a large number of people at high speed, provide reliable services, contribute to lower GHGs and have a low accident rate. However, urban rail is expensive and requires many technical and technological capabilities often unavailable in emerging economies because they are technology latecomers. This paper examines how two emerging economies, China and India, have adopted industrial policies to develop local capabilities for urban rail technology. The paper shows how the Chinese government has moved from purchasing urban rail technology from multinational companies (MNCs) to the current situation where it has developed local capabilities, owns rail technology patents and competes with the same MNCs on the international market. The paper also demonstrates how India is gradually improving the local manufacturing of rail subsystems as opposed to importation. Overall, the paper suggests a pathway to industrial policy adoption that demonstrates how emerging economies can catch up with urban rail technology development to address their local transportation needs.
Topic:
Development, Industrial Policy, Science and Technology, Multinational Corporations, Urban, and Railways
Political Geography:
China, India, and Asia

53. Modernizing the People's Liberation Army: The Human Factor

Author:
Marc Julienne and Constantin Lagraulet
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The tremendous demographic challenges facing China will not significantly affect the People’s Liberation Army (PLA) in the immediate future, but will become more problematic in the medium and long term. The rapid aging of the population and the resulting socio-economic imbalances will put pressure on defense budgets, military wages and the general attractiveness of the army. For the time being, the PLA’s primary goal in terms of human resources is to build a less oversized, more professional army, prepared for high-intensity combat. This objective is in line with the institutional reform of 2016, which shortened the chain of command and strengthened the political and ideological control of the Communist Party of China (CPC) over the PLA through an overhaul of the Central Military Commission (CMC). This reform also involved a major restructuring of China’s armed forces. The PLA is pursuing a streamlining target that emphasizes quality over quantity. This qualitative improvement concerns equipment, forces and chains of command, and is driven by the need to elevate modernity, operational effectiveness and interoperability. An analysis of the evolution of the PLA Navy Marine Corps and the People’s Armed Police (PAP) demonstrates this qualitative upgrading trend and the prioritization of combat readiness. To integrate increasingly modern and complex equipment, the PLA is also focusing on recruiting and retaining young conscripts and volunteers with a high level of education, in order to increase the number of commissioned and non-commissioned officers. The major reforms being carried out thus aim to enhance the status of the military so as to strengthen its economic and social attractiveness. On the other hand, the PLA, like other armies around the world, is confronted with societal phenomena such as internet addiction, near-sightedness and obesity, which hinder its ambitions and force it to make trade-offs in its selection standards.
Topic:
Foreign Policy, Demographics, Modernization, Chinese Communist Party (CCP), and People's Liberation Army (PLA)
Political Geography:
China, Taiwan, East Asia, and Asia

54. “Open” Telecom Networks (Open RAN): Towards a Reconfiguration of International Competition in 5G?

Author:
Mathilde Velliet
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
In line with the anti-Huawei diplomatic campaign of the Trump and Biden administrations, the United States has promoted an alternative: Open RAN, a concept defined by "open" network architectures. At the intersection of 5G geopolitics and standards, what risks and opportunities does Open RAN present for European technological sovereignty? The Radio Access Network (RAN) is the radio part of a mobile telecommunications system that enables the connection between a mobile device (such as a phone or computer) and the core network. While traditionally a single vendor (such as Huawei, Ericsson, or Nokia) provides a “proprietary” or “closed” solution for this part of the network, Open RAN (Open Radio Access Network) is a concept describing disaggregated architectures that divide the RAN into several bricks connected by open interfaces. The objective is to allow the operator to buy these hardware and software bricks from various suppliers, and to choose freely the most suitable option for each part. In the current context of a concentrated 5G market, dominated by three major manufacturers and even facing the risk of an Ericsson-Nokia duopoly with the exclusion of Huawei from many countries, telecom operators emphasize the flexibility and diversification of suppliers allowed by Open RAN, which would allow both more innovation and cost reduction. In line with its diplomatic campaign against “unreliable” Chinese suppliers, the United States has actively promoted Open RAN as an alternative. However, Open RAN seems far from being a panacea for Europe: in addition to the difficulties that remain in terms of maturity, security, performance and transparency of the specification process, it risks increasing European dependence on foreign suppliers. Although Huawei is not part of the international bodies working on Open RAN (such as the Telecom Infra Project or the O-RAN Alliance), many companies close to the Chinese political and military authorities are. Beyond the question of supplier security, American lobbying is linked to the commercial opportunity that Open RAN represents for American companies, currently leaders in the cloud, software and generic hardware components…even though they do not have a major 5G champion. Open RAN is therefore an issue at the crossroads of the geopolitics of 5G and standards, to which the European Union is beginning to provide a common political and analytical response, despite the diversity of positions among member states.
Topic:
5G, Telecommunications, and International Competition
Political Geography:
China, Europe, Asia, and United States of America

