CHINAwatch

China-Africa Summit 2024 - What are the implications

Backchat  on RTHK (Radio Television Hong Kong) on 6 September,  

Xi Thinks China Can Slow Climate Change. What if He’s Right?

So asks Jacob Dreyer in a New york Times Guest Essay dated 19 April 2024. Dreyer is a Shanghai-based  American editor and writer focused on the intersection of the Chinese political economy and science.

Dreyer's essay ticks all the right boxes on China;s green energy surge. These include China's powerful state-directed model in achieving all-of-society outcomes to combat Climate Change, its unbeatable cost-competitiveness for green energy businesses including EVs (electric vehicles), and its imperatives of achieving energy security through reduced reliance on imported fossil fuels through hostile transit "choke points" (e.g. the Malacca Strait controlled by America's Seventh Fleet). 

To these should be added China's possession of comprehensive and globally-oriented green-energy supply-and-value-chains, includng rare-earths and other materials, a  manufacturing powerhouse covering all aspects of production and utilization, and external connectivity through global Belt and Road linkages. 

China's current global green energy dominance is well documented in the International Energy Agency (IEA)'s Renewables 2023 Report (released Janury 2024). See its Executive Summary and a Reuters report of 11 January 2024. 

According to the IEA report, China will account for 56% of renewable energy capacity additions in the 2023-28 period. China is expected to increase renewable capacity by 2,060 gigawatts (GW) compared with the rest of the world's 1,574 GW addition. China accounts for almost 90% of the global upward forecast revision, consisting mainly of solar photovoltaic (PV). 

The IEA report flags up China's 80‑95% share of global green energy supply chains. Its solar PV manufacturing capabilities have almost doubled since last year, "creating a global supply glut," says the IEA.

Nevetheless, the IEA points out that China already accounts for 53% of the world's 2,095 GW of operating coal-fired generating capacity, a share likely to increase in coming years as more coal plants are retired in the developed world. So China is likely to achieve its declared goal of net zero carbon emission (carbon neutrality) by 2060 only during the final years before the target.  

The Impact of the Crisis in Ukraine on Global Supply Chains and China’s Economy.

An unbiased, critical Report dated 24.03.2022 by Beijing-based Centre for China and Globalization (CCG). 

Download CCG-Report-The-Impact-of-the-Crisis-in-Ukraine-on-Global-Supply-Chains-and-Chinas-Economy1 (1)

"This report begins by analyzing the massive shock caused by the Ukraine crisis and the US-European sanctions against Russia, providing initial estimates of the impact on the Russian economy, world financial markets, energy and food markets, global supply chains, the European economy and more widely the global economy. Second, the report posits several possible conclusions to the Ukraine crisis and the subsequent geostrategic impact on Europe. Finally, the report concludes by examining the Chinese economy beyond its borders and providing relevant recommendations. In summary, CCG believes that China could play the role of mediator in this crisis and potentially promote better multilateral relationships among Europe, the US and Russia."

The Report flags up the need for early resolution of the crisis, which is upending the world's stability and economy in myriad ways. It mentions China's possible role in acting as mediator but does not address the essential ingredients of a sustainable peace deal which may balance the demands on all sides.

China is in a delicate situation, not wanting to contravene the hallowed UN Charter principles of national sovereignty and opposition to unilateral action. See a 28 March 2022 report by a Hong Kong correspondent of Washington D.C.-based Feature Story News. Download 220325 i24 Chi Rus

On the other hand, it's clear that the United States wants to put maximum pressure on China to help strangle Russia. CGTN anchor Liu Xin famously quipped,  "Can you help me to fight your friend so that I can later concentrate on fighting you?"

So the sooner China can become the good guy by helping to broker an enduring peace over Ukraine, the better. A practical way-out may a "Swiss Solution" outlined in How to resolve the Ukrainian crisis dated 5 March, 2022 on Rome-based World Geostrategic Insights. 

Would a US-led Carbon Tax, instead of partnership, spur China's progress under the Paris Agreement?

A think-piece by Andrew S. Erickson and Gabriel Collins in Foreign Affairs of May/June 2021 argues that only pressure, not partnership, will spur China's progress on Climate Change.

The argument is that despite advances in renewable energy capacity, China's coal reliance in recent years has markedly increased, due to concerns with energy security, local vested interests, employment imperatives, and projects along the Belt and Road. The authors suggest that only coercion by way of a US-led carbon tax, along with Western allies, would do the trick, on grounds that China has under-performed with its Paris Agreement targets and is unlikely to be able to fulfill more promises. 

Not unexpected is the now-fashionable China bashing and demonization. What seems lacking is appreciation that as "factory to the world", China's economy is fundamentally different from that of the United States. It is much more dependent on energy input, of which coal is likely to remain a comparatively large contributor, due to insufficient endowment of more readily available natural gas.

