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1. CCP Inc. in West Africa: How Chinese Party-State Actors Secured Critical Minerals in Guinea

Author:
Briana Boland, Lauren Maranto, and Jude Blanchette
Publication Date:
06-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
This CCP Inc. case study explores how Chinese diplomatic, regulatory, financial, and commercial actors work in concert to secure critical minerals in the West African nation of Guinea. Efforts in Guinea to mine bauxite and iron ore, the primary inputs for aluminum and steel, illuminate Beijing’s conduits for influencing and supporting its geo-economic objectives. Examining one key Chinese player in Guinea’s mining sector, this study highlights state actors’ connections with nominally private Chinese companies and the importance of partnerships with state-owned enterprises for building costly infrastructure. Across multiple bauxite and iron ore mining ventures, Chinese diplomatic support and state financing provided conduits to help further favored projects and increase Chinese companies’ access to Guinea’s mining industries.
Topic:
International Cooperation, Natural Resources, Hegemony, Mining, and Superpower
Political Geography:
Africa, China, Asia, and Guinea

2. The Collapse of One China

Author:
Ivan Kanapathy
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
As the One China policy accommodation unravels and China’s military attains a credible capability to mount a cross-strait invasion, the United States and its allies should stop hedging and adopt enhanced measures to deter Beijing.
Topic:
Security, Military Strategy, Hegemony, and Rivalry
Political Geography:
China, Taiwan, Asia, North America, and United States of America

3. Best and Bosom Friends: Why China-Russia Ties Will Deepen after Russia’s War on Ukraine

Author:
Andrea Kendall-Taylor and David Shullman
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
The partnership between China and Russia has become one of the most critical features of the contemporary strategic relationship. Russia’s war in Ukraine has created economic and diplomatic dilemmas for China, but it hasn’t altered the fundamental alignment of interests and autocratic values that drives that relationship. In this Marshall Paper, David Shullman and Andrea Kendall-Taylor explain why the Sino-Russian relationship will only get deeper as a result of the war—even as it reveals strains and divisions that the United States and its allies may, eventually, be able to exploit.
Topic:
Security, International Cooperation, Military Strategy, Strategic Interests, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, Ukraine, and Asia

4. Decisionmaking at the Speed of the Digital Era

Author:
John Schaus and Laura Bocek
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
The United States has stated it is in a strategic competition with China. Analysts and actors identify the need to rapidly iterate through concepts and capabilities to develop new, more effective means of engaging in that competition. At present, however, the Department of Defense underutilizes publicly available data and the software development community to build tools that enable faster modeling, hypothesis testing, and variability analysis than traditional wargaming or modeling alone. This brief describes the speed and utility of developing a simple software tool to stress test a hypothetical People’s Republic of China (PRC) surprise attack against U.S. facilities in the Indo-Pacific.
Topic:
Hegemony, Strategic Interests, Digitalization, and Competition
Political Geography:
China, Asia, North America, and United States of America

5. Renew SBIR, Just Defend the Recipients against China

Author:
Charles Wessner and Sujai Shivakumar
Publication Date:
09-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
An April 2021 internal report by the Department of Defense (DOD) found that companies funded by the DOD’s Small Business Innovation Research (SBIR) program are being targeted by state-sponsored Chinese firms. Based on an examination of a sampling of SBIR award recipients, the Pentagon study concluded that “nearly all cases show that China, not the U.S., is the ultimate beneficiary of DoD and other U.S. government research investments, some of which are significant in size.” The study’s authors cautioned that the study sample was small and that their methodologies warrant review, but their findings are clearly a matter of concern for U.S. policymakers. This justified concern, however, seems to have morphed into quite a different approach. Citing the Pentagon study’s findings, Senator Rand Paul (R-KY), the senior Republican on the Senate Small Business and Entrepreneurship Committee, said in June 2022 that he would not support reauthorizing the SBIR program “without reforms to strengthen research security and stop abusive behavior by bad actors lining their pockets with taxpayer dollars.” In a move unrelated to national security, Senator Paul and several other lawmakers are also seeking limits on the number of awards that can be made to individual SBIR companies. (There is no empirical basis for such a restriction, nor could it be effectively implemented, but the proposed measure emerges anew as SBIR comes up for reauthorization.) The risks, however, are real. The Wall Street Journal reported in July that SBIR and the related Small Business Technology Transfer (STTR) program face “an overhaul or outright extinction” if Congress does not renew their budgets and funding runs out at the end of September. The DOD has already canceled a round of SBIR award solicitations “because of uncertainty over the program’s future.”
Topic:
Security, Defense Policy, Intellectual Property/Copyright, Business, and Rivalry
Political Geography:
China, Asia, North America, and United States of America

