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  • Author: Jai Chul Heo
  • Publication Date: 03-2021
  • Content Type: Policy Brief
  • Institution: Korea Institute for International Economic Policy (KIEP)
  • Abstract: China has been able to escape from the Covid-19 outbreak relatively quickly compared to other countries. Nevertheless, it still remains greatly influenced by the Covid-19 pandemic across its politics, economy, society, culture, and other areas, which has led to various changes throughout China. Therefore, this study comprehensively examined the impact of the Covid-19 outbreak on various aspects of Chinese politics, economy, society, and culture. And in response to these changes in Chinese society, the study explores new strategies toward China in the post-Covid-19 era.
  • Topic: Politics, Culture, Economy, COVID-19, Society
  • Political Geography: China, Asia, Korea
  • Author: Pyoung Seob Yang, Cheol-Won Lee, Suyeob Na, Taehyn Oh, Young Sun Kim, Hyung Jun Yoon, Yoo-Duk Ga
  • Publication Date: 04-2021
  • Content Type: Policy Brief
  • Institution: Korea Institute for International Economic Policy (KIEP)
  • Abstract: China’s investment in the European Union (EU) increased significantly during the European financial crisis, but has been on the decline in recent years. The surge of Chinese investment has raised concerns and demands for analysis on the negative effects it could have on the EU companies and industries. In this context, the present study aims to analyze the main characteristics of Chinese investment and M&A in Europe, major policy issues between the two sides, the EU’s policy responses, and prospects of Chinese future investment in Eu-rope, going on to draw important lessons for Korea. To summarize the main characteristics of China's investment in Europe, the study found that the EU's share of China's overseas direct investment has continued to increase until recently. Second, investment in the Central and Eastern European Countries (CEECs) is gradually increasing, although it is still insignificant compared to the top five destinations in the EU: Netherlands, Sweden, Germany, Luxembourg and France. Third, China's investment in the EU is being made in pursuit of innovation in manufacturing and to acquire high-tech technologies. When it comes to China's M&A in Europe, the study found that the proportion of indirect China's M&As (via third countries (e.g. Hong Kong) or Chinese subsidiaries already established in Europe) was relatively higher than direct ones. Empirical factor analysis of investment also shows that China's investment in the EU is strongly motivated by the pursuit of strategic assets. Other factors such as institutional-level and regulatory variables are found to have no significant impact, or have an effect contrary to expectations. This suggests that China's investment in the EU is based on the Chinese government's growth strategy, and accompanies an element of national capitalism Today, It is highly expected that the COVID-19 pandemic will have a reorganizing effect on the global value chain (GVC) and Foreign investment regulation in the high-tech sector motivated by national security is emerging as a global issue as the US and the EU are tightening their control. As Korean companies are not free from the risk of falling under such regulations, a thorough and careful response is required. And for the Korean government, it is necessary to prepare legal and institutional measures regulating foreign investment in reference to the US and the EU.
  • Topic: Foreign Direct Investment, Financial Crisis, European Union, Economy, Economic Growth, Global Value Chains, COVID-19
  • Political Geography: China, Europe, Asia, Korea, United States of America
  • Author: Sangbaek Hyun, Suyeob Na, Young Sun Kim, Koun Cho, Bongkyo Seo
  • Publication Date: 04-2021
  • Content Type: Policy Brief
  • Institution: Korea Institute for International Economic Policy (KIEP)
  • Abstract: The opening of China's financial sector has progressed at a very slow pace, unlike the manufacturing and trade sectors that have pushed for an active opening to the outside world. The Chinese economy has been growing rapidly while serving as a global production base, but since 2012, it has become necessary to modify its approaches to achieve growth as it enters an era of medium-speed growth. Recently, new reform and opening measures have been taken in various fields to improve the quality of the Chinese economy, and the need for reform and opening in the financial sector has also increased. Internally, the financial system centered on China's state-owned commercial banks has focused on indirect financing, which has served as a major obstacle to upgrading China's economy and industry to the next level, further increasing the need for reform and opening of the financial sector. Moreover, externally, the U.S.-China conflict which began in earnest in 2018, is applying strong pressure toward reform and opening in China’s financial sector. The Chinese government began to show a proactive attitude toward financial opening amid such internal needs and external pressure, and an important development was seen in China’s financial opening when President Xi Jinping declared further opening measures at the Boao Forum in April 2018. The Chinese financial authorities have prepared follow-up measures related to financial opening, and the Chinese government’s efforts toward financial opening in the three years from 2018 to 2020 yielded more results than the ten-year opening period since its accession to the WTO. Against this backdrop, this study examines the main contents of China’s financial opening process, which has been accelerating recently, and derives evaluation and implications.
