CHINAwatch

US-China De-Risking Policy - Risks and Opportunities for Hong Kong

A Hong Kong business lunheon presentation on 11 November 2023. Download US-China De-Risking Policy - Risks and Opportunities for HK

Some fresh perspectives on China's housing bubble and related debt

On 12 September 2023, at a debate under the aegis of The New Economist, a Chinese think-tank, Nomura Securities China Economist Tin Liu explained how China's mountain of housing-related debt should be looked at. 陆挺：关于当前经济和债务的看法及建议

Amongst others, Mr Liu made the following points -

(a) Debt is not byself a bad thing. Indeed, debt is a necessary conduit to transfer idle or excess savings into growth-ehancing productive actvities and investments. 

(b) Unlike Japan's over-indebted "lost decades", China's current debt bubble, though gigantic, has little impact on China's productive manufacturing sector. While Japan's development reached its peak consistent with its limited land size and population, China's growth potential has still a long way to go.

(c) To tackle the current debt and property bubble crisis, the first prioriy is stabilization (which ia already underway). To diffuse the crisis and in the interest of long-term development, future debt should be tied to population mobility, from congested cities to more dynamic second or third-tier cities and prefectures forming closely-knit economic clusters or areas. (See China’s Five City Clusters bring diversified real estate investment opportunities) *

(In 2015 China’s 11 largest city clusters accounted for one-third of the country’s population and two-thirds of its economic activity, according to the Asian Development Bank. Meanwhile, The Economist reports that the 19 city clusters account for nine-tenths of the country’s economic activity.)

* China's dynamic "city clusters", regions of massive urban conurbations on the eastern board and inland, are now linked by the nation's 35,000 km of highspeed rail, more than the rest of the world combined, which is set to double by 2035. China is leading in 37 out of 44 critical technologies of the 21t century, according to a Marfch 2023 study of the Australian Strategic Policy Institue (ASPI). This is supported by China's massive high-end technological human capial. By 2025, Chinese universities will be producing more than 77,000 STEM PhDs per year compared with approximately 40,000 in the US. Together with robotics, extensive farming mechanization, and ubiquitous digitization, China's economy has a long way to go. See Myth of ‘Peak China’ is overexaggerated and misplaced idea    

China's Role in a Multipolar World

PowerPoint presentation at the 10th Annual Conference on International Studies, Center for Strategic Research and Analysis, Lisbon, Portugal 14-15 September 2023. (CESRAN 2023) (An online presentation) 

Download China's Role in a Multipolar World - CESRAN 2023 (New) [Autosaved]                                                                                      

China's "global ambitions" according to two prominent Western sinologists

In Daring to Struggle: China's Global Ambitions Under Xi Jinping (10 June,2022), Bates Gill, Chair of the Department of Security Studies at Macquarie University and Senior Associate Fellow at the Royal United Services Insitute in London, focuses on China's six perceived strategic interests: Legitimacy; Sovereignty, Wealth, Power, Leadership and Ideas.

The Ideas consist of four strands - (a) a new global era with dynamic "changes not seen in a hundred years" as backdrop for the struggle to realize the China Dream of national renaissance; (b) an aim to build a "Community of Common Destiny" for mankind beset with interconnected and inter-dependent challenges like Climate Change and global security; (c) achieving global "unity with diversity" in international relations, relying on China's ancient adage of "harmony despite differences" (和而不同); and (d) seeking "Chinese Solutions" for global challenges instead of blindly following a superficial, one-size-fits-all Western hymnbook.  

In The Final Struggle: Inside China's Global Strategy (2022), Ian Eason, Senior Director of the Project 2049 Institute, based in Arlington, Virginia, USA, tries to turn President Xi's concept of "Common Destiny" on its head, hyping it as a sinister plot to achieve global dominance by shaping a panopticon "world government" bent to his will. Understandably, to veteran China-bashers and those otherwise infected with Sinophobia, every curved shadow would look like a snake, as the Chinese saying goes. (杯弓蛇影)

Eason's overhyped narrative and wafer-thin understanding of China notwithstanding, eye-catching infographics by Louis Martin Vezian are perhaps the most interesting parts of the book, showcasing at a glance how much national progress and global influence China has achieved over recent decades under the Chinese Communist Party (CCP). The following reproduced infographics may come in handy by way of reference or reminder. 