6. It's Moving Time: Taiwanese Business Responds to Growing U.S.-China Tensions

Author:
Scott Kennedy
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
A new report by the CSIS Trustee Chair in Chinese Business and Economics interprets a formal survey of over 500 Taiwanese business executives, documenting their views about the evolving environment on the island and beyond. The Washington policy community is quite familiar with the views that U.S. and European companies hold toward China, but less clear are the views of Taiwanese companies that are central to the story of the world’s interaction with China. Their opinions have implications for Taiwan’s economic trajectory, cross-strait relations, global supply chains, and the effectiveness of U.S. policy in the region. The report documents that Taiwanese companies are highly concerned about their potential overdependence on the Chinese economy and the possibility of a military conflict. As a result, there is significant support for expanding trade and investment ties via regional arrangements and bilaterally with the United States, as well as for maintaining Taiwan’s technological edge through more spending on research and development and broadening restrictions for technology transfer to China. But perhaps the most noteworthy finding is that Taiwanese companies appear to be moving their businesses at record levels from Mainland China, but also from Taiwan. This report, by Trustee Chair Scott Kennedy, explains how the survey was carried out, then analyzes the sources of Taiwanese companies’ anxieties and the ways they are responding, and concludes by considering the policy implications for all parties involved. The report’s appendix provides a full summary of the original survey results.
Topic:
Security, Defense Policy, Territorial Disputes, Business, Conflict, and Rivalry
Political Geography:
China, Taiwan, Asia, North America, and United States of America

7. What If . . . Alternatives to a Chinese Military Invasion of Taiwan Image

Author:
Benjamin Jensen, Riley McCabe, and Adrian Bogart
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
With the 20th Party Congress approaching and Xi Jinping seeking an unprecedented third term, it is important to explore the full range of actions Beijing could take to coerce Taiwan over the next 10 years. History provides a range of historical cases that suggest alternatives to a full-scale invasion. As part of its On Future War series, the CSIS International Security Program adapted six historical cases of coercion China could use to target Taiwan short of a costly amphibious invasion. The report looks back to look ahead, using the logic of historical cases ranging from the 1948 Berlin Airlift to the 1980s Tanker War in the Arabian Gulf to identify ways and means Beijing could use to compel Taiwan. The resulting range of scenarios point toward an urgent need to develop new escalation management frameworks supporting the new integrated deterrence strategy.
Topic:
Security, Defense Policy, Military Strategy, and Conflict
Political Geography:
China, Taiwan, and Asia