Also lacking is appreciation that China has already become the world's leading country in electricity production from renewable energy sources, with over double the generation of the second-ranking country, the United States. By the end of 2019, China had a total capacity of 790GW of renewable power, mainly from hydroelectric, solar and wind power.

Furthermore, the authors seem to doubt China's genuine desire for renewable energies. Apart from pollution and quality of life considerations, renewables will lessen China's exposure to choke points like the US-controlled Malacca Strait and the Strait of Hormuz near Iran subject to uncertain geopolitical risks. 

Melanie Hart, Luke Bassett, and Blaine Johnson's earlier analysis of 15 May, 2017 for the Center on American Progress puts things in more balanced, quantitative perspectives. Entitled Everything You Think You Know About Coal in China Is Wrong, it highlights the following considerations -

"China’s Paris commitment includes a promise to install 800 gigawatts to 1,000 gigawatts of new renewable capacity by 2030, an amount equivalent to the capacity of the entire U.S. electricity system. While China and the United States have roughly the same land mass, however, China has 1.3 billion people to the United States’ 325 million. It needs an electricity system that is much larger, so adding the renewable equivalent of one entire U.S. electricity system is not enough to replace coal in the near to medium term."

" three things American observers need to understand about coal in China:

1. China’s new coal-fired power plants are cleaner than anything operating in the United States.
2. China’s emissions standards for conventional air pollutants from coal-fired power plants are stricter than the comparable U.S. standards.
3. Demand for coal-fired power is falling so quickly in China that the nation cannot support its existing fleet. Many of the coal-fired power plants that skeptics point to as evidence against a Chinese energy transformation are actually white elephants that Chinese leaders are already targeting in a wave of forced plant closures."

"The U.S. coal fleet is much older than China’s: The average age of operating U.S. coal plants is 39 years, with 88 percent built between 1950 and 1990.  Among the top 100 most efficient plants in the United States, the initial operating years range from 1967 to 2012. In China, the oldest plant on the top 100 list was commissioned in 2006, and the youngest was commissioned in 2015."

"The United States only has one ultra-supercritical power plant. Everything else is subcritical or, at best, supercritical. In contrast, China is retiring its older plants and replacing them with ultra-supercritical facilities that produce more energy with less coal and generate less emissions as well. Out of China’s top 100 units, 90 are ultra-supercritical plants". 

"In the United States, the total nameplate capacity of our top 100 most efficient coal-fired power units is 80.1 gigawatts, and their cumulative annual carbon emissions amount to 361,924,475 metric tons. Meanwhile, the total nameplate capacity of China’s top 100 units is 82.6 gigawatts, and their cumulative annual carbon emissions are an estimated 342,586,908 metric tons."

"Since China’s fleet uses more advanced technology, it also consumes less coal: an average of 286.42 grams of coal equivalent, or gce, consumed per kilowatt-hour of power produced in China versus 374.96 gce consumed per kilowatt-hour produced at lower heating value in the United States."

What is more, it is doubtful if a US-led carbon tax would be a silver bullet. If anything, it could massively backfire. First, considering most of the world's consumer products are now made in China, such a tax, like US trade sanctions, is likely to hurt consumers worldwide, not least in the United States.

Second, the developing world is unlikely to be supportive. To survive, the poor are heavily dependent on whatever energy sources are available to them locally. Such a tax is likely to be viewed as a ruse of the world's richer to tax the less fortunate. 

A better outlook would be for the United States to coordinate with China their respective national policies, targets, and actions under the Paris Agreement. They could do well to cooperate on joint efforts to accelerate attainments of Climate Change targets across the globe.

For a start, they could showcase each other's best technologies and practices to their own peoples. This would vastly enhance their mutual understanding and learning of each other's capacities and progress. What is more, as the world's great powers and largest polluters, they could set a dynamic example for the rest of the world to reach for the stars under the Paris Agreement. 

Separately, this would have the added, yet powerful, benefit of building mutual trust and understanding between the two great powers, now locking horns for mortal combat that is bound to engulf the whole world. 

Why the world needs China

Keynote presentation by Cyrus Janssen, an American digital entrepreneur living in China, at Thompson River University, Canada, on 21 November, 2020. For those who think that (a) "There is no freedom in China" (b) "There is no safety in China" (3) "China is the biggest threat to democracy" (4) "China is trying to take over the world", the video clip may be an eye-opener. 

The above also resonates with my earlier piece on World Strategic Insights - The New China Scare - Why America Shouldn’t Panic About Its Latest Challenger

The New China Scare - Why America Shouldn’t Panic About Its Latest Challenger

At a time of paranoiac anti-China confrontations, it is instructive to re-visit Fareed Zakaria's insightful analysis in Foreign Affairs dated January/February, 2020. In sum, we need to ask whether China is really such an existential threat to the United States and the global liberal order. 

