MERICS Blog - European Voices on China en As Hong Kong rebels, why is Macau so quiet? <span>As Hong Kong rebels, why is Macau so quiet?</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Tue, 01/21/2020 - 14:59</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2020-01-21T12:00:00Z">2020-01-21</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><span><span>Thomas Geddes</span></span></span></span></p> <p><span><span><strong><span><span>President Xi has recently been promoting Macau as the posterboy for China's “One Country, Two Systems” principle. He may be hoping that Hong Kong's citizens will heed his call, but this seems unlikely for the differences between the two Special Administrative Regions (SARs) are huge.</span></span></strong></span></span></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2020-01/200121_HK_Skyline_Macao_Skyline_Sean%20Pavone_via_123rf_138163171_m.jpg?itok=NqYSi4Lz 325w, /sites/default/files/styles/max_650x650/public/2020-01/200121_HK_Skyline_Macao_Skyline_Sean%20Pavone_via_123rf_138163171_m.jpg?itok=-XsLCu0J 650w, /sites/default/files/styles/max_1300x1300/public/2020-01/200121_HK_Skyline_Macao_Skyline_Sean%20Pavone_via_123rf_138163171_m.jpg?itok=1AqZHGZ7 1300w, /sites/default/files/styles/max_2600x2600/public/2020-01/200121_HK_Skyline_Macao_Skyline_Sean%20Pavone_via_123rf_138163171_m.jpg?itok=AfMWi01C 2507w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2020-01/200121_HK_Skyline_Macao_Skyline_Sean%20Pavone_via_123rf_138163171_m.jpg?itok=NqYSi4Lz" alt="Macau skyline" title="Macau’s citizens identify more strongly with the PRC and are more trusting of Beijing. Image by Sean Pavone via 123rf" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><span>On a visit to Macau last month to mark the 20th anniversary of the city’s return to China, President Xi Jinping used the opportunity to heap praise on the former Portuguese colony for implementing the “One Country, Two Systems” </span></span></span><span><span>principle </span></span><span><span>“</span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>fully and accurately</span></span></span></a><span><span>”<em>—</em></span></span><span><span><span>in other words, for demonstrating fealty to Beijing and exhibiting strong patriotic values. Indeed, while many in Hong Kong – China’s other SAR – regularly defy the Chinese Communist Party’s (CCP) various encroachments and call for democracy, Macau has remained remarkably silent. What’s more, many in Macau are critical of the recent protests in Hong Kong. Clearly implicit in Mr Xi’s address was a call to Hong Kong to learn from its neighbor. </span></span></span></span></span></p> <p><span><span><span><span><span>It seems unlikely, however, that Hongkongers will comply. Too much distinguishes the two SARs from one another: Unlike Hong Kong, pro-CCP groups have controlled and influenced Macau for over half a century. What's more, Macau’s citizens not only identify more strongly with the PRC but are also more trusting of Beijing.</span></span></span></span></span></p> <p><a href=""><img alt="Exhibit 1" data-entity-type="file" data-entity-uuid="4b6f2709-5dc9-425e-8d4b-7848dc39f390" src="/sites/default/files/inline-images/190121_HongKong_Macau_ThomasGeddes_exhibit-final.jpg" /></a></p> <p><span><span><span><span><span>One reason may have to do with wealth. </span></span></span><span><span>Since its handover in 1999, </span></span><a href=";locations=MO-CN-HK&amp;start=1999&amp;view=chart"><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Macau’s GDP per capita</span></span></a><span><span> (at purchasing power parity) has more than quadrupled to USD 122,435 in 2018—nearly double that of Hong Kong and seven times that of the rest of China. Now flush with years of bumper budget surpluses, its government provides yearly </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>cash hand-outs</span></span></a><span><span> of around USD 1,250 to its permanent residents. This does not mean that all Macau residents are rich: </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>wealth inequality is high</span></span></a><span><span>.<span> But they are much better off on the whole than their mainland compatriots, who, along with Hong Kong, endure a</span> </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>far greater wealth gap</span></span></a><span><span>.</span></span></span></span></p> <p><strong><span><span><span><span><span>Unlike Hong Kong, Macau trusts Beijing</span></span></span></span></span></strong></p> <p><span><span><span><span><span>Not only has Beijing enabled Macau to prosper, it is also regarded by many in the city as more competent than their own local government. </span></span></span><span><span>While the latter has been plagued by scandals from </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>corruption</span></span></a><span><span> to mismanagement of public works, the former has proven very responsive to Macau’s needs. From kick-starting the city’s gambling industry boom, to allowing extensions of its miniature land mass (33 </span></span><span><span>km<sup>2</sup></span></span><span><span> compared with 1,107 </span></span><span><span>km<sup>2</sup></span></span> <span><span>for Hong Kong) and territorial waters, policies from Beijing have been welcomed warmly. Macau’s citizens know all too well how much their success depends on the central government. </span></span></span></span></p> <p><span><span><span><span><span>Identity also plays a key role. While </span></span></span><span><span>Macau’s citizens identify as much with the PRC as with Macau itself, local identity in the former Portuguese colony remains underdeveloped. <span>Like Hongkongers, people in Macau speak Cantonese as their first language and still use traditional Chinese characters in writing.</span> But unlike its neighbor, Macau has a tiny population of just 680,000 and has neither had an acclaimed cultural industry nor a unified education system to help foster a strong sense of collective identity. As a result, its citizens tend to use both Hong Kong and the mainland as cultural reference points. </span></span></span></span></p> <p><span><span><span><span><span>Despite four and a half centuries of Luso-rule, a mere </span></span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>2 percent of the population</span></span></span></a><span><span> can actually speak Portuguese and only around a quarter English (compared with </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>over half in Hong Kong</span></span></span></a><span><span>). <span>This certainly limits people’s exposure to western and perhaps more liberal influences. Although the Portuguese language is still very evident in Macau, be it on street signs or official documents, people’s identification with their colonial past remains weak. People do take pride in their civil liberties but, unlike Hongkongers, are less intent on safeguarding their already wavering rule of law. More strikingly perhaps, most have no qualms about singing the PRC’s national anthem and speaking Mandarin.</span></span></span></span></span></p> <p><span><span><span><span><span>The emergence of a distinct local identity has also been hampered by Macau’s gradual “mainlandization”. In 2016, almost half (43.6%) of its citizens were born in mainland China, slightly more than those born in Macau itself (40.7%). In comparison, less than a third (29.8%) of Hong Kong’s 7.3 million residents were born on the mainland. Exposure to mainland tourists is also much greater in Macau than in Hong Kong. Last year over </span></span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>25 million mainlanders</span></span></a><span><span><span> visited the city. As a result, the proportion of fluent Mandarin speakers in Macau has surged from 24 percent in 2006 to over 50 percent today. Since the handover, forces pushing towards greater social and economic integration with the mainland have been growing ever stronger.  </span></span></span></span></span></p> <p><span><span><strong><span>Unlike Hong Kong, pro-Beijing groups have controlled Macau for over half a century</span></strong></span></span></p> <p><span><span><span><span><span>Last but not least, Macau’s closeness and deference to Beijing can only be understood in the light of its recent colonial past. In December 1966, at the height of Mao’s Cultural Revolution, a violent clash broke out between the Portuguese and pro-Communist Chinese groups. The so-called “123 Incident” marked the effective end of Portugal’s rule over Macau. Soon after, the Portuguese authorities acknowledged the PRC’s sovereignty over the colony and banned pro-Kuomintang groups from the region. In Hong Kong, by contrast, the British succeeded in quelling a similar uprising at around the same time, which side-lined the Communist sympathizers there for good.</span></span></span></span></span></p> <p><span><span><span><span>From then on, groups loyal to the CCP took control of nearly all aspects of Macau’s economy, politics and society. Unlike the institutions in British Hong Kong, those in Macau were weak and more vulnerable to political interference. Indeed, until 1974, Portugal was itself an authoritarian state. Subsequent Portuguese governments appeared more concerned by domestic affairs and their relations with China than pushing for extensive democratic reforms in their Chinese colony. <span>In contrast to Hong Kong</span>, Macau never enjoyed a strong rule of law and was never </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>promised universal suffrage</span></span></a><span><span>.</span></span></span></span></p> <p><span><span><span><span>To this day, pro-establishment groups continue to dominate affairs in Macau. Whereas in Hong Kong the press still strives to act as a pillar of democracy, in Macau the Chinese-language media is mostly government-funded and more restrained by political pressures and </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>self-censorship</span></span></a><span><span>. To add to these constraints, Macau’s very size further discourages dissonant voices from emerging. Unlike Hong Kong, social circles in Macau are relatively small and incestuous. Its citizens are therefore much more averse to confronting the establishment for fear of putting their careers and businesses at risk. </span></span></span></span></p> <p><span><span><span><span>Macau is undoubtedly a freer place than most parts of China, but the CCP’s grip on it has always been much stronger than in Hong Kong. </span></span></span></span></p> <p><span><span><span><span><span>For all these reasons, if Mr Xi wishes to promote Macau as a model for the “One Country, Two Systems” principle, so be it. But if he thinks that Hong Kong can be compared with Macau and is likely to learn from it, he is most certainly mistaken.</span></span></span></span></span></p> <p><strong>About the author:</strong></p> <p><span><span><strong>Thomas Geddes</strong> is an intern in the Economic Research Program at MERICS. He has recently completed his Bachelors degree in China Studies at SOAS. He has also studied at Yunnan University in Kunming for three years.</span></span></p> <p><em>The views expressed in this article are those of the author and not necessarily reflect those of the Mercator Institute for China Studies.