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41. China, ASEAN, and the Covid-19 Pandemic

Author:
Joseph Chinyong Liow
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
For Southeast Asia, the COVID-19 pandemic was not only a public health crisis. It also provided an occasion for China to deepen its engagement in the region by dint of its own successful containment of the virus within its borders, and the resources it possessed to extend help to regional countries battling COVID-19 and its consequences, including economic, on their own shores. While Chinese help was welcomed, Southeast Asia also sought to avoid being beholden to any single external power. To that end, Southeast Asian states have actively pursued such diversification not only through efforts at reinforcing cooperation within ASEAN but also by using ASEAN as a vehicle to engage external powers. At the end of 2019, Chinese health authorities reported a cluster of pneumonia cases that had emerged in Wuhan, in the province of Hubei, which eventually led to the confirmation of a novel coronavirus. Several weeks later in January, the pandemic struck Southeast Asian shores when the first case outside of China was detected in Thailand. Within a few months, the world found itself in the grip of a global pandemic. By the end of January 2021, there were more than 100 million recorded cases of the COVID-19 infection, with over two million deaths. While the fatality rates are lower than those of previous pandemics of the SARS (Severe Acute Respiratory Syndrome) strain, it has by far been the most infectious, prompting Singapore foreign minister Vivian Balakrishnan to opine that with the pandemic “we are facing a global life and death crisis which requires extraordinary measures.” Threats posed by pandemics are not new to Southeast Asia. In the last two decades alone, the region had been beset by several transnational health crises, of which SARS and the H5N1 Avian Flu were arguably the most lethal. What is striking about the current climate, however, is the backdrop against which the pandemic is playing out: the COVID-19 pandemic has hastened the further bifurcation of an international order that was already threatening to come undone because of the intensification of Sino-U.S. rivalry and American withdrawal from multilateralism under Donald J. Trump. Southeast Asian states found themselves increasingly compelled to reassess their relationships with external powers. Taking the present pandemic as a point of entry, this paper considers its impact on Southeast Asia’s relations with China and the U.S. The paper makes three main arguments. First, it contends that Sino-U.S. rivalry has sharpened over the COVID-19 pandemic by dint of the politicization of this public health crisis by both parties. Second, it argues that China has identified and seized upon opportunities presented by the pandemic to enhance its regional and global standing through continued support for multilateralism and economic engagement through initiatives such as the BRI, in turn creating favorable conditions for the advancement of its foreign policy interests. Conversely, because of the severe deficiencies in how the Trump administration handled the pandemic domestically, the Biden administration will have to prioritize its domestic challenges at the expense of greater bandwidth and resources for foreign policy, especially in Southeast Asia, a region that since the end of the Vietnam War has never featured prominently in Washington’s pursuit of its overseas interests. Third, it posits that while Southeast Asia has doubtless benefited from Chinese support during this crisis, the region remains skeptical of Chinese strategic intent and concerned about overreliance. States have tried to diversify relations with regional powers while strengthening cooperation within ASEAN. The paper first looks, by way of background, at how the pandemic emerged as the latest arena of Sino-U.S. rivalry. It then explores how China has handled the pandemic domestically, where its success has allowed it to expand its influence as a putative provider of “global public goods.” In the interest of brevity, the paper then focuses on ASEAN by documenting collective regional efforts and strategies to navigate great power rivalry in the realm of global public health.
Topic:
International Relations, Security, ASEAN, and COVID-19
Political Geography:
China and Asia

