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Back to the future: Will Biden’s Asia policy come full circle? | The Interpreter

Back to the future: Will Biden’s Asia policy come full circle? | The Interpreter | ANALYSIS | Scoop.it
  • ‘Second, allied publics think the United States is turning inward and calling into question shared values and principles.’
  • ‘Third, many worry about the continued spectre of Trumpism and the “America First” mentality.’

‘Countering these factors will require persuasive answers to all three questions below.’

‘First, can the United States devote more attention abroad if it is occupied by challenges at home?’

‘The Covid-19 pandemic and its economic impact are rightfully Biden’s top priority, just as jumpstarting the US economy was Obama’s top task after the 2007­–08 global financial crisis.’

  • ‘Yet, many in Asia worry that these domestic priorities will displace international ones.’

‘The Biden administration can make up some ground in Asia simply by having senior leaders show up consistently at regional meetings, but it will have to work hard to convince Asian friends that other domestic and international priorities will not crowd out the necessary focus on Asia.’

‘Second, can Washington increase regional trade and investment if it cannot ratify trade deals?’

‘Trump famously campaigned on cancelling US participation in the Trans-Pacific Partnership (TPP), renegotiating “bad” trade deals, and putting tariffs on China.’

‘One might expect that trade would be less popular as a result.’

  • ‘Yet, polling from Gallup shows that 79% of Americans now see trade as an opportunity for growth, up from 45% a decade ago.’
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'Global Cycle Notes: Hope springs eternal’: China

'Global Cycle Notes: Hope springs eternal’: China | ANALYSIS | Scoop.it

CreditSuisse

‘The external demand shock will coincide with fading domestic policy stimulus. Improving private domestic final demand should prevent a contraction in factory output.’

Below is the just the China section. Read the entire - excellent - 27-page analysis of global economic trends and situation region by region.

‘After a strong expansion since February, the short-term outlook for Chinese industrial production has worsened.’

  • ‘Robust 1) external demand and 2) policy stimulus have been crucial drivers of the rebound, but are likely to fade in the months ahead.’
  • ‘Fortunately, improving private 3) domestic demand will partly offset the external shock, preventing an outright contraction in industrial output.’

External Demand. ‘External demand is likely to recede in the months ahead. The US and Europe represent over half of Chinese exports.’

  • ‘Major European economies have ordered a second round of shutdowns in the face of new COVID-19 waves.’
  • ‘In the US, rapidly rising COVID-19 infections have increased the risk of similar mobility limitations.’
  • ‘Manufacturing supply chains are likely to be less disrupted than during previous shutdowns, since measures are more targeted, but restrictions to consumer behavior are likely to tame consumer spending.’

Policy Stimulus. ‘The external demand shock will coincide with fading domestic policy stimulus.’

  • ‘A surge of policy-induced lending has revived infrastructure investment since Q2, but the tailwind is gradually fading.’
  • ‘Local bond issuance and government spending have both slowed.’
  • ‘Bank loan growth has fallen to pre-COVID levels.’
  • ‘The central bank has tightened financial conditions in recent months and signaled a desire to maintain the current policy stance for the foreseeable future.’
  • ‘Unless domestic shutdowns are required again, which seems improbable given China’s tight control over the virus, authorities are unlikely to ease policy further.’

Domestic Demand. ‘However, improving private domestic final demand should prevent a contraction in factory output and should position the industrial sector for a reacceleration in the spring.’

  • ‘The labor market should continue to recover, benefiting low-income groups.
  • ‘The savings rate should also come down meaningfully as job security improves, further fueling consumer spending.’

‘Business sentiment is likely to improve as the prolonged period of suppressed virus spread encourages future planning.’

‘Manufacturing investment has returned to late 2019 levels, but there is room for further upside.’

‘Despite several advanced vaccine trials by domestic pharmaceutical companies, China is unlikely to be able to produce enough doses to adequately immunize its large population anytime soon.’

  • ‘However, combining effective disease control and an inoculated population of essential workers should significantly reduce the risk of future outbreaks and related economic uncertainty.’
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In Search of Today's George Kennan

Greetings!

In today’s issue:

'In Search of Today’s George Kennan'

"The Elements of the China Challenge"

 'A 2020 Version of Conventional Wisdom about China'

  • 'Scoop: The State Department to release Kennan-style paper on China'
  • 'A 2020 Version of Conventional Wisdom about China'
  • 'An Insult to George Kennan'

A Look Back to 1947 | 'The Sources of Soviet Conduct' by George Kennan

CHINADebate, the publisher of the China Macro Reporter, aims to present different views on a given issue.

Including an article here does not imply agreement or endorsement of its content.

The State Department’s Office for Policy Planning just released "The Elements of the China Challenge."

  • That analysis is explicitly meant to be an ‘effort to develop a concept of U.S.-China relations on the scale of what Kiron Skinner [former head of the called Office for Policy Planning]  called “Letter X” — the unsigned essay by George Kennan, who assessed “the sources of Soviet conduct” in 1947 and outlined the containment strategy that guided American strategists for the rest of the Cold War.’ Washington Examiner 2019

Given that Mr. Kennan is hailed as ‘the architect of a doctrine that won the cold war,’ that’s a very high bar.

  • And the State Department’s analysis not only fails to clear that bar, it doesn’t even come close to reaching it.

The analysis’s description of the China situation could have come from a competent right-of-center think tank. David Wertime of Politico’s ‘China Watcher’ sums it up well:

  • ‘The State Department’s internal think tank has issued a long report on China, but it contains little that’s new.’ 
  • ‘The Policy Planning staff at Foggy Bottom touted the Wednesday report as the China equivalent to George Kennan’s 1946 “long telegram,” which spelled out the U.S. strategy of Soviet containment.’
  • ‘But while staff at what insiders call “S/P” are tasked with “innovation and creativity” within their agency, most of what’s here equates to the 2020 version of conventional wisdom about China, marshaling administration talking points that felt fresh two years ago but are well-worn now.’

Policy recommendations? The State Department’s analysis says, ‘Meeting the China challenge requires the United States to return to the fundamentals. To secure freedom, America must refashion its foreign policy in light of ten tasks.’

  • These ‘ten tasks,’ ranging from promoting constitutional government and civil society at home to championing the principles of freedom in word and in deed are more truisms than policies.

And the closest thing the analysis comes up with to a strategic objective or doctrine that would align the U.S.’s China policies and actions:

  • ‘In the face of the China challenge, the United States must secure freedom.’
  • ‘Secure freedom’? That’s it?

For decades and until a few years ago, the democracies did have a strategic objective for China:

  • To bring China into the world order as, what Robert Zoellick called, a ‘responsible stakeholder.’

After recognizing the China intended to go its own way – and a way that was often inimical to the interests of the democracies – that strategic objective was abandoned.

  • The challenge now is articulate a new strategic objective.

There are an array of suggestions.

  • At the extremes are calls to attack China before it gets too strong (very extreme) to just, well, engage harder and China will come around.
  • The middle ranges from confronting China in specific areas and arenas, to containing China, to impeding its continued rise – or some combination of these.

Without a clear strategic objective, policy actions are scattershot and incoherent and ineffective.

  • What we get are things like the ‘ten tasks’ in the State Department’s report.

To understand the difference between having a stated strategic objective and not having one, we need only look at the Office of Policy Planning’s model, George Kennan.

 

In his essay, ‘In Search of Today’s George Kennan,’ Edward Luce of The Financial Times writes:

  • ‘In 1947 X penned his history-changing “Sources of Soviet Conduct” in Foreign Affairs.’
  • ‘The piece, which crystallised America’s cold war containment strategy, was the making of George F Kennan’s life-long reputation as a master of geopolitics.’

‘Kennan helped Washington grasp that the Soviet Union was the same old paranoid Russia behind a Leninist mask.’

  • ‘It was “impervious to reason” but sensitive to force.’

‘Kennan provided a framework to break through the bitter divide between those who believed America should return to its prewar isolationism, and those who believed the USSR was itching for a dramatic showdown with the capitalist west.’

  • ‘Neither was true. Either path would have been disastrous.’
  • ‘Kennan’s crisp analytical mind sidelined both schools.’

‘He was the architect of a doctrine that won the cold war.’

 

‘Crystallizing the strategic objective for China is the most urgent task facing American foreign policy.

  • But, ‘What can be done?’ asks Mr. Luce, again in his essay, ‘In Search of Today’s George Kennan.’

‘America is desperate for the kind of strategic nous Kennan once personified.’

  • ‘A few years ago we may have looked to people such as Zbigniew Brzezinski or Henry Kissinger to offer some kind of answer.’
  • ‘The first is dead and the second places too high a value on his access to Trump, Putin, Xi Jinping and others, to risk plain talk.’

‘We need new minds.’

  • ‘All of us in Washington can point to dozens of smart foreign policy specialists in their own fields.’
  • ‘But where is the grand strategist?’

Until that grand strategist arrives, look at every analysis you read that lays out prescriptions for actions on China and ask:

  • What is the strategic objective or doctrine that these prescriptions seek to advance?

Until you have that answer, you will see recommendations like the ‘ten tasks’ in "The Elements of the China Challenge" for what they are: Stopgaps, until the next George Kennan arrives.

 

Go deeper into these issues - Browse the posts below.

To read the original article, click the title.

Let me know what you think. And please forward the China Macro Reporter to your friends and colleagues.

All the best,

Malcolm 

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'History Cannot Affirm Current US’ China Policy'

'History Cannot Affirm Current US’ China Policy' | ANALYSIS | Scoop.it

Global Times

‘Most Chinese scholars who have read the report believe it is an insult to Kennan by labeling the report as Kennan-style.’

The Global Times is a daily newspaper under the auspices of the Chinese Communist Party's People's Daily newspaper.

‘The US Department of State's Office of Policy Planning on Tuesday issued a report entitled "The Elements of the China Challenge." ’

  • ‘The paper, which is more than 70 pages long and has five parts, lays out 10 tasks for the US to accomplish in face of the "China challenge." ’
  • ‘There is no new wording in the report, which can be seen as a collection of malicious remarks from Secretary of State Mike Pompeo and other anti-China US politicians and senators.’