Download China's One-World Government (Louis Martin-Vezian)

Download Taking Over International Institutions (Louis Martin-Vezian)

Download Wall Street PRC (Louis Martin-Vezian)

Download PRC Owned IoT in America (Louis Martin-Vezian)

Download Compromised Container Ports (Louis Martin-Vezian)

Download We Surround You (Louis Martin-Vezian)

Download China is the Future (Louis Martin-Vezian)

Download Buying Global Influence - (Louis Martin-Vezian)

 

 

The Long Game : China's Grand Strategy to Displace American Order

This insightful 2021 book is by Dr. Roush Doshi, founding director of the Brookings China Strategy Initiative and a fellow (on leave) at the Yale Law School.

Quoting from a plethora of Chinese official and other Party documents, he tries to rationalize the evolution of Beijing's foreign relations from "hide and bind" to an assertive strategy of "blunting" US dominance, "building" rival military capabilities and diplomatic institutions, and "legitimizing" China's metanarrative, in a ""Long Game" to displace an US-led global order, reminiscent of Graham Allison's famous tome The Hundred Year Marathon - China's Secret Strategy to Displace America as he Global Superpower

However erudite, the book suffers from a "post hoc" logical fallacy that China's desire for national renaissance (the China Dream) is a long game to displace the United States. For Beijing, national renaissance is the key, not global dominance, even though the end result of the China Dream will translate into sharing global power and influence with the United States. 

Interestingly, the esteemed author's "asymmetric" recommendations for the United States are almost a mirror image of what is perceived to be China's 'Long Game" of "blunting, building, and legitimizing".

These include suggestions to join various ASEAN forums and the Asia Infrastructure Investment Bank (AIIB) to blunt China's influence; developing American allies' "Anti-Access/Area Denial" (A2/AD) capabilities against China; an America-led "Belt and Road" global initiative;  developing US military postures in the Indo-Pacific, including Oceania; building a robust global "command, control, communications, intelligence, surveillance and reconnaissance (C4ISR) structure, including space warfare; maintaining Dollar dominance (against "blunting" RMB internationalization and digitization); a new institution to audit US supply chains; strengthening American talent-building and innovative basic research, including partnership with allies; a competitive architecture for key industries and innovation capacities; and setting up a global "democratic cartel" of standards-setting bodies.   

While ticking the right boxes, these recommendations seem to miss the reality that China's global strengths do not lie in its military, which is no match to America's on multiple fronts. They lie in China's outsized market and global connectivity.

The author's recommendations cannot change the reality that China's economy in Purchasing Power Parity terms is already 25% larger than the United States. It is expected to be bigger in nominal terms by 2028, thanks to greater economic resilience from the pandemic.

Neither can they change China's centrality in the global supply and value chain, de-coupling notwithstanding. A vast majority of the world, especially those in Asia and Africa, have China as the largest trading partner - 128 out of 190 nations worldwide. Witness the world's largest trading bloc, the Reginal Comprehensive Economic Partnership (RCEP), with China as the central economic, trading, and container shipping hub.

Yes, America has many more "allies" than China, but most don't want to be forced to take sides, adopting at best a hedging strategy. 

What is more, the book reveals America's declining capacities in opting for "asymmetric", cost-conscious tactics.

All goes to explain why China is now more emboldened to assert its global influence and footprints, staying the course to realize the China Dream, healing the wounds of a "Century of Humiliation". An online book review dated 25 August of the Council on Council on Foreign Relations says as much. 

But China is unlikely to rule the world. Nor, for that matter, does China want, or is ready, to take over America's global responsibilities.

America still retains enduring superiority on multiple fronts, including a blessed geography, military sophistication and global reach, Dollar supremacy, and ideological attractiveness, at a time when the global image of China remains at best mixed, if not outright negative.   

Thanks to Covid-19, are we facing a turning point in history?