42. The Pandemic as a Geopolitical Gamechanger in the Indo-Pacific: The View from China

Author:
Yun Sun
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
How has the COVID-19 pandemic reshaped or influenced China’s geopolitical outlook and its grand strategy for the years to come? This is a question that will determine China’s relationship with the United States, the Indo-Pacific region, and the rest of the world. In the Chinese strategic community, the pandemic has been regarded as a “watershed” event that has reshaped the structure of the international system and the power equilibrium. Its importance is elevated to the same status as the end of World War II, which determined the bipolar international system between the U.S. and the Soviet Union, and the end of the Cold War which began thirty years of U.S. hegemony in a unipolar world. Although China began as a sheer loser in the pandemic given its culpability in the origin of COVID and its early poor management of the domestic spread of the disease, Beijing believes that it has eventually emerged as a pure winner in the pandemic: the relative gain China has made vis-à-vis the U.S.’s bigger losses in disease control, national power, economic growth, global leadership, and credibility has strengthened Chinese confidence that the tide is turning in China’s favor. The “effectiveness” of the Chinese political system, as manifested in its domestic disease control, has reinforced China’s ideological conviction of its superiority. As China uses COVID diplomacy to demonstrate the superiority and desirability of its political system, the pandemic is perceived as an opportunity for it to shape the new international order and promote China’s desired “Community of Common Destiny.” Challenges remain, as the U.S. revamps its alliance system under the Biden administration and as regional powers and Western countries grow increasingly concerned and anxious about China’s growing confidence and capabilities. However, for China, the pandemic has been a great opportunity, and China has emerged from it as a pure winner. It is an interesting question as to how the pandemic has changed the nature and the dynamics of the great power competition between the U.S. and China. Most would agree that the pandemic exacerbated, accelerated, and aggravated the deterioration of relations that the U.S. and China had already been experiencing before 2020. However, the differences lie in the degree, intensity, velocity, and extensiveness of the damage. Without the pandemic, the downward slope U.S. and China had already been on would not have come to a state of “freefall” in 2020. And that “freefall” period has long-lasting and significant implications for their bilateral relations in the post-COVID world. The damaged trust, confidence, and credibility, and the deeply entrenched sense of hostility, or even antagonism, have made any effort to repair the relations extremely difficult, if not completely impossible. And this reality will affect the regional dynamics in the Indo-Pacific region for the many years and decades to come.
Topic:
International Relations, Security, Foreign Policy, Geopolitics, and COVID-19
Political Geography:
China, Asia, North America, United States of America, and Indo-Pacific

43. Xi Jinping’s Evergrande Dilemma

Author:
John Lee
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Evergrande is one of the top-two real estate developers in a still highly fragmented Chinese sector. Its main strategy is to achieve ever-increasing scale (rather than profitability) in order to move ahead of and crowd out commercial competitors. It has also amassed the largest land reserves of all Chinese developers, which were financed through massive borrowings. By 2018, Evergrande held 822 pieces of undeveloped land in 228 cities, with a planned gross floor area of 3.28 billion square feet of new homes—the equivalent of 10 percent of Germany’s entire housing stock. It paid $75 billion just for this undeveloped land. Although Evergrande’s market share is only around 4 percent, its borrowings stand out. Its current balance sheet liabilities amount to an estimated 2 percent of China’s gross domestic product (GDP), while its off-balance-sheet liabilities could be another 1 percent of China’s GDP. This makes Evergrande the most indebted property developer in the world. Burdened by this debt, struggling to meet its debt interest and repayment obligations, and viable only if property asset values and sales continue to increase, Evergrande faces possible financial collapse—an event bound to have flow-on effects for the Chinese economy. However, the unusually high global interest in Evergrande has arisen because its woes are increasingly seen as symptomatic of those faced by the broader Chinese economy, which is struggling with enormous levels of indebtedness and overreliance on the real estate sector. Debt held by nonfinancial institutions in China increased from about 115 percent of GDP in 2010 to around 160 percent of GDP currently. This is the most rapid and largest increase in a 10-year period for any major economy and makes the level of debt held by Chinese nonfinancial institutions one of the highest in the world. The real estate sector accounts for around 15 percent of GDP, while property services account for another 14 percent—the highest in any developing economy. The share of the real estate sector as a proportion of GDP was only about 4 percent in 1997 and 9 percent in 2008. Since 2008, up to a third of all domestic fixed investment has gone into real estate, and up to half of total national debt is linked to the real estate sector.
Topic:
International Relations, Foreign Policy, Debt, Economics, Markets, and Business
Political Geography:
China and Asia