‘Right now, only a little more than 60 days are left for the current US administration.’

  • ‘An official from the State Department explained that the report is not meant to constrain the next US administration.’
  • ‘But the fact is the Department of State fears that the Biden administration will adjust US-China relations, and the release of the report is part of their efforts to consolidate the current extreme anti-China path.’ 

‘The US media outlet which first disclosed the report even compared it to an article published in 1947 by US diplomat George Kennan that had a profound influence on the US strategy to deal with the then Soviet Union.’

  • ‘Kennan, then US charge d'affaires in Moscow, sent an 8,000-word telegram to the Department of State detailing his views on the Soviet Union.’
  • ‘But most Chinese scholars who have read the report believe it is an insult to Kennan by labeling the report as Kennan-style.’

‘At least, there was no special political motive in Kennan's report.’

  • ‘But the latest report is trying to leave a legacy for the extreme anti-China policy adopted by the Trump administration and fawning on Pompeo, which is evil in essence.’

‘The impulsive and capricious governing style of Donald Trump leaves sufficient room for politicians like Pompeo to give free play to their ambitions.’

  • ‘The Department of State has become the governmental organ that has the most serious clashes with China, outperforming the CIA and the Department of Defense.’ 

‘Surrounded by such deep hostility and prejudice toward China and the wild ambition of the secretary of state, how could the Department of State's Office of Policy Planning make out anything objective about China?’

  • ‘Their observation ability, cautious attitude toward research, and sense of responsibility for history have been severely squeezed.’
  • ‘They are just currying favor from their seniors and manipulating extreme paths, pretending to be "thoughtful." ’

‘No report can make up for the US' China policy, nor will it leave any historic legacy.’

  • ‘The document released by the US State Department's Office of Policy Planning will end up being pieces of wasted paper.’
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"The Elements of the China Challenge"

Malcolm Riddells insight:

U.S. State Department

Office of Policy Planning | U.S. State Department

‘In the face of the China challenge, the United States must secure freedom.’

from the Executive Summary

‘Awareness has been growing in the United States — and in nations around the world — that the Chinese Communist Party (CCP) has triggered a new era of great-power competition.’

  • ‘Yet few discern the pattern in China’s inroads within every region of the world, much less the specific form of dominance to which the party aspires.’

‘The CCP aims not merely at preeminence within the established world order — an order that is grounded in free and sovereign nation-states, flows from the universal principles on which America was founded, and advances U.S. national interests —but to fundamentally revise world order, placing the People’s Republic of China (PRC) at the center and serving Beijing’s authoritarian goals and hegemonic ambitions.’

‘In the face of the China challenge, the United States must secure freedom.’

‘Meeting the China challenge requires the United States to return to the fundamentals. To secure freedom, America must refashion its foreign policy in light of ten tasks.’

  1. ‘First, the United States must secure freedom at home by preserving constitutional government, promoting prosperity, and fostering a robust civil society, all of which nourish the civic concord that has always been essential to meeting the nation’s challenges abroad.’
  2. ‘Second, the United States must maintain the world’s most powerful, agile, and technologically sophisticated military while enhancing security cooperation, grounded in common interests and shared responsibility, with allies and partners.’
  3. ‘Third, the United States must fortify the free, open, and rules-based international order that it led in creating after World War II, which is composed of sovereign nation-states and based on respect for human rights and fidelity to the rule of law.’
  4. ‘Fourth, the United States must reevaluate its alliance system and the panoply of international organizations in which it participates to determine where they fortify the free, open, and rulesbased international order and where they fall short.’
  5. ‘Fifth, in light of that reevaluation, the United States must strengthen its alliance system by more effectively sharing responsibilities with friends and partners and by forming a variety of groupings and coalitions to address specific threats to freedom while, in cooperation with the world’s democracies and other like-minded partners, reforming international organizations where possible and, where necessary, building new ones rooted in freedom, democracy, national sovereignty, human rights, and the rule of law.’
  6. ‘Sixth, the United States must promote American interests by looking for opportunities to cooperate with Beijing subject to norms of fairness and reciprocity, constraining and deterring the PRC when circumstances require, and supporting those in China who seek freedom.’
  7. ‘Seventh, the United States must educate American citizens about the scope and implications of the China challenge because only an informed citizenry can be expected to back the complex mix of demanding policies that the United States must adopt to secure freedom.’
  8. ‘Eighth, the United States must train a new generation of public servants — in diplomacy, military affairs, finance, economics, science and technology, and other fields — and public policy thinkers who not only attain fluency in Chinese and acquire extensive knowledge of China’s culture and history, but who also attain fluency in the languages, and acquire extensive knowledge of the cultures and histories, of other strategic competitors, friends, and potential friends.’
  9. ‘Ninth, the United States must reform American education, equipping students to shoulder the enduring responsibilities of citizenship in a free and democratic society by understanding America’s legacy of liberty and also preparing them to meet the special demands of a complex, information-age, globalized economy for expertise in science, technology, engineering, and mathematics.’
  10. ‘Tenth, the United States must champion the principles of freedom — principles that are at once universal and at the heart of the American national spirit — through example; speeches; educational initiatives; public diplomacy; foreign assistance and investment; sanctions in more difficult circumstances as well as other forms of non-military pressure; and, where the nation’s vital interests are at stake and all else has failed, military force.’

‘Grounded in America’s founding principles and constitutional traditions; invigorated by a bustling economy; undergirded by the world’s best-trained and best-equipped military; served by government officials who understand the American people and the American political system, recognize the diversity and common humanity of the peoples and nations of the world, and appreciates the complex interplay of ideas and interests in foreign affairs; and fortified by an informed and engaged citizenry — this multi-pronged approach will enable the United States to secure freedom.’

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Scoop: The State Department to release Kennan-style paper on China

Scoop: The State Department to release Kennan-style paper on China | ANALYSIS | Scoop.it

Axios

Bethany Allen-Ebrahimian | Axios China

‘The unclassified paper, called "The Elements of the China Challenge," draws inspiration from an influential article published in 1947 by the policy planning team’s founder, U.S. diplomat George Kennan, in which he introduced the idea of containment as a strategy to deal with the Soviet Union.’

‘The U.S. State Department's Office of Policy Planning is set to release a blueprint for America’s response to China’s rise as an authoritarian superpower, Axios has learned.’

‘Why it matters: The lengthy document calls for strong alliances and rejuvenation of constitutional democracy. Axios obtained a copy.’

  • ‘The unclassified paper, called "The Elements of the China Challenge," draws inspiration from an influential article published in 1947 by the policy planning team’s founder, U.S. diplomat George Kennan, in which he introduced the idea of containment as a strategy to deal with the Soviet Union.’

‘Details: The document, which is more than 70 pages long, examines the Chinese Communist Party's harmful conduct and its ideological sources, the vulnerabilities China faces, and how the U.S. and its allies should respond.’

  • ‘ "Meeting the China challenge requires the United States to return to the fundamentals," the paper states. The U.S. must fashion "sturdy policies that stand above bureaucratic squabbles and interagency turf battles and transcend short-term election cycles. The United States’ overarching aim should be to secure freedom." ’

‘The blueprint: The paper lays out "ten tasks" for the U.S. to accomplish.’

  1. ‘Promoting constitutional government and civil society at home.’
  2. ‘Maintaining the world's strongest military.’
  3. ‘Fortifying the rules-based international order.’
  4. ‘Reevaluating its alliance system.’
  5. ‘Strengthening its alliance system and creating new international organizations to promote democracy and human rights.’
  6. ‘Cooperating with China when possible and constraining Beijing when appropriate.’
  7. ‘Educating Americans about the China challenge.’
  8. ‘Train a new generation of public servants who understand great-power competition with China.’
  9. ‘Reforming the U.S. education system to help students understand the responsibility of citizenship in a complex information age.’
  10. ‘Championing the principles of freedom in word and in deed.’

‘Between the lines: The paper does not showcase the unilateralism that has characterized some elements of President Trump's foreign policy. It maintains conservative undertones, including an emphasis on economic liberty and a strong military.’

  • ‘The Trump administration "concluded that the CCP’s resolute conduct and self-professed goals require the United States and other countries to revise assumptions and develop a new strategic doctrine to address the primacy and magnitude of the China challenge," the document states.’

‘Expert take: "One unique feature of the memo is its focus on how the CCP's worldview shapes its behavior, which has been rare in U.S. government documents and should be a larger part of U.S. policy debates," said Rush Doshi, director of the Brookings China Strategy Initiative, who reviewed a copy.’

  • ‘But the paper mostly overlooks certain key topics, including allied industrial policy, cross-border data flows and new tech coalitions, said Doshi. And "economics and technology are at the center of U.S.-China competition, but they barely appear in the memo’s prescriptions," he added.’
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'Time for the West to Revisit its China Narratives'

'Time for the West to Revisit its China Narratives' | ANALYSIS | Scoop.it

China Watcher | Politico

David Wertime | Politico

‘Most of what’s here equates to the 2020 version of conventional wisdom about China, marshaling administration talking points that felt fresh two years ago but are well-worn now.’

‘The State Department’s internal think tank has issued a long report on China, but it contains little that’s new.’ 

  • ‘The Policy Planning staff at Foggy Bottom touted the Wednesday report as the China equivalent to George Kennan’s 1946 “long telegram,” which spelled out the U.S. strategy of Soviet containment.’
  • ‘But while staff at what insiders call “S/P” are tasked with “innovation and creativity” within their agency, most of what’s here equates to the 2020 version of conventional wisdom about China, marshaling administration talking points that felt fresh two years ago but are well-worn now.’

‘Notable absence: a “theory of mind” for China that goes beneath the surface.’ 