No, says Richard Haass, President of US Council on Foreign Relations. The Pandemic Will Accelerate History Rather Than Reshape It , he writes in Foreign Policy on 7 April, 2020, reminding us that "not every crisis is a turning point", harking back to his earlier tome A World in Disarray (Penguin Press, New York, 2017).

Outlined in The Global Analyst of June 2020 are Ten Reasons Why the Coronavirus Crisis Will Spawn a Brave New World of Discord.

An epochal rivalry for global dominance between the US and China will intensify whoever is in the White House. While the US retreats from obligations as global leader, China remains ill-fitted and unwilling to usurp America's role.

In face of mounting headwinds, China is emerging from Covid-19 with a more sober view of its geo-economic and geopolitical trajectory. Nevertheless, as China is the first to recover from the pandemic while the US tops the world with total Covid-19 cases approaching 3 million, China may well be able to overtake the US economy sooner than expected, before 2030. Click here 

What is more, obscured by demonization, the legitimacy of China's development model is gaining global ascendancy. This is supported by Washington D.C.-based research institutions like the 2020 Edelman Trust Barometer (page 7) and PEW Center people's satisfaction ratings . These consistently show that China's people trust their government much more compared with Western democracies.

With Covid-19, China's draconian city lockdown measures are now copied by many countries, Western democracies included. With long-established systemic racism in the United States highlighted by the George Floyd tragedy, the universality of capitalistic democracy is beginning to be questioned. Huntington's Clash of Civilizations is coming home to roost. 

Nevertheless, nationalism in on the rise across the globe. With a pervasive "China Scare", national security in personal protective equipment (PPE) and high-tech services such as 5G is likely to drive a global wave of decoupling from China, causing trade flow disruptions.

However, as China has already been intricately embedded in the global multi-faceted supply and value chain, meaningful decoupling is easier said than done. Challenges as described in Strategic US-China decoupling in the tech sector (Hinrich Foundation) and China dominates medical supplies, in this outbreak and the next (New York Times) are instructive. 

Meanwhile, as contagion risks remain, more and more business interactions are being conducted using Zoom or equivalents. With the advent of 5G, big data, and the Internet of Things, how businesses are transacted and how people live and work are migrating to a new normal. Robots and virtual experiences are becoming commonplace. A lot more will work from home. The quantity and features of offices and housing are likely to be transformed. There will be a paradigm shift in urban and global connectivity.

As Henry Kissinger opined in the Walls Street Journal on 3 April, 2020, The Coronavirus Pandemic Will Forever Alter the World Order.

The world will never be the same!  

The Struggle for Power: U.S.-China Relations in the 21st Century

Leading up to the more robust, realist, and all-of-government pushback against China in the latest White House report United States Strategic Approach to the People’s Republic of China is the above 14-chapter book, The Struggle for Power: U.S.-China Relations in the 21st Century

The relatively concise, 14-chapter book was compiled earlier in 2019 by a team of distinguished American experts and scholars including Joseph Nye, Condoleezza Rice, Michael Pillsbury, Graham Allison, Elizabeth Economy, and David Shambaugh. The tome is a good read to understand the intensifying dynamics in US-China rivalry for economic, military, technological, and ideological dominance. 

 

China in a New Era of Global Disruptions (including Covid-19 pandemic)

PowerPoint presentation to a Joint Meeting of the EGN Founding Chairmen’ Group and the CEO Pioneers Group on 20 March, 2020. 

Download China in a New Era of Global Disruptions

For additional perspective on China's development model, click here.

Cross Talk: Communist China at 70

Cross Talk debate on RT released on 2 October, 2019. (Broadcasting from Moscow and Washington D.C. channels, RT was the first news channel to break one billion YouTube viewers benchmark. It is now the No.1 TV news network on YouTube with more than nine billion views across its channels and over 14 million subscribers.)

China connects the world: Creation of a Sino-centric or more inclusive world order?

PowerPoint presentation to the British Business Association of Macao (BBAM) at Hotel St. Regis, Macao on 6th June, 2019.

Download China connects the world - Creation of a Sino-centric or more inclusive world order