First, is China trying to take over the world as portrayed by Michael Pillsbury's The Hundred-Year Marathon: China's Secret Strategy to Replace America as the Global Superpower (New York, 2015)? 

Yes, China has become the world's second largest economy and is growing to become first within a decade or so. But regardless of anxieties about relative decline, the United States remains dominant in many matrices of world power, including global military presence, leadership in cutting-edge science and technology, alliance systems with leading advanced countries, and the mighty dollar.

While China may be able to challenge some of these matrices, at least regionally, there is no indication that China will be able to take over the world anytime soon.

Moreover, according to the latest survey of 6 October, 2020 of Washington D.C.-based PEW Research Center, Unfavorable Views of China Reach Historic Highs in Many Countries. At the end of the day, few countries want to embrace China's political system. Nor does China want to rival American's military presence in more than 70 countries around the world.

Second, consider China's perceived assertiveness in the South China Sea.

As these waters are vital sea lanes of communication for China's economic and strategic lifeblood (energy and trade), is it surprising that a growing China will want to guard against encirclement by US military assets in the so-called First and Second Island Chains and the Malacca choke point ? 

As China's economy remains heavily dependent on these waters, of necessity they will remain free and open for international shipping. In any case, China is unlikely to be able to impose a "Monroe Doctrine" on the United States as a long-established Pacific Power, unlike the relative power position of the United States in 1823 vis-a-vis its European rivals, both geographically and militarily. This reality seems unlikely to change substantially in the foreseeable future. At least, geography is immutable. 

Third, since accession to the World Trade Organization, China has been the biggest beneficiary of the liberal world order founded by the United States. Despite perceived malpractices, China remains a staunch supporter of free trade and a multilateral system underpinned by global institutions including the United Nations.

Instead of pushing for needed reforms of the existing liberal order, should the United States throw the baby out with the bathwater? Would unilateralism and rule of the jungle serve America's best interests when the whole world's supply and value chains are intricately intertwined, and power becomes more diffused? Even America's allies don't really want to be forced to choose sides sacrificing their own key economic interests. 

Fourth, regarding human rights and democracy, despite perceived transgressions, there is little evidence that the vast majority of the peoples in Xinjiang, Tibet, Hong Kong, let alone the rest of China, are demanding regime change.

As regards ethnic cultural heritage, it is instructive that the PRC has taken care, right from the start, to show the native languages of its four largest minority ethnic groups - Uyghur, Tibetan, Mongolian and Zhuang - on all of China's banknotes - the Renminbi.  

Not forgetting that the United States has its fair share of human rights infringements (systemic racism, and extrajudicial detention camp at Guantanamo Bay come to mind), compared to the West, the Chinese Communist Party has been enjoying increasing support by the people, according to a July 2020 Harvard Kenney School Ash Center survey Understanding CCP Resilience: Surveying Chinese Public Opinion Through Time. All seem to support the nation's trajectory towards the China Dream of historic renaissance as a Great Power, bringing better and more dignified lives for its people.

Fifth, with 56 different ethnic groups, and great divergence of development between provinces, Western democratic models based on multi-party adversarial electoral systems can only lead to fragmentation, if not disintegration. Unlike former Communists, China is not imposing its ideology on other countries, or gunning for regime change.

Sixth, as for alleged belligerence, since the end of World War II, the United States has waged wars 57 times in 75 years. By comparison, China has waged few wars to speak of in recent decades, always pleading for peaceful coexistence, despite differences. 

Last but certainly not least, the world is big enough for diversity of political models, including China's and those of Arabic kingdoms. While substantial corrections are in order and differences or conflicts with Western political values remain, there is no reason to cancel cooperation or partnership in defined areas, such as regional peace, denuclearization, anti-terrorism, and Climate Change.

Indeed, measured cooperation will at least serve to calm down nerves, build trust for negotiations, and avoid a self-fulfilling security dilemma spawning unintended consequences that may spiral out of control.   

To put US-China power competition in a structural context, John Mearsheimer's webinar on 15 October 2020 with the University of Chicago - The Clash of Great Powers: China’s Rise and the Challenge to U.S. Primacy is opportune. The above run-down may help to answer, some, of not all, of the vital issues he raised. 

Click here for an alternative view in Foreign Affairs (November/December, 2020) on how the United States should respond to China's perception of America's "hastening decline". And here to listen to an American YouTuber living in China why an American patriot can love both America and China. 

Worsening Australia-China relations and what to do about it

As highlighted in this live TV interview on 9 June, China has warned citizens not to travel to Australia due to increasing hostility towards its nationals.

