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11. The People Powering Japan’s Startup Ecosystem

Author:
Kenji Kushida
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Japan’s startup ecosystem is now able to attract human capital in ways that were not possible fifteen years ago. Employment flexibility is critical to a maturing startup ecosystem, and Japan’s startup ecosystem is now enjoying positive feedback loops. Japan’s startup ecosystem now draws from top universities; large, prestigious companies; government ministries; global, foreign multinational corporations; and the startup ecosystem itself. While Japan’s lifetime employment system in large companies is alive and well, the rise of new employment logics has grown in parallel with corporate Japan’s traditional employment system. The rise of foreign firms and the IT industry, along with the declining attractiveness of large companies, has created a new logic of opportunities for top talent. Global linkages are still a challenge, and the government should focus on efforts to remove barriers to all global collaborations, especially given the disruption caused by Japan’s abrupt border closures in response to the COVID-19 pandemic.
Topic:
Employment, Business, Human Capital, and Startup
Political Geography:
Japan and Asia

12. 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

13. What Should India Do Before the Next Taiwan Strait Crisis?

Author:
Vijay Gokhale
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In the next two decades, the Taiwan question is likely to assume increasing importance for the Indo-Pacific region. The People’s Republic of China (PRC) is becoming more assertive about unifying Taiwan with the mainland, and it is also making progress toward establishing the military capability toward this end. For a rising PRC seeking to establish itself as the dominant global power, it is untenable that a part of its territory remains outside its control. Possible endeavors toward establishing this control could lead to a response by the United States, which would have broader ramifications for the region and the world. For the United States, any endeavors by the PRC to this end would undermine the very core of the idea that the United States is the defender of freedom and democracy across the world, thus undermining its credibility. It might also deal a devastating blow to the United States’ global power. In this context, and given the significance of Taiwan to both countries, it is an issue that can rapidly escalate, making it a matter of concern in the Indo-Pacific. Further, a conflict over Taiwan would dwarf the global economic fallout that began when Russia invaded Ukraine in 2022. Short of conflict, Chinese coercion of Taiwan could disrupt the freedom of navigation and sea lanes of communication through the Taiwan Strait and will have severe consequences for Asian geopolitics and geoeconomics. Given India’s substantial geopolitical and geoeconomic interests in the region and its long history of exchanges with East and Southeast Asia, India should pay constant and careful attention to this issue. Further, a policy to respond to various contingencies must be thought through and put into place. This paper tries to look at the possible policy that India might adopt ahead of a major crisis in the Taiwan Strait. The paper proceeds in three parts. The first part analyzes the geopolitical and geoeconomic consequences of another Taiwan Strait crisis for India. While it is difficult to estimate the actual damage that would be dealt to the Indian economy, it is clear that all segments of the economy would be affected, with the impact possibly substantial enough to set India back several years. A crisis would also impact India’s geopolitical interests and national security, given that China is increasing its assertiveness both along the Line of Actual Control as well as in the Indian Ocean. The second part argues against a commonplace view that India played no role in crisis management during earlier periods of high tension in the Taiwan Strait—the 1954–55 and 1958 Taiwan Strait Crises, also known as the First and Second Taiwan Strait Crisis, respectively. By using archival material in the United States, the United Kingdom, and India, it seeks to dispel the above notion and that Taiwan ceased to be a matter of interest for India after it had recognized PRC’s claim over Taiwan in 1950. Further, it looks at the lessons for policymaking from India’s handling of the crises. The third part of the paper briefly traces the history of India-Taiwan relations following India’s transfer of its diplomatic recognition to the PRC till the present day. It provides an overview of India’s Taiwan policy. Given that a war in the Taiwan Strait is not beyond reasonable doubt, it then discusses the scenarios India might find itself in and the possible policies to respond to these scenarios. It recommends a close following of the U.S.-ChinaTaiwan strategic triangle, a whole-of-government assessment around impacts of a Taiwan Strait contingency, and an assessment of policy options. It also recommends mapping the expectations that China and the United States would have of India, along with undertaking consultations with key partners on the Taiwan question.
Topic:
Foreign Policy, Geopolitics, Crisis Management, and Geoeconomics
Political Geography:
South Asia, India, Taiwan, Asia, and Indo-Pacific