8. Choking off China’s Access to the Future of AI

Author:
Gregory Allen
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
On October 7, 2022, the Biden administration announced a new export controls policy on artificial intelligence (AI) and semiconductor technologies to China. These new controls—a genuine landmark in U.S.-China relations—provide the complete picture after a partial disclosure in early September generated confusion. For weeks the Biden administration has been receiving criticism in many quarters for a new round of semiconductor export control restrictions, first disclosed on September 1. The restrictions block leading U.S. AI computer chip designers, such as Nvidia and AMD, from selling their high-end chips for AI and supercomputing to China. The criticism typically goes like this: China’s domestic AI chip design companies could not win customers in China because their chip designs could not compete with Nvidia and AMD on performance. Chinese firms could not catch up to Nvidia and AMD on performance because they did not have enough customers to benefit from economies of scale and network effects. Because of the new export controls, revenues that formerly flowed to U.S. chip companies will now go to Chinese chip companies, offering a viable path to economies of scale and competitive performance. In the short term, this policy will significantly harm Chinese AI data center companies. However, blocking U.S. AI chip designers from selling their world-leading chips is actually good for China in the longer term because it will strengthen China’s domestic chip design ecosystem. While the reasoning in this criticism is sound, it does not imply that the Biden administration’s actions are self-defeating. Rather, it shows how the policy as disclosed in September was incomplete. A policy like this would not make sense if that is the only step the administration planned to take. Clearly something was missing, and industry experts have been waiting for the other shoe to drop ever since. On October 7, the other shoe dropped. The Biden administration announced a massive policy shift on semiconductor exports to China as well as revised rules for how the lists of restricted parties are managed. In recent decades, U.S. semiconductor policy has been primarily market driven and laissez faire. With the new policy, which comes on the heels of the CHIPS Act’s passage, the United States is firmly focused on retaining control over so-called “chokepoint” (or as it is sometimes translated from Chinese “stranglehold”) technologies in the global semiconductor technology supply chain. The most important chokepoints in the context of this discussion are AI chip designs, electronic design automation software, semiconductor manufacturing equipment, and equipment components. The Biden administration’s latest actions simultaneously exploit U.S. dominance across all four of these chokepoints. In doing so, these actions demonstrate an unprecedented degree of U.S. government intervention to not only preserve chokepoint control but also begin a new U.S. policy of actively strangling large segments of the Chinese technology industry—strangling with an intent to kill.
Topic:
Science and Technology, Hegemony, Artificial Intelligence, Rivalry, and Emerging Technology
Political Geography:
China, Asia, North America, and United States of America

9. CCP Inc. in Greece: State Grid and China’s Role in the Greek Energy Sector

Author:
Briana Boland, Jude Blanchette, and Cory Combs
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
How did one of China’s core state-owned enterprises gain a foothold in Greece’s electricity sector? This case study examines the “CCP Inc.” ecosystem of Chinese officials, state-owned enterprises, policy banks, and private firms that helped State Grid Corporation of China (State Grid) and other Chinese companies gain a stake in the national electric grid and renewable energy projects in Greece. State Grid is the world’s largest utility company, pursuing an international strategy of expansion that both implements and informs Beijing’s policy goals for global energy infrastructure. By investigating how State Grid acquired a stake in Greece’s national power grid operator, the Chinese financing and energy sector business deals that followed State Grid’s investment, and the constraints that limited State Grid’s later efforts to expand its control over Greece’s electric grid, this case study offers insight to the role of state-owned enterprises in the global reach of China’s state capitalist system.
Topic:
Energy Policy, Finance, Electricity, and State-Owned Enterprises
Political Geography:
China and Asia

10. Colombia’s Relationship with the PRC

Author:
Evan Ellis
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
From October 6 to 16, the author traveled throughout Colombia to speak with businesspeople, academics, and other professionals about the country’s security panorama, its commercial and other relationships with the People’s Republic of China (PRC), and prospects for evolving those relationships under the new government of Gustavo Petro. This white paper, the first of two on those interactions, addresses the country’s important and deepening relationship with the PRC and its companies. In recent years, Colombia’s political and security relationship with the PRC has been limited. This arguably reflects Bogotá’s perception that deepening political and security ties with the PRC might damage its close and important relationship with the United States. Nonetheless, despite perceptions that the PRC is more of a threat than an opportunity in the commercial arena, the presence of Chinese companies and their representatives in the country has expanded remarkably. Under the Petro government, all dimensions of Colombia’s relationship with the PRC, from political and security affairs to economic ones, are poised to expand and shift in ways that may cause unease in Washington.
Topic:
International Cooperation, Bilateral Relations, Hegemony, and Rivalry
Political Geography:
China, Asia, Colombia, and South America