  • ‘The report generally describes China as a monolith, giving scant mention to the competing interests or equities that even a dictatorship must consider when making and executing policy, particularly in a large and complex country like China.’
  • ‘There’s little about internal sentiment, or how the U.S. might leverage that to its advantage.’
  • ‘The report quotes Xi at length, often implying disapproval even when Xi has uttered things any leader in his position might say, such as a statement that he wants China’s (untested) military to be able to “win battles” or his desire to make the world’s most populous country “a global leader in terms of power and global influence.” ’
  • ‘If S/P has better intel on China’s internal dynamics, it’s not sharing.’

‘ “China is not the Soviet Union,” according to Oriana Skylar Mastro, a fellow at the Freeman Spogli Institute for International Studies at Stanford University.’

  • ‘ “China is not trying to build a socialist international order,” she tells China Watcher.’
  • ‘ “China is a richer, more powerful, more pragmatic and a more attractive partner than the Soviet Union ever was. We ignore these differences at our peril.” ’
  • ‘Mastro adds that “the report fails to capture the fact that much of China’s power has been pursued in legitimate ways. I say this not to excuse China, but to highlight why it has been so difficult to get other countries to see the problem the way we do.” ’
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'The Sources of Soviet Conduct'

'The Sources of Soviet Conduct' | ANALYSIS | Scoop.it

Foreign Affairs

"X" (George F. Kennan) | U.S. State Department

July 1947

'The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.’ 

‘The political personality of Soviet power as we know it today is the product of ideology and circumstances:’

  • ‘ideology inherited by the present Soviet leaders from the movement in which they had their political origin, and’
  • ‘circumstances of the power which they now have exercised for nearly three decades in Russia.’

‘There can be few tasks of psychological analysis more difficult than to try to trace the interaction of these two forces and the relative role of each in the determination of official Soviet conduct.’

  • ‘Yet the attempt must be made if that conduct is to be understood and effectively countered.’

 

II

‘Of the original ideology, nothing has been officially junked.’

  • ‘Belief is maintained in the basic badness of capitalism, in the inevitability of its destruction, in the obligation of the proletariat to assist in that destruction and to take power into its own hands.’

‘But stress has come to be laid primarily on those concepts which relate most specifically to the Soviet regime itself:’

  • ‘to its position as the sole truly Socialist regime in a dark and misguided world, and to the relationships of power within it.’

‘The first of these concepts is that of the innate antagonism between capitalism and Socialism.’ 

‘This brings us to the second of the concepts important to contemporary Soviet outlook.’

  • ‘That is the infallibility of the Kremlin.’
  • ‘The Soviet concept of power, which permits no focal points of organization outside the Party itself, requires that the Party leadership remain in theory the sole repository of truth.’ 

‘But we have seen that the Kremlin is under no ideological compulsion to accomplish its purposes in a hurry.’ 

‘In these circumstances it is clear that the main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.’

‘It is important to note, however, that such a policy has nothing to do with outward histrionics: with threats or blustering or superfluous gestures of outward "toughness."

  • ‘While the Kremlin is basically flexible in its reaction to political realities, it is by no means unamenable to considerations of prestige.’

‘Like almost any other government, it can be placed by tactless and threatening gestures in a position where it cannot afford to yield even though this might be dictated by its sense of realism.’ 

 

III

‘In the light of the above, it will be clearly seen that the Soviet pressure against the free institutions of the Western world is something that can be contained by the adroit and vigilant application of counterforce at a series of constantly shifting geographical and political points, corresponding to the shifts and maneuvers of Soviet policy, but which cannot be charmed or talked out of existence.’ 

IV

‘It is clear that the United States cannot expect in the foreseeable future to enjoy political intimacy with the Soviet regime.’

  • ‘It must continue to regard the Soviet Union as a rival, not a partner, in the political arena.’
  • ‘It must continue to expect that Soviet policies will reflect no abstract love of peace and stability, no real faith in the possibility of a permanent happy coexistence of the Socialist and capitalist worlds, but rather a cautious, persistent pressure toward the disruption and weakening of all rival influence and rival power.’

‘Balanced against this are the facts that Russia, as opposed to the western world in general, is still by far the weaker party, that Soviet policy is highly flexible, and that Soviet society may well contain deficiencies which will eventually weaken its own total potential.’

  • ‘This would of itself warrant the United States entering with reasonable confidence upon a policy of firm containment, designed to confront the Russians with unalterable counterforce at every point where they show signs of encroaching upon the interest of a peaceful and stable world.’
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'In Search of Today’s George Kennan'

'In Search of Today’s George Kennan' | ANALYSIS | Scoop.it

The Financial Times

Edward Luce | The Financial Times

‘America is desperate for the kind of strategic nous Kennan once personified.’

‘In 1947 X penned his history-changing “Sources of Soviet Conduct” in Foreign Affairs.’

  • ‘The piece, which crystallised America’s cold war containment strategy, was the making of George F Kennan’s life-long reputation as a master of geopolitics.’

‘The Kennan we need today is someone who would be clear-eyed about the world America faces.’

  • ‘It is just as rapidly changing as it was in 1947.’

‘Kennan helped Washington grasp that the Soviet Union was the same old paranoid Russia behind a Leninist mask.’

  • ‘It was “impervious to reason” but sensitive to force.’

‘Kennan provided a framework to break through the bitter divide between those who believed America should return to its prewar isolationism, and those who believed the USSR was itching for a dramatic showdown with the capitalist west.’

  • ‘Neither was true. Either path would have been disastrous.’
  • ‘Kennan’s crisp analytical mind sidelined both schools.’

‘He was later to regret the indiscriminate use of his doctrine — most egregiously in Vietnam.’

  • ‘But he earned his spurs as the architect of a doctrine that won the cold war.’

‘America today faces a more complicated global picture.’ 

  • ‘Most of the foreign policy establishment sees China as America’s real 21st-century rival.’
  • ‘Russia is still Russia but it is far more easily containable than during the cold war.

‘China, on the other hand, poses a new kind of headache.’

  • ‘Unlike the Soviet Union, China’s economy is deeply intermeshed with the global supply chain.’
  • ‘It owns more than $1tn of American debt.’
  • ‘And it is capable of blunting America’s technological edge.’

‘Containment makes little sense when your prosperity is so intertwined.’

  • ‘A trade war is self-defeating.’
  • ‘Military confrontation is unthinkable, though deterrence must be maintained.’

‘What can be done?’

‘America is desperate for the kind of strategic nous Kennan once personified.’

  • ‘A few years ago we may have looked to people such as Zbigniew Brzezinski or Henry Kissinger to offer some kind of answer.’
  • ‘The first is dead and the second places too high a value on his access to Trump, Putin, Xi Jinping and others, to risk plain talk.’

‘We need new minds.’

  • ‘All of us in Washington can point to dozens of smart foreign policy specialists in their own fields.’

‘But where is the grand strategist?’

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Sinology by Andy Rothman - Biden & China: Building Back Better?

Sinology by Andy Rothman - Biden & China: Building Back Better? | ANALYSIS | Scoop.it

Sinology

Andy Rothman | Matthews Asia

‘A V-shaped economic recovery has been underway for eight consecutive months.’

‘The coronavirus remains largely under control in China.’

  • ‘There has not been a COVID death since mid-April, and only 374 patients were in hospital as of November 15, down from 58,016 on the February 17 peak.’
  • ‘(There were 69,864 COVID patients hospitalized in the U.S. on November 15.)’
  • ‘Minor outbreaks continue to appear in China, to which the government has responded with massive testing and contact tracing.’

‘Because COVID is largely under control in China, people have been able to resume a largely normal life.’

  • ‘And a V-shaped economic recovery has been underway for eight consecutive months.’

‘Chinese consumers are back:’

  • ‘Auto sales have recorded six months of double-digit year-over-year (YoY) growth.’
  • ‘New home sales have risen YoY for the last six months, after falling 39% during the first two months of the year.’
  • ‘Long lines in front of popular restaurants are back, as are traffic jams.’
  • ‘Sales at restaurants and bars increased 0.8% YoY in October, the first month of YoY growth since the outbreak began, and compared to a 46.8% fall in March.’
  • ‘Consumers are gradually feeling more comfortable gathering indoors.’

‘All of this with only modest fiscal and monetary stimulus.’

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Back to the future: Will Biden’s Asia policy come full circle? | The Interpreter

Back to the future: Will Biden’s Asia policy come full circle? | The Interpreter | ANALYSIS | Scoop.it
  • ‘Second, allied publics think the United States is turning inward and calling into question shared values and principles.’
  • ‘Third, many worry about the continued spectre of Trumpism and the “America First” mentality.’

‘Countering these factors will require persuasive answers to all three questions below.’

‘First, can the United States devote more attention abroad if it is occupied by challenges at home?’

‘The Covid-19 pandemic and its economic impact are rightfully Biden’s top priority, just as jumpstarting the US economy was Obama’s top task after the 2007­–08 global financial crisis.’

  • ‘Yet, many in Asia worry that these domestic priorities will displace international ones.’

‘The Biden administration can make up some ground in Asia simply by having senior leaders show up consistently at regional meetings, but it will have to work hard to convince Asian friends that other domestic and international priorities will not crowd out the necessary focus on Asia.’

‘Second, can Washington increase regional trade and investment if it cannot ratify trade deals?’

‘Trump famously campaigned on cancelling US participation in the Trans-Pacific Partnership (TPP), renegotiating “bad” trade deals, and putting tariffs on China.’

‘One might expect that trade would be less popular as a result.’

  • ‘Yet, polling from Gallup shows that 79% of Americans now see trade as an opportunity for growth, up from 45% a decade ago.’
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Back to the future: Will Biden’s Asia policy come full circle? | The Interpreter

Back to the future: Will Biden’s Asia policy come full circle? | The Interpreter | ANALYSIS | Scoop.it

‘Unfortunately, robust public support for trade in America does not translate into political support in Congress.’

  • ‘So it is unclear whether a Biden administration could win ratification of a revised TPP, which became the Comprehensive and Progressive Agreement for Trans-Pacific Partnership after Trump’s withdrawal.’

