May I first wish you and your family Merry Christmas and a Happy and Prosperous New Year!
We all need blessings as 2017 promises to be a decisive year with highly uncertain outcomes, for better or for worse. Would a Trump presidency usher in a new era of aggressive American dominance? Will it upend the existing Western liberal world order? Will there be a global trade war and arms race? Will the greenback continue its upward trend? Will oil and gas be back with a vengeance at the expense of global responses to Climate Change? What would become of Europe with Brexit and rise of right-wing political parties? How would China adapt to this new global reality? How would the nation transit to a new team at the 19th Party Congress by end- 2017? Would a soon-to-be-elected new Chief Executive be able to turn a new page for Hong Kong?
These are all gripping questions with no simple answers. Perhaps some of the following may offer a little fresh insight and perspective.
US face-off with Russia over Syria and military threats against Russia and China (Live TV interview with RT International)
South China Sea
10 Reasons Why the South China Sea Ruling May Lead to Regional Peace and Cooperation (Op-ed in the South China Morning Post and a Reprint in a management journal. An in-depth analysis of the Hague ruling is here. My riposte to a critique from the President of Princeton Energy Advisors, New Jersey, provides some further elucidation.)
North Korea's Special Economic Zones (An updated report)
A reportoire of inspirational music, videos, songs and words, There is also a collection in Chinese.
Cross-border M & A propositions
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Donald Trump has won the White House on a rising tide of anger from xenophobic, chauvinistic, blue-collar working-class Americans.
As President-elect, Trump has chosen several dyed-in-the-wool hardliners for strategy, defense and security. He has picked Climate Change deniers as Secretary for the Interior and as head of the Environmental Protection Agency. He is ditching the US-led Trans-Pacific Partnership. He has threatened to leave the World Trade Organization (WTO) without better terms Click here.
A Trump America thus appears overtly coercive and money-centric at putting “America First” at the expense of American soft-power and a U.S.-maintained liberal world order. This is worrying both allies and rivals.
Trump pledges to double down on America’s predominant military, including its Asia-Pacific navies. He has not given up aggressive views on China’s currency and trade. How may a gung-ho President Trump build “win-win”, if transactional, relationship with China, slated to be the most important foreign relations in the 21st century?
The following may offer food for thought.
On trade, without abrogating from the WTO, America may negotiate product-specific agreements with China, for example, on food safety or adequacy of supply of rare earths for strategic industries. America would also benefit from early conclusion of a bilateral investment protection agreement, covering intellectual property rights and other areas of concern.
On Climate Change, the historic 197-nation Paris Agreement has inbuilt momentum Click here. It is likely to endure with or without the United States Click here. China has been taking a lead in de-carbonization, for fear of regime-threatening pollution and energy security. According to a 2016 U.S. Department of Commerce study Click here, there are vast American business opportunities in China for high-voltage transmission, synchrophasor technology, smart cities and smart grids.
An energy-hungry China should stand to gain from its world’s-largest technically-recoverable shale gas reserve Click here. Operational constraints, however, include water-intensity, difficult terrain, and aquifer pollution risks. Additionally, to drive a greener economy, energy efficiency in power plants, factories, cars, and homes, is a top national priority. American technologies and expertise in these areas are likely to find a welcoming market.
Trump is committed to better infrastructure in order to create more jobs and boost productivity. China’s cost-competitive globe-trotting builders of large-scale infrastructure, including high-speed rail, may come in handy, subject to competitive bids, quality assurance and where necessary, national security vetting.
On the Renminbi, the Chinese currency, much of China’s perceived market distortion and disruption is due to an immature financial system. As the world’s most sophisticated financial superpower, America’s regulators and think-tanks have much to offer for China’s ongoing financial reform.
On healthcare, according to a recent U.S. Council for Foreign Relations report Click here, China’s 13th Five Year Plan (2016-20) provides many opportunities for American pharmaceutical, hospital, and insurance companies. Possibilities are driven by China’s aging demographics, rising incidence of non-communicable diseases, massive urbanization, widespread information technology, and friendly R & D policies and public-private partnerships.
U.S.-China cooperation is possible in attaining the United Nations 2030 Sustainable Development Goals (SDGs) Click here. As China’s financial and economic footprint is ubiquitous in the developing world, such as Africa, both China and the United States would stand to gain in global standing, apart from profits, by joint projects in food security, poverty relief, healthcare, disease prevention, education, and ecological preservation,
North Korea may also offer possibilities for thinking outside the box for US-China cooperation. In North Korea, there is a relatively affluent class representing some 10% of the population Click here. Apart from cronyism, a proportion are likely to be early beneficiaries of wealth-producing special economic zones Click here These are connected with across-the-border Chinese businesses. Given more investments and logistical links, they could play a constructive developmental role. Aside from more narrowly-targeted sanctions, the United States and China could consider stabilizing the regime through economic development. North Korea’s nuclear ambition is but an insurance policy against regime change. Mere sanctions, let alone military coercion, would only worsen such fear. As with Vietnam, national transformation often happens through economic development rather than regime-changing war.