</em></p></div> </div> </div> Tue, 21 Jan 2020 13:59:00 +0000 h.seidl 10946 at Europe's moment of truth with China <span>Europe&#039;s moment of truth with China</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Tue, 01/14/2020 - 17:29</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2020-01-15T12:00:00Z">2020-01-15</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/noah-barkin" hreflang="en">Noah Barkin</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>For much of the past year, China has been preoccupied with its trade conflict with the United States. Now that it has a clinched a “phase-one” deal with Washington, it is turning its attention to Europe. The problem? Europe hasn't made up its mind about how to respond, says Noah Barkin. </span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2020-01/200115_Huawei_Copenhagen_%20Francis%20Dean_via_123rf.jpg?itok=hLJZeiy1 325w, /sites/default/files/styles/max_650x650/public/2020-01/200115_Huawei_Copenhagen_%20Francis%20Dean_via_123rf.jpg?itok=bWAGF5Bh 650w, /sites/default/files/styles/max_1300x1300/public/2020-01/200115_Huawei_Copenhagen_%20Francis%20Dean_via_123rf.jpg?itok=NLbGAqUL 848w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2020-01/200115_Huawei_Copenhagen_%20Francis%20Dean_via_123rf.jpg?itok=hLJZeiy1" alt="llboA Huawei billboard, Copenhagen, Denmark" title="Europe’s biggest countries - Germany, France and Britain - are still debating whether Huawei should be given a role in their 5G rollouts. Image by Francis Dean via 123rf" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>When Wang Yi, China’s top diplomat, came to Brussels in December, he delivered two messages to Europe. The first was rather benign: "We are partners, not rivals," he told his audience at the European Policy Centre think tank, calling on the EU and Beijing to draw up an "ambitious blueprint" for cooperation.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The second was more of a thinly veiled threat: Europe and China had to “get mutual perceptions right,” he declared. Failure to do so would risk “unnecessary disruptions” to the relationship. Wang didn’t mention pro-democracy protests in Hong Kong, reports of human rights abuses in Xinjiang or security concerns surrounding telecoms giant Huawei. But his message was clear: If Europe wants smooth relations, it should stop criticizing China.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Europe, however, is still clarifying its stance toward China and may not be ready for the hard choices implied by Wang's quid pro quo.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Back in March, when the European Commission issued a toughly-worded paper that described China as a “systemic rival,” the EU seemed to be heading down a more confrontational path with Beijing. But in the intervening months, momentum has stalled. German Chancellor Angela Merkel and French President Emmanuel Macron both traveled to China but focused <strong>primarily</strong> on business ties. Most European countries have delayed increasingly urgent decisions over whether Chinese telecoms equipment giant Huawei should be allowed to build their 5G mobile networks.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>In 2020, Europe - whether it likes it or not - will be under intense pressure to finally pick a lane, with several high-profile events on the agenda including an EU-China summit and a meeting between Chinese leader Xi Jinping and EU national leaders in Leipzig in September, under the German presidency of the EU.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Here are the factors that are most likely to shape Europe’s relationship with Beijing.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Huawei conundrum</span></span></strong></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>As 2020 dawns, Europe’s biggest countries — Germany, France and Britain — are still debating whether Huawei should be given a role in their 5G rollouts.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Lately, the discussion has been most intense in Berlin, where Merkel has faced a revolt, led by her former environment minister, Norbert Röttgen, over her refusal to ban Huawei. Other parties, including her coalition partner, the Social Democrats, but also the Greens, the liberal Free Democrats and the far-right Alternative for Germany, are pushing back. It should become clear in the coming months whether Röttgen’s rebellion has a chance of succeeding.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>After repeated delays, Britain faces a similar decision, with Prime Minister Boris Johnson forced to weigh up the risks of Washington curtailing intelligence cooperation if he gives Huawei the green light, against the costs of a Chinese backlash if he does not.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The European Commission will unveil its<strong> </strong>5G “toolbox” in mid-January, which will give member states a menu of options for mitigating security risks linked to their next-generation mobile networks. After studiously avoiding decisions in 2019, the big European players will need to come down one way or the other in 2020. Their decisions will have a ripple effect for smaller countries.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="DE" xml:lang="DE" xml:lang="DE"><span>US trade pressure</span></span></strong></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>For the past year, amid the ups and downs of the U.S.-China trade conflict, European leaders have been worried about one thing: that Trump would strike a cosmetic deal with Beijing and then zero in on Europe.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Now, Europe’s nightmare scenario could become a reality. In December, U.S. Trade Representative Robert Lighthizer spoke openly about the “very unbalanced” trade relationship with Europe, signaling that this will be Washington’s focus in 2020.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>If Trump follows through on his threat of car tariffs, it could trigger a tit-for-tat downward spiral in the transatlantic relationship that pushes Europe toward a more conciliatory stance with China.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The Trump administration has also begun rolling out proposals for export controls on emerging technologies. U.S. officials have been reaching out to Europe and other "like-minded countries” to get their buy-in. But if Trump is waging a trade war with Europe, the appetite to go along with Washington’s plans to curb technology exports to China will be limited.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="DE" xml:lang="DE" xml:lang="DE"><span>EU-China investments</span></span></strong></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The German chancellor has signaled that she wants to clinch a comprehensive investment agreement between the EU and China in time for her September summit in Leipzig. But some EU officials have described the challenge of doing so as “impossible.” Sabine Weyand, the European Commission’s director-general for trade, has said talks with the Chinese are moving “at a snail’s pace.”</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>This might change in the coming months. If it doesn’t, the EU will be confronted with the question of how to respond to China’s intransigence. The new Commission is examining ways to curb unfair competition from state-owned enterprises and its new investment screening mechanism will be up and running in October.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>These initiatives, designed to shield Europe from certain Chinese investments, could make progress with Beijing in other areas more difficult. “There is a big gap between what we say and what we do,” one senior EU official said. "That gap has been reduced but we are still not where we need to be.”</span></span></span></span></span></p> <p><span><span><span><strong><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Human rights</span></span></strong></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The wild cards in the Europe-China relationship are the ongoing protests in Hong Kong and the growing backlash against Beijing’s re-education camps in Xinjiang. Both will remain prominent in news headlines in 2020, weighing on ties, souring public opinion on China and limiting the room for European leaders to work closely with Beijing.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The EU’s new foreign policy chief, Josep Borrell, seems unlikely to shy from criticizing China on human rights. Speaking in the European Parliament in Strasbourg in December, he promised to push member states to toughen their response to rights violations in Xinjiang, where an estimated 1 million Uighurs have been detained, and to fight for an EU equivalent of the U.S. Magnitsky Act, which would allow the EU to sanction individuals complicit in human rights abuses.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Pressure on European companies to curb their activities in Xinjiang is also likely to grow in 2020.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="DE" xml:lang="DE" xml:lang="DE"><span>New Commission</span></span></strong></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Under former European Commission President Jean-Claude Juncker, the EU took a decidedly firmer stance against China, agreeing to a new investment screening mechanism and labeling China a “systemic rival.”</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>His successor Ursula von der Leyen has promised a more “geopolitical” Commission. As German defense minister, she was highly critical of China. In her first weeks in the job, she has stuck to a hard line on issues like 5G. But she, like Borrell, is new to the job and the tone she strikes on China will be closely scrutinized in 2020 for clues about a shift in policy.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>One of von der Leyen’s key challenges will be to get the various commissioners and the European External Action Service working seamlessly together — alongside national governments — to confront new challenges from China at the nexus of technology and security. Whether she can do so will determine the strength of a common EU strategy toward Beijing.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="DE" xml:lang="DE" xml:lang="DE"><span>US election</span></span></strong></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>Talk to European officials these days and they will tell you, in resigned tones, that Trump’s re-election is all but inevitable. With nearly a year to go until the vote, there is ample time for this to change. But if U.S. Democrats struggle to unite behind a strong candidate and shift the momentum as the November election approaches, European countries are likely to hedge against a second Trump term by softening their tone with China.</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>The last thing they want is open confrontation with Washington and Beijing at the same time. As one veteran U.S. diplomat put it: “I fear that Europe will retreat to a transactional view of the world, doing deals with Russia and China.”</span></span></span></span></span></p> <p><span><span><span><span lang="DE" xml:lang="DE" xml:lang="DE"><span>This article was <a href="">first published by "Politico" on January 13, 2020.</a></span></span></span></span></span></p> <p><em>Noah Barkin is a Berlin-based journalist who has written about European political and economic themes for Reuters and other publications for more than two decades. He is a Visiting Academic Fellow at MERICS.</em></p> <p><em>The views expressed in this article are those of the author and not necessarily reflect those of the Mercator Institute for China Studies.</em></p></div> </div> </div> Tue, 14 Jan 2020 16:29:00 +0000 h.seidl 10916 at Toasting pine nuts – the China-Afghan air corridor turns one <span>Toasting pine nuts – the China-Afghan air corridor turns one</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Wed, 01/08/2020 - 14:19</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2020-01-13T12:00:00Z">2020-01-13</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Barbara Kelemen</span></span></span></span></p> <p><strong><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Growing Chinese commitment to Afghanistan’s pine-nut industry is a small but illuminating example of </span>Beijing’s interest in the region bordering Xinjiang, says Barbara Kelemen.