MERICS Blog - European Voices on China en Get yourself a job: Beijing’s measures to tackle rising youth unemployment <span>Get yourself a job: Beijing’s measures to tackle rising youth unemployment</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Mon, 07/22/2019 - 09:52</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="2019-07-22T12:00:00Z">2019-07-22</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/kristin-shi-kupfer" hreflang="en">Kristin Shi-Kupfer</a>, <a href="/en/team/max-j-zenglein" hreflang="en">Max J. Zenglein</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span>In 2019, an estimated record number of graduates will enter China's labor market – and there are indications that many will struggle to find a position. How does the country create jobs for the 8.34 million students who will graduate from its universities this year? To deal with the challenge, different regions have been experimenting with different solutions.</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/2019-07/190722_University_Graduates_bjl11097409.jpg?itok=P_aESFDs 325w, /sites/default/files/styles/max_650x650/public/2019-07/190722_University_Graduates_bjl11097409.jpg?itok=gbXjAJm9 650w, /sites/default/files/styles/max_1300x1300/public/2019-07/190722_University_Graduates_bjl11097409.jpg?itok=ICQzniTy 1300w, /sites/default/files/styles/max_2600x2600/public/2019-07/190722_University_Graduates_bjl11097409.jpg?itok=zZKCe0NW 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-07/190722_University_Graduates_bjl11097409.jpg?itok=P_aESFDs" alt="University graduates" title="In 2019, a record number of 8.34 million students will graduate from China&#039;s universities. 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>Looking at China’s official labor market statistics, all seems well: The latest surveyed unemployment rate in urban areas fell to five percent from a peak of 5.3 percent in February. Likewise, the ratio of labor demand to supply remains close to historic high levels of 1.28. For the first five months of the year the government claims to have created 5.97 million urban jobs, up 20 percent from the same period last year. As in previous years the government seems well on track to reaching its annual target of eleven million new urban jobs.</p> <p>Given this rosy picture, why then did Beijing create a new leading small group (LSG) for exactly this topic? LSGs are normally only established for major tasks that are particularly challenging. Yet in May, a State Council Employment Work Leading Group was set up, headed by Vice-Premier Hu Chunhua. Its 25 members are the vice leaders of nearly every ministry and institution. Its task: “researching as well as solving the major problem of employment.”</p> <p><strong>There is a sense of urgency among China’s leadership</strong></p> <p>Despite the seemingly strong labor market data there is clearly a sense of urgency among China’s leadership. Employment policies have been elevated to the status of macroeconomic policy by the government for the first time. In part this has to do with a more long-term structural transformation in the labor market, including technological change, but it also has to do with the current economic slowdown.  </p> <p>Indeed, data from non-government sources suggests a more challenging picture. According to China’s Institute of Economic Research (CIER), overall job offerings fell by 7.6 percent, while job seekers grew by 31.1 percent in the first quarter of 2019, lowering the overall ratio between supply and demand from 1.91 last year to 1.68. The Purchasing Managers’ Index sub-index on employment has fallen to the lowest level since 2009 for manufacturing and is nearing the historic low for the service sector.</p> <p>At the Summer Davos meeting in China’s northern city of Dalian on July 2, Han Jian, an associate professor with the China Europe International Business School, spelled out the potential impact on employment of the ongoing tensions with Washington, with estimated job losses ranging from 500,000 in the best-case scenario to 27 million in the worst case, according to different institutes’ calculations. However, demand for labor had already started falling before the trade war began, caused as much by the slower growth in GDP, a slowdown in the previously booming internet service sector, and by efforts to reign in risks in the financial sector. According to China Market Research Group more than 80 per cent of companies hiring graduates were not advertising for new staff. And more than half had reduced their openings, with banking worst hit.</p> <p><a href=""><img alt="China's educated youth is putting pressure on the labor market" data-entity-type="file" data-entity-uuid="52d8aa48-3451-464d-88c4-6e1486bf1f99" height="772" src="/sites/default/files/inline-images/Economic%20Indicators_Q2_2019_FocusTopic_%201_0.jpg" width="1158" /></a></p> <p>Still, new businesses in the internet and mobile internet sector have created some 30 million jobs, which, according to Han, indicates that China should be fine. Yet what Han highlights here is both a core feature of China’s employment policy for graduates and a structural problem of the labor market. How does the country create jobs for the 8.34 million students who will graduate from its universities this year? Different regions have been experimenting with different solutions. The province of Jiangsu, for example, is offering students the opportunity to apply for a two-year social service-related job. In Beijing, meanwhile, one key solution for the country is to allow the record number of graduates in 2019 to become self-employed and, ideally, drivers of mass innovation. Described as “big masses create employment (=businesses), ten thousand masses create innovation (大众创业,万众创新)”, the policy was initiated by Premier Li Keqiang in May 2014. </p> <p><strong>Graduates end up in jobs with salaries that are a far cry from their expectations</strong></p> <p>The city of Tianjin, by contrast, has decided to focus on offering special support for young graduates between 16 and 35 who have been unemployed for over a year. Among the offerings are guided tours through start-up parks, meetings with potential investors and access to specific seed funding.</p> <p>The results of these employment initiatives are not easy to assess given the fierce competition in the start-up sector and the frequent race-to-the-bottom in terms of pricing, particularly in industries such as food delivery and transportation. Making a decent living in the medium term might remain a distant dream for many of those who have founded start-ups or are employed in these service industries.</p> <p>This also reflects changing expectations among the young urban middle class. Many graduates end up in jobs with salaries that are a far cry from their original expectations. According to the online job platform Zhaopin, while a third of graduates are looking for monthly salaries of between 6,000 CNY (US$868) and 7,999 CNY (US$1,158), only 18 percent actually achieve this, adding to the social pressure young graduates face in finding adequate jobs. The problem, it claims, lies in a stark mismatch between what companies are looking for and what the labor market offers. For instance, even though demand for employees in the intermediate services sector increased by 25 per cent, applications from graduates declined 21 per cent.</p> <p><strong>Growing dissatisfaction has led to the creation of a small youth movement </strong></p> <p>It is not only that there is a mismatch in terms of sectors, but also in terms of expertise requirements and choice of lifestyle. Take the example of software engineers: Companies like Jingdong or Tencent offer up to 700 CNY per hour, yet still they struggle to find suitably qualified candidates. Meanwhile, the recent public outcry by young IT engineers, following Jack Ma’s call to enjoy working hard from 9am to 9pm six days a week, is a clear indicator that there is also a mismatch in terms of lifestyle expectations.</p> <p>Growing dissatisfaction and disappointment among graduates have led to the creation of a small, but nevertheless active group of young “leftist” students in Southern China who are committed to improving labor rights and workers’ rights. Beijing is worried that this youth movement could form potential alliances and bring graduate employment perspectives to the top of the agenda. If unemployment levels among middle class graduates grow, the structural problems in the employment market could turn into a larger socio-political crisis that Beijing would struggle to control.</p> <p><strong><em>This article is part of the<a href="/merics-trackers/economic-indicators-q2-2019"> latest issue of the MERICS Economic Indicators, </a>a project monitoring China's economic development.</em></strong></p></div> </div> </div> Mon, 22 Jul 2019 07:52:53 +0000 h.seidl 9606 at Recalibrating the price of "Made in China" <span>Recalibrating the price of &quot;Made in China&quot;</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Tue, 07/16/2019 - 14:20</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="2019-07-17T12:00:00Z">2019-07-17</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/michelle-tsai" hreflang="en">Michelle Tsai</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong>Traditionally among the biggest investors in China, Taiwanese companies are shifting their focus to neighboring countries. Michelle Tsai says the US-China trade conflict is only one reason.  </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/2019-07/190717_Foxconn_adrianhancu_via_123rf.jpg?itok=XkIPx_o- 325w, /sites/default/files/styles/max_650x650/public/2019-07/190717_Foxconn_adrianhancu_via_123rf.jpg?itok=LJ1RauL1 650w, /sites/default/files/styles/max_1300x1300/public/2019-07/190717_Foxconn_adrianhancu_via_123rf.jpg?itok=_BhgZTL4 1300w, /sites/default/files/styles/max_2600x2600/public/2019-07/190717_Foxconn_adrianhancu_via_123rf.jpg?itok=ftXGNfXh 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-07/190717_Foxconn_adrianhancu_via_123rf.jpg?itok=XkIPx_o-" alt="Foxconn" title="Since the late 1970s, Taiwanese businesses such as Foxconn have flocked to China for its promise of large markets and cheap labor. Image by adrianhancu 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>Taiwanese master-baker Wu Pao-chun was left in a tricky situation late last year as he opened a first Chinese outlet, in Shanghai. Needled by mainland social-media criticism about his purported support for an independent Taiwan, Wu publicly declared himself “Chinese” and a supporter of unification. But his move failed to lure Chinese customers in great number – and offended many of his long-standing Taiwanese regulars.  </p> <p><strong>Beijing seems ever more willing to interfere in economic activities </strong></p> <p>Since China launched economic reform in the late 1970s, Taiwanese businesses have flocked to China for its promise of large markets or cheap labor – or both. But Wu’s predicament shows political risks remain as Beijing seems ever more willing to interfere in economic activities. Despite four decades of economic interflows, a growing number of Taiwanese enterprises are finding the lure of “Made in China” too good to be true.  </p> <p>This is a momentous shift: as experienced manufacturing partners of Western brands and China’s tactical target of unification, Taiwanese companies are among those that pioneered investment into Chinese plant and equipment. The endless supply of commodities ‘Made in China’ that today have become part of daily life all the globe - from toys to electronics – exist thanks to Taiwanese investors as much as Chinese laborers.  </p> <p><strong>Taiwanese businesses have started to channel their capital to countries other than China </strong></p> <p>As of 2017, China’s Department of Commerce recorded Taiwan as the seventh largest source of foreign direct investment (FDI) in China – though it did not account for what are thought to be huge Taiwanese investment flows via Hong Kong, China’s largest FDI source. Together, investors from Hong Kong and Taiwan own 58 percent of foreign companies in China.  </p> <p>But in recent years, Taiwanese businesses have started to channel their capital to countries other than China. Official statistics show that Taiwanese investment into China fell from 81.2 percent of Taiwan’s total FDI-outflow in 2010 to 43 percent in 2017 as companies relocate factories to lower-cost countries in Southeast Asia, to the United States upon client’s request, or back to Taiwan.  </p> <p>The ongoing US-China trade dispute will probably only increase this trend. US imports from China decreased by 13.9 percent in the first quarter in annual comparison, while imports from Taiwan and Vietnam increased by 21.2, and 40.2 percent respectively. Taiwanese enterprises in China have started shifting investment back to Taiwan. The Ministry of Economic Affairs puts the figure at 411.7 billion New Taiwan Dollars (EUR 11.7 billion) and 36,850 jobs thus far this year – and the supply chain will likely change even more if the prospect of a long Sino-American trade stand-off prompts more manufacturers to leave China. </p> <p><strong>Taiwanese companies might be hit hard by the US-China trade conflict </strong></p> <p>Taiwan is a huge intermediary in US-China trade. 15 of the top 20 enterprises that export to the US from China are Taiwanese. With US tariffs on Chinese imports now as high as 25 percent, Taiwanese-owned manufacturing facilities in China are expected to be hit hard if high levies are extended to more consumer products. </p> <p>But the trade war might prove to be only the straw that broke the camel’s back. For some time, China has not been what it used to be for investors - the country’s competitiveness in terms of manufacturing cost is a shadow of its former self, and the effects of rising labor costs have been compounded by slowing economic growth. On top of that, Taiwanese companies have become increasingly alert to – and alarmed by – difficulties in Chinese markets. </p> <p>Many of them have come to realize that China is large, but also awkward to handle. Despite the privileges offered by the Chinese government to ‘attract investment’ (‘zhaoshang yinzi’ in earlier years), hidden rules and nationalist sentiments in many instances replaced government accountability and market transparency in daily business operations.  </p> <p><strong>Environment for Taiwanese companies in China is changing </strong></p> <p>Some companies transferred skills to Chinese counterparts but lost out to China’s home-grown “red supply chain” which often receive financial support from the government. Some were hit by labor protests that turned into nationalist rallies. The challenges keep intensifying. A newly revised guideline, for example, mandates that all publicly listed firms in China set up Communist Party organizations. “The production environment in China and its friendliness to Taiwanese business people are completely incomparable to 20 years ago,” one executive told me. </p> <p><strong>China is using the business community to interfere in Taiwan politics </strong></p> <p>As the Taiwanese economy became more dependent on China, the higher the political price Taiwan and its companies had to pay: China has not been shy to use the business community to interfere in the island’s politics. Despite Taiwan’s restrictions on Chinese investment, China has overtaken the US and Japan to become its biggest trading partner. Mr. Wu is not the only Taiwanese entrepreneur to publicly support the “One China Principle.”  </p> <p>Just as Beijing has attempted to politicize its economic engagement with Taiwan, the trade dispute between China and the United States is about much more than trade. There is an underlying clash of ideologies in which Western liberal capitalism is being challenged by China’s economic rise and “socialism with Chinese characteristics.” With China and the US seemingly on the brink of a tech war to gain geostrategic dominance, trade talks could turn to be no more than a prelude to deeper global economic restructuring.  </p> <p>What is certain is that Taiwanese companies have learned to put their eggs in different baskets. “Made in China” is no longer only about production costs, but also about political risks when China’s accountability and transparency become thorny issues. But whether their shift in investment will create a “non-red supply chain” outside China will depend on concerted government policies, perhaps also new forms of regional cooperation.</p> <p><em>Michelle Tsai was a Visiting Academic Fellow at MERICS from November to May 2019.</em></p></div> </div> </div> Tue, 16 Jul 2019 12:20:16 +0000 h.seidl 9586 at Some Athenians are all Greek to the Chinese <span>Some Athenians are all Greek to the Chinese</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Wed, 07/10/2019 - 16:49</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="2019-07-11T12:00:00Z">2019-07-11</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><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>In Athens, local resistance to investment from China is not so much about opposing China, as resistance to change, says </span></span></span></span></span></span></span>MERICS freelance researcher Jacob Mardell. He 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/2019-07/190711_The%20new%20floating%20docks%20at%20COSCO%20owned%20Piraeus%20shipyard_Jacob_Mardell_1.png?itok=Mp1_g3zf 325w, /sites/default/files/styles/max_650x650/public/2019-07/190711_The%20new%20floating%20docks%20at%20COSCO%20owned%20Piraeus%20shipyard_Jacob_Mardell_1.png?itok=bNm6nIgr 650w, /sites/default/files/styles/max_1300x1300/public/2019-07/190711_The%20new%20floating%20docks%20at%20COSCO%20owned%20Piraeus%20shipyard_Jacob_Mardell_1.png?itok=YS0cFKLZ 1200w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-07/190711_The%20new%20floating%20docks%20at%20COSCO%20owned%20Piraeus%20shipyard_Jacob_Mardell_1.png?itok=Mp1_g3zf" alt="The new floating docks at COSCO-owned Piraeus shipyard" title="The new floating docks at COSCO-owned Piraeus shipyard. 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><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>There are two types of Chinese immigrant in Athens. The first type is found amid the fever-hot hustle and bustle of the Metaxourgeio “ghettos” and leverages connections back home to sell cheap clothes and luggage to the bargain hunters of Athens. These men and women started arriving in the 1980s from entrepreneurial, coastal Chinese cities like Wenzhou and Fuzhou. </span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>The second type are well-to-do immigrants, with money and the impetus to start a new life in Europe - the type of people we’d refer to as “expats” in polite conversation. This new wave of migration is more recent, dating back to 2013, when Greece rolled out a cash-for-residency scheme that enables foreigners to obtain a “</span></span></span><a href=""><span><span><span>Golden Visa</span></span></span></a><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>” if they spend at least 250,000 Euros on property. So far, 12,666 people have come to Greece on a Golden Visa, and almost two-thirds of them are from China.</span></span></span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>The tourist industry looks hungrily to the Chinese market</span></span></span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>Chinese tourists also bring cash to the economy – though not enough of it according to Effi, a Greek tour guide: “Most of them are not spending time, not spending money here,” she tells me. “They’re on all-inclusive packages - one or two might buy a tax-free Chanel bag, but that’s it.” The tourists I speak to are indeed on a tight schedule: groups gather in the olive groves at the foot of the Acropolis, listen to their tour guides, consult maps, disperse, and usually end up at Fu Yun Long for lunch.</span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>The Greek tourist industry still looks hungrily to the Chinese market for growth. In an effort to induce the Acropolis visitors to stay longer, the Piraeus Port Authority (PPA) has come up with a “master plan” that involves converting old warehouses into five-star hotels. Piraeus is already the beneficiary of Chinese businesspeople. Pressured by the EU to privatize state assets following the debt and economic crisis, Greece sold 67 percent of PPA to Chinese shipping colossus COSCO, a company that had been operating and investing in Piraeus as Piraeus Container Terminal SA (PCT) since 2010. </span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>Picking up on a </span></span></span><a href=""><span><span><span>quote</span></span></span></a><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span> from the Chinese ambassador describing Piraeus as Europe’s “dragon head,” commentators like to emphasize Piraeus’ role in reaching Northern European markets via the Belgrade-Budapest railway, but this is only a tiny part of the story. Piraeus’ primary function is trans-shipment by sea - breaking down the mega-ships that come from China through the Suez Canal and putting containers on smaller feeder vessels that head to dozens of ports across Europe. </span></span></span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>Chinese ownership <em>per se</em> is not the main objection to COSCO</span></span></span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>It’s the Chinese businesspeople involved with PPA and PCT that are focused on and successfully achieving economic growth. This means money, jobs, and progress - but also means noise, pollution, and more industry. Speaking to people in the poor Piraeus’ neighbourhood of Perama, it is this and not Chinese ownership <em>per se</em> that appears to be the main objection to COSCO. Good fortune is relative – things are getting better in Perama, but many still remember how good times were <em>before</em> the crisis.</span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>Everyone in Perama knows someone – a cousin, a friend – who owes their job to COSCO. A young man tells me about a neighbour, five years out of work, whom COSCO took on despite his advanced age. A woman, late 30s, tells me about a cousin who found work at the port as a driver. She goes on to say that she’s not a fan of COSCO. She grew up here, and it’s sad to see what Perama has become: “When I was ten, we kept the doors open all day, we had fresh air, and a nice view of the mountains.”