As Australia-China relations are plummeting, Gareth Evans, former Australian foreign minister (1988-96), and currently with the Australian National University, offers a nuanced yet realist view of how to engage with a perceived "increasingly-assertive" China to achieve a truly win-win relationship.

Read his article How Not to Respond to China dated18 June, 2020 on an online platform of the Asia Global Institute, a University of Hong Kong think-tank. 

China's Greater Bay Area embraces fintech and supports Macao's bid to become China's offshore RMB-denominated NASDAQ

A speech (in Chinese) of 12 October, 2019 by the Party Secretary of Guangdong's Provincial Financial Supervision Bureau reveals the extent of economic and technological transformation of the dynamic Greater Bay Area. Of note is the rise of fintech and the support of Macao's bid to become China's offshore NASDA. 

Following are the salient points - 

(1) Guangdong's traditional strength lies in its 500 "specialization townships" producing special products for the entire world, e.g. Guzhen produces 80% of the world's lighting products; Xiaolan 70% of the world's lock cylinders; Xintang, 70% of the world's jeans etc;

(2) Transsion Holdings' best-selling smart phones account for 48% of Africa's entire market;

(3) Now the province is advancing towards Innovation and High Technology, including finance applications; 

(4) Regardless of quality, filed patent applications in 2017 reached 176,000, 16 times New York, 8 times Tokyo, and 5 times San Francisco;

(5) Blockchain technology enables accumulated commercial credits for SMEs to obtain bank credits on strength of secured orders without collaterals;

(6) Guangdong's 600 listed companies represent only 1.3% of the province's 45,000 national-level high-and-new technology enterprises. The sky is the limit for IPO's. A tailored-made application has been submitted to Beijing to promote Macao as China's offshore RMB-denominated NASDAG; 

(7) A Guangzhou Futures Exchange is expected by year-end, embracing Green Bonds in light of EU's  mandated requirements for Green Belt and Road Projects; 

(8) The Greater Bay Area has a population of 77 million, among the world's youngest population with per capita GDP of US$20,000, within the range for advanced countries, a dynamo amongst consumer markets worldwide, driven by 5G and short video clips; 

(9) Fintech is embraced in cross-border finance. A three-year-old WeBank has reached RMB 3 trillion in loan books, with 150 million subscribers. 70% are blue-collar workers, 37% without any credit records. Average loan amount RMB 8,000 and average interest only RMB 100 for 90% of the loans. Loans below RMB 300,000 are approved on the same day. Driven by blockchain, the Bank has 2,000 staff - half are technologists;

(10) With nearly 100,000 technologists, Ping An Technology owns 1,700 world fintech patents, including world's No. 1 position in Voiceprint Recognition, Facial Recognition, Machine Reading Comprehension, AI Music Composition etc, ahead of the U.S.

 

Belt and Road is alive and kicking

A Standard Chartered Bank special report of 9 October, Belt and Road - Making its presence felt examines the latest developments on the ground in Asia, Africa and the Middle East, including what has happened after the US has declared a trade war against China. 

The report shows that -

"Trade and investment links between China and BRI countries continue to deepen, cementing alliances, improving competitiveness and shifting the global supply chain amid the US-China trade war. Rapid BRI expansion comes with challenges and risks – BRI partner countries face widening trade deficits and rising external debt. Bilateral debt relief offered by China should help to avoid systemic debt fallout. Increased transparency would likely improve project quality, address growing concerns and facilitate debt resolution. Commercial, environmental and social viability would help ensure project sustainability."

Download Standard Chartered - Belt and Road Report 9 October 2018  

According to a report dated 26 October, 2018 in the Asia Times, China's trade with Belt and Road countries exceeds US$860 billon over the first three quarters in 2018, a rise of 13.2% from a year earlier. Over the same period, Chinese enterprises have made a total US$10.78 billion of non-financial direct investment in these  countries, a rise of 12.3% from last year. They have helped establish 82 economic and trade cooperation zones, creating 244,000 local jobs and paying taxes and fees to host countries totalling US$2.01 billion.

During a historic visit to Beijing, the first in seven years, and accompanied by a 500-strong business delegation, Japan's Prime Minister Abe pledged to change course in relations with China, from confrontation to a "new era of cooperation", paving the way to Japanese participation in China's Belt and Road Initiative in some 30 joint infrastructural projects. Click here  Not only would this breakthrough reinvigorate interest in China's global Initiative, it would also help to shore up the corporate governance and credibility of both the projects concerned and the whole Initiative as well. 

2018 Forum for China-Africa Cooperation (FOCAC) Beijing Summit, 3-4 September

My live TV interview with TRT WORLD (Turkish Radio and Television Corporation World Channel) on 3 September, summarizing some of the challenges and opportunities of China's engagement with Africa, a continent on the move.