  • Topic: Finance, Economy, Economic Growth, Banks
  • Political Geography: China, Asia, Korea
  • Author: Sungwoo Hong, Yeo Joon Yoon, Jino Kim, Jeewoon Rim, Jimin Nam
  • Publication Date: 02-2021
  • Content Type: Policy Brief
  • Institution: Korea Institute for International Economic Policy (KIEP)
  • Abstract: The conflict between the United States and China may be the issue of most importance as well as interest to the world, prior to COVID-19. This conflict between the two countries is appearing not only in the economic sector, but also in various field such as politics, diplomacy, and military affairs. Such competition between the two countries is likely to escalate further as multilateral systems such as the WTO are threatened and protectionism intensifies in the post-COVID-19 world. Even within Latin America, the competition between the two countries frequently appears in a variety of forms. Conflicts between the United States and China in Latin America tend to occur mainly in the infrastructure sectors. Furthermore, the United States pressured Latin American countries to choose between the United States and China, with the results of this pressure depending on the political orientation of the ruling government. In order to investigate the impact of retaliatory tariffs between the two countries on Latin American countries’ exports and welfare, we employ an event analysis for exports and computational general equilibrium (CGE) model for welfare, with Argentina, Brazil, Mexico, and Chile as the subject of our analysis. Based on the outcome of the event study, Brazil’s exports to the United States moderately increased due to the tariff imposition, and such an effect persisted for short term. Its exports to China rose considerably immediately after the tariff imposition, and then the impact tended to decrease over time. By contrast, it is difficult to conclude that the tariff imposition had a statistically significant and lasting effect on the exports of the remaining three countries to the United States and China. As a result of the analysis using the CGE model, meanwhile, the tariffs imposed between the United States and China trivially increased the welfare of Latin American countries.
  • Topic: Foreign Policy, Economy, Tariffs, Exports, Trade, Rivalry
  • Political Geography: China, Asia, South America, Latin America, Korea, United States of America
  • Author: Ketian Zhang
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Belfer Center for Science and International Affairs, Harvard University
  • Abstract: China’s coercive behavior in the post–Cold War period suggests three patterns. First, China uses coercion when it wants to establish a reputation for resolve. Second, China has been a cautious bully, resorting to coercion only infrequently. Third, when China perceives the “geopolitical backlash cost” of military coercion to be high, it chooses instead to use sanctions and grayzone coercion. (“Geopolitical backlash cost” refers here to the possibility that the target state will seek to balance against China, with the potential for U.S. military involvement.) When China perceives the geopolitical backlash cost to be low, it is more likely to use military coercion.