55. How China’s Foreign Aid Fosters Social Bonds With Central Asian Ruling Elites

Author:
Nargis Kassenova
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Foreign Policy, Foreign Aid, and Elites
Political Geography:
China, Central Asia, and Asia

56. A Historical Evaluation of China’s India Policy: Lessons for India-China Relations

Author:
Vijay Gokhale
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The violent clash in the Galwan valley in eastern Ladakh in 2020 fundamentally altered the dynamics of the India-China relationship. China’s increasing transgressions and attempts at coercion in the border areas since 2008–2009 have put the boundary question to the center of the India-China relationship. The salience of this question has also increased because the geopolitical backlash to China’s actions in 2020 has been greater than in previous instances, and because India’s policymakers and strategic community are no longer willing to give Beijing the benefit of the doubt regarding its intentions and actions. This has prompted a comprehensive relook in India at the past, present, and future of the relationship. While much of this has focused on the relationship from the Indian perspective and on trying to understand India’s China policy, the current chill in ties has highlighted the necessity of understanding China’s India policy. Thus, using Chinese sources, this paper analyzes the drivers of that policy and the options available to Indian policymakers to engage with, adapt to, and mold it. This paper argues that from the time of Mao Zedong’s rise to the helm of the Chinese Communist Party and the founding of the People’s Republic of China in 1949, China’s India policy has been shaped by its view of the larger great power strategic triangle of China, the Soviet Union (later Russia), and the United States. As this triangle has evolved, this has had a direct effect on the India-China relationship. For much of the past seventy years, China was the weakest corner of the triangle and therefore driven by goals of security and status. In that context, it saw India—another large, developing country in Asia—as a competitor for security and status alike. As a result, China always looked at India through the lens of its own relations with the Soviet Union and the United States. It did not view India on its own merits, or credit it with agency, but as unequal as well as untrustworthy. China’s objective during the Cold War was to keep India as neutral as possible. In the post–Cold War period, the goal evolved to limit through containment and coercion India’s capacity to harm China’s strategic goal of hegemony. This paper analyzes China’s India policy in three phases. In the first phase between 1949 and 1962, China viewed the United States as its primary adversary and its core objective was to keep India neutral and away from the U.S. camp on matters of concern to Beijing. Flowing from this was the secondary objective of utilizing India’s influence in the developing world to build “Asian solidarity” to stem U.S. inroads into Asia.
Topic:
Foreign Policy, Bilateral Relations, Territorial Disputes, and Military
Political Geography:
China, India, and Asia

57. 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

58. 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

59. Russia’s National Security Narrative: All Quiet on the Eastern Front

Author:
Eugene Rumer and Richard Sokolsky
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The two defining features of Russian President Vladimir Putin’s foreign policy have been an increasingly adversarial relationship with the West and an increasingly close partnership with China. These drivers have been the salient feature of official Russian national security documents for the past three decades. Since the end of the Cold War, the U.S. national security community has viewed Russian strategic thinking as misguided because it failed to see China as the real threat to Russia. This view ignores the Kremlin’s preoccupation with Europe as the most important strategic theater where its interests are at stake, and where they are threatened by the West’s superior capabilities and ambitions. This view also ignores how unimportant—relative to Europe—the Asia-Pacific is for Russia. Russia’s partnership with China is secured, however, by a set of coherent and complementary strategic rationales, which supersede frequent concerns in the Russian strategic community at large about China and its growing capabilities and intentions vis-à-vis Russia. Those concerns appear to have little impact on Russian policy. Notwithstanding those concerns in Russia’s unofficial national security discourse, China’s footprint on its foundational national security and foreign policy documents is invisible—and China, as a source of military threat to Russia, does not appear to be part of the Kremlin’s calculus. The North Atlantic Treaty Organization (NATO) has long been the pacing challenge of Russian military modernization, and the main contingency for which it has been preparing has been future conflict in the European theater. For the Putin regime, there is no alternative to Russia’s “no limits” partnership with China. Moreover, even if Putin were no longer on the scene, a successor regime would have powerful economic, geopolitical, demographic, and military-strategic incentives to maintain this partnership. An adversarial relationship with China would pit Russia against two superior powers in two widely separated geographic theaters. The war in Ukraine has cemented the Russian-Chinese partnership for the foreseeable future.
Topic:
Foreign Policy, National Security, Bilateral Relations, Partnerships, and Russia-Ukraine War
Political Geography:
Russia, China, Eurasia, and Ukraine