14. 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

15. China’s AI Regulations and How They Get Made

Author:
Matt Sheehan
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China is in the midst of rolling out some of the world’s earliest and most detailed regulations governing artificial intelligence (AI). These include measures governing recommendation algorithms—the most omnipresent form of AI deployed on the internet—as well as new rules for synthetically generated images and chatbots in the mold of ChatGPT. China’s emerging AI governance framework will reshape how the technology is built and deployed within China and internationally, impacting both Chinese technology exports and global AI research networks. But in the West, China’s regulations are often dismissed as irrelevant or seen purely through the lens of a geopolitical competition to write the rules for AI. Instead, these regulations deserve careful study on how they will affect China’s AI trajectory and what they can teach policymakers around the world about regulating the technology. Even if countries fundamentally disagree on the specific content of a regulation, they can still learn from each other when it comes to the underlying structures and technical feasibility of different regulatory approaches. In this series of three papers, I will attempt to reverse engineer Chinese AI governance. I break down the regulations into their component parts—the terminology, key concepts, and specific requirements—and then trace those components to their roots, revealing how Chinese academics, bureaucrats, and journalists shaped the regulations. In doing so, we have built a conceptual model of how China makes AI governance policy, one that can be used to project the future trajectory of Chinese AI governance (see figure 1). China’s three most concrete and impactful regulations on algorithms and AI are its 2021 regulation on recommendation algorithms, the 2022 rules for deep synthesis (synthetically generated content), and the 2023 draft rules on generative AI. Information control is a central goal of all three measures, but they also contain many other notable provisions. The rules for recommendation algorithms bar excessive price discrimination and protect the rights of workers subject to algorithmic scheduling. The deep synthesis regulation requires conspicuous labels be placed on synthetically generated content. And the draft generative AI regulation requires both the training data and model outputs to be “true and accurate,” a potentially insurmountable hurdle for AI chatbots to clear. All three regulations require developers to make a filing to China’s algorithm registry, a newly built government repository that gathers information on how algorithms are trained, as well as requiring them to pass a security self-assessment. Structurally, the regulations hold lessons for policymakers abroad. By rolling out a series of more targeted AI regulations, Chinese regulators are steadily building up their bureaucratic know-how and regulatory capacity. Reusable regulatory tools like the algorithm registry can act as regulatory scaffolding that can ease the construction of each successive regulation, a particularly useful step as China prepares to draft a national AI law in the years ahead. Examining the roots of these regulations also grants insight into the key intellectual and bureaucratic players shaping Chinese AI governance. The Cyberspace Administration of China (CAC) is the clear bureaucratic leader in governance to date, but that position may grow more tenuous as the focus of regulation moves beyond the CAC’s core competency of online content controls. The Ministry of Science and Technology is another key player, one that may see its profile rise due to recent government restructuring and increased focus on regulating underlying AI research. Feeding into this bureaucratic rulemaking are several think tanks and scholars, notably the China Academy for Information Communications Technology and Tsinghua University’s Institute for AI International Governance. In the years ahead, China will continue rolling out targeted AI regulations and laying the groundwork for a capstone national AI law. Any country, company, or institution that hopes to compete against, cooperate with, or simply understand China’s AI ecosystem must examine these moves closely. The subsequent papers in this series will dig into the details of these regulations and how they came about, deepening understanding of Chinese AI governance to date and giving a preview of what is likely coming around the bend.
Topic:
Foreign Policy, Science and Technology, Cybersecurity, Regulation, and Artificial Intelligence
Political Geography:
China and Asia