</span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2020-01/200108_China_Afghanistan_alekstaurus%20via%20123rf.jpg?itok=KHe7B9Re 325w, /sites/default/files/styles/max_650x650/public/2020-01/200108_China_Afghanistan_alekstaurus%20via%20123rf.jpg?itok=05zSD6E6 650w, /sites/default/files/styles/max_1300x1300/public/2020-01/200108_China_Afghanistan_alekstaurus%20via%20123rf.jpg?itok=UdlsSnJ8 1300w, /sites/default/files/styles/max_2600x2600/public/2020-01/200108_China_Afghanistan_alekstaurus%20via%20123rf.jpg?itok=1YPBgbey 2186w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2020-01/200108_China_Afghanistan_alekstaurus%20via%20123rf.jpg?itok=KHe7B9Re" alt="Image by alekstaurus via 123rf" title="Image by alekstaurus via 123rf" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">A burgeoning pine-nut trade between Afghanistan and China shines a light on Beijing’s growing interest in the region on its western border. Last year, the two countries boosted Afghanistan’s pine-nut industry when they opened an air-freight corridor, and this November, Chinese companies contracted to buy 2.2 billion dollars of Afghan pine nuts over the next five years. Given Afghanistan’s exports to China were 28 million dollars in 2018 and overall </span><a href=""><span>exports</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> reached roughly 884 million dollars, China’s importance looks set to rise.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The air-corridor to Shanghai was hailed as a great improvement and expected to raise revenues from pine nut exports to 1 million dollars – and it seems to be living up to expectations. The Afghan government in October said the pine nut harvest would rise 10 percent to around 24,000 tons in 2019. With the dried fruit selling at around 36 dollars per kilo, farmers can expect additional revenues of around 800,000 dollars, mainly thanks to Chinese demand. </span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Before the opening of the air corridor, Afghanistan struggled with rampant smuggling – and some legal exports ­– to Pakistan. Across the border the pine nuts were packaged and re-exported, often to China. As Afghanistan still lacks facilities and certification needed for processing pine nuts, the refining stages have merely shifted from Pakistan to China. The profits from value added processes now go to China – and Afghan traders still export only raw product.</span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">China-Afghan economic cooperation still faces challenges</span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">So there is light and dark when it comes to this instance of economic cooperation – it clearly still faces challenges. Yousef Dawran, a local pine-nut trader and entrepreneur, worries that “air corridors are too expensive and mainly a short-term solution” and calls the project “<span>mainly a great PR story”. </span>According to Yousef, real economic change requires longer term and more sustainable solutions. </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Perhaps Afghanistan needs to focus more on pine-nut processing capacity.</span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Yousef’s disappointment is fed by the feeling that <span>the cooperation has not delivered “as much as expected” – that China could and should be doing more. </span>Alice Wells, the US Acting Assistant Secretary for South and Central Asia, has on a number of occasions </span><a href=";start=2553"><span>criticized</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> China for its lack of economic assistance to Afghanistan. She has described Beijing’s Belt and Road Initiative (BRI) in Afghanistan as a “slogan” rather than reality, pointing to <span>stalled projects such as the </span></span><a href=""><span>Kabul-Jalalabad Road</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">.  </span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>China sees economic cooperation as a way to stabilize Afghanistan</span></span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">China’s government has sharply rejected such complaints, in turn pointing to projects like the 2016 cargo train between Nantong and Hairatan, the 2018 air corridor and a number of infrastructure projects as proof of its genuine commitment. Yao Jing, the Chinese Ambassador to Pakistan, has said that the main challenge for larger Chinese projects – such as the Mes Aynak copper mine – remains Afghanistan’s ongoing lack of domestic security and stability. </span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">But that is also exactly why China has to continue with economic cooperation projects, however small or fraught. Beijing sees economic cooperation as a way to stabilize a country that is in turn vital for stability of China’s western provinces, especially Xinjiang. Beijing worries that the East Turkestan Islamic Movement (ETIM) or its successor organization, the Turkestan Islamic Party (TIP), consider Afghanistan a conduit into China to radicalize Uighurs in Xinjiang. </span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Afghanistan’s regional significance for China’s security is one reason for China’s greater military presence on its western periphery. The People’s Armed Police force has for some time </span></span><a href=""><span>operated</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span> from bases in Tajikistan only 10 miles from the Afghan border. There have also been reports of Chinese </span></span><a href=""><span>activities</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span> in Afghanistan’s Wakhan corridor in Badakhshan province. And Chinese officials have maintained a </span></span><a href=""><span>pragmatic relationship</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span> with the Taliban since the late 90s.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Beijing has emerged as a new facilitator of talks between Afghan conflict parties</span></span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Given all this, </span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Beijing has emerged as a new facilitator of talks between the Afghan government and the Taliban. Without the historical legacy of Russia or the US, with economic clout in Kabul and considerable influence in Islamabad, it could become a more trusted go-between for Afghanistan’s long warring factions than other parties. Pakistan’s support has been crucial to the Taliban and has complicated Islamabad’s bilateral relations with the United States. </span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>A clear sign of China’s increasing influence is its push to start an Afghan peace process. A meeting between the Taliban and the Afghan government is now </span></span><a href=""><span>set</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span> to take place in Beijing. Although it is hard to say how much of it is the Taliban showing the US that it has alternatives, China is now seen as one of the potential brokers and facilitators of the intra-Afghan dialogue. It has relations with Kabul, contacts with the Taliban, and potentially holds sway over Pakistan. </span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>US President Donald Trump has pledged to reduce the US military presence in Afghanistan and about half of the US soldiers in the country are expected to start going home soon. </span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>As complete US-withdrawal from Afghanistan has become possible, the question is whether China would step up to fill the void as a stabilizing power. Its commitment to the Afghan pine-nut industry suggests that there are ways for China to do so although its intentions in that regard remain unclear. For all his criticism, pine-nut trader Yousef firmly believes economics and stability come hand in hand.</span></span></span></span></span></p> <p> </p> <p><strong>About the author:</strong></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><strong>Barbara Kelemen</strong> was an intern in the Foreign Policy program at MERICS from October until December 2019. She holds a Double MSc in International Affairs from the London School of Economics and Peking University. She previously worked with Slovakia's MFA, STRATPOL and the International Institute for Strategic Studies (IISS, London). </span></span></span></span></span></span></p></div> </div> </div> Wed, 08 Jan 2020 13:19:44 +0000 komprakti 10871 at China’s restive women <span>China’s restive women</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Mon, 01/06/2020 - 11:22</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2020-01-06T12:00:00Z">2020-01-06</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p>Charlotte Cramer</p> <p><strong><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>The government continues to lock up activists to stop feminism becoming a mass movement. Charlotte Cramer says Beijing will only succeed if it at last takes women’s rights seriously.</span></span></span></span></span></span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2020-01/200106_Me_too_%20Shao-Chun%20Wang%20%20via%20123rf_1.jpg?itok=kvImpLvZ 325w, /sites/default/files/styles/max_650x650/public/2020-01/200106_Me_too_%20Shao-Chun%20Wang%20%20via%20123rf_1.jpg?itok=yHO-5C8E 650w, /sites/default/files/styles/max_1300x1300/public/2020-01/200106_Me_too_%20Shao-Chun%20Wang%20%20via%20123rf_1.jpg?itok=6UbrBwdx 1300w, /sites/default/files/styles/max_2600x2600/public/2020-01/200106_Me_too_%20Shao-Chun%20Wang%20%20via%20123rf_1.jpg?itok=aMgvpFy6 2154w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2020-01/200106_Me_too_%20Shao-Chun%20Wang%20%20via%20123rf_1.jpg?itok=kvImpLvZ" alt="Image by Shao-Chun Wang via 123rf" title="Image by Shao-Chun Wang via 123rf" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>The feminist activist Sophia Huang went to a police station in the southern Chinese city of Guangzhou to pick up her identity papers at the end of October. She has not been seen since and the reason for her detention remains unclear. Authorities had kept a close eye on Huang for her involvement in China’s #MeToo movement, though it’s possible a post about Hong Kong’s pro-democracy protests was the immediate cause of her arrest. Regardless of the pretext, the fact remains </span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>that the government is brazenly suppressing women’s rights.</span></span></span></span></span></span></span></span></p> <p><strong><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Beijing is censoring the feminist discourse on several levels</span></span></span></span></span></span></span></span></strong></p> <p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>At the turn of the century, Beijing tolerated</span></span></span><a href=""><span><span><span> small-scale protests and public gatherings</span></span></span></a><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span> about issues like sexual assault.