  • Topic: Sovereignty, Power Politics, Geopolitics, Economy
  • Political Geography: China, Asia, South China Sea
  • Author: Cullen S. Hendrix
  • Publication Date: 03-2020
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: The Trump administration’s Africa strategy is rooted in three misconceptions about China’s African footprint—and a fourth about US-Africa economic relations—that are either factually incorrect or overstated in terms of the broader strategic challenges they pose to US interests: (1) Chinese engagement in Africa crowds out opportunities for trade and investment with and from the United States; (2) Chinese engagement in Africa is resource-seeking—to the detriment of US interests; (3) Chinese engagement in Africa is designed to foster debt-based coercive diplomacy; and (4) US-Africa economic linkages are all one-way and concessionary (i.e., aid-based). Hendrix finds little evidence to suggest Chinese trade and investment ties crowd out US trade and investment opportunities. China’s resource-seeking bent is evident in investment patterns, but it is more a function of Africa’s having comparatively large, undercapitalized resource endowments than China’s attempt to corner commodity markets. Chinese infrastructural development—particularly large projects associated with the Belt and Road Initiative—may result in increased African indebtedness to the Chinese, but there is little reason to think debt per se will vastly expand Chinese military capacity in the region. And finally, US-Africa economic relations are much less one-sided and concessionary (i.e., aid-based) than conventional wisdom suggests.
  • Topic: Bilateral Relations, Infrastructure, Economy, Trade, Donald Trump
  • Political Geography: Africa, China, North America, United States of America
  • Author: Kevjin Lim
  • Publication Date: 03-2020
  • Content Type: Policy Brief
  • Institution: The Washington Institute for Near East Policy
  • Abstract: Beijing has steadily become Tehran’s economic ventilator, diplomatic prop, and military enabler, and the Iranians need this backstop now more than ever. When the coronavirus spun out of control in Wuhan this January, Iran ignored the example of many other countries and continued to maintain direct flights and open borders with China. Even after President Hassan Rouhani’s government suspended all such flights on January 31, Mahan Air—a company affiliated with Iran’s Islamic Revolutionary Guard Corps—kept flying between Tehran and four first-tier Chinese cities, leading many to allege that the airline was instrumental in introducing or at least exacerbating Iran’s raging epidemic. Whatever the truth behind these allegations, Mahan’s policy is symptomatic of a larger geopolitical reality: Tehran has become profoundly, disproportionately, and perhaps irretrievably dependent on Beijing, despite its own revolutionary opposition to reliance on foreign powers. Where diplomatic and economic sanctions have fallen short, the pandemic has succeeded in isolating the Islamic Republic like never before, compelling it to keep its borders to China open. COVID-19 has also dispelled the notion that Iran’s heavily-sanctioned “resistance economy” still suffices to keep the country solvent. The government has conceded that staying afloat would be impossible if it curtailed cross-border trade, shut down industries, and quarantined entire cities. The crisis is so severe that Iran’s Central Bank has for the first time in decades requested billions of U.S. dollars in assistance from the IMF. Indeed, according to Deputy Health Minister Reza Malekzadeh, whenever his colleagues questioned why China flights continue, bilateral economic relations were among the reasons given. Two days after the government’s ban on such flights, Chinese ambassador Chang Hua tweeted that Mahan CEO Hamid Arabnejad wanted to continue cooperating with Beijing. Neither man specified exactly what this meant, but the implied message to Tehran was clear given China’s resentment of travel bans. Meanwhile, the Iranian Students News Agency, Tabnak, and other domestic media criticized Mahan for prioritizing profit margins over public health.
  • Topic: Foreign Policy, Bilateral Relations, Sanctions, Geopolitics, Economy, COVID-19
  • Political Geography: China, Iran, Middle East, Asia
  • Author: Frank Aum, Jacob Stokes, Patricia M. Kim, Atman M. Trivedi, Rachel Vandenbrink, Jennifer Staats, Joseph Yun
  • Publication Date: 02-2020
  • Content Type: Policy Brief
  • Institution: United States Institute of Peace
  • Abstract: A joint statement by the United States and North Korea in June 2018 declared that the two countries were committed to building “a lasting and stable peace regime on the Korean Peninsula.” Such a peace regime will ultimately require the engagement and cooperation of not just North Korea and the United States, but also South Korea, China, Russia, and Japan. This report outlines the perspectives and interests of each of these countries as well as the diplomatic, security, and economic components necessary for a comprehensive peace.