As for the South China Sea, temperature is already lowering as a few rival territorial claimants, including the Philippines, are developing greater rapport with China. There has been recent breakthrough, albeit guarded, in reaching an agreed Code of Conduct between ASEAN and China by mid-2017 Click here. The prognosis is favorable for all sides to set aside (though not give up) their respective historic claims and instead, cooperate on exploration of maritime resources, management of over-stretched fisheries, and conservation of marine ecology. The United States would have a most fruitful role in this scenario.
On the Middle East, although China does not see eye to eye with the United States and is unwilling to get involved in wars, China is intent on fighting Islamic terrorist separatists on her own soil. Opportunities exist for joint US-China anti-terrorism intelligence-sharing and related covert actions. Where the United Nations is involved, China’s sizeable peacekeeping contingent may also assist in humanitarian operations, as in the case of Syria.
On space exploration, Russia and America have cooperated for decades since the mid-70s. This cooperation still continues with the International Space Station (ISS) under the Global Space Exploration Strategy, endorsed by 14 space agencies worldwide including the U.S. and China. Click here As China’s space program is gathering pace, trust-building joint missions are possible, if NASA restrictions are lifted.
Last but not least, Wanda Cinema, which owns the largest cinema chains on the Mainland, has bought AMC and Legendary, the two largest American cinema chains. It has unveiled a 408-acre, state-of-the-art studio in Qingdao, expected to open in 2018. It wants to partner, not to complete, with Hollywood Click here. Its vision is to make films that sell not only in China but across the globe. America’s producers, script-writers, actors and cinematographers should be well poised to tap into this potential goldmine.
In short, electioneering rhetoric aside, the incoming Trump presidency would be able to leverage China to make America great again, without necessarily compromising America’s global soft-power or turning the US-led liberal world order upside down.
A series of reports by The Red (Team) Analysis Society, a non-profit geopolitical consultancy, expounds upon Russia's grand plan to exploit the massive energy resources of the Arctic and its increasing navigability to boost Russia's global clout at a time when the Arctic's economic and geopolitical potential is being opened up by climate change.
The Red (Team) Report of 19 December 2016 traces the Russian North's history up to its most up-to-date development. Reference is made to its navigational potential linking up the Russian Ural and Western Siberia with the Canadian North Sea Route. It is noteworthy that Exxon's drilling in the Russian Arctic was halted only by Western sanctions whereas a more Russia-friendly Trump president-elect names Rex W. Tillerson, Exxon chief, as Secretary of State.
It is also interesting that China has been invited to take part in the Russian North project. China has invested $12 billion in the Yamal-Nenets Automous Region and the adjacent Arkhangelsk Port bordering North West Europe. This investment has fresh strategic meaning if it eventually links up with China's maritime "Silk Road" route to Northwest Europe as part and parcel of the One Belt, One Road grand strategy.
Russia's new and more powerful icebreakers capable of breaking up to 3 metres thick ice are making it possible for Russian and Chinese cargo convoys to ply along the Northern route all year around. This route follows the Siberian coast to and from the Bering Strait to the Russian and European northern ports from Norway to Rotterdam.
Concurrently, the Russian ministry of Defence is rapidly militarising the Arctic, through the creation of the Joint Strategic Command North and the deployment of nuclear submarines and other naval assets. Click here
As I heralded in March 2014, the Arctic Region is poised to change the world. Click here.
The world could become even more closely connected physically if a visionary China-Russia-Canada-America high-speed rail should ever become a reality. However, the Arctic is also likely to become a proxy arena for great-power geopolitical rivalry.
Either way, it is no surprise that China is quietly boosting economic and geopolitical ties with the Arctic region, especially its most powerful player - Russia. It's also indicative that a new Trump presidency is likely to adjust America's foreign relations with Russia.
A PowerPoint presentation on 16 December, 2016 to the Founding Chairmen Group of the Denmark-based Executive Global Network (EGN), Hong Kong, of which I am an Advisory Board Member. Download Implications of a Trump Presidency
My full-length live TV interview on 30 November on The Worldwith ABC (Australian Broadcasting Corporation). I gave a snapshot analysis of why Trump's presidency is likely to change regional dynamics and soft power in favor of China.
A report "North Korea’s Special Economic Zones: Plans vs. Progress" published on 23 November 2015 on a website 36 Northof the U.S.-Korea Institute (USKI) at SAIS provides some latest information on these Zones in the DPRK. The website is part of an extensive program launched in 2006 to make the Paul H. Nitze School of Advanced International Studies (SAIS), Johns Hopkins University, a hub of Korea-related activities in the Washington, DC area, and to increase information and understanding of Korea and Korean affairs.
Another report on Mail Onlinedated 26 November 2016 shows interesting photos of the top 10% elite in North Korea with a relatively affluent life-style.