</span></span></span></span></span></span></span></p> <p><span><span><span><span><strong><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>China – ironically or not – has come to represent neoliberalism</span></span></span></strong></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>In a country governed by Syriza, the “coalition of the radical left,” Perama is especially old-school left. Neoliberalism is a dirty word around these parts. And China – ironically or not – has come to represent it. In Piraeus, I spend an evening sipping beer with a former trade union leader, Giannis Tsalimoglou, who tells me about COSCO’s erosion of workers’ rights and benefits. The conversation is long, but one sentence stands out: “They come, and they turn everything upside down.”</span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>At a higher level, resistance to change is led by Greece’s powerful Central Archaeological Council (KAS), which has </span></span></span><a href=""><span><span><span>raised</span></span></span></a><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span> objections to COSCO’s ambitious development plans. The opposition party, New Democracy, has </span></span></span><a href=""><span><span><span>connected</span></span></span></a><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span> the decision to Syriza’s “ideological obsessions,” but others tell me local politics is probably to blame. Polyxeni Ntavarinou, an expert at the Institute of International Economic Relations, says KAS’ recalcitrance is something akin to a “natural process” to the locals. </span></span></span></span></span></span></span></p> <p><span><span><span><span><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>Natural or not, it’s a local resistance unfamiliar to Chinese investors. Like most of the long-term Chinese residents of Athens, Lan Sidian’s father is from Fujian province. Lan junior is CEO of Golden Alliance Investment Group, an offshoot of his father’s company that helps Chinese land their Golden Visas. When the conversation turns to KAS and the long </span></span></span><a href=""><span><span><span>delayed</span></span></span></a><span lang="EN-GB" xml:lang="EN-GB" xml:lang="EN-GB"><span><span>, Chinese-backed Hellenikon Airport, Lan sighs. “You don’t see any skyscrapers here. Imagine if they turned just one of their islands into a free trade zone. Imagine if the Greeks opened up just a little bit. But they are afraid of change.”</span></span></span></span></span></span></span></p></div> </div> </div> Wed, 10 Jul 2019 14:49:30 +0000 h.seidl 9556 at Brussels makes way for Beijing in the Balkans <span>Brussels makes way for Beijing in the Balkans</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Mon, 07/01/2019 - 13:01</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="2019-07-04T12:00:00Z">2019-07-04</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><span><span><span><strong><span>In Montenegro and in the rest of the Western Balkans, the European Union is not as attractive as it used to be, and China is giving new hope to the region. <span>Beijing offers a tempting paradigm: no-strings-attached finance and no political interference. </span></span></strong></span></span></span><strong>Our author Jacob Mardell is currently travelling along China's "New Silk Road."</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/2019-07/190701_Moraca_Bridge_Montenegro_%20Ivan%20Kuznetsov_via_123rf_115538818_m.jpg?itok=Ak6qv7bA 325w, /sites/default/files/styles/max_650x650/public/2019-07/190701_Moraca_Bridge_Montenegro_%20Ivan%20Kuznetsov_via_123rf_115538818_m.jpg?itok=dx3jmN3p 650w, /sites/default/files/styles/max_1300x1300/public/2019-07/190701_Moraca_Bridge_Montenegro_%20Ivan%20Kuznetsov_via_123rf_115538818_m.jpg?itok=hsV6Wf4r 1300w, /sites/default/files/styles/max_2600x2600/public/2019-07/190701_Moraca_Bridge_Montenegro_%20Ivan%20Kuznetsov_via_123rf_115538818_m.jpg?itok=VvwEMD3S 2509w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-07/190701_Moraca_Bridge_Montenegro_%20Ivan%20Kuznetsov_via_123rf_115538818_m.jpg?itok=Ak6qv7bA" alt="Construction site of Moraca bridge, Montenegro" title="China&#039;s BRI on the ground: The Moraca bridge project in Montenegro is built and financed by China. Ivan Kuznetsov 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>The European Union’s decision to </span><a href=""><span>postpone membership talks</span></a><span> with Albania and North Macedonia couldn’t have been more poorly timed.</span></span></span></span></p> <p><span><span><span><span>With Brussels’ commitment to the region in doubt, China’s "Belt and Road" Initiative offers an attractive alternative to countries losing hope in the endless wait to join the EU.</span></span></span></span></p> <p><span><span><span><span>China used to be synonymous with cheap clothes and colorful plastic. In Montenegro today, it’s better known for sky-high cranes and gargantuan concrete pillars, as a 200-meter-tall, 1-kilometer-long bridge takes shape over the Moraca river.</span></span></span></span></p> <p><span><span><span><span>The project — part of an ambitious plan to build a highway from the Adriatic coast to the border with Serbia — is led by the China Road and Bridge Corporation (CRBC), with a loan from the Exim Bank of China. This is what the Belt and Road looks like on the ground: Chinese engineering muscle coupled with cheap Chinese loans.</span></span></span></span></p> <h4><br /><span><span><span><span>Little historical baggage and suitcases full of cash</span></span></span></span></h4> <p>In Montenegro and in the rest of the Western Balkans, China has arrived bearing little historical baggage — only suitcases full of cash. That’s in marked contrast to “the West,” which has a centuries-long tradition of interfering in local politics, and more recently — via the EU — of promising much and delivering little.</p> <p><span><span><span><span>The costly construction project in Montenegro isn’t popular with everyone, but critics blame the government rather than the Chinese.</span></span></span></span></p> <p><span><span><span><span>Over cups of strong coffee at a Podgorica restaurant, I ask an engineer working on the project whether he is worried about Chinese influence. He laughs, and says, “The EU already tells our politicians how to vote and what to say — with China it will be the same, just other issues.”</span></span></span></span></p> <p><span><span><span><span>Montenegrins are generally pro-EU, but they are fed up. They may be more frustrated with their own politicians than with Brussels, but more broadly they are angry that nothing has changed, and that promises are going unfulfilled.</span></span></span></span></p> <p><span><span><span><span>This sentiment is widespread throughout the Western Balkans. Whenever I talk to people about China, the subject of EU integration comes up sooner or later.</span></span></span></span></p> <p><span><span><span><span><span>In North Macedonia, a local academic tells me that he’s seen the same “talking heads” from Brussels on television saying the same thing for the past five years.</span></span></span></span></span></p> <h4><br /><span><span><span><span><span>Beijing is operating in a vacuum </span></span></span></span></span></h4> <p><span><span><span><span><span>In Bosnia and Herzegovina, I sit in the office of a local minister and listen to a rant that feels less like political theater and more like straight-up venting: “People are fed up of hoping and hoping with no results, no investment, no employment. The future is unforeseen, but the EU is not as attractive as it used to be.”</span></span></span></span></span></p> <p><span><span><span><span><span>Even in Albania, which is remarkably pro-Western, a charming and soft-spoken former politician tells me, “There is frustration to be honest, there is always money but it’s not easy to access — there are no easy choices.”</span></span></span></span></span></p> <p><span><span><span><span><span>It doesn’t matter whose fault it is. The bottom line is that people feel neglected, disappointed. After the breakup of Yugoslavia, there was horrific violence and economic devastation, but then there was hope. Now there is just stagnation.</span></span></span></span></span></p> <p><span><span><span><span><span>Because the EU is absent in the region, Beijing is currently operating in something of a vacuum, and it offers a tempting paradigm: no-strings-attached finance that operates on the basis of mutual respect. Unlike Brussels, Beijing doesn’t demand political conditions or careful accounting. At home and internationally, Beijing prioritizes development over details like reform and human rights. In the Balkans, it is offering to build national projects the EU won’t touch: coal plants in Bosnia and Serbia, the highway in Montenegro.</span></span></span></span></span></p> <p><span><span><span><span><span>At a conference on the Belt and Road Initiative hosted by Belgrade University and funded by the Chinese Embassy in Belgrade, one of the organizing academics tells me that “between Russia and Europe on either side, I see China as a third way.”</span></span></span></span></span></p> <h4><br /><span><span><span><span><span>China can’t provide an alternative to EU integration</span></span></span></span></span></h4> <p><span><span><span><span><span>In Bosnia and Herzegovina, I walk down the banks of the Miljacka with a young translator who shows Chinese tourists around Sarajevo. We’d been talking about China, but unprompted, after a brief silence, she offers, “You know, for a long time it’s been Russia vs. the West. The West is still the West and the Balkans is still the Balkans, but China is a fresh face.”</span></span></span></span></span></p> <p><span><span><span><span><span>China can’t provide an alternative to EU integration. It’s not even close to competing with inter-European trade and investment. But Beijing's presence in the region is new. China is rich. It’s optimistic about the future. It provides hope. It takes root in the gaps that Brussels has left between expectations and reality.</span></span></span></span></span></p> <p><span><span><span><span><span>In North Macedonia, the government has changed the name of the entire country to placate Greece and smooth the way for eventual accession. From far away, this may seem like a small concession, but the resolution of the decades long </span></span><a href=""><span><span>name dispute</span></span></a><span><span> between Greece and Macedonia is an incredibly emotive issue.</span></span></span></span></span></p> <p><span><span><span><span><span>On a recent trip to the country to investigate two highways being built by Chinese company Sinohydro, I hear countless people complain about the government having taken away the country’s name. The government has committed an act of tremendous political self-harm for the sake of EU integration, and now it is being told to wait because the Bundestag has a busy summer schedule.</span></span></span></span></span></p> <p><span><span><span><span><span>If, as </span></span><a href=""><span><span>the comments</span></span></a><span><span> of European Commissioner for Enlargement Johannes Hahn suggest, the EU is worried about China’s influence in the European neighborhood, it should really step up its commitment to the region. Unfortunately, it appears to be doing the exact opposite.