16. How Saudi Arabia Bent China to Its Technoscientific Ambitions

Author:
Mohammed Al-Sudairi, Steven Jiawei Hai, and Kameal Alahmad
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Technoscientific cooperation between the People’s Republic of China (PRC) and Arab states has blossomed in recent years.1 The phrase itself has become an official “watchword” (tifa) in the context of Sino-Arab relations, suffusing nearly every official policy paper or statement on the Arab world from Beijing, including its Arab Policy Paper (2016), the China-Arab States Cooperation Forum Action Plan (2020), and the Ministry of Foreign Affairs’ Report on Sino-Arab Cooperation in the New Era (2022).2 Yet this newly hailed “breakthrough” (tupo) has attracted both scrutiny and concern from Western officials and academics worried about their states’ influence in the Middle East and, perhaps more pertinently, the outcome of their perceived ongoing global competition with China. The anti-Huawei campaign waged across the Gulf states by American officials during the end of Donald Trump’s presidency and the beginning of Joe Biden’s was animated by questions shaped by these anxieties: Will access to, and adoption of, Chinese technologies lead to the diffusion of new distinctively “Chinese” norms and standards (such as Chinese conceptions of cyber sovereignty) or barriers to unfettered Western market access over the long run? Will these same technologies compromise national digital ecosystems and infrastructures, thereby allowing the PRC to access sensitive information surrounding Western technologies and military deployments in the region while imposing its own distinctively Chinese vision on the region? And to what extent will these processes of technoscientific borrowing embolden authoritarianism and potentially take these states out of a Western security orbit?3 Such questions are neither new nor limited to the Middle East. The PRC’s complicated entanglements in Africa over the past few decades have produced similar-sounding concerns from the West surrounding a range of issues including Chinese “debt trap diplomacy” and resource exploitation, to which scholars such as Deborah Brautigam, Ching Kwan Lee, and Lina Benabdallah have provided nuanced counternarratives.4 Inspired by these works’ emphasis on local factors that China adapts to rather than the “Chinese ways” that Beijing and its proxies ostensibly impose, and also seeking to address some of the (primarily) Western apprehensions on Sino-Arab technoscientific cooperation, this paper focuses on a single regional actor—the Kingdom of Saudi Arabia, a major comprehensive strategic partner (quanmian zhanlüe huoban) of the PRC.5 The paper is anchored by the contention that technoscientific development in Saudi Arabia reflects, above all, the objectives and strategies of the Saudi state in its pursuit of technoscientific self-strengthening. In approaching this topic from a local perspective, this analysis seeks to upend conventional narratives that view these transformations mainly through the prism of China’s rise, or that of the U.S.-China rivalry. There are dreamers and planners beyond those in the Beltway and Zhongnanhai, such as those in al-Yamamah Palace, and their ambitions must be taken into account in understanding the nature, scope, intensity, velocity, and specifics of their collaborations with China. The paper is divided into three sections. The first discusses the evolution of Saudi Arabia’s approach to technoscientific development. It serves to shed light on the underlying logic guiding the kingdom’s global search for technoscientific partnerships. The second focuses on Chinese-Saudi technoscientific cooperation and localization projects, providing a general overview of the history of such cooperation followed by a discussion of some of its structural trends and impediments in terms of human resources, the circulation of capital, and the role of the state versus the private sector. The third and final section dwells on some of the key takeaways and contextualizing lessons based on the previous sections’ findings.
Topic:
Development, International Cooperation, Science and Technology, Innovation, and Strategic Engagement
Political Geography:
China, Middle East, Asia, and Saudi Arabia

17. Negotiating Local Business Practices With China in Benin

Author:
Folashade Soule
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Commercial negotiations between Benin and China demonstrate how both sides navigate the dynamics of Africa-China business-to-business relationships. In Benin, Chinese and local Beninese officials engaged in drawn-out negotiations on a deal to construct a business center aimed at deepening business links between Chinese and Beninese merchants. Strategically located in Cotonou, Benin’s principal economic city, the center aims to promote investment and wholesale businesses by serving as a hub for China’s business-to-business relations not just in Benin but regionally in West Africa, especially in the large and growing neighboring market of Nigeria. This paper relies on original research and fieldwork conducted in Benin from 2015 to 2021 and the author’s access to draft and final contracts from the negotiations, which allow for a side-by-side comparative textual analysis, as well as initial field interviews and follow-up interviews with key negotiators, Beninese businessmen, and former Beninese students in China. The paper shows how Chinese and Beninese authorities negotiated the establishment of the center and, above all, how Beninese authorities made Chinese negotiators adapt to local Beninese labor, construction, and legal norms and put pressure on their Chinese counterparts. This strategy meant that negotiations took longer than usual to complete. China-Africa cooperation is often characterized by speedy negotiations, an approach that in some cases turns out to be harmful—since this can allow vague and unfair clauses to be featured in final contracts. The negotiations over the Chinese business center in Benin is a good example of how well-coordinated negotiators that take their time and work in coordination with various counterparts throughout the government can help facilitate better outcomes in terms of high-quality infrastructure and compliance with prevailing construction, labor, environmental, and business norms, while also preserving a good bilateral relationship with China.
Topic:
Foreign Policy, Development, Bilateral Relations, and Business
Political Geography:
Africa, China, Asia, and Benin