</span></span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> But now it is censoring such discussions, shutting down feminist blogs, and erasing the term #MeToo from social media as it is afraid of feminism turning into a mass movement. Nonetheless, Zhang Leilei, who has campaigned against sexual harassment on public transport, has said Beijing is a losing battle. “More and more people are talking about gender issues in China. More people are becoming feminist.” </span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Eliminating individual activists like Huang does not gloss over the deep-rooted gender inequality of Chinese society. As a result of the cultural preference for sons and the now-abandoned “one-child” policy, there are </span></span></span></span><a href=""><span><span><span><span>33 million more Chinese men than women</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>. That means a cohort of men equivalent in size to the entire population of Malaysia has few – or no – prospects of marrying and founding a family. This has led to greater violence against women and more rape cases, and to more </span></span></span></span><a href=""><span><span><span><span>human trafficking and forced marriage</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>. </span></span></span></span></span></span></span></span></span></p> <p><strong><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>China is a tough place to be a woman</span></span></span></span></span></span></span></span></span></strong></p> <p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>China ranked 103rd of 144 countries </span></span></span></span><a href=""><span><span><span><span>in the 2018 Global Gender Gap</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> Report – forty places lower than a decade ago. The </span></span></span></span><a href=""><span><span><span><span>pay gap between men and women is widening</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> and employment discrimination has increased, not least through Beijing’s new “two-child” policy. Women are encouraged to bear children to secure the future of the nation, while their working rights are anything but secure. It’s no rarity for </span></span></span></span><a href=""><span><span><span><span>pregnant women to get fired or punished</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> through a pay cut. Beijing’s message is clear ­– women should stay at home. Single, independent women in their late twenties and older are shamed as “leftover women”.</span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Lastly, women suffer alarming rates of sexual harassment. A </span></span></span></span><a href=""><span><span><span><span>study put together in 2018</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> showed that 80 percent of respondents had experienced some form of it at work. More than half of the respondents of another study experienced </span></span></span></span><a href=""><span><span><span><span>sexual assault on public transportation</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>. Sexism and sexual assault at work, on the way to and from work, or elsewhere are everyday fare for nearly 682 million women in China. In the light of this, the promise of Mao’s famous dictum that “Women hold up half the sky” has not been fulfilled. </span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Eliminating individual activists won’t alter the fact that many Chinese women have new priorities, goals and aspirations. According to a study from 2019, women most often equate success with </span></span></span></span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><a href="">self-achievement</a></span></span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span> – more than<span> family and marriage. Lengxuecainü, a famous blogger and inspiration for many women has written: </span></span></span></span><a href=""><span><span><span><span>“The most comfortable way of life is staying single and childless”</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>. New forms of self-representation – online and off, by the famous and not famous – are rejecting the traditional sexualized and objectified female. </span></span></span></span></span></span></span></span></span></span></p> <p><strong><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>But women in China are fighting back</span></span></span></span></span></span></span></span></span></strong></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>A broad swathe of Chinese women is fighting back. In Shanghai mid-October, a man was </span></span></span></span><a href=""><span><span><span><span>sentenced for sexual harassment</span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> in public transportation for the first time. The perpetrator only got a six-month jail sentence, but the verdict will give other victims hope and bolster the recent trend for women to take sexual assault and discrimination cases to court. In July, the #MeToo movement scored a first success when the former boss of Liu Li, a well-known civil society figure, publicly apologized. “This </span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span><span>is definitely hard, but not hopeless,” Liu said.</span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Eliminating individual activists also won’t stop the feminist movement beyond China’s borders. Chinese women studying and working abroad are exposed to feminist movements in any number of foreign cities, where also Chinese feminism can live on. The exhibition “The Voiceless Rise Up! The exhibition of MeToo in China” was shut down in mainland China, only to be put on in New York City. Co-organizer </span></span></span></span><a href=""><span><span><span>Luo Mai said</span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>: “We thought it might be the right time for an exhibition to remind people that the Chinese #MeToo movement is still around”. </span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>In her book “Betraying Big Brothers: The Feminist Awakening in China”, Leta Hong Fincher said: “Although the antifeminist crackdown in China had driven some feminists to study and work abroad, very few of the persecuted activists I interviewed said they want to give up their activism.” China’s women are steadily turning gender inequality into a national problem. If Beijing is worried about feminism becoming a mass movement, it should stop locking up activists and quickly give more support, rights, and freedom to Chinese women. </span></span></span></span></span></span></span></span></span></p> <p><strong><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Charlotte Cramer</span></span></span></span></span></span></span></span></span></strong><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span> is currently pursuing a B.A. in Sinology at Freie Universität Berlin. She was an intern in the communications department at MERICS from September until December 2019.</span></span></span></span></span></span></span></span></span></p></div> </div> </div> Mon, 06 Jan 2020 10:22:02 +0000 komprakti 10861 at Xi’s one-party state is smothering what made China successful <span>Xi’s one-party state is smothering what made China successful</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Thu, 12/19/2019 - 11:00</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2019-12-19T12:00:00Z">2019-12-19</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/nis-grunberg" hreflang="en">Nis Grünberg</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span><span><span><span>A wave of ideological indoctrination and discipline is undoing a generation of flexible policy making, says Nis Grünberg. Love for the party and the socialist idea are no replacement.</span></span></span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2019-12/191219_Xi_Jinping_Davos_2017_Mykhaylo%20Palinchak%20_Via_123rf.jpg?itok=OFN5sMtQ 325w, /sites/default/files/styles/max_650x650/public/2019-12/191219_Xi_Jinping_Davos_2017_Mykhaylo%20Palinchak%20_Via_123rf.jpg?itok=lXucI5b2 650w, /sites/default/files/styles/max_1300x1300/public/2019-12/191219_Xi_Jinping_Davos_2017_Mykhaylo%20Palinchak%20_Via_123rf.jpg?itok=28DU1nV5 1300w, /sites/default/files/styles/max_2600x2600/public/2019-12/191219_Xi_Jinping_Davos_2017_Mykhaylo%20Palinchak%20_Via_123rf.jpg?itok=OeeN7dH6 2508w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-12/191219_Xi_Jinping_Davos_2017_Mykhaylo%20Palinchak%20_Via_123rf.jpg?itok=OFN5sMtQ" alt="Xi Jinping at the World Economic Forum in Davos, 2017" title="Image by Mykhaylo Palinchak via 123rf" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><span><span>China’s Communist Party is very ambitious. It wants to shore up one-party rule, expand the country’s welfare systems, modernize the economy, fight corruption, protect the environment and promote an efficient public administration. To reach these goals - some of which contradict each other - Xi Jinping has centralized power in a way last seen under Mao. </span></span></span></span></span></span></p> <p><span><span><span><span><span><span>Any political activity under the current CCP General Secretary and President of China involves patriotic education alongside the strict political guidance that has always been the party’s domain. Xi equates patriotism with love for the party and the socialist idea. This means Xi's reform agenda not only applies to the political system and the administration, but also to China’s social model. The official ideology is about nothing less than China as a nation <em>and</em> civilization – a campaign that threatens to suffocate the economy and society.</span></span></span></span></span></span></p> <p><span><span><span><span><span><span>At the end of October, China’s top leaders gathered for the Fourth Plenary Session of the CCP’s 19<sup>th</sup> Central Committee. They devoted much attention to how party and state apparatuses can govern effectively – how Beijing's political guidelines could be implemented nationwide. Their answer is to focus increasingly on "patriotic education" and disciplining decision-makers in politics as well as business and society. Party members are being encouraged to see their joining the party as a "political birthday" and to become more broadly involved.  </span></span></span></span></span></span></p> <p><span><span><span><strong><span><span><span>Ideology turns successful flexibility into stifling formalism</span></span></span></strong></span></span></span></p> <p><span><span><span><span><span><span>Beijing is relying on tried-and-tested formulas: centralization and more party control over policy making. But ideology and political education play a much greater role – and as a result over-regimentation is becoming a real danger. Voices from within the ranks have criticized Beijing for being too strict and leaving too little room for experiment and local autonomy. Even the party-state media like the People’s Daily newspaper have carried reports about meetings between provincial and central government officials to better coordinate goals. </span></span></span></span></span></span></p> <p><span><span><span><span><span><span>China is enormously heterogeneous. Provincial governments face very different challenges and often struggle with narrowly defined universal requirements. Provinces dominated by heavy industry, for example, find it difficult to stimulate innovation in new technologies. Structurally weak regions are still busy expanding of school and hospital systems, while the metropolises of the east coast face challenges like environmental sustainability.  </span></span></span></span></span></span></p> <p><span><span><span><span><span><span>But local answers and experiments are in decline. This is a real problem as enthusiasm for different solutions is considered to have been the driver of China's successful reforms. The meaningless fulfillment of political guidelines is beginning to be openly denounced as dangerous "formalism", not least by Xi himself. But party headquarters does not see this as a warning sign. It counters criticism with even more detailed instructions to exercise control.