</span></span></span></span></span></p> <p><span><span><span><strong><span><span>This article was</span></span></strong><a href=""><strong><span> first published by Politico on June 26, 2019.</span></strong></a></span></span></span></p></div> </div> </div> Mon, 01 Jul 2019 11:01:09 +0000 h.seidl 9521 at China’s key opinion leaders on the trade conflict with the US: influence and censorship <span>China’s key opinion leaders on the trade conflict with the US: influence and censorship</span> <span><span lang="" about="/en/user/646" typeof="schema:Person" property="schema:name" datatype="">jheller</span></span> <span>Thu, 06/27/2019 - 16:30</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="2019-06-27T12:00:00Z">2019-06-27</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/mao-yishu" hreflang="en">Mao Yishu </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>Who are China’s key opinion leaders on social media? What are their views on the trade war with the US, and how much influence do they have on government policy? Analysis of their early discussion offers insights into Beijing’s approach to the trade war. </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/2019-06/190627_US_China_Trade_Ships_123rf_98616873_m.jpg?itok=l5lY3PNF 325w, /sites/default/files/styles/max_650x650/public/2019-06/190627_US_China_Trade_Ships_123rf_98616873_m.jpg?itok=Y6vFN4O2 650w, /sites/default/files/styles/max_1300x1300/public/2019-06/190627_US_China_Trade_Ships_123rf_98616873_m.jpg?itok=TgpeRWy- 1300w, /sites/default/files/styles/max_2600x2600/public/2019-06/190627_US_China_Trade_Ships_123rf_98616873_m.jpg?itok=53rk071s 2443w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-06/190627_US_China_Trade_Ships_123rf_98616873_m.jpg?itok=l5lY3PNF" alt="China’s key opinion leaders on the US-China trade conflict: influence and censorship" title="China and the US are facing off on trade and other issues. Image by lightwise 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 lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Ahead of the vital meeting of </span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span><span>Chinese President Xi Jinping and US President Donald Trump at the G20 summit on June 28-29, China has stepped up </span></span></span></span></span><a href=""><span><span><span><span><span><span>media censorship</span></span></span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span><span> and blocked a significant number of financial analyst blogs across social media platforms. This nervousness shows that</span></span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span> public opinion is a force that the party-state cannot ignore entirely and has to negotiate with when it comes to forming foreign and economic policy. With tensions rising in the talks with Washington, Beijing is deeply cautious of domestic sentiment.</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>In this blog post, we look at the early discussions on social media of a number of key opinion leaders (KOLs) who have large influence on the public opinion in China and, therefore, on Beijing’s approach to the dispute with the US. </span></span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Since the trade talks between the US and China broke down in early May, the two sides have had no contact. The conflict appeared to be at risk of escalating into a cold war when the US put Huawei and then Chinese supercomputer manufacture </span><a href=""><span><span><span>Sugon</span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> a</span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">nd its affiliates on its “entity list.” If this escalation continues, it will not only put more pressure on the world economy, but also risk creating a “</span><a href=""><span><span><span>global technological slump</span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">”. Whether Xi and Trump can get the negotiations back on a more constructive path depends fundamentally on how China interprets the US’s motivation. </span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Debate has been silenced since September</span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Online discussions about the trade war are currently being heavily censored. However, March to September 2018 was a relatively relaxed space in which discussion of this topic was tolerated, perhaps for the government to test the public sentiment and gather opinions. The discussion has been silenced since September, when China released its first position paper on the issue and entered negotiations with the US. Looking at the discussion from this earlier period helps to understand China’s perspective on the conflict.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Unfortunately, the outlook does not look bright, according to the views expressed in 104 articles written by five of the most influential voices on the most popular Chinese social media platform, WeChat (see Box for details).  Four of these can be considered independent KOLs. The fifth is a public account affiliated with the People’s Daily, which is used as the benchmark here for the perspectives and opinions communicated by the government during this period. </span></span></span></span></p> <p><span><span><span>Figure 1 shows how many arguments about the cause for the trade conflict fall into different categories. It reveals that since the early days of the trade conflict with the US, these KOLs see the major cause as political in nature. They believed that the US and China have entered “the Thucydides Trap,” when a rising power threatens to displace the current superpower. The US wants to remain the one superpower in the world and therefore the trade dispute is only used as an excuse to contain China’s rise, they argue.  In an article from March 2018 published on Wuxiaobo Channel, guest commenter Guo Shiying, a financial analyst, succinctly <a href="">argued</a>: “<span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Trade war is not just a trade war. </span></span><span><span>China-US competition has entered deep water… 2018 should be the year marking the beginning of Sino-US conflict, which is likely to escalate. </span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>The uncertainties in the economic and trade relations and even regional security will be increasingly presented</span></span>.”</span></span></span></p> <p> </p> <a href=""><img alt="YM_Blog_01" data-entity-type="file" data-entity-uuid="2ce2e3a8-7e40-4404-b9dd-cb01a88656a7" src="/sites/default/files/inline-images/YM_Blog_01_1.png" class="align-center" /></a> <p> </p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Figure 2 reveals that an overwhelming majority of the KOLs prepared the Chinese public from the onset of the friction </span><a href=""><span><span><span>for the dispute to be protracted</span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">. There was only one mention by independent KOLs in June, and twice by part-state affiliated KOLS in August and November, of the possibility that it could be resolved. </span></span></span></span></p> <p><strong><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">“Not only a trade war, but a comprehensive strength contest”</span></span></span></span></strong></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">The idea that the conflict could escalate to other realms was also widely envisioned. Ren Zeping, </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>the chief economist of Evergrande group,</span></span></span> <a href=""><span>wrote in July 2018</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"><span><span>“What is presented to us is not only the trade war, but also the comprehensive strength contest in the fields of economy, politics, culture, science and technology, cyber, and ideology…In the history of the rise of emerging powers in the past few hundred years, the current trade wars, economic wars, resource wars, and financial wars are inevitable and must be faced."</span></span></span></span></span></span></p> <p> </p> <a href=""><img alt="YM_Blog_02" data-entity-type="file" data-entity-uuid="03584c4d-dda7-4c2c-9e9b-86a007c118d8" src="/sites/default/files/inline-images/YM_Blog_02_1.png" class="align-center" /></a> <p> </p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Further escalation is likely if mistrust is not dispelled</span></strong></span></span></span></p> <p>Since discussion from both independent and party-state affiliated KOLs are examined here, their views offer a glimpse of Beijing’s thinking when entering negotiation with Washington. China has been deeply suspicious of the US since the early days of the bilateral conflict. Recent moves by the US to put a limit on the export of technologies to China will only confirm this suspicion. China has since made clear that it is considering using <a href="">rare earth</a> and <a href="">currency</a> to fight back. Further escalation is very likely if they do not dispel the mistrust in each other at the upcoming G20 meeting.</p> <p> </p> <p class="infobox_hell"><span><span><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Five key opinion leaders on Chinese social media</span></strong></span></span></span></span></span><br /><br /><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Xiakedao (</span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW">侠客岛</span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">): 1.3 million subscribers. Managed by a group of young journalists from the People’s Daily, this public account has published a large number of articles by scholars on the topic of trade. Although it is a party-state affiliated media channel, when compared to commentaries on the official media’s traditional outlets, the articles have more substantiated arguments and vocal policy recommendations. </span></span></span></span></span></span><br /><br /><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Wuxiaobo Channel (</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>吴晓波频道</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>): With more than 2 million subscribers at its highest point and valued at 2 billion yuan in a financing round in 2017. In April 2019 this number was disputed and is currently being </span></span></span><a href=""><span><span><span><span><span>investigated by Chinese regulators</span></span></span></span></span></a><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>. Wu Xiaobo is a former business journalist at Xinhua and a writer of many published books. He often invites scholars and industry experts to comment on financial topics.