60. 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

61. 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

62. 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

63. 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

64. 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

65. Networks and Competitive Advantage in a Contested World

Author:
Jennifer Kavanagh
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In an increasingly multipolar world and amid challenges from China, Russia, and elsewhere, the United States faces a complex set of foreign policy demands and the real risk of becoming overextended. Networks—of states, businesses, and individuals—offer policymakers a way to prioritize and reduce global commitments while advancing core U.S. interests. Leveraging the right networks in the right ways can extend U.S. influence, support the economic and physical security of Americans, and compete with adversaries at sustainable cost. Today’s policymakers understand the power of networks but need more guidance on how to build and employ them as tools of competition in a contested world rather than a world of open borders and markets. Influence networks—networks primed to spread and amplify U.S. power, enhance U.S. competitiveness, and protect national interests—have three characteristics. They are attraction networks, organized around places and issues where countries and corporations are already interacting, meeting common needs with customized resources. China’s Belt and Road Initiative (BRI), for instance, is organized around a shared need for infrastructure across the Global South and embeds Chinese influence by tailoring agreements to each partner’s local conditions. The United States has used attraction effectively in the F-35 Joint Strike Fighter program, but most U.S. foreign investment has been centralized and top-down. They are gated networks with clear criteria for entry, access, and exit. Gates capture network power and direct it toward specific goals. The European Union (EU) has used gated economic markets to build significant regulatory power and geopolitical relevance. The United States has tended toward universalism but employs gates in some security networks, like the North Atlantic Treaty Organization (NATO), and is turning toward gates in economic networks with friendshoring initiatives in some industries. Finally, they are distributed networks that have robust ties between members throughout the network, allowing influence to flow quickly along more pathways and facilitating collective action. The United States has often relied on less resilient hub-and-spoke networks to retain control. U.S. Indo-Pacific security alliances are hub-and-spoke, while NATO is more distributed, enabling more rapid, coordinated responses and wider spread of U.S. influence. Networks with these characteristics can help policymakers tackle their hardest problems. For example, better use of influence networks can support U.S. efforts to prioritize and fully resource the more significant challenge posed by China by pushing forward changes that advance European security autonomy and by building and mobilizing needed, distributed networks in the Indo-Pacific theater. Influence networks can inform U.S. strategies for building ties to hedging states that offer access to key resources or strategic locations—for example, by focusing on shared local needs of potential partners and U.S. comparative advantages and by creating distributed business or civil society partnerships. Finally, influence networks provide ways to approach the Russia-China relationship that support U.S. security and economic interests, including avoiding the isolation of either. These examples begin to illustrate how influence networks can improve U.S. strategies toward foreign policy challenges by offering policymakers a way to prioritize commitments, capitalize on U.S. strengths, and avoid overextension that harms U.S. interests. Additional exploration and application of these networks will investigate these and other foreign policy challenges in more depth.
Topic:
Foreign Policy, Networks, Strategic Competition, and Multipolarity
Political Geography:
Russia, China, and United States of America

66. 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

67. 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

68. 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

69. 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

70. 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

71. 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

72. 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

73. "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

74. NATO’s 2022 Strategic Concept: Matching Ambition with Reality

Author:
Jonny Hall and Hugh Sandeman
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
This Strategic Update is based on a discussion hosted by LSE IDEAS in July 2022 on NATO’s 2030 Strategic Concept. Participants in the discussion included: General Sir James Everard, Gordon Barrass, General Sir Richard Barrons, Lt Gen Giles Hill, ProfessorChristopher Coker, Dr Luca Tardelli, Marissa Kemp, Tom McKane, and Peter Watkins. This Strategic Update reflects points made during the discussion, but no participant is in any way committed to its specific content, and the views expressed here are attributable solely to the authors. The Strategic Concept is the first since 2010 and was redrafted throughout a fundamentally different geopolitical and security context—following the Russian annexation of Crimea in 2014 and subsequent full-scale invasion of Ukraine in 2022. This Update addresses the Concept’s recognition of necessary strategic realignment, with NATO’s widening in both its defence commitments and geographic focus on China, as well as its ambiguity in regards to practical military strategy, deterrence, and endpoint of the war in Ukraine.
Topic:
Security, NATO, Military Strategy, Geopolitics, Deterrence, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, and United States of America

