In March, Italy signed an agreement pledging its support for China’s trans-continental Belt and Road Initiative. Rome hopes Chinese companies will invest in the country’s ageing infrastructure, while critics worry about China’s perceived geopolitical ambitions. However, Beijing's push has to be seen in a larger context: an important driver of its outbound ambitions is the interaction of economic and demographic change at home. Faced with an ageing society, China is looking for investment opportunities in countries with younger populations along the BRI.
The Shanghai Stock Exchange will establish an innovation and technology equity board to turn stock market gains into technological innovation. Previous tech boards have underperformed the market for years. But increased foreign investment and bank lending to the private sector as well as an improved listing process give reason to be optimistic.
By Rebecca Arcesati
The historic moon landing of China’s Chang'e 4 marks a symbolic victory for the emerging space power. But lack of transparency along with concerns about dual-use plans and surveillance undermine China’s efforts to persuade the world of its peaceful rise. For Europe, Beijing can be a selective partner on space matters at best.
Kai von Carnap
China is a world leader in blockchain development and is testing it in applications from civil administration and tax documents to evidence in the criminal justice system. Yet the technology creates a dilemma for China’s leaders. Their priority on centralized control contradicts the decentralized distribution of data through a blockchain.
By Rebecca Arcesati
China’s efforts to shape global technology standards and norms have been at the heart of its ambitions to achieve technological self-reliance. Now these efforts are yielding results in areas like 5G, Artificial Intelligence (AI) and cybersecurity – and they endanger Europe’s industrial competitiveness.
The People’s Bank of China has begun easing monetary policy to respond to slowing economic growth, falling producer prices, and peak bond repayments. The success of this round of monetary easing depends on the allocation of funds to relevant companies and the effectiveness of heavy-handed restrictions on capital flows.
One country and one region that are each home to more than a billion people – China and Africa – are fundamental to international efforts to combat climate change. Since China is a leading investor in Africa’s infrastructure as part of its Belt and Road Initiative, it is timely to identify lessons – good and bad – from China’s own development experience for African policy makers and interested investors. This can support African countries to adopt a more sustainable industrial path than did China over the last forty years.
Karen Fisher, Haiqing Yu
The digital economy offers new employment opportunities for China’s disabled people. Expanding the digital economy to include broader parts of the population combines the economic goal of China’s transition to a high-tech nation with the political imperatives of growth and social stability. This is the fourth part of a series based on a MERICS publication on social services in China.
Podcast with Alicia García Herrero
The meeting between US President Trump and the Chinese leader Xi Jinping on the sidelines of the G20 summit in Argentina did not lead to an end to the Sino-American trade war, but only to a truce between the two super powers. According to the Hong Kong-based economist Alicia García Herrero the truce gives both sides more time to disentangle their economies from each other.
Interview with Mareike Ohlberg (via Young China Watchers)
The collection of citizens' personal data is a global issue, but China's social credit system is unique in its ambitions. Its uses range from assessing individual credit risks to forcing companies to comply with environmental standards, but also to discouraging dissenting political opinions. In this interview MERICS researcher Mareike Ohlberg describes China's struggle to define the standards for a nationwide system.
China’s electric vehicle (EV) battery industry is well positioned to be competitive in global markets. The industry’s strong performance results from state support of domestic manufacturers. As China’s EV battery manufacturers expand abroad, manufactures in free market economies are up against Chinese state-backed competitors.
Unrest over Chinese online financing platforms shows that the combination of unregulated market forces and uninformed individual decision making can lead to undesirable outcomes. Unless the CCP is willing and able to foster comprehensive reforms, events might again spiral out of control when new innovative financial solutions are introduced.
Despite much effort, China still has many problems achieving its goal of cyber sovereignty. But on the way towards independence, the country might achieve something else: cyber hegemony.
MERICS Guest Author Genia Kostka
Educated and wealthy urban Chinese have an overwhelmingly positive view of commercial and government-run systems that rate the “trustworthiness” of citizens, businesses and social organizations. Rather than perceiving them as instruments of surveillance, they see them as a way to protect consumers from food scandals or financial fraud – and to access benefits connected to a high social credit score.
Beijing will use the China-Africa Cooperation Forum to present China as a global power. US disengagement from and European disunity and indecision towards Africa help Beijing’s self-promotion as a reliable partner for African countries. For Europe, China can be a partner or competitor in Africa, depending on the issue.
China will have to sacrifice a portion of its growth if it wants to reduce its dangerous debt burden. Reducing credit growth will almost inevitably lead to an even higher reduction in GDP growth. This is a price the Chinese government is not yet prepared to pay, but it could be forced to act in the medium term if it wants to avoid a financial crisis.
Frank N. Pieke plans to build on MERICS' successful first five years as the institute's new director and CEO. The former head of the Leiden Asia Center and the Oxford China Center sees the Communist Party's transformation as the key to understanding China's global rise. At the helm of MERICS, Pieke and his deputy Mikko Huotari want to facilitate more coordinated information-sharing on China in Europe.
China’s foreign affairs expenditures may pale in comparison to the United States or Germany, but they grew at an unprecedented speed over the past 15 years. Even in the face of slower GDP growth and rising domestic obligations, China is likely to further scale up its spending to secure its influence in an increasingly multipolar world. This article is part 4 of a MERICS blog series on China’s new foreign policy setup.
China’s new development agency is designed to coordinate aid and prioritize strategic foreign policy goals over short time commercial interests. At the same time, the new agency institutionalizes a mercantilist model of development typified by the Belt and Road Initiative. This article is part 3 of a MERICS blog series on China’s new foreign policy setup.
The “Made in China 2025” strategy is supposed to align the global ambitions of the government and Chinese state-owned and private companies. If innovation is driven by strategic national targets rather than by profit expectations, it represents an export of China’s state-led economic system and a challenge to the affected industries and economies of industrialized countries.
Hong Kong and Singapore are the models for China's planned Free Trade Ports in Hainan and Shenzhen. But if the Pilot Free Trade Zones launched over the past few years are any indication, the new ports are unlikely to provide genuine economic freedom with free capital flows and legal certainty.
Caroline Meinhardt, Michael Laha, Rebecca Arcesati, Václav Kopecký
Europe’s cautious approach to developing emerging technologies is hampering its global competitiveness. The European Commission’s AI strategy falls far behind China’s ambitious blueprint in several key aspects, including funding, sector-specific policies, startup incentives, and talent attraction. This article is part 2 of a mini-series to present the outcomes of the MERICS European China Talent Program 2018.
There are many indications that China could suffer a second round of capital flight. Interest rates in Western economies are up, and Chinese savers don't have access to favorable rates at home. Fears of tax increases or currency devaluation are other factors that might drive wealthy Chinese to try to move their capital abroad and circumvent the government's strict capital controls.
At a time of rising protectionism, China is sending a signal of liberalization by lowering its import tariffs on cars. The unilateral move is only a first step if China wants to prove its commitment to the multilateral trading system. Sacrificing outdated protections can also help China’s transition towards a higher value-added economy.
The US president’s attacks on multilateralism may push Chancellor Merkel into an unlikely alliance with Beijing. Germany and the EU have to test ways to work with China in the absence of transatlantic coordination. The goal must be to organize an international pushback against destructive US trade policies.