</span></span></span></span></span></span></span></span><br /><br /><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Ning Nanshan (</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>宁南山</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>): 1.3 million subscribers. A self-claimed “middle-class worker in Shenzhen”, his personal details remain unknown to the public. The topics he covers include current affairs in the high-tech industry and economy. Well-known for the abundant data provided in his articles to back-up his arguments, his public account is </span></span></span><a href=""><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>currently blocked</span></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><br /><br /><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Zeping Macro (</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>泽平宏观</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>): 0.8 million subscribers. A public account managed by </span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span><span><span>任泽平</span></span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span><span>, the chief economist of Evergrande group,</span></span></span></span></span> <span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span><span>China's second-largest property developer by sales. He is the former deputy director of the State Council’s Macro Department of the Development Research Center. </span></span></span></span></span></span></span></span></span></span><br /><br /><span><span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Gu Ziming (</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>顾子明</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>): The mastermind behind several public accounts with over a million followers including “</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>政事堂</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>” (political office), “</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>政事堂</span></span></span> <span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>plus” (political office plus), “</span></span></span><span lang="ZH-TW" xml:lang="ZH-TW" xml:lang="ZH-TW"><span><span>政事堂</span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Pro” (political office pro), and “Honored Guziming”. All these accounts have published articles about China’s economy and politics. All are currently blocked. Each time his account has been blocked, he has started a new one and has been able to accumulate over a million subscribers again within a short period. Personal details about him are unknown.</span></span></span></span></span></span></span></span></p></div> </div> </div> Thu, 27 Jun 2019 14:30:05 +0000 jheller 9511 at Europe cannot afford to ignore China’s deepening influence in Africa <span>Europe cannot afford to ignore China’s deepening influence in Africa</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Tue, 06/25/2019 - 10:40</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="2019-06-25T12:00:00Z">2019-06-25</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/sabine-mokry" hreflang="en">Sabine Mokry</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong>China’s investments in African infrastructure capture most of the headlines. But the Chinese government has been doing far more than this, both intensifying and broadening its engagement with African regional organizations. These activities may be lower profile, but they are a growing influence on African policy makers, as Europe appears focused on its own problems.</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/2019-06/190625_FOCAC_Beijing_Image_by_ImagineChina20180828_51112.jpg?itok=7w16PDUX 325w, /sites/default/files/styles/max_650x650/public/2019-06/190625_FOCAC_Beijing_Image_by_ImagineChina20180828_51112.jpg?itok=bDC16FCh 650w, /sites/default/files/styles/max_1300x1300/public/2019-06/190625_FOCAC_Beijing_Image_by_ImagineChina20180828_51112.jpg?itok=qDXqdVXB 1300w, /sites/default/files/styles/max_2600x2600/public/2019-06/190625_FOCAC_Beijing_Image_by_ImagineChina20180828_51112.jpg?itok=gx1O5Wjz 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-06/190625_FOCAC_Beijing_Image_by_ImagineChina20180828_51112.jpg?itok=7w16PDUX" alt="Europe cannot afford to ignore China’s deepening influence in Africa" 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>China does not yet match the EU’s engagement in African institutions – particularly in terms of funding – but its activities across the continent are growing and deepening. April this year saw the opening of the China-Africa Institute (<span lang="ZH-CN" xml:lang="ZH-CN" xml:lang="ZH-CN">中国非洲研究院</span>) in Beijing. The institute has been set up to boost ties between the two regions, providing a forum for exchange, training and research.</span></span></p> <p><span><span>But there is a deeper intention. As Politburo Member and Director of the Office of the Foreign Affairs Commission Yang Jiechi explained at the <a href="">opening ceremony</a>, one of the institute’s tasks will be to ensure that cooperation between China and Africa is “presented to the world in the right way.” Peter Kagwanja, CEO of the Africa Policy Institute, agreed that its goal should be to “<a href="">generate counter-narratives to debunk and discard doomsday theories</a><span><span>” which he sees emanating from “Western” scholarship.</span></span> Following the Chinese government’s script, he claimed, “Sino-Africa relations is still work in progress in which intensified people-to-people relations can lead to a China-Africa community of peace and prosperity.” </span></span></p> <p><span><span>This is happening at a time when Europe’s attention has turned inwards. Faced with Brexit and rising nationalist populism, the European Union’s engagement with its neighboring continent has been focused on preventing Africans from migrating to Europe. Meanwhile China is busy building on its long-standing relationships with many African countries and broadening its diplomatic engagement with the continent as a whole. The effects of this closer collaboration could soon become felt, changing African policy maker’s perceptions of China and influencing their choice of who they cooperate with in future.</span></span></p> <p><br /><span><span><strong>China invests heavily into building long-term relationships with African countries</strong></span></span></p> <p><span><span>A review of events over the past few years, that may not have made international headlines, reveals the direction of this trend. A few months before the opening of the China-Africa Institute, the African Union (AU) set up its own representative office in Beijing, partly funded by the Chinese government. The grand opening was celebrated in the Chinese government’s guesthouse, hosted by the Foreign Minister and State Councilor for Foreign Affairs. This was against the background of recent allegations that the AU’s Chinese-funded headquarters in Addis Ababa had been bugged, with data transferred at night to servers in Shanghai over a period of five years. The allegations were denied by officials on both sides and the incident appears not to have soured relations. In July last year, the Chinese government hosted high-ranking officials from almost all African states and AU officials for a two-week long China-Africa Defense Forum. Over the course of the past three years, China’s engagement with the AU, the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC) has also intensified significantly. Many of these initiatives have been driven by Beijing. </span></span></p> <p><span><span>Between January 2016 and April 2019, Chinese diplomats have regularly met with representatives from African regional organizations. The strongest relations have been built in the areas of diplomacy and security. But the Chinese government is also now providing support for African regional organizations’ peace-building efforts, with financial contributions and technical assistance. On an international level, it supported the AU’s push for a bigger role in peacekeeping within the UN. </span></span></p> <p><span><span>While the eye-catching infrastructure investments shape many of China’s bilateral relations to African countries, investment in infrastructure hardly appears in China’s interactions with the region as a whole. Similarly, there are comparatively few efforts at fostering economic ties between China and Africa at the regional level. Economic matters occasionally appear, but remain vague, for example when the SADC chairperson invited the Chinese business community to invest in the region. It is worth watching whether this changes once the African Free Trade Zone, which is supposed to be announced at the AU Summit in July, is operational.  </span></span></p> <p><span><span>Most of China’s interactions with African regional organizations focus, instead, on the governmental level. China has hosted meetings with African representatives in preparation for the G20 summit and holds regular consultations with the AU on human rights issues. Consultations focus on socio-economy rights, especially poverty alleviation and also touch upon human rights at the international level. It has also offered funding to African regional organizations, most significantly, a 31.6 million USD grant to ECOWAS to build a new headquarters in Abuja, Nigeria.</span></span></p> <p><br /><span><span><strong>In Africa, China is clearly positioning itself as a viable alternative to the EU</strong></span></span></p> <p><span><span>To put this in context, Europe’s engagement on the African continent still dwarfs that of China. The EU maintains a wide range of dialogue formats with African organizations, with the AU in particular. There are regular commission to commission meetings, minister meetings as well as summits every three years. With 20 billion Euros per year, the EU and its members states provide the most development assistance to Africa of any of its partners. The EU also contributes a substantial amount to the African Peace Facility. It is undoubtedly still an important source of funding.</span></span></p> <p><span><span>But while the EU’s geographical proximity to Africa and its institutional similarities with the AU may have put it at an advantage so far, it cannot afford to ignore the growth in China’s political engagement with the continent. Other external actors, such as Japan and Russia, are stepping up their engagement with Africa too, but China is the most active. It is not just that it has been Africa’s largest trading partner since 2009, or that it set up a military base in Djibouti in 2017. European policy makers need to look beyond these frequently mentioned milestones and pay attention to the Chinese government’s continuous and multi-faceted political engagement with African policy makers at all levels.</span></span></p> <p><span><span>China is clearly positioning itself as a viable alternative to the EU, increasingly also in terms of funding. In September 2017, the Chinese government pledged 100 million USD in military assistance for the African Standby Force. In March 2018, China’s Exim Bank announced that it would provide ECOWAS Bank for Investment and Development with 500 million USD for development projects in South and West Africa. As African leaders become increasingly annoyed with the EU’s focus on curbing migration – a fact that was demonstrated most recently by the AU’s rejection of the EU’s migration plan – these efforts could fall on fruitful ground.