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1. Will economic statecraft threaten western currency dominance? Sanctions, geopolitics, and the global monetary order

Author:
Carla Norrlof
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
The return of great power rivalry is stoking renewed fears of weakening Western currency dominance. Financial sanctions are becoming the preferred economic tool for accomplishing geopolitical goals. These instruments are especially popular with the United States and Europe. In response, rival great powers, notably China and Russia, are diversifying away from Western currencies and developing counterstrategies to maintain economic and foreign policy autonomy. As other countries are hit by increasingly punishing Western sanctions, the incentive to join Russia and China’s alternative international monetary order increases. New analysis, published in this report, shows early signs that some countries may be trying to diversify away from the dollar. A growing circle of countries attempting to evade the Western-centric financial and currency order may over time erode the dollar and the euro’s sizeable lead, though will likely fall well short of ending their global dominance. This report analyzes these trends and quantifies the extent of reserve diversification following Russia’s 2022 war on Ukraine. It also assesses the polarity of the international currency order since the onset of the euro in 2002. Reserve diversification out of the dollar, and into the euro, has been modest, though Chinese renminbi reserves grew after Russia’s February offensive in Ukraine. Dollar unipolarity declined acutely in 2017 as the number of countries sanctioned by the United States increased and the US President Donald J. Trump threatened to revoke alliance commitments. Using economic statecraft while retaining global economic influence will require the United States to keep its economic house in order and allies close, if the current unipolar currency order is to survive.
Topic:
Economics, Monetary Policy, Sanctions, and Geopolitics
Political Geography:
China, Europe, and Asia

2. Hong Kong’s future on edge: Countering China’s national security law

Author:
Ash Jain, Joel Kesselbrenner, and Peter Mattis
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
Over the past seventy-five years, the United States and its allies have constructed and defended a rules-based international system that has provided unprecedented levels of peace, prosperity, and freedom. In recent years, the system has come under increasing strain, as a new era of great power competition has emerged. Despite hopes that China would become a “responsible stakeholder” in a rules-based system, Beijing has grown increasingly assertive, especially under President Xi Jinping. Beijing’s more confrontational path poses a significant challenge to a rules-based system. The challenge presented by China is particularly acute in the context of Hong Kong, where the Chinese Communist Party (CCP) has brashly violated an international treaty and curtailed democratic institutions and human rights. As the world enters an era of strategic competition with China, Beijing’s actions in Hong Kong should be a priority for policymakers in the United States and allied countries. This report addresses the importance of Hong Kong within the context of China’s broader challenge to the rules-based system and offers recommendations for how the United States and its allies can prevent a further erosion of democracy in Hong Kong and, over time, seek to restore it. It suggests that the United States and its allies still have available a range of pragmatic policy tools that can can be used to exert pressure and impose meaningful costs on Beijing. These should be implemented as part of a broader, comprehensive strategy to prevent China from undermining the rules-based system in the security, economic, and governance domains. On June 30, 2020, the CCP imposed a sweeping new National Security Law on Hong Kong, effectively giving Beijing direct control over the autonomous territory. Since then, China has acted to erode Hong Kong’s liberal traditions, in violation of Beijing’s treaty commitments under the Sino-British Joint Declaration. The National Security Law has for all practical purposes outlawed democratic activism, organizing, and speech. Over the past year, Beijing has cracked down on Hong Kong’s democratic institutions and thrown the pro-democracy movement into disarray. Beijing’s crackdown in Hong Kong is aimed at achieving several objectives. First, China’s leaders seek to maintain the legitimacy of the CCP in the face of a pro-democracy movement that it fears could spread to the mainland. Second, they seek to advance the unification of China by harmonizing the cultural, social, and economic aspects of life across the country, including Hong Kong. Third, the CCP aims to achieve a comprehensive modernization of China, while retaining the Party’s leadership, including by reaping economic benefits from the Greater Bay Area Integration Plan. Finally, China’s crackdown is aimed at stemming the advance of a liberal, democratic world order by pushing back on democratic norms that it views as antithetical to the Party and a danger to its efforts to modernize China on its own terms.
Topic:
Diplomacy, Economics, Human Rights, Politics, Sanctions, and Business
Political Geography:
China, Asia, and Hong Kong