11. A Seismic Shift: The New U.S. Semiconductor Export Controls and the Implications for U.S. Firms, Allies, and the Innovation Ecosystem

Author:
Sujai Shivakumar, Charles Wessner, and Thomas Howell
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
On October 7, 2022, the Department of Commerce’s Bureau of Industry and Security (BIS) announced sweeping revisions to its export controls, which are aimed at restricting China’s ability to obtain certain high-end semiconductor devices with potential military applications, develop and maintain supercomputers, and manufacture advanced semiconductor devices. This announcement, the most expansive export control action in decades, represents a fundamental shift in the traditional strategy underlying the U.S. and allied export control regime. As National Security Advisor Jake Sullivan put it , until now, “we previously maintained a ‘sliding scale’ approach that said we need to stay only a couple of generations ahead. That is not the strategic environment we are in today. Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.” In effect, the new measures are intended to dramatically slow, if not freeze Chinese developmental capability.
Topic:
Science and Technology, Innovation, Rivalry, and Semiconductors
Political Geography:
China, Asia, North America, and United States of America

12. CCP Inc. in Portugal: China's Investments in Financial Services and the Reach of the Chinese Communist Party in the Private Sector

Author:
Andrew Polk
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
This “CCP Inc.” case study explores how an ecosystem of Chinese party-state actors enabled a range of state-owned and private Chinese companies to embed themselves in Portugal’s financial system, creating a foothold to widen China’s financial presence within the country and beyond. The report specifically focuses on Fosun International Limited, a subsidiary of the Chinese conglomerate Fosun Group, which became a key source of foreign direct investment in Portugal through strategic acquisitions that opened market access for Chinese firms. Fosun’s investments in Portugal provide insight into the Chinese Communist Party’s activism in shaping the business environment for private sector players, as the company’s international strategy faced the challenge of balancing alignment with state goals against a regulatory crackdown on private sector outbound spending.
Topic:
Finance, Investment, Private Sector, and International Competition
Political Geography:
China and Asia

13. A World in Crisis: The “Winter Wars” of 2022–2023

Author:
Anthony H. Cordesman and Paul Cormarie
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
t is obvious that the world now faces a wide range of potential wars and crises. What is far less obvious is the level of confrontation between the U.S. and its strategic partners with both Russia and China, the rising levels of other types of violence that are emerging on a global level, how serious these wars and crises can become, and what kind of future could eventually emerge out of so many different crises, confrontations and conflicts, and trends. These issues are addressed in depth in a new analysis by the Emeritus Chair in Strategy at the CSIS entitled A World in Crisis: The “Winter Wars” of 2022–2023. This analysis explores the risk on the basis that war does not have to mean actual military conflict. Here, it is important to note that avoiding or minimizing combat is scarcely peace. As Sun Tzu pointed out in the Art of War well over 2,000 years ago, “war” does not have to involve the use of military force or any form of actual combat. His statement that “the supreme art of war is to subdue the enemy without fighting” applies to every form of major military confrontation and gray area warfare between opposing powers. It recognizes that it is all too easy to predict dire outcomes from the War in Ukraine, the current arms races with Russia and China, and growing levels of violence and confrontation between other states. There is still a case, however, for examining the broader impact of the war, the growing intensity of the arms races with Russia and China, and the current overall patterns of global conflict as the world enters the winter of 2022-2023. It is already clear that this will be a deeply troubled winter in many areas of the globe, that the level of confrontation between major powers has risen sharply, that they do seek to subdue the enemy without fighting, and their rivalry has become the equivalent of political and economic warfare. It is equally clear that the wide range of lower-level conflicts between other powers, their civil wars, and the abuses many governments commit against their own citizens are also intensifying, although many of these conflicts have been going on in some form for years or even decades. In far too many cases, the world is not moving toward peace. It is moving towards repression and war. Accordingly, this analysis argues that the world already faces a series of possible and ongoing “Winter Wars” in 2022-2023 that may not escalate to open military conflict but that are wars at the political and economic level and in competition to build-up more lethal military forces both for deterrence and to exert political leverage. It also shows that these “Wars” already pose serious risks and could escalate sharply and in unpredictable ways for at least the next five to ten years.
Topic:
Security, Military Strategy, Rivalry, and Competition
Political Geography:
Russia, China, Europe, Asia, North America, and United States of America

