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 Sacrificing outdated protections can also help China’s transition towards a higher value-added economy.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.
Interview with Jessica Batke
When China’s law on non-governmental organizations went into effect in early 2017, observers worried that many international NGOs would pull out as a result. Almost 18 months later, the picture is mixed as Jessica Batke of ChinaFile has found out. As part of ChinaFile’s NGO Project, she tracks the experiences with the new law and says that no NGO is known to have left China so far. Yet, this could change in 2018. Small NGOs find it particularly difficult to comply with the new regulations.
The success of authoritarian innovation in China challenges liberal market theories. Technological innovation is no longer just driven by Silicon Valley-style capitalism, but also by technocrats in Beijing. China is proving to be a "red swan," as unforeseen as a "black swan" event. Its techno authoritarianism appears well suited for dealing with many megachallenges of the 21st century.
At this year’s German-Chinese media dialogue in Berlin participants shared concerns over separating real news from fake news on social media while acknowledging the fundamental differences in how both sides see the role of the media. Chinese participants spoke of the media’s job to promote government views, i.e. on globalization. Germans demanded better access to the Chinese media market and better conditions for foreign correspondents in China.
European schools should step up their efforts to teach students the Chinese-language skills required in a changing global landscape. Governments should follow the British example of acknowledging the strategic importance of learning Mandarin – and provide the political support and funding necessary to close this gap.
China is determined to become the globally-leading innovation center for Artificial Intelligence (AI). National industrial policies to promote AI are implemented at top speed at local and provincial level. In some cases, the local goals even exceed the national ambitions.
The Chinese government’s decision to pull Chinese nationals from international hacking contests should worry international IT companies. They stand to lose valuable information about security vulnerabilities in their devices and run the risk that exploits will be reported to the Chinese government instead.
China’s growing political, economic and cultural influence in Europe is finally attracting the public attention it deserves. In this OpEd for the New York Times, former Beijing correspondent and current MERICS fellow Didi Kirsten Tatlow offers a personal view of how China expanded its footprint in Berlin since she last lived in the German capital.
Descriptions of Xi Jinping as new Mao Zedong or destroyer of the Deng Xiaoping legacy are prominent in the media outside of China. But resorting to old paradigms about leadership in Chinese politics may prevent us from seeing the differences between Xi and his predecessors.
From 5G networks to blockchain and electric driving: China has caught up to the forefront of new technologies that are based on artificial intelligence. Chinese companies benefit from state support for R&D, from internationally trained experts and from the sheer mass of data generated by 800 million internet users. Today’s innovation leaders in the United States and the EU would do well not to rest on their laurels.
(via The Diplomat)
China’s foreign relations institutions have emerged as stronger players from this year’s National People’s Congress (NPC). Taking advantage of the void left by the United States, Beijing is working to realize Xi Jinping’s vision of turning China into a global power by 2049.
News that China plans to reduce the frequency of its summits with Central and Eastern European countries has been interpreted as a charm offensive towards Brussels, where many see the 16+1 as divisive. But it could also be an acknowledgment that many of China’s economic promises to the region have not materialized or even an attempt to further divide Europe.
Interview with Helena Legarda
China wants to develop a “world class” military force that can “fight and win wars” by 2049. So it comes as little surprise that the defense budget just got another boost. Military spending will rise by 8.1 percent this year. What’s behind this figure and China’s military modernization drive? Helena Legarda discusses the 2018 military budget and China’s strategies.
The CCP has always ruled supreme in China, but reform era leaders have pushed for a separation between party and state organs. This is changing under Xi Jinping. The planned constitutional amendments at this year’s National People’s Congress and a recent Central Committee decision suggest a reversal of this process – and a takeover of state functions and offices by the CCP.
Geoffrey Hoffman (via ChinaFile)
Censorship and surveillance versus a free and open internet: China's ideas of cyber sovereignty are incompatible with how liberal democracies define cyberspace. Despite these inevitable conflicts, the two models could coexist in relative peace as long as governments focus on the shared goal of cyber defense.
Kim Jong-un’s Olympic olive branch to South Korea may illustrate the decline of US influence in East Asia, but it is wrong to assume that China is the beneficiary of these developments. Beijing has no better answers than Washington to deal with Pyongyang’s recalcitrance, and the Kim regime will not dance to any foreign power’s tune, certainly not China’s.
Beijing tries hard to sell its Belt and Road Initiative (BRI) as a “win-win” for all. But the announcement of a new Chinese-led dispute settlement mechanism will only feed suspicions that the cross-border connectivity program is negotiated entirely on China’s terms.
Chinese media reports dismiss the current debate in Europe over Chinese political influencing. At the same time, their government is telling Western institutions, companies and organizations not to meddle in China’s affairs. China could be more persuasive if it allowed open transnational exchanges and debate - rather than using opaque channels and financial leverage to broaden its influence.
On her recent visit to China, Britain’s Prime Minister Theresa May got a foretaste of the difficult path ahead in carving out a new role for the UK on the world stage. Pressured to forge new trade and investment relationships with major powers like China, the UK might soon find out that it feels much less at home outside the EU than inside.
With little room for tightening, Beijing lacks good options to prevent a return of capital flight. China cannot afford to match the US policy changes as lower tax rates and higher interest rates would further drive up budget deficits and debt.
Worries about the future of civil society organizations in China are limited to only a handful of European countries. Others put their faith in established informal ties or have subscribed to Chinese understandings of “people-to-people exchanges,” which are unlikely to be affected by restrictions on non-governmental organizations.
Helping ensure the survival of the Iran nuclear deal presents China with the opportunity to raise its profile in international affairs and to set the tone in the nuclear non-proliferation debate.