3. China's Evolving Role in Latin America: Can it Be a Win-Win?

Author:
Enrique Dussel Peters
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
Weeks before Chinese President Xi Jinping meets with President Barack Obama in Washington, the Atlantic Council's Latin America Center launched a new report that unravels the complexities of the Latin America-China relationship. Titled China's Evolving Role in Latin America: Can it Be a Win-Win?, the report provides five recommendations to help both China and Latin America usher in a mutually beneficial post-commodity-boom relationship. The key to long-term success will be to insure that the relationship promotes—rather than delays—economic growth and social progress in the hemisphere. In the report, renowned Mexico-based China Expert Enrique Dussel Peters, an Atlantic Coucil author and Professor at the Graduate School of Economics at the National Autonomous University of Mexico (UNAM), calls for a ratcheting up of strategic planning and multilateral support so the relation¬ship is a win-win for all parties, including the United States. A deep dive of the state of play is provided for five countries: Argentina, Brazil, Cuba, Mexico, and Venezuela. These countries illustrate the spectrum of ties with China, ranging from those with long and complex historical relation¬ships to those almost entirely structured around recent opportunities for economic cooperation.
Topic:
Diplomacy, Economics, and Bilateral Relations
Political Geography:
China and Latin America

4. Avoiding the Blind Alley: China's Economic Overhaul and Its Global Implications

Author:
Daniel H. Rosen
Publication Date:
10-2014
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
PRESIDENT XI JINPING ANNOUNCED a sweeping overhaul for China's economy in November 2013, with pledges to make market forces decisive, treat homegrown and foreign investors with the same laws and regulations, and change the mission statement of the government. The reform program, known as the Decisions plan and presented at the Communist Party leadership's Third Plenum meeting, is comprehensive and marks a turning point in China's modern history. The degree of boldness also indicates that after 35 years of world-beating economic performance, China's development model is obsolete and in need of urgent, not gradual, replacement. To justify the risks, President Xi quoted an impassioned plea for policy modernization by his predecessor Deng Xiaoping: the only way to avoid a dead end – a blind alley – is to deepen reform and opening both at home and with the world.
Topic:
Economics, International Trade and Finance, Political Economy, and Reform
Political Geography:
China

5. India and Pakistan: The Opportunity Cost of Conflict

Author:
Shuja Nawaz and Mohan Guruswamy
Publication Date:
04-2014
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
India and Pakistan, born out of a single British-ruled entity in 1947, have continued an implacable rivalry marked by periodic wars and hostilities as well as through proxies. This unending conflict has led them to invest heavily in their militaries and even to choose nuclear weaponry as a deterrence on the part of Pakistan toward India and on India's part toward both Pakistan and China. Although there have been occasional moves toward confidence building measures and most recently toward more open borders for trade, deep mistrust and suspicion mark this sibling rivalry. Their mutual fears have fuelled an arms race, even though increasingly civil society actors now appear to favor rapprochement and some sort of an entente. The question is whether these new trends will help diminish the military spending on both sides.
Topic:
Security, Foreign Policy, Economics, International Trade and Finance, and Reform
Political Geography:
Pakistan, China, India, Asia, and Southeast Asia

6. Morocco's Emergence as a Gateway to Business in Africa

Author:
J. Peter Pham and Ricardo Rene Laremont
Publication Date:
08-2014
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Africa is home to seven of the world's ten fastest-growing economies. By 2050, the continent's population is expected to overtake India's and China's, doubling to two billion people. Moreover, those two billion Africans will be younger than their counterparts in every other region of the world and will account for one in four workers globally by mid-century. Africa's rich endowment of natural resources, including about 30 percent of the world's known reserves of minerals and 60 percent of the planet's uncultivated arable land, is already well-known to investors.
Topic:
Security, Economics, International Trade and Finance, and Foreign Direct Investment
Political Geography:
Africa, China, and Morocco