14. U.S.–China Relations in the Tank: A Handbook for an Era of Persistent Confrontation

Author:
Michael J. Mazarr
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Edited by Jude Blanchette of CSIS and Hal Brands of SAIS, the Marshall Papers is a series of essays that probes and challenges the assessments underpinning the U.S. approach to great power rivalry. The Papers will be rigorous yet provocative, continually pushing the boundaries of intellectual and policy debates. In this Marshall Paper, Michael J. Mazarr argues that amid escalating U.S.-China tensions, American policymakers are gravely underprepared to manage the episodic crises that form an inevitable part of great power rivalry. Effective crisis response can not only prevent escalation, but also strengthen U.S. strategic advantage within the larger rivalry. Drawing lessons from the Cold War, Mazarr distills six principles to guide crisis management among U.S. policymakers navigating an increasingly crisis-prone U.S.-China relationship.
Topic:
Security, Rivalry, Strategic Interests, and Competition
Political Geography:
China, Asia, North America, and United States of America

15. A Green Wave?

Author:
Jessica Drun
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Edited by Jude Blanchette of CSIS and Hal Brands of SAIS, the Marshall Papers is a series of essays that probes and challenges the assessments underpinning the U.S. approach to great power rivalry. The Papers will be rigorous yet provocative, continually pushing the boundaries of intellectual and policy debates. In this Marshall Paper, Jessica Drun examines how political and identity trends within Taiwan are likely to affect cross-strait relations. Primarily a reaction to assertive actions and policies from Beijing, Drun argues, these trends are moving away from Beijing’s preferences and in Drun’s view are likely to fuel rising PRC belligerence through 2027 and beyond. With this in mind, she suggests the United States should proceed with a long-overdue review of its Taiwan policy, built on a more nuanced understanding of domestic political realities within Taiwan, changes in the cross-strait military balance, growing PRC influence in international organizations, and the broader geopolitical environment.
Topic:
Security, Politics, Military Strategy, Conflict, and Strategic Interests
Political Geography:
China, Taiwan, and Asia

16. “Reunification” with Taiwan through Force Would Be a Pyrrhic Victory for China

Author:
Jude Blanchette and Gerard Dipippo
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Many commentators and officials speculate about Beijing’s plans to compel “reunification” with Taiwan. Much of the existing commentary focuses on how or when a Chinese attack on Taiwan could occur, but there is little discussion of the nonmilitary consequences of such a scenario for China and the world. This brief explores the implications of a Chinese attack on Taiwan based on reasonable, albeit speculative, assumptions. When considered more holistically, the implications of an attack on Taiwan would be grim for Beijing, even if Chinese forces “successfully” capture the island. China would probably be diplomatically and economically isolated from key advanced economies, and Chinese leader Xi Jinping would have to tread a narrow path to avoid dire consequences for China and the Chinese Communist Party (CCP) as a whole. This analysis helps clarify what could be at stake for the world and reaffirms the importance of deterring Beijing from contemplating such an attack on Taiwan.
Topic:
Security, Defense Policy, Military Strategy, and Conflict
Political Geography:
China, Taiwan, and Asia