</span></span></span></span></span></span></p> <p><span><span><span><span><span><span>Ideology has gained the upper hand. Citizens are being urged to live by the twelve Socialist Core Values and party cadres to study Xi’s ideas. The CCP has drummed together party cadres for training and study under the slogan “Never forget the original ideal and ambition, keep in mind the mission”. As party members become ideological torchbearers, the system generates ever more formalism. Instead of creatively and flexibly solving real problems, decision-makers are (re)producing political documents with ideologically correct inflections. </span></span></span></span></span></span></p> <p><span><span><span><span><span><span>Systematically, the party is trying to control the private economy. It placed officials in a hundred "key companies" in Hangzhou. They will represent the government, advise on political issues and serve as a link to the public administration in China’s digital center. But the longer-term aim is clear: digital start-ups are on a short leash. They already go to great lengths to "harmonize" content. Bytedance, owner of the TikTok app, employs 35,000 people, of which 10,000 have worked in the censorship department at one time or another.</span></span></span></span></span></span></p> <p><span><span><span><strong><span><span><span>Xi’s new patriotism is a questionable tool to ensure better rule</span></span></span></strong></span></span></span></p> <p><span><span><span><span><span><span>There used to be an implied social contract in China – if Beijing can guarantee material progress, the population will not demand a voice. But the Xi regime’s new patriotism requires each individual to actively support the political line. The new "Plan for Patriotic Education" targets the internet-using young. All forms of entertainment are to spread the party's message in targeted ways - ideological mobilization always and everywhere. </span></span></span></span></span></span></p> <p><span><span><span><span><span><span>These are questionable tools to ensure more efficient and equitable governance. Extreme centralization is already paralyzing the maneuverability that defined the system over past decades. The pressure to fall in line with an ideological and cultural understanding prescribed by Beijing is spreading. In Xinjiang, its dark side is increasingly apparent.  </span></span></span></span></span></span></p> <p><span><span><span><span><span><span>So far, there is no successor to Xi Jinping in sight. The president's two-term limit was lifted in 2018 and Xi could well use this leeway to make the system an even more personalized and centralized one. To argue that China needs a strong government to fight corruption and instability and to assert itself internationally may be correct. But this is no excuse to abolish the qualities that have palpably led to success: flexible policy making and openness to experimentation – and the world. Sadly, the Xi regime is smothering these forces.</span></span></span></span></span></span></p> <p><span><span><span><em><span><span><span>This article was first published in German <a href="">by Zeit Online on December 14, 2019.</a></span></span></span></em></span></span></span></p></div> </div> </div> Thu, 19 Dec 2019 10:00:25 +0000 h.seidl 10751 at China building roads and bridges in Kyrgyzstan: A project fueled by ambition <span>China building roads and bridges in Kyrgyzstan: A project fueled by ambition</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Tue, 12/17/2019 - 14:10</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2019-12-17T12:00:00Z">2019-12-17</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/jacob-mardell" hreflang="en">Jacob Mardell</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span>Over the past decade, China has established itself as Kyrgyzstan’s most important economic partner. The China Road and Bridge Corporation (CRBC) is one of the most successful state-owned Chinese companies invested in projects in this landlocked and mountainous central Asian country. In his conversations with workers on the ground, Jacob Mardell found out that BRI is not only a tale of national, but also of personal ambition. He </span></span></span>is currently travelling countries along the Belt and Road to investigate how the initiative is being implemented on the ground.</strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2019-12/191211_Bridge%20under%20construction%20by%20CRBC%20in%20Kyrgyzstan_Jacob_Mardell_IMG_20191029_112951.jpg?itok=GkYFM3n1 325w, /sites/default/files/styles/max_650x650/public/2019-12/191211_Bridge%20under%20construction%20by%20CRBC%20in%20Kyrgyzstan_Jacob_Mardell_IMG_20191029_112951.jpg?itok=IQRFNirD 650w, /sites/default/files/styles/max_1300x1300/public/2019-12/191211_Bridge%20under%20construction%20by%20CRBC%20in%20Kyrgyzstan_Jacob_Mardell_IMG_20191029_112951.jpg?itok=CwDgXxLT 1300w, /sites/default/files/styles/max_2600x2600/public/2019-12/191211_Bridge%20under%20construction%20by%20CRBC%20in%20Kyrgyzstan_Jacob_Mardell_IMG_20191029_112951.jpg?itok=HhNI6nvZ 1432w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-12/191211_Bridge%20under%20construction%20by%20CRBC%20in%20Kyrgyzstan_Jacob_Mardell_IMG_20191029_112951.jpg?itok=GkYFM3n1" alt="Bridge under construction by CRBC in Kyrgyzstan." title="A bridge under construction by CRBC in Kyrgyzstan. Image by Jacob Mardell." typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span>I'm at a work camp in Southern Kyrgyzstan, where CRBC are literally moving mountains in order to forge a brand-new road connection between the North and South of the country. CRBC’s simple, container box compound is flanked by swollen velvet hills, where goat herds and horses graze, and life trundles along at a premodern pace. </span></span></span></p> <p><span><span><span>Chinese state-owned enterprises aren’t known for their transparency and openness. That’s why it’s such a pleasant surprise to find myself sipping an earthy Pu’erh tea with Mr. Song, a senior manager at China Road and Bridge Corporation (CRBC).</span></span></span></p> <p><span><span><span>Song is part of the new generation of Chinese engineers - he is a young 33, quietly confident, easy to talk to. He is not exactly critical, but his speech is free from the yawn-inducing nothingness of officialese. At first, he cautiously prefaces statements by saying, “of course, this is my personal opinion,” but he soon warms to the idea that I’ve come precisely to hear his personal opinions.</span></span></span></p> <p><span><span><span><strong>Concrete fueled development vs. the rural idyll</strong></span></span></span></p> <p><span><span><span>The simple narratives are sometimes the best: humankind conquering nature, concrete fueled development vs. the rural idyll. Here, amid the mountains, sheep, and heavy machinery, it’s easy to see these dynamics in action. "There are parts of this route that you couldn't even cross on horseback,” Song tells me - "we are changing all of that."</span></span></span></p> <p><span><span><span>The solemn impenetrability of these mountains has defined life here for millennia. The road will neuter them, and this is the essence of development. Song believes wholly in this civilizing development mission: “When we arrived here, some local people didn't want the road, they didn't understand - in their minds, they didn’t understand how this road would change them.” </span></span></span></p> <p><span><span><span>Song has lived in Kyrgyzstan for ten years now. Before this project, he encountered similar resistance in the South. “The people had their sheep, they were satisfied about their lives and didn’t want to change. When I started the road, there was nothing, but once we’d finished, I saw they’d set up a business by the roadside and their mentality had changed. That’s the most important thing that needs to happen here - a change of mentality.”</span></span></span></p> <p><span><span><span>"So you're sharing China's development experience?" I ask him. “Of course - 30, 40 years ago we were all against the capitalists, but now nobody cares about the system, we just want a better life.”</span></span></span></p> <p><span><span><span>Over the past decade, China has established itself as Kyrgyzstan’s most important economic partner. Exim Bank of China, the entity that is bankrolling this road project, holds almost half of this small Central Asian republic’s external debt. China is also heavily investing in the Kyrgyz economy, largely in the mining sector.</span></span></span></p> <p><span><span><span><strong>China Road and Bridge Corporation undercut European competition</strong></span></span></span></p> <p><span><span><span>As Chinese officials often say, the Belt and Road is a “win-win,” both for China and the host countries of its manifold investment and infrastructure projects. One of the big wins for Beijing has been the development of companies like CRBC. In 2018, CRBC undercut European competition to win an EU-funded project in Croatia, causing controversy and prompting anxious questions about the competitiveness of European construction firms in a world dominated by Chinese giants.</span></span></span></p> <p><span><span><span>“Between countries, it is like between people,” Song says, “If a person is working hard, studying hard, then they will secure a good future. China is working hard too. We want life to be better and these things push us to work.”</span></span></span></p> <p><span><span><span>The Kyrgyz employees I speak to are near universal in their praise of the Chinese work ethic. Nurlan works for CRBC as an engineer. He’s gentle and disarmingly affable, but plain spoken - “Migration is in their blood,” Nurlan says of the Chinese workers, “they have a hard life, and they expect a hard life.” </span></span></span></p> <p><span><span><span>Before CRBC, Nurlan worked for an Iranian company. “The Iranians like a comfortable life. They’ll order dinner at restaurants and expense it to the company. The Chinese,” Nurlan tells me, “are not spending money for themselves - only on the road.”</span></span></span></p> <p><span><span><span>According to Nurlan, another big difference is that CRBC have capital to play with. “They can build with their own money,” Nurlan says, “the Iranians might have to lay down tools if their funds get caught up in the system, but I’ve never seen CRBC stop work.” CRBC will bid for tenders even if the profit margins are small or non-existent - “they have workers, equipment here, they need to keep working, so they will win even just to keep their position.”</span></span></span></p> <p><span><span><span><strong>Corporate appetite and personal drive</strong></span></span></span></p> <p><span><span><span>China’s infrastructure initiative isn’t just a tale of national ambition - of geo-economic will to expand influence and develop trade routes. The BRI is also a story of corporate appetite and personal drive. “The ambition of CRBC is to be the best contractor in the world,” Song tells me. </span></span></span></p> <p><span><span><span>“And what about you?” I ask, “what do you work so hard for?”</span></span></span></p> <p><span><span><span>“If I have the ability, I want to control a company branch. That's my purpose...I studied hard at school. I went to university. I want to do well." Song’s biggest challenge professionally: “the language barrier.” Personally? “I miss my family.” Homesickness is a problem for everyone here.</span></span></span></p> <p><span><span><span>Next door to Song’s office I talk to two young engineers. Like Song, both men came here fresh out of university. One of them sports a Star Wars t-shirt and a thin gold chain. His name is Wu. He came to Kyrgyzstan in 2015, right after marrying his wife. “What does your wife think?” I ask.</span></span></span></p> <p><span><span><span>“She definitely hopes to be together. We have a daughter, two years old. I had to sacrifice time with my family to be here.”</span></span></span></p> <p><span><span><span>“And what did you get for this sacrifice?” I ask.</span></span></span></p> <p><span><span><span>“What do I get in return…” He pauses and looks at his computer screen, as if hoping for an answer. “That’s a very good question. I also ask myself this often,” he says.