‘With the Regional Comprehensive Economic Partnership now signed, awaiting ratification, America needs a positive trade and investment plan now more than ever.’

‘Third, can the United States deter China and reassure regional allies with fewer defence resources?’

‘Biden’s team will have to show how the United States can reverse the deteriorating regional military balance with flat (or declining) defence budgets.’

  • ‘The incoming team has outlined some innovative ideas about how make better use of defence dollars, but many in Asia will remain sceptical until they see US resources match US rhetoric.’
  • ‘After all, if China continues to do “more with more”, it will be hard for America to do “more with less”.
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Back to the future: Will Biden’s Asia policy come full circle? 

Back to the future: Will Biden’s Asia policy come full circle?  | ANALYSIS | Scoop.it

Lowy Institute

Zack Cooper | American Enterprise Institute

‘Although Biden’s Asia strategy won’t be called Pivot 2.0, that is how many in the region will perceive it.’

‘Many of America’s friends in Asia have high expectations for the incoming administration of Joe Biden.’

  • ‘Biden has, after all, signalled that the region will be a top priority and promised to “build a united front of US allies and partners to confront China’s abusive behaviours and human rights violations”.’

‘This regional focus and devotion to alliances and partnerships reminds many of the Obama-era “pivot” to Asia.’

  • ‘Indeed, the basic logic of the pivot still holds: the global centre of gravity is shifting towards Asia, so more of America’s time, energy and resources should be devoted to the region.’
  • ‘But simply re-running the pivot is not an option.’
  • ‘After all, although Biden’s Asia strategy won’t be called Pivot 2.0, that is how many in the region will perceive it.’

‘Convincing Asian observers that this time is different because of three factors are working against the United States.’

  • ‘First, regional states assess that Washington’s political and economic influence is waning.’
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Meeting China's Tech Challenge

Greetings!

In today’s issue:

China Property Market and the Economic Recovery

  • 'China economy: will hot property market threaten post-pandemic rebound?' 
  • 'The "Three Red Lines" '

'Meeting the China Challenge: A New American Strategy for Technology Competition'

  • 'The Task is Urgent'
  • 'Five Features of China's Tech Challenge'

The View from Europe

Biden-Skeptics in Asia

  • 'Watch what you wish for, including a Biden victory'
  • 'Barack Obama’s Legacy in Asia Looms Over Joe Biden'
  • 'Barack Obama’s Legacy in Asia Looms Over Joe Biden'

 

CHINADebate, the publisher of the China Macro Reporter, aims to present different views on a given issue.

Including an article here does imply agreement or endorsement of its content.

China Property Market and the Economic Recovery

So much of the analysis I read about China’s post-pandemic economic recovery pays scant attention to the central role of China’s booming property market.

  • Or to the risks to the economy that the market may pose.

Filling those gaps is 'China economy: will hot property market threaten post-pandemic rebound?' in The Financial Times.

  • ‘One of the primary reasons for this economic resilience has been the relentless march of its property market.’
  • ‘Construction activity has increased and house prices in major cities continue to rise.’

‘However, the Chinese authorities, worried that cheap money will flood into an already highly-leveraged sector, are putting pressure on developers to reduce their borrowing.’

  • ‘The sector’s approach has relied on taking on large quantities of debt to accumulate more and more land — sometimes in speculative areas outside of major cities.’

‘Anxious about the potential risks to financial stability, Beijing drafted new rules – the so-called “three red lines” – in response to excessive leverage in the property sector.’

  • ‘It limits their borrowing depending on their performance on three metrics: debt to cash; net debt to equity; and debt to assets.’

‘It is not clear whether the government can completely control flows of capital into the sector, which include non-bank financing sources such as trust companies.’

  • ‘ “The three red lines won’t stop leading developers from obtaining alternative financing,” says one developer in Chengdu, capital of southwestern Sichuan province.’
  • ‘ “The key for developers to survive is still to grow big rather than reduce leverage.” ’

So when you’re analyzing China’s economy, keep an eye on the property sector.

  • And to track that sector, especially keep an eye on the tug of war between the government regulations and developers’ leverage and access to alternative financing. 

'Meeting the China Challenge: A New American Strategy for Technology Competition'

In tech, the U.S. ‘faces formidable competition from the People’s Republic of China (PRC)—a country that has deployed full state power, and sometimes used illegal means, to build an innovation system to gain on the United States.’

  • This from ‘Meeting the China Challenge: A New American Strategy for Technology Competition.’
  • That 72-page report is from Working Group on Science and Technology in U.S.-China Relations, organized by the 21st Century China Center at the UC San Diego School of Global Policy and Strategy and the Asia Society Center on U.S.-China Relations

‘To protect against the risks posed by China and safeguard U.S. security and competitiveness, the United States must embrace three complementary policy goals:’

  1. ‘Bolster U.S. innovation capabilities through meaures ranging from increased funding for fundamental research to selective upgrading of our production system.’
  2. ‘Tailor targeted risk management measures to address current and future security threats.’
  3. ‘Preserve as many of the benefits of an open, ethical, and integrated global knowledge system and innovation economy as possible.’

These recommendations, crafted by an all-star team of China and tech experts, are pretty much opposite to the U.S.’s current approach of direct confrontation: decapitating Huawei, cutting China off from semiconductors, the like.

  • I don’t have the expertise to evaluate the Working Group’s suggestions, but certainly it’s hard to argue that putting the U.S. house in order should be central to the strategy.

But consider. The report also notes:

  • ‘The task is urgent. China’s behavior under Xi Jinping raises fundamental concerns about the nature of China’s global ambitions.’
  • ‘China’s pursuit to become a high-tech superpower is inextricably linked to its quest for regional dominance and global deference.’

Given China’s ambitions and the threats they imply, I am surprised that the Working Group doesn’t include recommendations that the U.S. continue and even increase its efforts to cut China off from the foreign resources it’s using to pursue these goals.

  • To my mind, a more effective, comprehensive strategy should encompass both strengthening the U.S. and continuing to limit China’s access to the world’s hardware and software.

The View from Europe

In a recent issue, I posted reports suggesting that because President Trump has made the U.S. seem unreliable to European allies, those allies would be weary in joining the U.S. in a coalition confronting China.

  • I got pushback from those with reason to know that this line of reasoning was wrong.

They told me that, for Europe, China has gone from a far-away commercial opportunity to an uncooperative threat ever closer to its doorstep.

  • And not only would Europeans happily join U.S. initiatives confronting China, the groundwork for that cooperation is already being laid.

Europeans do seem to fully recognize they have a China problem.

  • Europe’s gripes with China are laid out well and at some length by Philippe Le Corre of the Harvard Kennedy School and the Carnegie Endowment in 'China’s Challenging Year in Europe.'
  • This essay is so good that I really hated having to choose excerpts for today’s issue – you should read it in its entirety.

In sum, Mr. Le Corre says:

  • ‘These days, “impatience” and “frustration” seem to be the operative terms in European relations with China, whether the issue is trade and investment, humans rights, scientific cooperation, or more aggressive diplomatic tactics.’
  • ‘There is growing fatigue with China’s promises and rhetoric.’

And, Europeans acknowledge the difficulty of getting China to pay attention to their concerns”

  • ‘As for Europeans, the challenge will be to stand strong on their agenda, values and interests, in the face of a China that still considers Washington – no matter who is in the White House – the only leading interlocutor among Western powers.’

To meet that challenge, looks as though Europe needs an alliance with the ‘only leading interlocutor among Western powers.’

Biden-Skeptics in Asia

Speculating on the policies of an incoming administration is a fraught – and not very productive - exercise.

  • Seeing how those in other countries speculate on those same policies, however, is.
  • How they view the policies before inauguration day will be lens through which they view those policies as they are announced and implemented.

In the case of president-elect Biden, some Asians view his election with trepidation.

  • Their logic is that he was part of the Obama presidency; Obama was weak on Asia – and not tough on China; therefore, Mr. Biden will be weak on Asia and not tough on China.

Among the people of note pushing this line is Bilahari Kausikan, former permanent secretary of Singapore's Ministry of Foreign Affairs and currently ambassador-at-large. Just before the election he wrote the essay, ‘'Watch what you wish for, including a Biden victory,' in which he said:

  • ‘If Biden wins, he will carry all the baggage of the Obama administration with him to the White House.’
  • ‘Obama's vice president cannot disavow all responsibility for what happened on Obama's watch.’

For him, President Trump is the U.S. leader best for Asia:

  • ‘The most dangerous issues in Asia require hard power: the Himalayas, the Taiwan Straits, and the East and South China seas.’
  • ‘Trump understood power, albeit instinctively.’
  • And Joe Biden does not.

All this ignores the fact that Biden is not Obama, that the geopolitical environment has changed tremendously since the Obama administration, and that nothing in Mr. Biden’s statements or those of his supporters suggests a lack of interest in Asia or a laxness toward China – quite the opposite.

Yet, because he is tied to Obama in the minds of these Asians, says Mr. Kausikan,

  • ‘Friend and foe alike will scrutinize Biden’s every move for any sign of weakness.’

Go deeper into these issues - Browse the posts below.

To read the original article, click the title.

Let me know what you think. And please forward the China Macro Reporter to your friends and colleagues.

All the best,

Malcolm 

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'China economy: will hot property market threaten post-pandemic rebound?' 

'China economy: will hot property market threaten post-pandemic rebound?'  | ANALYSIS | Scoop.it

The Financial Times

‘Anxious about the potential risks to financial stability, Beijing drafted new rules in the summer that seek to constrain the property sector’s leverage.

‘China’s gross domestic product is expected to grow by around 2 per cent this year — a significantly better result than any other major economy, most of which are expected to suffer sharp contractions.’

‘One of the primary reasons for this resilience has been the relentless march of its property market.’

  • ‘Construction activity has increased and house prices in major cities continue to rise.’

‘However, the Chinese authorities, worried that cheap money will flood into an already highly-leveraged sector, are putting pressure on developers to reduce their borrowing.’