17. Strategic Competition in the Financial Gray Zone

Author:
Heather A Conley, James Andrew Lewis, Eugenia Lostri, and Donatienne Ruy
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
Over the past 10 years, the U.S. government has slowly reoriented its foreign and security policy from the fight against global terrorism toward strategic competition with Russia and China. This reorientation has been accompanied by a new examination of how strategic competition will impact the integrity and future stability of the U.S. economy and financial system. One of the most important elements of strategic competition is sub-threshold warfare (also called asymmetric, hybrid, or gray zone warfare), wherein strategic competitors seek to shape the geostrategic environment in their favor, from information operations to economic warfare—which includes such tools as illicit finance and strategic corruption. Strategic competitors present a clear economic and financial threat to the United States when they operate in the emerging financial gray zone, in which malign actors can take advantage of the U.S. financial system to further their aims and disarm the country internally. The U.S. government, along with its allies, has only begun to acknowledge the sweeping nature of the financial gray zone and to reposition itself to compete within it. Because adversaries exploit the seams between the internal and external policies and authorities, Washington must have greater insights into a complex operating system and better integrate data across the many relevant agencies—in a way, connecting the financial dots. As it develops this comprehensive picture, the U.S. government should develop stronger defensive and offensive policy tools to counter this emerging threat.
Topic:
Economics, Finance, Strategic Competition, and Rivalry
Political Geography:
China, Asia, North America, and United States of America

18. Securing Asia’s Subsea Network U.S. Interests and Strategic Options

Author:
Matthew Goodman and Matthew Wayland
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
More than 1 million kilometers of submarine cables traversing the ocean floor, each about as wide as a garden hose, transmit up to 99 percent of international data, underpinning global trade and communication. This vital digital infrastructure faces myriad threats, from earthquakes and typhoons to fishing nets and saboteurs. The United States derives significant advantages from its centrality in Asia’s subsea cables, which contribute up to $169 billion to the U.S. economy annually and could benefit more U.S. workers and businesses as demand for digital products and services grows globally. But realizing those benefits will require the United States to step up its policy engagement on Asia’s cable networks, which are changing with China’s rise, the emergence of new regional hubs, and new transpacific routes designed to reduce risks and increase network resiliency.
Topic:
Security, International Trade and Finance, Communications, Maritime, and Commerce
Political Geography:
China and Asia

19. The Two Technospheres Western-Chinese Technology Decoupling: Implications for Cybersecurity

Author:
Center for Strategic and International Studies
Publication Date:
03-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
Decoupling of digital innovation, systems, and data flows between Western nations and China is a growing global issue with high potential to destabilize the digital world. Through a series of workshops and an analysis of existing efforts, the Multilateral Cyber Action Committee (MCAC) has provided an assessment on the current status of technology decoupling and the growing divergence of the Western and Chinese technospheres. The report provides a set of recommendations for action to mitigate the growing cybersecurity risks posed by technology decoupling.
Topic:
Security, Science and Technology, Cybersecurity, and Rivalry
Political Geography:
China, Europe, Asia, and North America

20. Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective

Author:
Gerard Dipippo, Ilaria Mazzocco, and Scott Kennedy
Publication Date:
05-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
A new report by the CSIS Economics Program and the Trustee Chair in Chinese Business and Economics quantifies the size of total industrial policy spending by China and compares it to seven other major economies: Brazil, France, Germany, Japan, South Korea, Taiwan, and the United States. Much of the existing research on industrial policy focuses on its effects, but there are few, if any, published studies that attempt a systematic comparison and quantification of overall industrial policy spending. The heart of the report is the careful calculation of total industrial policy spending by China and the other economies, combining estimates from multiple tools, among them direct subsidies, tax breaks, below-market credit, and state investment funds. The report provides additional context by examining the historical trajectory of industrial policy of these economies and the evolution of industrial policy across these economies for three industries—aluminum, semiconductors, and electric vehicles. The historical and sectoral analyses point to some similarities across economies, but they also demonstrate how distinctive China has been in terms of both quantifiable spending and non-quantifiable policy tools. Finally, this report discusses several important policy implications, including greater transparency and more harmonized reporting about industrial policy spending and the potential ways in which policymakers could employ these data to more effectively limit industrial policy spending by China and other economies.
Topic:
Economics, Industrial Policy, Industry, and Labor Market
Political Geography:
China and Asia