These update my following post dated 19 December 2015:
"Yazhou Zhoukan , Chinese-language Asia Weekly, (20 December, 2015, p.16-17) reported on the construction of various special economic zones in North Korea largely with the help of China’s capital and engineering teams. Download North Korea building SEZs
At the north-west border with China near Dandong City, the Sinuiju Special Economic Zone 新义州经济特区, shelved in 2002 due to tax evasion and other charges, is apparently being revived. This promises to become North Korea’s largest export base, comprising a total area of 132 sq.km to include clusters of textiles manufacturing, tourism and commercial facilities. A 40,000 sq.m. Sinuiju International Exchange complex is reported to have been completed, ready for occupation next year. A cooperation agreement was signed during China’s Politburo Standing Committee Member Liu Yunshan’s recent visit.
Another large development zone is the Rason Special Economic Zone 罗津先锋经济特区 around the Rajin Port at the eastern tip. It is said to comprise a dozen sectors including agriculture, logistics, light manufacturing, oil refinery and eco-tourism.
There is also a host of infrastructural projects vaulted to build some 3,000 km of expressways and 3,500 km of modern rail.
Total investments are reported to number billions of dollars, although the figures quoted in the article, up to $400 billion, appear too large to be credible.
If true, these facilities could well signal that a new North Korea, tilted towards both economic and military development, may well emerge. This may augur well for North Korea’s eventual development into a less insecure nation relying solely on nuclear threats to prop up its regime. After all, Vietnam’s transformation from a closed communist state to a modern vibrant economy is instructive."
Even Trump says he has an open mind on Climate Change, transcript of his interview with the New York Times suggests that he is likely to put money ahead of climate.
Trump has also vowed to boost the oil and gas industries, including pipelines from Canada and more lands opened up for shale gas fracking.
As pointed out in The Economist leader, The burning question: Climate change in the era of Trump (26 November, 2016), the historic Paris Agreement, supported by 197 nations, is nevertheless likely to endure with or without the United States. Countries threatened by rising sea levels are unlikely to sit tight. Europe's green movement is unlikely to wither. China, the world's worst polluter, is also taking a lead in de-carbonization driven by regime-threatening pollution fears and geopolitical energy security considerations.
As President-elect, Trump has openly declared ditching the Trans-Pacific Partnership (TPP), which was a US-initiative in the first place. Notwithstanding initial denial of World Trade Organization chief Roberto Azevedo, Trump has also hinted at leaving the WTO, which the US was instrumental in founding, if the US cannot renegotiate its terms of trade. The WTO includes 164 countries worldwide and has been the cornerstone of global trade for many decades until its primacy is challenged in recent years by regional and bilateral agreements. China has since been a great beneficiary of WTO which she initially joined at great costs to herself by having to open up her market for many products.
All signs are that a Trump America is likely to retract from its leading role of maintaining the existing global order, unless its intervention can be monetized. This is now greatly worrying allies and as well as rivals. .
China has been seeking to gain more influence as an integral part of the existing global order. America's retreat from it to focus everything on "America First" is likely to hand over much of global soft power to a rising China as a defender of the global commons.
This would have game-changing consequences for an America-dominated world order.
My Guest Lecture at the University of Hong Kong on 22 November 2016.
The PowerPoint presentation, with 72 slides, examines some of the most salient game-changing dynamics of the 21st century, including the Fourth Industrial Revolution, "Connectography", Internet of Things in Smart Cities, Fintech, Blockchain, e-Commerce, e-banking, the global connectivity of the China Dream with One Belt, One Road (OBOR), regional networks, the Paris Agreement on Climate Change, the Rise of State Capitalism, the Demographic Cliff, Capital in the 21st Century, Asset Bubbles, Debt Mountains, Globalization and its Discontents, and the Rise of Nationalism, Chauvinism, Nativism and Localism, all leading to an interconnected, independent yet uncertain world of distributed powers where America's retraction under a Trump Presidency is likely to give way to increasing influence of a dynamic China embracing globalization with a vengeance.
A 10th October Lowy Institute Analysis by Thomas Wright explores "how US foreign policy would change should Donald Trump or Hillary Clinton win the US presidential election. Wright argues that a Trump presidency could see the United States undermine the liberal international order that it helped to establish. Clinton, by contrast, would be a more traditional internationalist president".
"Trump’s foreign policy will very likely be informed by his core beliefs: opposition to America’s alliance relationships; opposition to free trade; and support for authoritarianism, particularly in Russia".
"Clinton’s foreign policy is likely to reflect a more traditional internationalism, but may also distinguish itself from the Obama administration by a greater effort to deal with regional challenges to order in the Middle East, Europe, and Asia".
"If Clinton wins, she will need to respond to growing populist and nationalist sentiment in America in favour of limiting US engagement in the world".
Never before is an American presidential election been watched and debated so closely by so many nations, most of all the world's rising powers. All, not least Russia and China, are geared up in anticipation of a potential paradigm shift in the dynamics of the world order.
A Brookings Institution analysis by Jeffrey Bader dated 10 October "A framework for U.S. policy toward China" offers some possible pointers on how a new US President, particularly if Clinton wins, may re-calibrate policies in relation to a rising China.