  • ‘The sector’s approach has relied on taking on large quantities of debt to accumulate more and more land — sometimes in speculative areas outside of major cities.’

‘In the past decade, their growth has also coincided with an international era of cheap debt.’

  • After the global financial crisis, China ramped up investment in infrastructure and construction.’

‘Some of the funds came through China’s state-owned banks but some came from new sources.’

  • ‘Financiers shifted from investment banks to a bond market supported by western countries’ ultra-loose monetary policy.’
  • ‘Since then, billions of dollars have flowed to Chinese property developers; S&P currently rates $181bn worth of Chinese developer bonds, meaning the sector makes up the majority of the Asia high-yield bond market.’

‘The offshore dollar bond market has been just one part of a diverse array of financing options for developers, with even greater sums being borrowed from banks on the Chinese mainland.’

  • ‘That money in turn has funded a nonstop rush to buy and develop land owned by local governments.’

‘That makes them an important part of the fiscal model in a country that “is far more decentralised in terms of fiscal relations than many, many other countries around the world”, says Weiping Wu, a professor of Urban Planning at Columbia University in New York.’

  • ‘ “That rush for land isn’t just pushed by developers,” she says. “Municipalities also have incentives to lease out land. It’s a big source of extra-budgetary revenue.” ’

‘Anxious about the potential risks to financial stability, Beijing drafted new rules in the summer that seek to constrain the sector’s leverage.’

  • ‘Beijing’s so-called “three red lines” response to excessive leverage in the property sector was unveiled at a meeting with top developers in the capital in August.’
  • ‘It limits their borrowing depending on their performance on three metrics: debt to cash; net debt to equity; and debt to assets.’
  • ‘The provisional measures came amid wider efforts to keep house prices in China under control, which have included measures from individual cities to curb demand.’

‘They seem to be taking effect: in September, official Chinese data showed that prices in major cities were up 4.6 per cent compared with a year earlier, the slowest rise since 2016.’

  • ‘ “What they worry is that real estate developers are taking advantage of this round of monetary easing and further [leveraging] up,” says Haibin Zhu, chief China economist at JPMorgan.’
  • ‘ "If one of them [developers] would fail, that will have a big impact on the local employment situation, also the fiscal situation, also the credit chain,” he adds.’
  • ‘A government focus on balance sheets echoes longstanding scrutiny from analysts in the high-yield bond market.’

‘Even before the three red lines were unveiled, developers were scaling back their leverage.

  • ‘S&P’s Mr Yip estimates that, across the more than 60 developers he rates, debt grew at just 3 per cent through the first half of the year, compared with a rate of 16 per cent over the course of 2019.’

Beyond short-term liquidity risks, property developers are also exposed to a reversal of the bet they have made on land values, which depends on appetite from Chinese consumers.’

  • ‘ “This cycle can be perpetuated as long as what you build is valued and you’re making a solid profit margin out of it, that’s been the case for many decades in China,” says Mr Yip.’
  • ‘If margins disappeared, he adds, that would amount to “quite a doomsday scenario”.

‘But while China’s property sales have been resilient in the wake of the Covid-19 pandemic, the long-term outlook is weaker.’

  • ‘Moody’s last month projected that property sales will remain “modest” over the next 12-18 months and suggested that the current economic recovery is “tenuous”.’
  • ‘JPMorgan’s Mr Zhu says real estate’s direct contribution to GDP has remained stable at around 13 per cent over recent years but adds that the importance of the housing and real estate markets “will gradually decline”.’

‘This year’s house price boom in China is uneven and concentrated in the big cities. “Except for the Pearl River Delta, the Yangtze River Delta and Beijing-Tianjin, real estate has no hope in other areas in China because there is nothing to attract young people and new populations,” says one former executive at Evergrande who now works for a rival developer.’

  • ‘He adds that local governments are even more reliant this year on land sales to developers as local companies and factories struggle.’
  • ‘ “The three red lines are completely contrary to the way China’s real estate industry operates,” he says.’
  • ‘ “The approach of real estate companies is to use debt and leverage to make money. Now restricting debt means restricting our ways to earn money.” ’

‘It is not clear whether the government can completely control flows of capital into the sector, which include non-bank financing sources such as trust companies.’

  • ‘ “The three red lines won’t stop leading developers from obtaining alternative financing,” says one developer in Chengdu, capital of southwestern Sichuan province.’
  • ‘ “The key for developers to survive is still to grow big rather than reduce leverage.” ’

‘In the longer term, there may a test of what happens if the country’s long-run process of urbanisation eventually runs out of steam.’

  • ‘ “I think urbanisation is still a key support driver in the sector,” says Christopher Yip, a director at S&P Global Ratings in Hong Kong. “The scale of that, it’s quite hard to even just maintain.” ’
  • ‘A transformation of China’s cities — the urbanisation rate surpassed 60 per cent last year, compared with 50 per cent in 2011 — has enriched the country’s property developers, the businesses that lend them money and the citizens who have bought their apartments.’

‘But the urbanisation that fuelled their growth in the first place cannot continue indefinitely.’

  • ‘ “The land-based urbanisation that’s been ongoing for some 20 years now is not going to last all that long,” says Prof Wu at Columbia, pointing to “a lot of vacancies in buildings [and] in small districts”.’
  • ‘Projects might continue if people shift out of cities rather than into them — a trend under way globally since the outbreak of the pandemic.’

‘Despite the rebound in the economy in recent months, the new measures raise the question of whether China’s developers can be quietly tamed at a time of economic uncertainty and potentially slowing property sales.’

  • ‘If one of them fails to repay their debts, that could have unpredictable consequences for the domestic financial system.’

‘If a default does eventually threaten a large Chinese developer, Beijing’s current determination to discipline the sector will face its ultimate test.’

  • ‘ “In crunch time, what are they going to do?” asks an investment banker. “Are they going to be comfortable with a large developer defaulting?” ’
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China’s Challenging Year in Europe | Echowall

China’s Challenging Year in Europe | Echowall | ANALYSIS | Scoop.it

ECHOWALL

Philippe Le Corre | Harvard Kennedy School

‘As for Europeans, the challenge will be to stand strong on their agenda, values and interests, in the face of a China that still considers Washington – no matter who is in the White House – the only leading interlocutor among Western powers.’

It was hard for me to cut so much of this excellent report. Mr. Le Corre very skillfully summarizes the many interactions with China that have led Europe to sour on the relationship. Absolutely worth reading in full.’

‘From early 2019, Chinese government think-tanks and media started publishing lengthy reports on the state of the EU and its members, praising a flourishing bilateral relationship and calling for further steps.’

  • ‘Chinese analysts were especially keen on stressing that relations with China’s largest export market were at their height – quite unlike the Sino-American relationship, which had sunk into acrimony under the Trump administration.’

‘Despite China’s apparent enthusiasm, the “year of Sino-European friendship” has brought more challenges than successes, due to a mix of’

  • ‘promise fatigue on the European side (with regard to a better access to the Chinese market for European companies in particular);’
  • ‘growing Chinese assertiveness on the international stage; and’
  • ‘increasing Chinese propaganda and controversies around the Covid-19 pandemic.’

‘In addition, Europeans have started to realize that China is not just an aspiring global power, it has become one.’

  • ‘President Xi Jinping’s assertion that, “This new era will see China moving closer to center stage and making greater contributions to mankind,” has turned into reality.’
  • ‘China has in fact already moved to center stage.’

‘In a year marked by a global pandemic, China’s double approach towards the EU and its members has thus far been unsuccessful.’

  • ‘Despite this recent past of deepening ties, the last six months have been anything but smooth in China-EU relations.’

‘These actions in Europe [skillfully summarized in the essay] might have led Beijing to conclude that it could no longer take the soft European position for granted.

  • ‘But there is no evidence that the Chinese Communist Party (CCP) in any way adjusted its efforts to match this new situation.’

‘On the contrary, diplomats at China’s Ministry of Foreign Affairs (MFA) have apparently been empowered by the party leadership to be far more outspoken, a trend already described by some as “wolf warrior diplomacy”.’

‘China’s two-fold approach towards the EU and member-states has thus far been unsuccessful.’

  • ‘To the contrary, there are now growing signs that the EU is moving toward a more unified position on China, on both economic matters and crucial political ones, like Hong Kong’s new national security law and China’s treatment of ethnic minority groups such as Uyghurs, Kazakhs, Tibetans and Mongols.’

‘These days, “impatience” and “frustration” seem to be the operative terms in European relations with China, whether the issue is trade and investment, humans rights, scientific cooperation, or more aggressive diplomatic tactics.’

‘There is growing fatigue with China’s promises and rhetoric.’

  • ‘ “China policy internally is becoming more totalitarian all the time,” Reinhard Bütikofer, the German MEP who chairs the European Parliament’s Delegation for Relations with China, told Euronews, “and its policy towards the outside world is becoming more aggressive all of the time.” ’
  • ‘Bütikofer urged a re-think of EU-China relations: "We tell China, we have had it with their win-win rhetoric.” ’

‘As for Europeans, the challenge will be to stand strong on their agenda, values and interests, in the face of a China that still considers Washington – no matter who is in the White House – the only leading interlocutor among Western powers.’

  • At least, there is now more European unity than ever in the past thirty years.'

 

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'Watch what you wish for, including a Biden victory'

'Watch what you wish for, including a Biden victory' | ANALYSIS | Scoop.it

Nikkei Asian Review

Bilahari Kausikan | former permanent secretary of Singapore's Ministry of Foreign Affairs and is currently ambassador-at-large

‘If Biden wins, he will carry all the baggage of the Obama administration with him to the White House.’

‘Trump understood power, albeit instinctively.’

  • ‘And he wielded it crudely, and sometimes incoherently.’

‘Hard power needs to be balanced by hard power; the balance stiffened by credible nuclear deterrence to keep other nuclear powers in check.’

  • ‘The U.S. is an irreplaceable component of any Asian balance.
  • ‘No combination of Asian powers alone has sufficient strategic weight to balance China.’