</span></span></span></p></div> </div> </div> Tue, 17 Dec 2019 13:10:07 +0000 h.seidl 10681 at Protests along the BRI: China’s prestige project meets growing resistance <span>Protests along the BRI: China’s prestige project meets growing resistance</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Tue, 12/10/2019 - 10:54</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2019-12-10T12:00:00Z">2019-12-10</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/oyuna-baldakova" hreflang="en">Oyuna Baldakova</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Anti-Chinese protests in Russia and Kazakhstan show that</span></span></span> <span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Beijing’s Belt and Road projects can be undone by the popular resistance and local politics of their host countries.</span></span></span> <span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Government support is not enough, </span></span>says Oyuna Baldakova.</span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2019-12/191210_Laike_Baikal_pbu783933_03.jpg?itok=z-9TXTku 325w, /sites/default/files/styles/max_650x650/public/2019-12/191210_Laike_Baikal_pbu783933_03.jpg?itok=LO3XDvl_ 650w, /sites/default/files/styles/max_1300x1300/public/2019-12/191210_Laike_Baikal_pbu783933_03.jpg?itok=9wNPa4FU 1300w, /sites/default/files/styles/max_2600x2600/public/2019-12/191210_Laike_Baikal_pbu783933_03.jpg?itok=3uI9ooJ2 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-12/191210_Laike_Baikal_pbu783933_03.jpg?itok=z-9TXTku" alt="Lake Baikal, Siberia" title="A public outcry led a court to shelve construction of a Chinese-financed water-bottling plant on Lake Baikal in Siberia. Image by ImagineChina" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Powerful anti-Chinese protests in Russia and Kazakhstan show that</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> popular prejudice and local politics can endanger Chinese projects even in countries whose governments regard Beijing as a crucial partner. China is learning the hard way that the greater its influence abroad and the more numerous its foreign initiatives, the more carefully it has to tread. </span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Russian President Vladimir Putin and his Chinese counterpart Xi Jinping declared Russia and China would form a “comprehensive strategic partnership of coordination for a new era” when they met in Moscow in June ­– only three months after a public outcry led a court to shelve construction of a Chinese-financed water-bottling plant on Lake Baikal in Siberia. </span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The Irkutsk court disagreed with previous findings that drawing water from the world’s largest freshwater resource would have no major environmental impact. This was noteworthy as t</span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>he plant at Kultuk would not have been the first one on Lake Baikal -</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> some </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">environmentalists</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> did not even feature it in their Top Ten of regional environmental dangers.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The judge’s ruling that the AkvaSib plant was illegal cheered a population in which anti-Chinese sentiment is rife. Grievances range from local ones about an influx of </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Chinese tourists</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> and the mushrooming of illegally built, Chinese-owned lakeside hotels to wider regional worries about sizeable – and at times illegal – </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">logging of timber</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> for export to China and the large-scale </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">lease of farmlands</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> in the Russian Far East to Chinese farmers.</span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Anti-Chinese sentiments are often instrumentalized </span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Historically conditioned Sinophobia feeds such attitudes, but so too does local mistrust of all levels of often intransparent and uncommunicative Russian government. When it combines with worries about China’s influence, potent dramatizations can result – for example, fears about corrupt officials “selling off” land or other assets to Chinese investors. Local elites too can instrumentalize such narratives to score points against local or national political rivals.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">One of the alleged sponsors of a massive </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">online campaign</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> against the AkvaSib project was often said to have been the Russian oligarch </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Oleg Deripaska</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">. He owns one of the existing </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">water-bottling plant</span></a><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">s</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> on Lake Baikal and has an interest in keeping the number of companies shipping water to China as low as possible. In September’s elections for Irkutsk city council, a number of candidates unabashedly used anti-Chinese rhetoric to attract voters.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Anti-Chinese sentiments are often instrumentalized not to score points against Beijing, but to send a message to the host countries’ rulers. With weak judiciaries and almost no independent media, populations are susceptible to strong political messages that spread via messaging apps and other unregulated social media channels.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Rumors spread by social media in Kazakhstan unleashed a wave of anti-Chinese rallies throughout its major cities in September – just before President Kassym-Jomart Tokayev traveled to Beijing to upgrade the Sino-Kazakh from an “all-round strategic partnership” to a “permanent comprehensive strategic” one. Popular mobilization was often attributed to </span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Mukhtar Ablyazov</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">, the exiled leader of the banned party Democratic Choice of Kazakhstan. </span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Local shows of dissent are a </span></strong><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>big problem for Xi Jinping</span></span></span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The protests started in Zhanaozen, an oil town in western Kazakhstan with high unemployment that witnessed the </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>bloody repression of protests in </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">2011</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">. </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Rumors spread that China planned to relocate factories to Kazakhstan. Stories of the “</span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">55 Chinese factories</span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">” came with warnings about potential Chinese expansion and an influx of Chinese workers, the mounting debt owed China, and the mass detention of co-ethnic Kazakhs in Xinjiang.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The episodes centered on Kultuk and Zhanaozen stand for a string of other anti-Chinese protests in countries whose governments declare themselves major BRI-supporters. Local shows of dissent are embarrassing for the leaders of these host countries. But they are a </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>bigger and urgent problem for Xi, as they show how difficult</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> it has become for Beijing to avoid or control any unintended consequences related to its multitude of BRI projects.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">A growing number of China’s firms are “going out” to tackle projects abroad even though their ability to undertake a thorough analysis of complex realities on the ground and engage with local populations is limited. There is a real risk that more projects could be derailed for reasons other than the projects being ill advised. And this could feed a vicious circle as the negative effects of the “projects gone bad” reinforce popular anti-Chinese sentiments. </span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">China cannot control a host country’s local politics or the commercial interests of local oligarchs. But it does have considerable sway over Chinese companies venturing abroad. It is in Beijing’s interests to make these outward investments more transparent and to take tighter control over the projects being tackled by Chinese companies “going out”.</span></span></span></span></span></p> <p><span><span><span><span><strong><em><span><span><span>Oyuna Baldakova is a Visiting Academic Fellow at MERICS from October 2019 until January 2020. She is currently pursuing a PhD at the Graduate School of East Asian Studies at Freie Universität Berlin.<strong> </strong></span></span></span></em></strong></span></span></span></span></p> <p><span><span><span><span><strong><em><span><span><span>The views expressed in this article are those of the author and not necessarily reflect those of the Mercator Institute for China Studies.</span></span></span></em></strong></span></span></span></span></p></div> </div> </div> Tue, 10 Dec 2019 09:54:06 +0000 komprakti 10661 at Hong Kong: What’s next? <span>Hong Kong: What’s next?</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Thu, 12/05/2019 - 14:45</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2019-12-06T12:00:00Z">2019-12-06</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/frank-n-pieke" hreflang="en">Frank N. Pieke</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">For months now Hong Kong has gone through a rollercoaster of escalating protest, police action and government intransigence. The impression is left of a government that is out of touch with the population, unable or unwilling to represent Hong Kong’s interests against China and, most of all, without a game plan.</span></span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2019-12/191031_HK_Journalist_runs_away_from_tear_gas_Lan_Kwai_Fong_Katherine_Cheng_via_Flickr_CC%20BY-ND%202.0.jpg?itok=5tobR4Eg 325w, /sites/default/files/styles/max_650x650/public/2019-12/191031_HK_Journalist_runs_away_from_tear_gas_Lan_Kwai_Fong_Katherine_Cheng_via_Flickr_CC%20BY-ND%202.0.jpg?itok=KgrVq1gM 650w, /sites/default/files/styles/max_1300x1300/public/2019-12/191031_HK_Journalist_runs_away_from_tear_gas_Lan_Kwai_Fong_Katherine_Cheng_via_Flickr_CC%20BY-ND%202.0.jpg?itok=dnao-DUO 1300w, /sites/default/files/styles/max_2600x2600/public/2019-12/191031_HK_Journalist_runs_away_from_tear_gas_Lan_Kwai_Fong_Katherine_Cheng_via_Flickr_CC%20BY-ND%202.0.jpg?itok=As5vhcx6 1920w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-12/191031_HK_Journalist_runs_away_from_tear_gas_Lan_Kwai_Fong_Katherine_Cheng_via_Flickr_CC%20BY-ND%202.0.jpg?itok=5tobR4Eg" alt="A journalist runs away from tear gas at Lan Kwai Fong, Hong Kong " title="Image by Katherine Cheng via Flickr (CC BY-ND 2.0)" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">In June, the administration of this Chinese “Special Economic Zone” and former British colony proposed a new bill for the extradition of people in Hong Kong to the People’s Republic of China. The bill triggered the growing apprehensions and fears of the Chinese government, whose mounting influence and interference in Hong Kong’s society, economy and government increasingly violated Hong Kong’s special status under the principle of “One Country, Two Systems”. </span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">In November, protestors’ violent occupation of several university campuses was met with an equally violent police response, escalating the anti-government movement to a level unheard of in Hong Kong since its retrocession to China in 1997. The occupations had happened in response to the government’s stubborn refusal to accept any further demands of the movement after it had withdrawn the extradition bill in September. Although some of the demands are indeed difficult simply to concede (universal suffrage, the resignation of Chief Executive Carrie Lam), even the very moderate and reasonable demands for </span><span lang="NL" xml:lang="NL" xml:lang="NL">retraction of the official characterization of the protests as “riots” or </span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">an independent inquiry into police brutality have been brushed aside as well.