</span></span></p></div> </div> </div> Tue, 25 Jun 2019 08:40:15 +0000 h.seidl 9481 at African networks, smartphones - and surveillance <span>African networks, smartphones - and surveillance</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Tue, 06/18/2019 - 09:28</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="2019-06-18T12:00:00Z">2019-06-18</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/tom-bayes" hreflang="en">Tom Bayes</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>The African continent offers Huawei and other Chinese technology giants rich opportunities. Tom Bayes unpicks the stories of their rise in Africa and warns more is at stake than technology.</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/2019-06/190618_AU_Headquarters_hiroo%20yamagata%20via%20flickr%20%28CC%20BY-SA%202.0%29.jpg?itok=tXxBsYKk 325w, /sites/default/files/styles/max_650x650/public/2019-06/190618_AU_Headquarters_hiroo%20yamagata%20via%20flickr%20%28CC%20BY-SA%202.0%29.jpg?itok=JEMadIC2 650w, /sites/default/files/styles/max_1300x1300/public/2019-06/190618_AU_Headquarters_hiroo%20yamagata%20via%20flickr%20%28CC%20BY-SA%202.0%29.jpg?itok=2WG19OqT 1300w, /sites/default/files/styles/max_2600x2600/public/2019-06/190618_AU_Headquarters_hiroo%20yamagata%20via%20flickr%20%28CC%20BY-SA%202.0%29.jpg?itok=c-anXcQ5 2592w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-06/190618_AU_Headquarters_hiroo%20yamagata%20via%20flickr%20%28CC%20BY-SA%202.0%29.jpg?itok=tXxBsYKk" alt="The African Union Headquarters in Ethopoia" title="The African Union headquarters in Addis Ababa was funded and built by China. In 2018, French newspaper Le Monde quoted anonymous AU sources saying that data had been transferred to Chinese servers for five years. hiroo yamagata via flickr (CC BY-SA 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>Recent controversies about </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Huawei</span></span></a><span><span> have centered on the developed world. But the influence of China’s emerging technology giants reaches well beyond the US and Europe. In Africa, China and its companies are shaping the tech sector – and through it the continent’s economies. With a surging population and wide digital shortfall, Africa offers rich opportunities to sell and innovate, water on the wheels of </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>China’s strategy</span></span></a><span><span> to become a “cyber superpower”. But with Beijing also keen to export its model of control through and of the internet, its ambitions reach beyond mere technology. </span></span></span></span></span></p> <p><span><span><span><strong><span><span>Huawei has come to dominate African networks</span></span></strong></span></span></span></p> <p><span><span><span><span><span>An understanding of China’s role in African tech – positive and problematic – is key to understanding what is likely to be one of the most important relationships of the 21<sup>st</sup> century. On one level, this is a story about large-scale infrastructure, just a less obvious kind than the familiar dams and railways. Since being encouraged to enter African markets under China’s 1999 “Going Out” policy, Huawei has come to dominate telecoms </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>network installation</span></span></a><span><span> in Africa. Displacing European rivals like Eriksson and Nokia, Huawei is the number one provider in Africa (and Chinese rival ZTE number five). </span></span></span></span></span></p> <p><span><span><span><span><span>Huawei alone has installed 70% of African </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>4G networks</span></span></a><span><span>. As well as large </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>profit margins</span></span></a><span><span> for Huawei, this has brought real benefits to its African clients, affordably connecting areas perhaps otherwise unreached – and stimulating economic activity perhaps otherwise left dormant. As an example of the oft-touted win-win partnership, this pays dividends for China-Africa diplomacy. </span></span></span></span></span></p> <p><span><span><span><strong><span><span>“Africa first”: Chinese companies tailoring products for the continent</span></span></strong></span></span></span></p> <p><span><span><span><span><span>On another level, this is a story about offering Africans innovative, affordable consumer electronics to exploit the new connectivity. The most striking example is Shenzhen-based </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Transsion</span></span></a><span><span>. Though it has never sold a handset in its native China, its brands Tecno, iTel, and Infinix sell more smartphones than anyone else in Africa. Transsion has successfully pursued an “Africa first” policy by </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>tailoring its products</span></span></a><span><span> to consumers - long battery life, for example, to cope with patchy power supplies.</span></span></span></span></span></p> <p><span><span><span><span><span>Having built networks and put phones in people’s pockets, Chinese companies are also looking to offer African consumers the services, apps, and platforms that exploit new technologies. China’s internet giants are closely involved. For example, roll-out of </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>WeChat Pay</span></span></a><span><span> and AliPay is gathering pace, particularly in southern and </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>eastern Africa</span></span></a><span><span>. High rates of “</span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>unbanked</span></span></a><span><span><span><span>”</span></span></span></span><span><span> citizens and rising mobile phone ownership in Africa offer major opportunities for mobile payments and banking services. </span></span></span></span></span></p> <p><span><span><span><span><span>But there is also a less upbeat story about China’s role in African tech: the potential for oppression through surveillance and espionage, and the promotion of restrictive internet governance.</span></span></span></span></span></p> <p><span><span><span><span><span>The shine was taken off China’s gift of a USD 200 million headquarters for the African Union (AU) when </span></span><a href=""><em><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Le Monde</span></span></em></a><span><span> revealed in 2018 that the building’s Huawei data infrastructure had since 2012 been secretly sending the AU’s internal data to Shanghai servers (and the building liberally peppered with hidden microphones). The embarrassing episode dented trust in Chinese tech products – indeed the AU swiftly moved to install new, non-Chinese systems in the building in Addis Ababa, Ethiopia. </span></span></span></span></span></p> <p><span><span><span><strong><span><span>China may one day be training “digital authoritarianism” in Africa</span></span></strong></span></span></span></p> <p><span><span><span><span><span>But it didn't stop Chinese-African tech cooperation. US government-backed </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Freedom House</span></span></a><span><span> last year pointed to Beijing’s active program of training in “digital authoritarianism” for African and other government officials, sharing Chinese tools and techniques of internet censorship and surveillance. These activities align with a growing </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>trend of restrictive internet governance</span></span></a><span><span> by some African governments - from </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>blackouts</span></span></a><span><span> at moments of political sensitivity in the DRC, Sudan and elsewhere, to new, tighter internet and </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>social media laws</span></span></a><span><span> in Uganda, Kenya, and Tanzania. China is actively promoting its vision of “</span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>cyber sovereignty</span></span></a><span><span>” and in parts of Africa it is finding willing supporters. </span></span></span></span></span></p> <p><span><span><span><span><span>As they help construct an ever-more high-tech surveillance state at home, Chinese companies are well positioned to export cutting edge surveillance technologies to Africa – including to governments with bleak governance and human rights records. In 2018, in the midst of a fraught transition from Robert Mugabe’s dictatorship, the Zimbabwean government signed a deal for Guangzhou-based Cloudwalk to build an AI facial recognition system for use by security and police forces.</span></span></span></span></span></p> <p><span><span><span><span><span>Beyond the human rights concerns, the deal pointed to another angle to the China-Africa tech story: the quest for technological advantage. As one local outlet put it: “the Zimbabwe Government is </span></span><a href=""><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>sending our faces to China</span></span></a><span><span> so China’s Artificial Intelligence can learn to see black faces”. Existing AI facial recognition technologies are principally trained on white and East Asian datasets; the Zimbabwe deal offered Cloudwalk valuable data for improving its recognition of other ethnicities – thereby strengthening the arsenal of surveillance tools available to authoritarian governments. </span></span></span></span></span></p> <p><span><span><span><span><span>By expanding into African markets, China’s tech companies are gaining access to that sought-after commodity, data. Yes, these companies are playing a positive role in connecting African citizens, consumers, and businesses. But they also have another role helping Beijing to promote its model of the internet as a controlled space - and as a data-driven instrument of social and political control.</span></span></span></span></span></p> <p><span><span><span><span><em>Tom Bayes was a Visiting Academic Fellow at MERICS from November 2018 until April 2019. His research focuses on China’s growing role in Africa’s peace and security. Prior to MERICS, he worked at the UK Permanent Representation to the EU in Brussels and in business intelligence based in London, where he conducted investigations in Francophone Africa. Bayes was educated at the University of Oxford, the London School of Economics, and Zhengzhou University.</em></span></span></span></span></p></div> </div> </div> Tue, 18 Jun 2019 07:28:49 +0000 h.seidl 9431 at China’s discreet option on trade <span>China’s discreet option on trade</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Tue, 06/11/2019 - 14:49</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="2019-06-12T12:00:00Z">2019-06-12</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 lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Forget Beijing “weaponizing” its currency through devaluation or the “nuclear option” of it dumping US Treasuries. It could quietly shrink the US trade deficit – at Europe’s expense. </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/2019-06/190612_Dollar_Renminbi_%20Dilok%20Klaisataporn_via_123rf.jpg?itok=buxe0Qru 325w, /sites/default/files/styles/max_650x650/public/2019-06/190612_Dollar_Renminbi_%20Dilok%20Klaisataporn_via_123rf.jpg?itok=jbtBMSub 650w, /sites/default/files/styles/max_1300x1300/public/2019-06/190612_Dollar_Renminbi_%20Dilok%20Klaisataporn_via_123rf.jpg?itok=VQJtGKTA 1300w, /sites/default/files/styles/max_2600x2600/public/2019-06/190612_Dollar_Renminbi_%20Dilok%20Klaisataporn_via_123rf.jpg?itok=27J6y0WS 2508w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-06/190612_Dollar_Renminbi_%20Dilok%20Klaisataporn_via_123rf.jpg?itok=buxe0Qru" alt="China’s discreet option on trade" title="Speculation has mounted that China might push its currency lower to make exports cheaper, or liquidate its hoard of US Treasury bonds. Image 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"><span><span>US President Donald Trump has recently deepened the trade dispute with China by singling out microeconomic players like telecoms equipment maker Huawei. As he has done so, speculation has mounted China might retaliate at macroeconomic level by pushing its currency lower to make exports cheaper, or by liquidating its hoard of US Treasury bonds to hurt the US economy. Both fears are unrealistic – it is more likely that China will gradually re-allocate its holdings from US sovereign bonds to those of other countries to support the yuan. This option would even enable it to quietly give Trump what he wants - a reduction of the US trade deficit with its biggest trading partners.