‘The most dangerous issues in Asia require hard power: the Himalayas, the Taiwan Straits, and the East and South China seas.’

  • ‘Asia's continued prosperity rests on a foundation of the stability provided by a balance of hard power.’

‘If Biden wins, he will carry all the baggage of the Obama administration with him to the White House.’

  • ‘Obama's vice president cannot disavow all responsibility for what happened on Obama's watch.’
  • ‘Friend and foe alike will scrutinize his every move for any sign of weakness.’

‘Biden will not enter the White House with entirely free hands.’

  • ‘He must manage and balance the divergent agendas of the progressive and traditional wings of the Democratic Party. Policy may well be pulled in different directions.’
  • ‘Appointees may not all be of like mind.’
  • ‘Foreign and domestic policies traded-off.’

‘A Biden administration could end up as incoherent as its predecessor, but without its grasp of power.’

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Biden set to restore US credibility in Asia

Biden set to restore US credibility in Asia | ANALYSIS | Scoop.it

Brookings

Ryan Hass | Brooking

‘If Trump “restored the credibility of American power,” then why did China feel so comfortable flouting American demands in the years since?’

‘With the prospect of a Democrat returning to the White House now certain, we can expect a growing temptation for Asian security experts to engage in reflexive hand-wringing about an imagined American retreat in the face of a rising China.’

‘Bilahari Kausikan provided one such example of this phenomenon in the Nikkei Asia article “Watch what you wish for, including a Biden victory” published on on Nov. 3.’

  • ‘This kind of critique relies upon an argument that Obama was overly cautious in exercising hard power, Trump was tough, and Biden could turn the clock back to the Obama era in ways that could invite further Chinese boundary-testing.’
  • ‘This tired argument is factually, historically, and prescriptively flawed.’

‘First, the assertion of Obama’s so-called weakness in dealing with China relies upon cherry-picked data points to paint an inaccurate picture.’

‘Second, the narrative of Trump as a leader with an instinctive understanding of power and how to wield it is belied by the deterioration of American influence and prestige in the region in recent years.’

  • ‘If Trump “restore[d] the credibility of American power” by launching symbolic airstrikes on a Syrian airfield while serving chocolate cake to Xi Jinping in Mar-a-Lago, as Bilahari has argued, then why did China feel so comfortable flouting American demands in the years since?’

‘The hard reality is that Beijing has shown disregard for American opposition to its actions in Xinjiang, Hong Kong, Taiwan, the South China Sea, and along the China-India border.’

  • ‘In fact, Beijing has grown more comfortable ignoring American objections to its actions in each passing year of the Trump administration.’

‘This trend speaks to a broader truth —'

  • ‘Beijing weighs much more than whether a U.S. leader is willing to shoot an occasional missile at an inferior adversary when it calculates American resolve.’

‘And third, the suggestion that Biden’s China policy will be a carbon copy of Obama’s is analytically unfounded.’

  • ‘Nobody in the Biden campaign has argued for dusting off the old policy playbook to deal with the current challenges posed by China.’

‘Biden’s views on China are responsive to the increasingly competitive nature of the U.S.-China relationship.’

  • ‘Biden’s top advisers generally are skeptical of China’s ambitions.’
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Barack Obama’s Legacy in Asia Looms Over Joe Biden

Barack Obama’s Legacy in Asia Looms Over Joe Biden | ANALYSIS | Scoop.it
Many leaders in Asia, in particular, remain unhappy with the former president’s foreign policy.
Malcolm Riddells insight:

The Atlantic

Timothy McLaughlin

‘Obama, Bilahari Kausikan told me, excelled at diplomacy, but was “uncomfortable with exercising power,” and, as a result, Biden “will be deeply scrutinized for any sign of weakness, and he will be scrutinized by friends and foes.” ’

‘The Obama years loom particularly large across the Pacific region—and the retrospection is not all rosy.’

  • ‘While many foreign partners will welcome a return to a semblance of normalcy after four years of Trump’s chaotic “America First'' doctrine, there is also a wariness in parts of Asia over a possible reversion to Obama-era policies and players under Biden, particularly when it comes to confronting China’s growing power.’

‘Three years into his first term, President Barack Obama stood before the Australian Parliament and sketched out his vision for the United States’ tilting toward Asia.’ 

  • ‘ “The pivot,” as it was known, was largely welcomed by regional leaders, but Obama’s confidence in his ability to shift America’s unwieldy foreign-policy apparatus proved to be overstated.’ 
  • ‘ “The pivot to Asia was a good idea, but it was never properly implemented,” Bilahari Kausikan, an outspoken former permanent secretary of Singapore’s ministry of foreign affairs, told me.’

‘Obama, Kausikan told me, excelled at diplomacy, but was “uncomfortable with exercising power,” and, as a result, Biden “will be deeply scrutinized for any sign of weakness, and he will be scrutinized by friends and foes.” ’

  • ‘That, he continued, “is a reality he cannot escape.” ’

‘Yet some Asian nerves will nevertheless need easing.’ 

 

‘Washington has also experienced a profound shift in recent years in how China is viewed, exemplified by a slew of legislation targeting the country, some of which has passed with near unanimous support, a trend that will probably continue.’ 

  • ‘That could force Biden to rule out certain picks seen as too soft on China.’

‘Take Susan Rice, Obama’s former national security adviser, whose name has been floated by a number of publications for a Biden-administration post.’

  • ‘She personifies the type of Obama-era official some in the region are hesitant to see return to American government, whom China hawks at home and abroad view with serious skepticism.’
  • ‘In a widely shared Facebook post in August, Kausikan wrote that Rice would be “a disaster,” when her name surfaced as a possible running mate for Biden, arguing that she has very little interest in Asia and no stomach for competition with China.'

 

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'The Task is Urgent'

Working Group on Science and Technology in U.S.-China Relations

21st Century China Center at the UC San Diego School of Global Policy and Strategy & the Asia Society Center on U.S.-China Relations

‘The task is urgent. China’s behavior under Xi Jinping raises fundamental concerns about the nature of China’s global ambitions.’

Read the full 72-page report, ‘Meeting the China Challenge: A New American Strategy for Technology Competition.’

‘The United States has been the undisputed global technology leader since the end of World War II, but today, our preeminence faces three major interlinked challenges:’

  1. ‘The United States has allowed the foundations for its technological leadership to erode.
  2. ‘It faces formidable competition from the People’s Republic of China (PRC)—a country that has deployed full state power, and sometimes used illegal means, to build an innovation system to gain on the United States.’
  3. ‘And it has overreacted to the competition challenge from China, and in doing so, is poised to damage its own innovation ecosystem, which flourishes in an environment of global openness.’

‘To confront these challenges, the United States must do two things, now:’

  1. ‘make needed investments in and policy adjustments for our S&T base at home; and’
  2. ‘craft a new approach to global cooperation that minimizes the security risks China poses without unduly sacrificing the benefits of openness.’

‘The task is urgent. China’s behavior under Xi Jinping raises fundamental concerns about the nature of China’s global ambitions.’

  • ‘Xi Jinping has vowed to modernize China’s armed forces by 2035, and to transform China into world-class military power.’
  • ‘China is using its growing military might to press its territorial claims against its neighbors and harass foreign vessels in international waters.’
  • ‘In its foreign policy, Beijing uses its economic power in attempts to coerce sovereign governments, private companies, and overseas universities, media, and civil society organizations to conform to its political line.’
  • ‘It is also constructing a surveillance state that threatens individual liberties in Xinjiang, Tibet, Hong Kong, and the rest of China.’

‘China’s pursuit to become a high-tech superpower is inextricably linked to its quest for regional dominance and global deference.’

  • ‘Though the desire to develop China through innovation is legitimate, many of the ways in which the PRC government uses technology alarm the United States and other nations that hold liberal views of human rights and fair competition.’

‘How China uses its technological prowess is one concern; the way it develops or acquires new technologies is another (White House Office of Trade and Manufacturing Policy 2018).’

  • ‘China’s well-resourced, winner-take-all approach to creating national champions in frontier technology is neo-mercantilist.’
  • ‘Through massive subsidies far beyond the scale of other countries, and by shielding domestic firms from international competitors, China has enhanced its standing in global markets and damaged other countries, including the United States.’

‘Though China has increased its adherence to intellectual property rights (IPR) laws, it still employs a variety of illicit methods to acquire technological know-how from the U.S. and other countries.’

‘China’s changing behavior at home and on the world stage, coupled with its deviation from the norms of fair competition in S&T development, create economic and security risks for the United States and other countries and require forceful collective responses.’

‘In this report, we make recommendations for a U.S. approach to China in four domains of science and technology.’

  • ‘Maintaining U.S. Leadership in Fundamental Research’
  • ‘A 5G Strategy for America:S. Options and the China Challenge’
  • ‘Bolstering U.S. Strength in Artificial Intelligence’
  • ‘U.S.-China Competition and Collaboration in Biotechnology’

‘We envision a national strategy that will balance risks and opportunities over the long-term and that achieves three complementary objectives.’

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'Five Features of China's S&T Challenge'

Working Group on Science and Technology in U.S.-China Relations

21st Century China Center at the UC San Diego School of Global Policy and Strategy & the Asia Society Center on U.S.-China Relations

 'China has proclaimed in law that all of its citizens and corporations are obligated to assist China’s national security agencies in matters related to national security, cybersecurity, and intelligence.’

‘The China S&T challenge has five distinctive features:

‘First, it is financed and directed by the PRC government as a means to achieve regional dominance and global power.’

  • ‘In 2009, China surpassed Japan to become the second largest funder of R&D in the world. In 2018, China spent $554.3 billion on R&D, only slightly below the level spent by the United States.’
  • ‘That same year, China’s share of global R&D (26.3 percent) approached the U.S. share (27.6 percent).’
  • ‘Over the next six years, Beijing plans to invest an additional $1.4 trillion of state and private funds in next-generation technologies.’

‘The Chinese government and Communist Party also invest substantially in expanding its pool of human talent.’