</span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">Beijing has little interest in a genuine understanding of Hong Kong</span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">The impression is left of a government that is out of touch with the population, unable or unwilling to represent Hong Kong’s interests against China and, most of all, without a game plan. Clearly, strategy is decided not in Hong Kong itself, but in Beijing. Although the Chinese authorities quite wisely have thus far refrained from direct interference, they seem to have little interest in a genuine understanding of Hong Kong or finding ways to allay the apprehensions about China among large sections of the population.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">Despite the escalation of violence over the last few months, Hong Kong remains in a stalemate. Neither the protestors nor the government or Beijing have a strategy that might lead to a solution. However, the district council elections on 24 November in which anti-establishment candidates won a landslide victory could be a turning point, especially after the US president signed two bills regarding Hong Kong into law just two days later. The first requires an annual review of Hong Kong’s human rights record in order for the territory to keep its separate status and thus remain excluded from US trade sanctions against China. The second bill bans the sale of crowd-control munitions like tear gas and rubber bullets to the Hong Kong police.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">The election result and the new legislation in the US have given the anti-establishment movement new hope, putting further pressure on to the Hong Kong government and Beijing. Although this might break through the current stalemate, it also raised the stakes enormously.</span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">Hong Kong’s newly elected district councillors could use their position to form a broad coalition to pressure the government to make genuine concessions. As councillors, they now have a legitimate platform as representatives of the vast majority of the population, giving the movement the leadership and public face that it lacked until now. However, they should be quick and decisive and not wait for a possible flareup of spontaneous demonstrations. Even more seriously, there is the danger of radicalization among some of the young participants in the demonstrations and university occupations of recent weeks. If terrorist attacks were to happen, Beijing will most likely conclude that there is no other option than direct intervention.</span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">New US legislation makes Hong Kong events part of the US-Chinese conflict</span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">The new US legislation is a distinctly two-edged sword. It increases the pressure on the government and Beijing, showing that the world is watching and no longer prepared to stand idly by. Hong Kong might be Chinese sovereign territory, but China is still beholden to the terms of the Joint Declaration with the UK in 1984 that guarantees the special status and separate system of Hong Kong. However, the two new US laws now also openly make the events in Hong Kong part of the conflict between China and the United States. As just one piece on the chessboard, Hong Kong might in the future find itself sacrificed for a higher aim if that suits either Beijing or Washington. </span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">Of course, as first a colony and then a special administrative zone, Hong Kong’s future never fully was in the hands of the people of Hong Kong anyway. However, recent developments have made the territory’s destiny even more contingent on a great power game over which it has no control. European governments could have a role to play here. Where the US seeks confrontation in stark human rights terms, Europe should continue to insist on the relevance of the 1984 Joint Declaration and focus on the continued relevance of the “One Country, Two Systems” formula. It would be a huge step forward to restore Hong Kong’s trust if China agrees to abide by this formula also after 2047 when the fifty-year term of the Joint Declaration ends.</span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">The protesters and the Hong Kong government must find ways to sort out differences</span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB">The only way for Hong Kong to decide its own future is for the Hong Kong government and protest movement to find ways to sort out their differences. The government must accept the movement’s most immediate demands (an independent inquiry in police brutality, no longer branding the protests as riots) and begin to act as a real government of Hong Kong rather than Beijing’s proxy. The latter will require genuine elections, also of the Chief Executive, and a timetable that needs to be negotiated. The movement in turn requires real and united leadership, must accept any genuine concessions from the government, and avoid any further dangerous escalation. All of this requires great wisdom and courage, and fast.  </span></span></span></span></span></p></div> </div> </div> Thu, 05 Dec 2019 13:45:29 +0000 h.seidl 10646 at Europe’s backlash against Huawei has arrived <span>Europe’s backlash against Huawei has arrived</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Fri, 11/29/2019 - 14:06</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2019-11-29T12:00:00Z">2019-11-29</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/noah-barkin" hreflang="en">Noah Barkin</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Resistance to Chinese technology is growing in Germany—and the ripple effects could reach across the continent.</span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2019-11/190129_Mobile_screen_5G_ImagineChina_bjl6613453.jpg?itok=lkTmFQMj 325w, /sites/default/files/styles/max_650x650/public/2019-11/190129_Mobile_screen_5G_ImagineChina_bjl6613453.jpg?itok=kSb82QMx 650w, /sites/default/files/styles/max_1300x1300/public/2019-11/190129_Mobile_screen_5G_ImagineChina_bjl6613453.jpg?itok=FoDG_VyC 1300w, /sites/default/files/styles/max_2600x2600/public/2019-11/190129_Mobile_screen_5G_ImagineChina_bjl6613453.jpg?itok=CWVR5bQR 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-11/190129_Mobile_screen_5G_ImagineChina_bjl6613453.jpg?itok=lkTmFQMj" alt="Image by ImagineChina " title="Image by ImagineChina" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The eastern German city of Leipzig was supposed to be the site where Angela Merkel crowned her fourth and final term as chancellor with a foreign-policy coup: a comprehensive investment agreement with China sealed in the presence of President Xi Jinping and fellow EU leaders. Instead it could be remembered as the place where Merkel’s China policy was thrown irreversibly off course by rebels in her party who refused to accept her plans to allow the Chinese telecommunications group Huawei to build Germany’s fifth-generation mobile network.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">It is not clear yet whether the revolt—led by former Environment Minister Norbert Röttgen and supported by a cross-party grouping of lawmakers and cabinet officials as well as Germany’s intelligence agencies—will succeed. But there is a chance that it will. And if it does, we could look back on Leipzig as an inflection point in Germany’s—and Europe’s—relationship with China.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">That is because an exclusion of Huawei in Germany could have a ripple effect across Europe, encouraging other countries to follow suit. Excluding Huawei would also upset the delicate balance Merkel has been trying to strike between Washington and Beijing, Germany’s two biggest trading partners outside of Europe. And it would probably trigger a forceful response from Beijing that could undermine Germany’s already faltering economy and hit some of its biggest firms, inexorably pushing the country, and Europe, down a more confrontational path with Beijing.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">This is not how Merkel wants to end her 16-year reign as chancellor. After a year in which the European Union, encouraged by Germany, began to push back more aggressively against China, introducing a new mechanism to screen foreign investments and declaring Beijing a “systemic rival,” 2020 was supposed to be the year in which Berlin and Brussels reaped the fruits of their tougher stance. Under acute pressure from US President Donald Trump’s trade war, the reasoning went, Xi would be compelled to find common ground with Europe. It was a chance for the EU to wring concessions from China on a range of issues, including long-stalled negotiations on an investment agreement that would open up the Chinese market to European firms.</span></span></span></span></p> <p><strong><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">China's appetite for compromise seems limited</span></span></span></span></strong></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">In recent months, Merkel signaled that she wanted to sign off on the investment deal at a summit in Leipzig next September attended by Xi and fellow European leaders. But she is not off to a good start. With a year to go until the U.S. election, it is Trump, not Xi, who is under pressure to deliver his promised trade deal with China. Beijing has hunkered down, refusing to budge on the big structural changes that Trump’s negotiators want most. This has shifted the dynamic with Europe. China’s appetite for compromise, which seemed ample last April when it bowed to EU pressure and made a series of reform pledges—on technology transfers, subsidies, trade rules and investments—suddenly seems limited. Officials in Brussels say Beijing is refusing to take meaningful steps in negotiations on the investment agreement. </span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">If anything, Beijing has grown more defensive and combative with Europe in recent months amid new revelations about the mass detention of Muslims in China’s western region of Xinjiang and escalating protests in Hong Kong. In recent weeks, China has threatened Sweden with “consequences” for awarding a freedom of speech prize to Gui Minhai, a Chinese-born Swedish publisher imprisoned in China for printing books critical of the government. And a former employee of the British Consulate in Hong Kong has accused Chinese police of torture. Stories like this have added wind to the sails of those in Germany and elsewhere in Europe who are pressing for a ban of Huawei, a company they say is under the thumb of the Chinese Communist Party and an active enabler of its dystopian surveillance state, including in Xinjiang. (Huawei denies both.)