</span></span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Is China “weaponizing” its currency?</span></span></span></strong></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 yuan has fallen sharply against the US dollar since the trade negotiations between the US and China fell apart. At the time of writing, one US-Dollar buys CNY 6.9, very close to the CNY 7 mark that most analysts believe to be a critical downward threshold. Some analysts now believe China is “weaponizing” its currency, allowing it to fall so that the additional tariffs US consumers now have to pay on some Chinese goods are offset by lower US dollar prices as a consequence of a weaker yuan.</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>This line of thinking is compelling since China has manipulated its currency to artificially low, export-invigorating levels in the past. But it seems unlikely that the yuan’s current fall is the work of Beijing: Firstly, every time the trade conflict has escalated the yuan has suffered. Secondly, Beijing has already been gradually reducing its holdings of US Treasuries, a sign that it wants to support, not weaken its currency.  Thirdly, current market volatility makes it dangerous to play with depreciation: It could cause a mass sell off and capital flight. Finally, devaluing the yuan would further inflame Trump.</span></span></span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span><span>Aside from “weaponizing” the yuan, analysts have also been speculating about People’s Bank of China’s (POBC) use of its “nuclear option,” selling its enormous trove of US sovereign bonds that the country amassed as a consequence of years of manufacturing-driven trade surpluses. The US Treasury reckons China holds more than USD 1 trillion – USD 1,000 billion – of its bonds. Selling them</span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span> could see their prices tank, yields soar, and a US stock-market sell off as money flowed into bonds. </span></span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>A destabilized US economy would also hurt China</span></span></span></strong></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 “nuclear option” would be very</span></span></span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span> destabilizing for the US – but, crucially, also costly for the world economy, China included. If China dumped its US Treasury, the value of its portfolio would plummet as it was forced to accept lower and lower prices to find buyers. Destabilizing the US would also be doubly costly: The Chinese economy still depends to a large degree on Americans buying its goods; a destabilized US economy would hurt Chinese industry considerably. Liquidating US Treasuries is a double-edged sword that any sensible Chinese leader would consider drawing only as a last resort. </span></span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Speculation about the nuclear option was fuelled by the PBOC selling USD 20 billion in US sovereign bonds in March, its biggest monthly sale for two-and-a-half years. But such fears ignored the fact the China’s central bank has been gradually selling US Treasuries since September, mainly to keep the yuan above that mark of USD 7 as the trade dispute made investors move some funds elsewhere. Continuing on this least spectacular of the paths may be the most attractive option for China.  </span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>If China’s central bank continued its gradual sale of US Treasuries, the US Federal Reserve could print money with which to purchase them, keeping markets steady. The dollar would come under pressure as China exchanged its holding for other countries bonds. As a result, China would reduce its reliance on the US financial markets, lower the price of the dollar, and weaken American purchasing power.</span></span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Even an unspectacular option might have far-reaching effects</span></span></span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Most likely China would shift to euro-denominated sovereign bonds, the Eurozone being the only economy comparable in size to the US. With some USD 27 trillion in debt securities outstanding, the Eurozone bond market is almost as big as that of the US, which counts USD 40 trillion. European bond yields, already low, would be pushed down even further by the added liquidity, meaning China would earn even less interest than on its US Treasury holdings.  But the euro would likely rise against both US dollar and yuan, which would lead to Europeans buying more goods from the US and China. </span></span></span></span></span></span></p> <p><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>The interconnected global economy means that even China’s least spectacular option would still have far-reaching effects: A continuation of US Treasury sales would weaken the US dollar against the yuan and the euro; the Europeans and Chinese would find that US goods become cheaper and more alluring, while the Americans would find Chinese and European goods more expensive and not buy so many.  China could quietly lower the US’s trade imbalances with China and Europe. Trump might hail the lower US trade deficit. But export-dependent European businesses would be more critical and perhaps demand EU politicians “take control” of international trade by, for instance, imposing tariffs, much like Trump tries to do.</span></span></span></p> <p><strong>This article was first published on the <a href="">Financial Times' Beyond Brics blog on June 6, 2019.</a></strong></p></div> </div> </div> Tue, 11 Jun 2019 12:49:32 +0000 komprakti 9411 at Europe’s search for a China strategy <span>Europe’s search for a China strategy</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Fri, 06/07/2019 - 10:38</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="2019-06-07T12:00:00Z">2019-06-07</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/lucrezia-poggetti" hreflang="en">Lucrezia Poggetti</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><span><strong><span>The European Union needs a coherent approach to address the challenges posed by China. But getting there is difficult: the EU elections have shifted political weights, and too many member states follow their own agenda vis-à-vis China. </span></strong></span></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/2019-06/190607_EU_China_Summit_2017_Car_President_of_European_Council_via_Flickr.jpg?itok=r6fF3Xu2 325w, /sites/default/files/styles/max_650x650/public/2019-06/190607_EU_China_Summit_2017_Car_President_of_European_Council_via_Flickr.jpg?itok=aI8xheGr 650w, /sites/default/files/styles/max_1300x1300/public/2019-06/190607_EU_China_Summit_2017_Car_President_of_European_Council_via_Flickr.jpg?itok=1yGZkxno 1300w, /sites/default/files/styles/max_2600x2600/public/2019-06/190607_EU_China_Summit_2017_Car_President_of_European_Council_via_Flickr.jpg?itok=OoSn_A2B 2048w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-06/190607_EU_China_Summit_2017_Car_President_of_European_Council_via_Flickr.jpg?itok=r6fF3Xu2" alt="Europe’s search for a China strategy" title="The EU is realizing that close economic relations with China have brought about political and security challenges it was not prepared for. Image by European Council President via flickr (CC BY-NC-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>China’s rise and its geopolitical ambitions have started to manifest more clearly inside Europe, making the need for a China strategy ever more compelling. European unity is key to effectively addressing the challenges posed by Beijing. After years of closer trade and investment ties, the European Union is realizing that close economic relations with China have brought about political and security challenges it was not prepared for.</span></span></span></span></p> <p><span><span><span><span>This newfound awareness is visible in the EU’s latest attempts to protect its strategic sectors and critical infrastructure. This includes the adoption of an EU framework for </span><a href=""><span><span>foreign investment screening</span></span></a><span> and the issuing of guidelines for the security of </span><a href=""><span><span>Europe’s 5G networks</span></span></a><span>.</span></span></span></span></p> <p><span><span><span><strong><span>No member state alone can deal with China on an equal footing</span></strong></span></span></span></p> <p><span><span><span><span>The European Union has come to appreciate that it needs a strategy for China as, far from being solely an economic player, China is </span><a href=""><span><span>a rising political and security actor</span></span></a><span> with geopolitical ambitions. This was evident in the European Commission’s ‘</span><a href=""><span><span>strategic outlook</span></span></a><span>’ of March 2019, which informed EU leaders’ more assertive tone at the subsequent EU–China Summit in April 2019. Many observers have noticed Brussels’ unprecedented labelling of China as a ‘systemic rival’ and ‘economic competitor’. Less emphasis has been put on the European Union’s acknowledgment that China’s geopolitical goals ‘present security issues for the EU, already in a short- to mid-term perspective’. According to the strategic document, these are visible in China’s increasing military and technological advances and cross-sectoral hybrid threats such as information operations and large military exercises.</span></span></span></span></p> <p><span><span><span><span>Addressing the challenges posed by Beijing requires European unity, as no member state alone has the resources and negotiating power necessary to deal with China on an equal footing. Paris and Berlin have demonstrated support for Brussels’ call for a ‘whole-of-EU’ approach vis-a-vis China, at least symbolically.