  • ‘They operate more than 200 high-level talent recruitment programs in science and technology, which are run by numerous agencies, including China’s National Science Foundation; the ministries of Science and Technology, Education, Human Resources and Social Security; and most prominently, the Party’s Organization Department.’

‘Many of these programs encourage scientists working abroad—most, but not all of whom are of Chinese origin—to support efforts to build China’s S&T capacity through their research.’

  • ‘While these programs are not illegal in the United States, they may serve as channels for the transfer of valuable research to China.’

‘Second, China sometimes advances its position through illegal means.’

  • ‘While China absorbs foreign technologies legitimately through licensing, foreign investments, and the return of overseas graduates, it also does so through cyber hacking of businesses and research institutes, technological espionage, and other forms of intellectual property (IP) theft.’
  • ‘The PRC government committed to stop commercial cyber hacking in 2013, but Chinese intruders resumed operation after a brief hiatus.’

‘Third, China is mounting a major effort to dominate the global technology standards of the future.’

  • ‘The new “China Standards 2035” plan uses massive subsidies to promote the indigenous development of technologies and then employs economic diplomacy to enhance China’s influence over the international bodies that set the crucial standards and norms for emerging technologies.’
  • ‘China has already succeeded in placing many officials at international standard-setting bodies, including the current Secretary General of the International Telecommunication Union.’
  • ‘China’s rapidly growing influence not only provides commercial advantages for Chinese firms, but also gives its autocratic government a strong voice in shaping digital privacy norms and other vital standards that influence global telecom competitiveness and security policies.’

‘Fourth, China has moved steadily to erase the boundaries between civilian commerce and national security prerogatives in global technology markets.’

  • ‘While all countries cross these lines occasionally, democracies are usually dissuaded from doing so by a thicket of safeguards.’
  • ‘In contrast, China has proclaimed in law that all of its citizens and corporations are obligated to assist China’s national security agencies in matters related to national security, cybersecurity, and intelligence.’

‘Finally, China is pursuing a military-civilian fusion (MCF) development strategy that makes it complicated for American S&T institutions to work with Chinese partners on any project that might have military applications.’

  • ‘Xi Jinping personally directs the MCF initiative, and views it as essential to China’s rise as a world-class military and technological power.’
  • ‘A growing number of emerging technology-intensive sectors are designated key areas for MCF investment under national plans.’

‘While MCF faces structural obstacles in China, it is important that U.S. policymakers put guardrails in place now to minimize security risks arising from the initiative.

  • ‘Appropriate safeguards will allow S&T interdependence to continue to the benefit of both countries.’
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Guess Who's Not Signing the World's Biggest, China-led, Trade Deal?

Guess Who's Not Signing the World's Biggest, China-led, Trade Deal? | ANALYSIS | Scoop.it

Greetings!

In this issue:

1.What China's Leaders are Really Thinking

  • 'Biden's Election Raises Hopes and Doubts in Beijing'

2. Guess Who Pulled the Plug on Ant's IPO?

  • 'China’s President Xi Jinping Personally Scuttled Jack Ma’s Ant IPO'

3. The 'Regional Comprehensive Economic Partnership' Signing: Sad Day for the U.S.

  • ‘Asia-Pacific Countries Push to Sign China-Backed Trade Megadeal’
  • 'World’s Biggest Free-Trade Deal Set to Be Signed This Weekend'

4. Handicapping China's Digital Economy

  • 'A Template for Understanding 'China's Digital Economy'

 

 

When Cheng Li of Brookings says, ‘Chinese leaders believe…,’ he is not giving an opinion based on careful study of speeches, public documents, and news reports.

  • Instead he is drawing on conversations with Chinese leaders, officials, and scholars with whom he has had years and decades of close, trusted relationships, many long before they achieved their present positions.
  • (And though he has never said so, I would guess those same people rely on Dr. Li to explain the U.S. to them.)

That’s why his latest essay, ‘Hopes and Doubts in Beijing Resetting U.S.-Chinese: Relations Won’t Be Easy,’ in Foreign Affairs gives us that rare insight into what Chinese decision makers are thinking as they prepare to deal with a Biden administration.

  • This makes Dr. Li’s report the most valuable of the many being churned out – important for us – and the Biden foreign policy team – to read.

I won’t attempt to summarize it here, but I will relate the point that most struck me as critical for the U.S. to know in approaching China:

  • ‘Chinese leaders tend to attribute the deterioration in U.S.-Chinese relations entirely to the Trump administration’s desire to contain China’s rise.’
  • ‘There is no recognition in Beijing of legitimate U.S. concerns regarding unfair Chinese economic and technological practices and its aggressive behavior in the Asia-Pacific region.’

And not encouraging that the issues most critical to the U.S. can be resolved.

  • But, as Dr. Li points out, ‘Even if Beijing is more predisposed to work with a Democratic U.S. administration, a significant reset of the bilateral relationship will be tricky.'

 

Last issue, I reported on the many Rashomon-like theories about why China suspended Ant Financial’s IPO.

  • I wrote that speculation was fruitless: only the officials involved could what happened for sure.

While we don’t have Chinese officials on record, a new Wall Street Journal report seems to have found some who are willing to talk.

  • What they told WSJ reporters certainly fits the best with facts.

Xi Jinping himself pulled the plug.

  • And Jack Ma’s speech critical of the financial regulators seems to have been the last straw in Mr. Xi’s increasing dissatisfaction with Ant’s business model and Ma’s oversized reputation.

In a day-to-day sense, the suspension of the IPO is important. But more critical, the WSJ report pulls back the curtain on the seldom-seen Chinese decision-making process and increases our understanding of Mr. Xi’s attempts to balance big private business and the Party’s authority:

  • ‘Mr. Xi has displayed a diminishing tolerance for big private businesses that have amassed capital and influence—and are perceived to have challenged both his rule and the stability craved by factions in the country’s newly assertive Communist Party.

According to a senior Chinese official:

  • “Xi doesn’t care about if you made any of those rich lists or not.”
  • “What he cares about is what you do after you get rich, and whether you’re aligning your interests with the state’s interests.”

As the oft-cited Chinese expression goes, ‘Kill the chicken to scare the monkey.’  [杀鸡儆猴]

  • In this case it’s the reverse: Mr. Xi has killed the proverbial 500-pound gorilla.
  • And you can be sure the other apes are taking note.

 

'World’s Biggest Free-Trade Deal Set to Be Signed This Weekend' reports Bloomberg.

  • And guess who won’t be there?

For years now, I’ve reported – with trepidation - on the progress of the negotiations on the Regional Comprehensive Economic Partnership (RCEP).

  • And now it’s ready to be signed by fifteen Asia-Pacific nations led by China, but not the U.S.

That will be bad for the U.S. - again

  • President Trump withdrew the U.S. from the Trans-Pacific Partnership (TPP).
  • Never mind that: It would never have passed Congress.

But whatever the reason for failing to join the TPP – which excluded China – the U.S. missed its best opportunity yet to confront China on trade and other contentious issues.

Now the bigger, if not better, RCEP, is a big win for China.

  • It helps cement its role as the dominant economy and trading partner in Asia to the detriment of the U.S.
  • And it demonstrates that China not the U.S. is focused on the interests of the countries there.

 

Tracking the development of China’s digital economy just got easier.

  • A new report from Brookings provides a simple template to track progress.

Three types of technologies constitute the digital economy:’

  1. ‘Transactional technologies such as e-commerce platforms and global networks, which lower information asymmetries and provide digital infrastructure to improve the matching of market supply and demand.’
  2. ‘Informational technologies such as cloud computing, big data analytics, business management software and artificial intelligence (AI), which leverage the falling costs of computing power, improving access to digital infrastructure and exponential growth of data to offer new services.’
  3. ‘Operational technologies such as smart robots, 3D printing and the Internet of Things (IoT), which lower the costs of production by integrating data with industrial equipment.’

And the report goes on to analyze China’s strengths and weaknesses for each type.

Go deeper into these issues - Browse the posts below.

To read the original article, click the title.

Let me know what you think. And please forward the China Macro Reporter to your friends and colleagues.

All the best,

Malcolm 

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'World’s Biggest Free-Trade Deal Set to Be Signed This Weekend'

'World’s Biggest Free-Trade Deal Set to Be Signed This Weekend' | ANALYSIS | Scoop.it

Bloomberg

‘The deal’s advance illustrates how Trump’s move to withdraw from the Trans-Pacific Partnership has diminished America’s ability to counterbalance China’s economic clout with its neighbors.’

‘Fifteen Asia-Pacific nations including China aim to clinch the world’s largest free-trade agreement this weekend.

  • ‘The Regional Comprehensive Economic Partnership, which includes countries stretching from Japan to Australia and New Zealand, aims to reduce tariffs, strengthen supply chains with common rules of origin, and codify new e-commerce rules.’
  • ‘Its passage may disadvantage some U.S. companies and other multinationals outside the zone, particularly after President Donald Trump withdrew from talks on a separate Asia-Pacific trade deal formerly known as the Trans-Pacific Partnership.’

‘ “China has pulled off a diplomatic coup in dragging RCEP over the line,” said Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings.’

  • ‘ “While RCEP is shallow, at least compared to TPP, it is broad, covering many economies and goods, and this is a rarity in these more protectionist times.” ’

‘The deal’s advance illustrates how Trump’s move to withdraw from the TPP -- now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership -- has diminished America’s ability to counterbalance China’s economic clout with its neighbors.’

  • ‘That challenge may soon shift to President-elect Joe Biden if, as expected, he’s officially certified the winner of the Nov. 3 election.’

‘The question of whether RCEP changes the regional dynamic in favor of China depends on the U.S. response, said William Reinsch, a trade official in the Clinton administration and senior adviser at the Center for Strategic and International Studies in Washington.’