</span></span></span></span></p> <p><strong>An increasingly charged debate over 5G in Germany</strong></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Relations between Berlin and Beijing have grown more tense in recent months. The Chinese leadership has still not forgiven German Foreign Minister Heiko Maas for meeting with the Hong Kong pro-democracy activist Joshua Wong in Berlin in September and has canceled a series of bilateral meetings. German officials say they are still waiting for China to propose a date for government consultations—Berlin and Beijing’s flagship annual meeting. The Germans want to hold this in the first quarter of next year, before an EU-China summit in Beijing, for which there is also no firm date. “Serious damage has been done to the bilateral relationship in many areas,” the Chinese ambassador to Germany said in a speech in Bonn this week.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The tensions are building against the backdrop of an increasingly charged German debate over 5G. After Peter Altmaier, Merkel’s economy minister, made a clumsy attempt to defend Huawei in the aftermath of the weekend rebellion—equating the risks of spying from China with those emanating from an “unreliable” United States—he came under attack from Trump’s envoy to Germany.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">While Huawei critics argue that the risks of entrusting critical 5G infrastructure to a company that under Chinese law is obliged to collaborate with the country’s intelligence apparatus, Merkel and Altmaier have highlighted the economic risks of excluding it.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Germany’s carmakers and big industrial heavyweights, from Siemens to the chemicals group BASF, rely heavily on the Chinese market. They are desperate to prevent  a backlash from China that seems certain to result from an exclusion of Huawei.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">And they have good reason to worry: During a visit to Beijing in September, Merkel was warned by Chinese leaders that an exclusion of the Shenzhen-based group from the German 5G network would have serious consequences for bilateral economic ties, according to German officials. It would certainly doom the chances of clinching Merkel’s cherished investment agreement. And her Leipzig summit next year, meant to be the high point of Germany’s EU presidency and a crowning achievement before she leaves the political stage, would probably go up in smoke.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">That could explain why, weeks after Merkel’s Beijing visit, German security criteria for 5G were watered down, with her approval, opening the door to Huawei. This softening triggered the rebellion last weekend, one of the biggest challenges to Merkel’s authority in recent years.</span></span></span></span></p> <p><strong>Growing resistance against Merkel's Huawei-friendly stance</strong></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The lead rebel Röttgen, who ran afoul of Merkel when he was environment minister and was sacked by her in 2012, is now head of the foreign affairs committee in the German parliament and a prominent critic of her government’s strategic inertia. Last month, he assembled a group of conservative allies to fight back against Merkel’s Huawei-friendly stance. Lawmakers from the Social Democrats, Merkel’s coalition partners, soon joined in, followed by Maas, the foreign minister. When Merkel’s hand-picked successor, Annegret Kramp-Karrenbauer, who is also defense minister and leader of the Christian Democratic Union, questioned the wisdom of including Chinese suppliers in early November, the battle was officially on.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">At their party conference in Leipzig, Merkel’s Christian Democrats backed a motion that would give the lower house of parliament a veto on the security criteria for 5G suppliers like Huawei. The text ensures the criteria will include language that rules out suppliers that might be subject to the influence of a foreign country. “This is not about Huawei,” Röttgen said. “It’s about the fact that Huawei is a company that can’t escape the influence of the Communist Party leadership, whether it wants to or not.”</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">It may take months to know for sure whether his rebellion will succeed. But Huawei’s prospects in Germany, and in Europe, are looking shakier by the day.</span></span></span></span></p> <p><em><strong>This article was first published in <a href="">"Foreign Policy"</a> on November 27, 2019.</strong></em></p> <p><em><strong>Noah Barkin is a Berlin-based journalist who has written about European political and economic themes for Reuters and other publications for more than two decades. He is a</strong><strong> Visiting Academic Fellow at MERICS.</strong></em></p> <p><em><strong>The views expressed in this article are those of the author and not necessarily reflect those of the Mercator Institute for China Studies.</strong></em></p></div> </div> </div> Fri, 29 Nov 2019 13:06:15 +0000 komprakti 10621 at Pricey currency exchange <span>Pricey currency exchange </span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Fri, 11/22/2019 - 09:06</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2019-11-22T12:00:00Z">2019-11-22</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/maximilian-karnfelt" hreflang="en">Maximilian Kärnfelt</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Beijing can’t allow the yuan to keep falling, says Maximilian Kärnfelt. A weaker currency is good for exporters, but bad for other parts of the economy. </span></span></span></span></span></span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2019-11/19102_Dollar_Yuan_123rf_kenishirotie_26158728_m.jpg?itok=U7gVhWmm 325w, /sites/default/files/styles/max_650x650/public/2019-11/19102_Dollar_Yuan_123rf_kenishirotie_26158728_m.jpg?itok=Ot2pTmJ4 650w, /sites/default/files/styles/max_1300x1300/public/2019-11/19102_Dollar_Yuan_123rf_kenishirotie_26158728_m.jpg?itok=8OpafsCr 1300w, /sites/default/files/styles/max_2600x2600/public/2019-11/19102_Dollar_Yuan_123rf_kenishirotie_26158728_m.jpg?itok=YErzoL7T 2507w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-11/19102_Dollar_Yuan_123rf_kenishirotie_26158728_m.jpg?itok=U7gVhWmm" alt="Pricey currency exchange " title="Image via 123rf by Kenishirotie 26158728" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Since the US-China trade war started in 2018, Beijing has thumbed its nose at higher US import duties by letting the yuan (CNY) depreciate by more than seven percent. This has kept Chinese exports from plummeting, but burdened other, less sturdy parts of the economy. As a result, China’s leadership does not have much room for further controlled depreciation – at some point, international investors could even sell CNY-denominated assets, although capital controls are in place.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Depreciation has shielded China’s exporters from the trade war, easing the pressure on corporate profits and jobs - two pillars of social stability. But it has shifted the burden onto external finances by making it more expensive to import, invest abroad, and service foreign debt. Government and consumers – and even companies – are feeling the pinch. </span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>If the US does not lift tariffs, China will only have limited room to use its currency to shield its export sector.</span></span></span></span></span></span></span></span></p> <p><strong>Supporting exports, hurting external purchasing power</strong></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>At the start of last year, the CNY traded at 6.5 yuan to the USD and it now trades around 7, a depreciation of 7.4 percent. Investors sold yuan when the US announced new tariffs and escalated the trade war; they bought yuan on news talks were progressing – and recently did so again on hopes of a “phase one” trade agreement. But there has been more escalation than de-escalation and, as Chinese economic growth slowed, downward pressure on the yuan left its mark.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>The People’s Bank of China (PBOC) could have resisted that trend, but appears to have happily desisted. China’s central bank avoided selling foreign currency reserves to prop up or inflate the value of its currency – the country’s reserves increased by more than 27 billion USD last year. Instead, the PBOC was careful to move the CNY-rate of its daily dollar fixing gradually downwards with the market, while carefully controlling resulting capital outflows.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>A weaker currency has ensured China’s exports only contracted slightly. In September, China’s year-to-date exports have fallen by only 0.2 percent. By supporting exports, China’s authorities have kept some of the negative effects from the trade war from causing social instability. This was an especially important goal ahead of the 70th anniversary of the founding of the People’s Republic of China (PRC), though it is a policy priority at any time.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>But a depreciating yuan has hurt China’s external purchasing power, which means economic foreign policy has become more expensive. Foreign infrastructure projects like those connected to the Belt and Road Initiative (BRI) network have become more costly for their Chinese backers. Depreciation also worked against Beijing’s goal of internationalizing the yuan as foreign investors’ confidence in the value of the currency took a knock or two.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Depreciation has also made buying anything in USD more expensive for Chinese companies. They import enormous amounts of USD-denominated commodities such as oil and gas, have shown a large appetite for acquiring foreign businesses in recent years, and have steadily raised their exposure to debt in foreign currencies. In particular, servicing these foreign debts would become increasingly difficult if the yuan were to decline more. </span></span></span></span></span></span></span></span></p> <p><strong>Beijing cannot let the yuan lose much more in value</strong></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>The yuan’s falling value also looks set to hit consumers - imported goods will become more expensive and inflation risks increase. If exporters sell dollar earnings to the PBOC, the domestic money supply could rise as the central bank prints money. It had avoided this problem in the past by instructing banks to keep a large capital reserves, but recently cut requirements in response to slowing economic growth.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Beijing cannot let the yuan lose much more in value – there appears to be little room below the 2008 low of 7.2 to the dollar. Corporate debt defaults have not yet risen, but Chinese billions continue to flow into foreign projects and living costs are rising. Food prices in September were 8.4 percent higher than the year before, and average houses price in 70 cities in August were up 9 percent. Depreciation is not to blame for these trends, but could yet worsen them. </span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>If that won’t deter Beijing, the specter of capital flight surely will. If investors fear more depreciation or view current exchange-rate losses on investments as too high, they could sell their yuan-denominated assets. Capital controls are meant to prevent this, but panicked investors could trigger capital flight, financial-sector turmoil and a drop in the currency. As in 2015, China would have to spend its prized currency reserves to <a href="">defend the yuan</a></span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>.</span></span></span></span></span></span></span></span></p></div> </div> </div> Fri, 22 Nov 2019 08:06:41 +0000 komprakti 10551 at