44. Winning the Geo-Tech Battle and Building the Quad Alliance in the Indo-Pacific

Author:
Eric B. Brown, John Lee, and Thomas J. Duesterberg
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Under Xi Jinping, the People’s Republic of China (PRC) has established as its paramount geopolitical objective the replacement of the free and open, rules-based order in Asia with an alternative world order, one that is to be dominated by the interests and values of the Chinese Communist Party (CCP). This decision presents a danger to the entire world, not just to any one state or group of states. For, as US Secretary of State Antony Blinken said at the March 2021 US-PRC meeting in Alaska, the alternative to a rules-based order “is a world in which might makes right and winners take all, and that would be a far more violent and unstable world for all of us.” In furtherance of its objectives, the PRC is in the midst of a large military build-up, but there is much more. For today’s CCP, political power grows not only from the “barrel of the gun,” as Mao Zedong once put it, but also from cutting-edge technologies. Thus, while Beijing pours billions into artificial intelligence and surveillance tech to impose its new “digital totalitarianism” inside the PRC, from Hong Kong to Xinjiang, it is also using its growing technological prowess to press its larger geopolitical agenda in the Indo-Pacific and beyond. It is weaponizing technology and connectivity, along with trade, finance, and other policy instruments to try to rule the key technologies and industries of the future, as well as to improve its strategic positioning and acquire political power over other countries—for instance, through its bid to dominate other nations’ most sensitive data networks, or via the export of its suite of “social stability” technologies, i.e., the “techno-tyrant’s toolkit.” In all this, the CCP’s intent is to entrench its power and Leninist norms and practices to the extent it can do so beyond the PRC’s borders, and to make other nations, or at the least their ruling elites, beholden to it. So in addition to the PRC’s militarily destabilizing activities in the West Pacific and incursions into India’s Himalayas, there is also a “geo-technological front.” If Xi’s CCP succeeds at enmeshing other countries in its expanding “PRC sphere of technological influence,” it could unlock and be able to exploit decisive military, economic, diplomatic, and ideological advantages.
Topic:
International Relations, Security, Economics, and Alliance
Political Geography:
China, South Asia, East Asia, and Asia-Pacific

45. Regaining the Digital Advantage: A Demand-Focused Strategy for US Microelectronics Competitiveness

Author:
Bryan Clark and Dan Patt
Publication Date:
07-2021
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
Microprocessors are a critical element of US national infrastructure and manage the country’s energy grids, transportation systems, and telecommunications networks. Without a reliable supply of computer chips and microelectronic components, most US economic and societal activity would grind to a halt. The semiconductor manufacturing process is largely concentrated in East Asia, where manufacturers could be subjected to pressure or coercion by the People’s Republic of China. The semiconductor supply chain, and its inherent resilience and security, could be strengthened by US government investment to bring more steps of the microelectronics production and assembly process onto US shores. To guide government policies, this study proposes a four-factor framework measured from the perspective of the US microelectronics customers and industry. These factors include: resilience of continued microelectronics supplies to the US market; assurance that US microelectronics reflect their intended design and are free of security vulnerabilities; the ability of the US microelectronics industry to meet current microelectronics demand, which shapes the ecosystem; and the value added from US firms, which supports future demand.
Topic:
International Relations, Defense Policy, National Security, Science and Technology, Communications, Infrastructure, Cybersecurity, and Military Spending
Political Geography:
China, Asia, North America, and United States of America

46. China’s Gambit for Total Information Dominance: A US-Australia Response

Author:
Patrick M. Cronin
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
This report assesses China’s comprehensive approach to information power and its implications for the U.S.-Australia alliance. The purpose of the report is threefold: to enlarge alliance awareness of China’s whole-of-society information challenge; highlight critical responses to this challenge from Canberra and Washington; and deepen alliance thinking regarding strategy and policy. The scale and scope of China’s information enterprise distinguishes it from other countries. Overt persuasion campaigns and covert influence operations are thoroughly researched, carefully choreographed, and uninhibited by concerns over individual or sovereign rights. Beijing goes beyond the use of information and instead seeks to achieve primacy in discourse power by weaponizing narrative in ways analogous to asymmetric military strategies. China uses a distinctive whole-of-society approach to building a dazzling wealth of data and information. Aided by intellectual property theft, forced technology transfers, decades of education training abroad, and other forms of acquiring information, China’s industrial policy goes beyond protectionist measures like subsidies. When Military-Civil Fusion is considered, this development has far more than economic and technological ramifications.
Topic:
International Relations, Science and Technology, Alliance, Data, and Information Technology
Political Geography:
China, Asia, Australia, and United States of America