  • Topic: Conflict Resolution, Security, Diplomacy, Economy, Peace
  • Political Geography: Russia, Japan, China, Asia, South Korea, North Korea, Korean Peninsula, United States of America
  • Author: Jagannath P. Panda
  • Publication Date: 11-2020
  • Content Type: Policy Brief
  • Institution: The Jamestown Foundation
  • Abstract: Connectivity linkages between the People’s Republic of China (PRC) and trans-Himalayan countries have taken on a new hue with the recent Himalayan ‘Quadrilateral’ meeting between China, Pakistan, Afghanistan and Nepal (MOFA (PRC), July 27). Often referred to as a “handshake across the Himalayas,” China’s outreach in the region has been characterized by ‘comprehensive’ security agreements, infrastructure-oriented aid, enhanced focus on trade, public-private partnerships, and more recently, increased economic and security cooperation during the COVID-19 pandemic.[1] The geopolitics underlying China’s regional development initiatives, often connected with its crown jewel foreign policy project Belt and Road Initiative (BRI), have been highly concerning—not just for the countries involved, but also for neighboring middle powers like India, which have significant stakes in the region.[2] At the Himalayan Quad meeting, foreign ministers from all four countries deliberated on the need to enhance the BRI in the region through a “Health Silk Road”. Chinese Communist Party (CCP) General Secretary and PRC President Xi Jinping’s ‘Community of a Shared Future for Humanity’ was cited as justification for facilitating a “common future with closely entwined interests,” and the ministers agreed to work towards enhancing connectivity initiatives to ensuring a steady flow of trade and transport corridors in the region and building multilateralism in the World Health Organization (WHO) to promote a “global community of health” (Xinhua, July 28).
  • Topic: Diplomacy, Territorial Disputes, Geopolitics, Economy
  • Political Geography: Pakistan, Afghanistan, China, India, Asia, Nepal
  • Author: Phil Thornton
  • Publication Date: 07-2020
  • Content Type: Policy Brief
  • Institution: Atlantic Council
  • Abstract: The world is facing unprecedented health and economic crises that require a global solution. Governments have locked down their economies to contain the mounting death toll from the COVID-19 pandemic. With this response well underway, now is the time to move into a recovery effort. This will require a coordinated response to the health emergency and a global growth plan that is based on synchronized monetary, fiscal, and debt relief policies. Failure to act will risk a substantial shock to the postwar order established by the United States and its allies more than seventy years ago. The most effective global forum for coordinating this recovery effort is the Group of 20 (G20), which led the way out of the global financial crisis (GFC) in 2009, the closest parallel we have to the current catastrophe. Eleven years ago, world leaders used the G20 meeting in London as the forum to deliver a unified response and a massive fiscal stimulus that helped stem economic free fall and prevented the recession from becoming a second Great Depression. A decade on, it is clear that the G20 is the only body with the clout to save the global economy. This does not mean that the G20 should be the only forum for actions for its member states. The United States, for example, should also work closely with like-minded states that support a rules-based world order, and there are many other fora where it can and must be active with partners and allies. But no others share the G20’s depth and breadth in the key focus areas for recovery. The other multilateral organizations that could take up the challenge lack either the substance or membership. The United Nations may count all countries as members but is too unwieldly to coordinate a response. The International Monetary Fund (IMF) has the resources but requires direction from its 189 members. The Group of Seven (G7), which once oversaw financial and economic management, does not include the fast-growing emerging economies. The G20 represents both the world’s richest and fastest-growing countries, making it the forum for international collaboration. It combines that representation with agility.
  • Topic: Security, Energy Policy, G20, Global Markets, Geopolitics, Economy, Business , Trade, Coronavirus, COVID-19
  • Political Geography: China, Middle East, Canada, Asia, Saudi Arabia, North America, United States of America