21. Sanctions, SWIFT, and China’s Cross-Border Interbank Payments System

Author:
Barry Eichengreen
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
In response to Russia’s attack on Ukraine, the United States and a coalition of cooperating countries imposed harsh financial sanctions on the Russian government, corporations, and individuals.1 These sanctions bar Russian banks from using SWIFT (the Society for Worldwide Interbank Financial Telecommunications) to facilitate cross-border payments, prohibit banks from doing most forms of business with Russian entities, and freeze assets held abroad by the Central Bank of Russia in the form of treasury securities and bank deposits. These developments have led Russia, as well as other countries contemplating whether they might find themselves in the same position, to explore alternatives. Such options could include building a substitute for SWIFT to send instructions regarding cross-border interbank transactions; identifying financial counterparties other than Western banks with which to do international business and platforms other than Western clearinghouses through which to make payment; and finding a vehicle other than the dollar for denominating and executing transactions. Specifically, countries are looking to China, which has large internationally active banks, has created its own clearinghouse for cross-border transactions and is embarked on a campaign to encourage broader international use of its currency, the renminbi.2 This note investigates how far China has gone in creating alternatives to SWIFT, Western banks, and the dollar. It explores whether Russia and other countries might be drawn toward this parallel international financial universe and what economic and political implications this has—for the United States, for its geopolitical rivals, and for global economics and politics. China is making strides in fostering cross-border use of the renminbi and building a renminbi-based interbank payments system that can serve as an alternative to SWIFT and Western clearinghouses. However, these remain somewhat limited alternatives—for the moment. The situation could change faster if lent additional impetus by Western sanctions. Thus, countries such as the United States that employ financial sanctions should prepare for the development of alternative financial arrangements in China and possibly elsewhere. This may mean relying more heavily on nonfinancial measures insofar as financial sanctions eventually become less effective.
Topic:
Economics, Sanctions, Finance, Borders, and Banks
Political Geography:
China and Asia

22. How China’s Human Capital Impacts Its National Competitiveness

Author:
Briana Boland, Kevin Dong, Jude Blanchette, and Ryan Haas
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
How will the strengths and weaknesses of China’s human capital impact national competitiveness? China’s efforts to maintain economic growth, strengthen supply chains, develop strategic science, technology, engineering, and mathematics (STEM) sectors, and secure a modern military edge hinges on the ability to cultivate and utilize human capital. As the United States and other countries increasingly engage in multidomain competition with China, it is critical to start from a clear-eyed understanding of China’s human capital and Beijing’s strategy for nurturing national talent. Investments in higher education, strategic STEM sectors, and military talent demonstrate key areas in which Beijing is focusing on cultivating human capital. However, China must overcome significant obstacles to innovate as it faces substantial demographic pressures, socio-economic inequalities, and challenges to attracting and retaining top talent both domestically and internationally.
Topic:
Economics, Labor Issues, Human Capital, and Strategic Competition
Political Geography:
China and Asia

23. Bridging U.S.-Led Alliances in the Euro-Atlantic and Indo-Pacific: An Inter-theater Perspective

Author:
Luis Simon
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Although U.S. strategic competition with China and Russia is often presented as a challenge with two separate fronts, this brief argues that the Euro-Atlantic and Indo-Pacific theaters are increasingly linked. Insofar as preserving a favorable balance of power in these two regions hinges largely on U.S. power, and as long as they both continue to exercise a significant pressure on U.S. defense resources, their alliance and deterrence architectures should be looked at from an inter-theater perspective. Thus, optimally managing atwo-front challenge would require a serious effort to bridge U.S.-led alliances in both regions.
Topic:
International Cooperation, Hegemony, Alliance, Strategic Competition, Rivalry, and Strategic Interests
Political Geography:
Russia, China, Europe, Asia, North America, United States of America, and Indo-Pacific