</span></span></span></span></p> <p><span><span><span><span>During Chinese President Xi Jinping’s state visit to France in March 2019, French President Emmanuel Macron invited European Commission President Jean-Claude Juncker and German Chancellor Angela Merkel to </span><a href=""><span><span>join his meeting with the Chinese leader</span></span></a><span>. The German government also announced its intention to invite all member states to a </span><a href=""><span><span>2020 EU–China Summit</span></span></a><span> under its EU Presidency. This move raised eyebrows in Brussels, but Berlin hopes to encourage other members to pursue a common approach to China and refrain from Beijing-led ‘</span><a href=""><span><span>multi-bilateral</span></span></a><span>’ talks.</span></span></span></span></p> <p><span><span><span><strong><span>Attempts to devise a coherent EU approach to China have hit a wall recently</span></strong></span></span></span></p> <p><span><span><span><span>However, governing elites in some European Union member states look at China through the prism of economic opportunity, downplaying the risks. They believe that close political ties with Beijing are key to unlocking greater economic opportunities, which cripples the EU’s efforts to devise a common strategy.</span></span></span></span></p> <p><span><span><span><span>This approach is based on the naive assumption that politically cozying up to the Chinese leadership fosters a special relationship that translates into privileged economic treatment. Such an approach also assumes that a bilateral partnership on equal terms with China is possible. It disregards the fact that the Chinese government can </span><a href=""><span><span>retaliate</span></span></a><span> any time, should it consider it necessary for its </span><a href=""><span><span>own agenda</span></span></a><span>, regardless of whether memoranda, ‘strategic partnerships’ or any other agreements have been signed.</span></span></span></span></p> <p><span><span><span><span>Lately, attempts to devise a coherent EU approach to China have not only hit a wall in Europe’s eastern flank — with </span><a href=""><span><span>the Chinese-led 16+1 grouping</span></span></a><span> of Central and Eastern European countries expanding to 17+1 after welcoming </span><a href=""><span><span>Greece</span></span></a><span> — but also at its core. In March 2019 Xi spent four days in Italy, where </span><a href=""><span><span>the country</span></span></a><span> became the first EU founder and G7 state to officially endorse the </span><a href=""><span><span>Belt and Road Initiative</span></span></a><span> (BRI). This is telling of a broader trend in which </span><a href=""><span><span>Europe criticizes</span></span></a><span> the growth of China’s global infrastructure scheme, and demands that the Initiative meet </span><a href=""><span><span>transparency and sustainability standards</span></span></a><span>, while at the same time various European governments endorse the BRI.</span></span></span></span></p> <p><span><span><span><strong><span>Closing knowledge and perception gaps is essential</span></strong></span></span></span></p> <p><span><span><span><span>Against this backdrop, how can the European Union ensure that its members look to China from a more long-term strategic perspective and act cohesively? An essential step is to close the knowledge and perception gaps across the continent. While it is up to national governments to increase their own countries’ expertise on China, the European Union can lead in driving debates about China’s rise and the implications for Europe. This would benefit those states where information about China is currently largely funded or driven by Beijing.</span></span></span></span></p> <p><span><span><span><span>Democracies in China’s wider neighborhood — like Australia, New Zealand and Taiwan — have been at the forefront of dealing with China’s systemic challenge. </span><a href=""><span><span>Exchanging notes</span></span></a><span> with these partners would provide European countries with useful information on Chinese activities and response measures to adopt.</span></span></span></span></p> <p><span><span><span><span>The recent 5G recommendations and the new investment screening mechanism show that a few concerted steps have been taken </span><a href=""><span><span>since 2016</span></span></a><span>, when it became more visible that China’s influence was impacting </span><a href=""><span><span>European cohesion</span></span></a><span> vis-a-vis Beijing. Allegedly, members of the China-led 16+1 grouping of Central and Eastern European countries also better </span><a href=""><span><span>coordinated</span></span></a><span> their positions with Brussels in preparation for the latest Summit in </span><a href=""><span><span>Croatia</span></span></a><span>.</span></span></span></span></p> <p><span><span><span><span>The reshuffling of EU institutions that will result from the European Parliament elections raises questions over how Brussels will reshape current efforts into a more coherent and strategic approach towards China going forward. Beijing will likely try to use the opportunity offered by the upcoming changes in the EU administration to </span><a href=""><span><span>advance its interests</span></span></a><span>. Securing European interests vis-a-vis China through a long-term common strategy is increasingly a necessity.</span></span></span></span></p> <p><em>This article was first published <a href="">by East Asia Forum on May 31, 2019.</a></em></p></div> </div> </div> Fri, 07 Jun 2019 08:38:50 +0000 h.seidl 9386 at The great silence <span>The great silence</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Mon, 06/03/2019 - 11:10</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="2019-06-03T12:00:00Z">2019-06-03</time> </div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <a href="/en/team/kristin-shi-kupfer" hreflang="en">Kristin Shi-Kupfer</a> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong>Supress and conceal: China is an emerging world power, yet it has still failed to find any other way of dealing with the legacy of the bloodily crushed protest movement of 1989.</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/2019-06/Tank%20man.jpg?itok=IIUuiKLE 325w, /sites/default/files/styles/max_650x650/public/2019-06/Tank%20man.jpg?itok=sNEM0wpF 594w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2019-06/Tank%20man.jpg?itok=IIUuiKLE" alt="Source: Bettmann via Getty Images" title="Source: Bettmann via Getty Images" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>Despite their old age and fragile state of health, the “Tiananmen Mothers” – women committed to keeping the memory of their murdered relatives alive and seeking a reappraisal of the events – are  watched by police officers at every turn during the coming days. Other civil rights activists are  accompanied on “trips” outside the capital. Anything that might appear suspicious to the censors - be it plastic ducks in “tank formation”, playing cards with the numbers 6-4-8-9, or just a simple candle – will be erased from the Internet.</p> <p>None of this looks confident or worthy of a great power. But for the Chinese Communist Party, dealing with the protests of 1989 is not just a question of attitude, but of how to maintain its own power. By suppressing the peaceful demonstration, Beijing deprived itself of the confidence and commitment of its citizens. Since June 1989, the CCP made people believe that only one thing matters: that the government provides a steady increase in their prosperity, and, in addition, prestige for their country on the world stage. The entire nation is suffering from this  political opportunism and moral decay caused by the turbo-capitalism Beijing has unleashed.</p> <p><strong>Dissatisfaction within China is mounting</strong></p> <p>At a time of growing economic crisis and escalating international conflicts, the only response from communist leadership seems to be to rush forward - economic and political decoupling, as it is called in the context of the trade conflict with the USA, and an aggressive "China First".</p> <p>Within the country, however, the dissatisfaction has never calmed down. Workers are fighting for their rights and better wages, supported by students. Veterans are demanding better care, ripped-off consumers are demanding better quality and higher compensation. LGBT activists are protesting against uniformity and criminalisation, academics and teachers are beginning to break their self-imposed silence concerning surveillance and censorship. Meanwhile well-off entrepreneurs are getting themselves additionalpassports or greencards, , and moving their families and assets outside the country.</p> <p>None of these forms of protest has currently the potential to endanger the rule of the CCP. A national protest movement like the one of 1989 is very unlikely at a time when the state has perfected high-tech surveillance, liberal democracies are looking less persuasive, and there is a good shot of relative comfort and prosperity. But these patches of discontent are a constant reminder to the government that its own people at best only tolerate them and have clear expectations of their leaders.</p> <p><strong>What does that mean for us?</strong></p> <p>China's supposed stability - which is often used in the West as reason to paint a rosy picture of Xi Jinping’s totalitarian regime - is no such thing. Increasing nationalism and an anti-Western mood fuelled by Beijing as a way out of a serious economic and geopolitical crisis is not a good choice for us either. To say – as not only the Chinese leadership do, but also some here in the West who claim to “understand” China – that the suppression of the protests was necessary in the end to keep the country stable, is not just cynical. It is also counterproductive for the sustainable development of constructive relations with the People's Republic.</p> <p>Thirty years after the suppression of the protests in Tiananmen Square, there are two things we can do. The first is to bring our thinking about business and politics more closely together than before. Fair competition and open markets cannot be separated from independent representation of interests and the rule of law. China certainly does respond to clear messages in the area of human rights. Anticipatory obedience and embarrassing evasion, on the other hand, will be used by Beijing against us. More pressure needs to be applied to companies regarding humane and sustainable production and supply chains. But we also need to show more responsibility as consumers. Fairly produced goods cost more, but it costs nothing to look more closely and ask questions - just a little effort or inconvenience.</p> <p>The second thing we can do is to listen more closely to the Chinese who are already working toward and hoping for a different China after Xi Jinping. We should be reading what they write in the Internet and seeking out conversations with them. A sweeping dismissal of their questions or their criticisms of our systems would be fatal. We must take these seriously, too. We must define red lines and communicate these to the communist leadership. However, this must not lead to a general anti-Chinese attitude.</p> <p>If we fail to do these things, then we too partly carry the blame for Beijing's great silence about the Tiananmen dead.</p> <p><strong>This article was first published in German <a href="">in "Süddeutsche Zeitung" on May 31, 2019.</a></strong></p> <p> </p></div> </div> </div> Mon, 03 Jun 2019 09:10:11 +0000 komprakti 9351 at