  • ‘ “If the U.S. continues to ignore or bully the countries there, the influence pendulum will swing toward China.” ’
  • ‘ “If Biden has a credible plan to restore the U.S. presence and influence in the region, then the pendulum could swing back our way.” ’
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Asia-Pacific Countries Push to Sign China-Backed Trade Megadeal

Asia-Pacific Countries Push to Sign China-Backed Trade Megadeal | ANALYSIS | Scoop.it

The Wall Street Journal

‘The deal will increase pressure on U.S. President-elect Joe Biden to bolster U.S. economic ties and fill a policy vacuum in a critical part of the world.’

‘China and 14 other Asia-Pacific nations seek to sign a trade deal this weekend that will knit their economies closer together—the second pact covering large swaths of the region whose signatories don’t include the U.S.’

  • ‘The agreement, the Regional Comprehensive Economic Partnership, or RCEP, could be signed Sunday.’

‘The U.S. originally intended to be part of the first—a group of Pacific Rim countries called the Trans-Pacific Partnership, or TPP—but quit after President Trump took office.’

  • ‘The other 11 countries, including Japan, Canada, Mexico and Australia, went ahead without the U.S. and signed a lower-impact version of the deal in 2018.’
  • ‘But that pact didn’t include China, and the one now at the finish line does. ‘

‘The deal will increase pressure on U.S. President-elect Joe Biden to bolster U.S. economic ties and fill a policy vacuum in a critical part of the world.’

  • ‘Washington’s withdrawal from the TPP became a symbol of what many in the region saw as a U.S. turn inward.’

‘Mr. Biden said last year he would try to renegotiate the TPP. At best that won’t be fast or easy:’

  • ‘Trading partners like Japan may require concessions, and many in the U.S. remain skeptical of big free-trade pacts.’
  • ‘Even before President Trump triumphantly withdrew from the TPP as one of his first official acts, it was effectively dead in the U.S.’

‘No draft of the new China-backed pact has been released, but experts say it is likely to be shallower than the TPP.’

  • ‘One official involved in the negotiations said it aims to lower tariffs, strengthen supply chains, set common rules on intellectual-property protection and ease business-visa arrangements, but doesn’t touch on labor rights or environmental protections.’
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China’s President Xi Jinping Personally Scuttled Jack Ma’s Ant IPO

China’s President Xi Jinping Personally Scuttled Jack Ma’s Ant IPO | ANALYSIS | Scoop.it

The Wall Street Journal

Jing Yang & Lingling Wei | The Wall Street Journal

“What Xi cares about is what you do after you get rich, and whether you’re aligning your interests with the state’s interests.”

‘Chinese President Xi Jinping personally made the decision to halt the initial public offering of Ant Group, which would have been the world’s biggest, after controlling shareholder Jack Ma infuriated government leaders with a speech, according to Chinese officials with knowledge of the matter.’

‘On Oct. 24, days before the financial-technology giant was set to go public, Mr. Ma took the stage at a financial forum in Shanghai attended by top regulators, politicians and bankers.’

  • ‘Attendees included China’s Vice President Wang Qishan, central bank governor Yi Gang and some senior state-bank executives.’

‘During his 21-minute speech, Mr. Ma bluntly criticized the government’s increasingly tight financial regulation for holding back technology development, part of a long-running battle between Ant and its overseers.’

  • ‘He criticized Beijing’s campaign to control financial risks. “There is no systemic risk in China’s financial system,” he said. “Chinese finance has no system.” ’
  • ‘He also took aim at the regulators, saying they “have only focused on risks and overlooked development.” ’
  • ‘He accused big Chinese banks of harboring a “pawnshop mentality.” That, Mr. Ma said, has “hurt a lot of entrepreneurs.” ’

‘Mr. Ma also quoted Mr. Xi saying, “Success does not have to come from me.” ’

  • ‘As a result, the tech executive said, he wanted to help solve China’s financial problems through innovation.’
  • ‘Top government officials saw citing Mr. Xi as an effort to burnish his own image and tarnish that of regulators.’

‘His remarks went viral on Chinese social media, where some users applauded Mr. Ma for daring to speak out.’

  • ‘In Beijing, though, senior officials were angry, and officials long calling for tighter financial regulation spoke up.’

‘Mr. Xi, who read government reports about the speech, and other senior leaders were furious, according to the officials familiar with the decision-making.

  • ‘Mr. Xi ordered Chinese regulators to investigate and all but shut down Ant’s initial public offering, the officials said, setting in motion a series of events that led to the deal’s suspension on Nov. 3.
  • ‘It isn’t clear whether it was Mr. Xi or another government official who first suggested the shutdown.’

 ‘After Mr. Xi decided that Ant’s IPO needed to be halted, financial regulators led by Mr. Liu, the leader’s economic czar, convened on Oct. 31 and mapped out an action plan to take Mr. Ma to task, according to the government officials familiar with the decision-making.’

  • ‘At a meeting of the Financial Stability and Development Committee headed by Mr. Liu, the group decided to “put all kinds of financial activities under regulation and treating the same businesses in the same way,” according to a government statement.’
  • ‘The decision was aimed squarely at Ant, the government officials said, and cleared the way for the pro-stability members of the group to dust off draft regulations they had been working on for a long time.’

‘Among them was one regulating online microlending.’

  • ‘With Mr. Xi’s blessing, the central bank and the banking regulator made the draft rule even tougher than previously conceived, according to the Chinese officials familiar with the decision-making.’
  • ‘The new rule had a requirement that didn’t exist in previous drafts: Firms such as Ant would need to fund at least 30% of each loan it makes in conjunction with banks.’

‘The draft rules were published on Nov. 2, the same day Mr. Ma and a couple of his executives at Ant were summoned to a rare joint meeting with the central bank and the regulatory agencies overseeing banking, insurance and securities.’

  • ‘The next day, the Shanghai Stock Exchange suspended the Ant IPO, citing the meeting and changes in the regulatory environment.’

‘ “Xi doesn’t care about if you made any of those rich lists or not,” said a senior Chinese official.’

  • ‘ “What he cares about is what you do after you get rich, and whether you’re aligning your interests with the state’s interests.” ’
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Biden's Election Raises Hopes and Doubts in Beijing

Biden's Election Raises Hopes and Doubts in Beijing | ANALYSIS | Scoop.it

Foreign Affairs

Cheng Li | Director of Brookings Institution’s John L. Thornton China Center 

‘But even if Beijing is more predisposed to work with a Democratic U.S. administration, a significant reset of the bilateral relationship will be tricky.

‘Never before has Beijing paid such close attention to the outcome of a U.S. presidential election.’

  • ‘Chinese leaders believe that former Vice President Joe Biden’s triumph over President Donald Trump provides an opportunity to halt—or at the very least slow—the two countries’ alarming march to confrontation.’

‘China’s leadership was generally pessimistic about the prospects for improving relations with the United States as long as Trump was at the helm.’

  • ‘Beijing believes the Trump administration has sought to defeat China in much the same way that the United States defeated the Soviet Union in the Cold War.’
  • ‘Chinese President Xi Jinping and the CCP leadership were under no illusions about the possibility of tranquil, harmonious coexistence with a second Trump administration.’

‘The Trump administration’s actions toward Taiwan have been of particular concern to the Chinese.’

  • ‘With the passage in the U.S. Congress of the Taiwan Travel Act of 2018 and the 2019 Taipei Act—bills that have strengthened U.S.-Taiwanese relations and were signed into law by Trump—Beijing fears that Washington is edging toward recognizing Taiwan as an independent country.’
  • ‘The administration’s actions and rhetoric on this front have hardened antipathy toward Trump within the CCP leadership and bolstered those Chinese officials eager to take an aggressive approach toward the United States.’

‘Chinese leaders know that U.S. hostility toward China isn’t confined to the Trump administration.’

  • ‘Both Republicans and Democrats have directed harsh criticism at Beijing and advocated decoupling U.S. supply chains from China.’

‘At the same time, many Chinese officials don’t believe there is an anti-China consensus in Washington.’

  • ‘One noteworthy episode during the vice-presidential debate—when neither Vice President Mike Pence nor California Senator Kamala Harris could give a clear answer about whether the United States sees China as a competitor, a rival, or an enemy—garnered the attention of opinion makers in Beijing.’
  • ‘It seemed to underscore the lack of a strategic framework for U.S.-Chinese relations in Washington.’

‘But even if Beijing is more predisposed to work with a Democratic U.S. administration, a significant reset of the bilateral relationship will be tricky.’

‘Chinese leaders tend to attribute the deterioration in U.S.-Chinese relations entirely to the Trump administration’s desire to contain China’s rise.’

  • ‘There is no recognition in Beijing of legitimate U.S. concerns regarding unfair Chinese economic and technological practices and its aggressive behavior in the Asia-Pacific region.’

‘Chinese officials understand that the serious political divide exposed by the election result—with the United States highly polarized—will force Biden to assuage domestic tensions and could leave him without the political capital to fully transform U.S. China policy.’

  • ‘Moreover, Chinese leaders fear that in an effort to bridge partisan divisions, the Biden administration may see an aggressive China policy as a means of finding common ground with Republicans.’
  • ‘If so, confrontation between the two countries could continue, or even accelerate, instead of giving way to a more stable balance between cooperation and competition.’  

‘The Chinese leadership is weighing all these possible trajectories of a Biden China policy and seems to be hedging its bets on the incoming administration.’

‘On the one hand, Beijing will be eager to reengage with the United States in multiple areas.’

  • ‘In line with Biden’s foreign policy agenda, China will be particularly interested in working collaboratively on issues of global public health (especially the shared battle against COVID-19), climate change, nuclear nonproliferation, antiterrorism, cybersecurity, and global economic and financial stability.’

‘At the same time, however, Beijing believes that China’s economic recovery, its internal handling of the COVID-19 pandemic, its relative sociopolitical stability, and its growing international clout give it added leverage in the bilateral relationship.’

  • ‘The Chinese leadership may accommodate U.S. demands in certain areas, but it will likely remain firm and uncompromising on anything touching on China’s self-declared core interests of its claim to sovereignty over Taiwan and the maintenance of CCP rule.’
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