75. 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

76. 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

77. ASEAN: Seeing the Russian invasion of Ukraine through a glass darkly

Author:
Tan Sri Munir Majid
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
Ahead of the ASEAN special summit on 12-13 May in Washington D.C., Tan Sri Dr Munir Majid confronts the dichotomy between ASEAN’s chartered principles on territorial integrity and the disunity of individual member states’ responses to the Russian invasion of Ukraine. The shadow of China looms large over the diminishment of ASEAN’s centrality, and the long-term dangers to the southeast Asia region from the conflict have been little considered. The Biden administration should emphasise the war’s impact on business and economics during the summit, as well as Russian irredentist support, to help ASEAN’s leaders see through the glass more clearly
Topic:
Economy, Business, Alliance, ASEAN, Regional Politics, and Russia-Ukraine War
Political Geography:
Russia, China, and Ukraine

78. 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

79. Can Chancellor Scholz Save the West? The New German Government and Global Geopolitics

Author:
Maximilian Terhalle
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
In the wake of Chancellor Angela Merkel’s departure from the German Chancellorship, her successor, Olaf Scholz, inherits a Germany which has been lacking in strategic vision and an acute foreign policy for a considerable amount of time. Maximilian Terhalle asks, can Chancellor Scholz provide this vision for his country, and imbue NATO and the EU with a coherent and unified foreign policy in the face of threats from China, Russia, and a divided ‘West’?
Topic:
Foreign Policy, NATO, European Union, Geopolitics, Olaf Scholz, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, and Germany

80. Trump ended WTO dispute settlement. Trade remedies are needed to fix it.

Author:
Chad P. Bown
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Unhappy with the rulings of the WTO dispute settlement system, which disproportionately targeted US use of trade remedies, the United States ended the entire system in 2019. There are multiple hurdles to agreeing to new terms of trade remedy use and thus potentially restoring some form of binding dispute settlement. First, a change would affect access to policy flexibility by the now large number of users of trade remedies. Second, although China’s exports are the overwhelming target of trade remedies, exporters in other countries increasingly find themselves caught up in trade remedy actions linked to China. Third, critical differences posed by China’s economic model may call for new rules for trade remedies, but no consensus on those rules has emerged. Even some of the most promising reforms have practical limitations, create additional challenges, or may be politically unviable.
Topic:
Economics, Trade, Donald Trump, and WTO
Political Geography:
China and United States of America

81. 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

82. 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

83. 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

84. 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

85. 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

86. 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

87. 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

88. 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

89. The US–Italy Economic Relations in a Divided World

Author:
Adriana Castagnoli
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
In 2021, bilateral trade returned to the sustained pace it had prior to the Covid pandemic. Direct investment also grew – crucially, not just Italian investment in the United States but the other way round too. While Italy’s economic ties with Russia and China remain potential hotspots, Rome has never questioned its Atlantic orientation. Nevertheless, possible austerity policies following sanctions against Russia could spread social discontent that populist parties can exploit for consensus purposes in the 2023 general election, rekindling anti-Americanism rooted in different segments of Italian society.
Topic:
Foreign Policy, Foreign Direct Investment, Economic Policy, Trade, and Energy
Political Geography:
Russia, China, Italy, and United States of America

90. 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

91. 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

92. 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

93. Early Warning in the Taiwan Strait

Author:
Mark Stokes and Eric Lee
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Project 2049 Institute
Abstract:
Shows of force from China’s People’s Liberation Army exist on a continuum from peace to war and can be characterized as coercive or annihilative. In this report, Executive Director Mark Stokes and Associate Director of Programs Eric Lee examine kinetic and non-kinetic threats posed to Taiwan by the People’s Liberation Army. The authors explore the history of Taiwan’s early warning infrastructure and radar order of battle. They then assess how these capabilities support Taiwan’s air sovereignty missions of surveillance and control around its territories. They conclude by suggesting ways the United States can bolster Taiwan’s early warning capabilities.
Topic:
Security, Defense Policy, Sovereignty, Surveillance, and Army
Political Geography:
China, Taiwan, Asia-Pacific, and United States of America

94. 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

95. 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

96. 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

97. 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

98. 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

99. 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

100. 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