18. How Huawei’s Localization in North Africa Delivered Mixed Returns

Author:
Tin Hinane El Kadi
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa. The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure. Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa. Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students. However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading. North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.
Topic:
Development, Science and Technology, Telecommunications, Huawei, and Digital Space
Political Geography:
China, Asia, Algeria, North Africa, and Egypt

19. U.S.-China Technological “Decoupling”: A Strategy and Policy Framework

Author:
Jon Bateman
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
A partial “decoupling”2 of U.S. and Chinese technology ecosystems is well underway. Beijing plays an active role in this process, as do other governments and private actors around the world. But the U.S. government has been a primary driver in recent years with its increased use of technology restrictions: export controls, divestment orders, licensing denials, visa bans, sanctions, tariffs, and the like. There is bipartisan support for at least some bolstering of U.S. tech controls, particularly for so-called strategic technologies, where Chinese advancement or influence could most threaten America’s national security and economic interests. But what exactly are these strategic technologies, and how hard should the U.S. government push to control them? Where is the responsible stopping point—the line beyond which technology restrictions aimed at China do more harm than good to America? These are vexing questions with few, if any, clear answers. Yet the United States cannot afford simply to muddle through technological decoupling, one of the most consequential global trends of the early twenty-first century. The U.S. technology base—foundational to national well-being and power—is thoroughly enmeshed with China in a larger, globe-spanning technological web. Cutting many strands of this web to reweave them into new patterns will be daunting and dangerous. Without a clear strategy, the U.S. government risks doing too little or—more likely—too much to curb technological interdependence with China. In particular, Washington may accidentally set in motion a chaotic, runaway decoupling that it cannot predict or control. Sharper thinking and more informed debates are needed to develop a coherent, durable strategy. Today, disparate U.S. objectives are frequently lumped together into amorphous constructs like “technology competition.” Familiar terms like “supply chain security” often fail to clarify such basic matters as which U.S. interests must be secured and why. Important decisions are siloed within opaque forums (like the Committee on Foreign Investment in the United States [CFIUS]), narrow specialties (like export control law), or individual industries (like semiconductors), concealing the bigger picture. The traditional concerns of “tech policy” and “China policy” receive outsized attention, while second-order implications in other areas (such as climate policy) get short shrift. And as China discourse in the United States becomes more politically charged, arguments for preserving technology ties are increasingly muted or not voiced at all. This report aims to address these gaps and show how American leaders can navigate the vast, perilous, largely unmapped terrain of technological decoupling. First, it gives an overview of U.S. thinking and policy—describing how U.S. views on Chinese technology have evolved in recent years and explaining the many tools that Washington uses to curb U.S.- China technological interdependence. Second, it frames the major strategic choices facing U.S. leaders—summarizing three proposed strategies for technological decoupling and advocating a middle path that preserves and expands America’s options. Third, it translates this strategy into implementable policies and processes—proposing specific objectives for U.S. federal agencies and identifying the technology areas where government controls are (or are not) warranted. The report also highlights many domestic investments and other self-improvement measures that must go hand in hand with restrictive action.
Topic:
National Security, Science and Technology, Intellectual Property/Copyright, Authoritarianism, Economy, Espionage, Military, and Interdependence
Political Geography:
China, Asia, North America, and United States of America

20. 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