47. Europe's China Chimera

Author:
Peter Rough
Publication Date:
02-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
When Xi Jinping, the chairman of the Chinese Communist Party (CCP), dreams of global domination, he worries about one thing above all else: a hostile United States backed by its allies—and on the Eurasian landmass, the US has no more important ally than Europe. As a result, Xi has worked to weaken the transatlantic alliance through a two-pronged economic stratagem. First, under the guise of globalization, China has insinuated itself into the European economy, creating dependencies. Second, Beijing is manipulating those dependencies to hollow out and supplant Europe’s advanced economies. To give this deception cover, China has built a vast political network across Europe, from basic sympathizers to outright spies. Until recently, barely anyone took notice, but the financial crisis and forever wars of the past two decades, culminating in the election of Donald Trump as president of the United States, lured the self-confident Xi out into the open. During the coronavirus pandemic, China revealed an aggressive attitude toward Great Britain’s former colonies that shocked the United Kingdom. In the span of mere months, London shifted from cooperation to confrontation. In July, it became the first country in Europe to block the Chinese telecommunications giant, Huawei, from its next-generation networks. Germany, the continent’s most important country, still sees China as key to post-pandemic recovery and economic growth, however. Xi has exploited this attitude to strike an investment agreement with the European Union (EU), the chief purpose of which is to forestall a transatlantic approach under the new US president, Joe Biden. Together, the United States and Europe have unparalleled advantages against any competitor. Now is the time for cooperation, before Xi’s dreams become our collective nightmare.
Topic:
International Relations, Foreign Policy, and Chinese Communist Party (CCP)
Political Geography:
China, Europe, and Asia

48. A US-India Trade Agenda for the Biden Administration

Author:
Aparna Pande and Husain Haqqani
Publication Date:
02-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
The US ought to counteract the influence of Chinese authoritarianism early and often. One relatively low-cost way is to encourage India to engage more deeply as a competitor with China in the global economy. A democracy since its independence in 1947, with a population about the same as that of China, India is that country’s natural rival in Asia. Beginning with India’s decision in 1990-91 to liberalize its economy, the nation has gradually opened its vast market to global trade. Fueled by fresh access to foreign capital and technology, India’s economy grew over six percent during the first decade of the 21st century. In May 2014, this progress was further advanced by the election of Prime Minister Narendra Modi. For the first time in India’s history, a conservative administration had a clear parliamentary majority, making it possible to legislate foundational, market-positive reform. India has adopted a new insolvency and bankruptcy code and replaced multiple taxation regimes across its states with a federal goods and services tax, which is welcome. But India has done little to end its excessive protectionism. Its distrust of foreign corporations, a legacy of colonial rule, endures. Indian policy makers may believe that the US is so eager for Indian competition with China that Washington will grant them a pass on restrictive trade and investment policies. But there is a better choice. India is nowhere near its full economic potential, and the fix isn’t complicated. The Biden agenda for India should encourage India to lower tariffs, to remove barriers to foreign retail, to roll back unnecessarily restrictive data privacy rules, and to provide economic incentives for foreign investment.
Topic:
International Relations, Foreign Policy, Bilateral Relations, and Trade
Political Geography:
China, South Asia, India, and United States of America

49. Transforming the Middle East: The Origins, Impact, and Evolution of the Abraham Accords

Author:
Robert Greenway
Publication Date:
03-2021
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
The Abraham Accords constitute the beginning of a transformation of a region that has confounded many, and that will continue to be a vital battleground astride the security and economic interests of world powers. American leadership was a necessary but alone insufficient condition to the emergence of this agreement. American leadership will remain essential to its growth and evolution. The alignment of our regional partners and allies in both economic and security domains will ensure that the agreement endures. It will also incentivize others to join us in pooling critical capacities to advance and defend mutual interests. This transformation serves to constrain Iran – the threat from which has been recognized as causal – even as it constrains the malign influence and predatory practices of China and Russia. They will continue to manufacture and exploit fissures among the U.S. and its regional partners if we fail to exploit the favorable shift in the region’s security and economic architecture. On the other hand, appropriate support will allow the Abraham Accords to advance and secure America’s interests with the use of significantly fewer resources and with more capable partners integrated as never before.
Topic:
International Relations, Security, Foreign Policy, Diplomacy, Economics, and Negotiation
Political Geography:
Russia, China, Middle East, Israel, and Palestine

50. How China Regards its Future in the World

Author:
Marcos Caramuru and Philip Yang
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Brazilian Center for International Relations (CEBRI)
Abstract:
China’s post-Covid plans regarding national investment and foreign policy are ambitious and its success depends on the ability to build trustworthy relations with its Asian neighbors and the great powers. The XXII China Analysis Group meeting gathered experts to discuss China’s positioning and the ways in which it could overcome challenges and aim for a positive bilateral agenda with the USA during the Biden administration.
Topic:
International Relations, Foreign Policy, Bilateral Relations, Investment, and COVID-19
Political Geography:
China, Asia, and United States of America