China's Internet economy is developing rapidly with the help of government funding and a protected domestic market. European governments have to rethink their digital policies to be prepared for the Chinese competition.
The state’s role in economic planning has increased under Xi Jinping, and national interests take precedence over market principles. Signs point to more government controls and intervention, rather than liberalisation, as a result of the 19th Party Congress.
With its recent promises of better market access for foreign companies, China tries to placate international criticism. But the steps are half-hearted at best, especially since the relaxations in some areas go hand in hand with new restrictions in others.
Interview with Shazeda Ahmed
In setting up the so called Social Credit System, China plans to monitor, rate and regulate the behavior of citizens and companies with the help of big data. What motivates the government? What are the major challenges? And what do people in China think about this system?
(via The Diplomat)
Sigmar Gabriel’s demand that China follow a “One Europe” created an unusual analogy to the “One China” policy, which accepts China’s dictum that foreign nations should not entertain diplomatic relations with Taiwan. Beijing’s comments on European unity also show that it struggles to understand the European idea of subordinating sovereignty in certain areas to a community of nations.
China’s outbound M&A volume has contracted significantly since the beginning of the year. The Chinese government’s attempt to curtail acquisitions outside the core business areas of Chinese companies and the resulting breathing spell could have a favourable effect on M&A success probabilities.
Interview with Shen Dingli (via Young China Watchers)
As China positions itself as a major country, it is confronted with a host of global security issues. Young China Watchers discussed China's positions on these issues, from the South China Sea to North Korea as well as its relations with the United States, India and Africa, with Dr. Shen Dingli, Professor and Associate Dean at Fudan University’s Institute of International Studies.
North Korea’s triumph in the standoff with the United States may be short-lived. The strategic value of its nuclear deterrent is questionable, as it has profoundly alienated China, North Korea’s long-time ally. At the same time, the regime in Pyongyang continues to dig its own grave with its failed economic policies.
(via The Diplomat)
The increasing digitalization of life in China has increased the need for the security of personal data. To ensure effective data protection, the party-state would have to create a unified legal framework and to subject itself to supervision.
Rolf J. Langhammer
China’s GDP growth rate target wastes resources and prevents necessary structural adjustments. The target encourages the build-up of overcapacities and forces the government to stimulate demand even if this demand is not sustainable. China should replace growth targets with economic forecasting and assessments of China’s capacity growth potential.
Fleur Huijskens, Richard Tucsanyi and Balazs Ujvari
EU member states can use the China-initiated organization to promote their standards for development financing and perhaps even to pursue geopolitical interests in Asia. This blogpost is a product of the MERICS European China Talent Program in April 2017.
Interview with Carsten Holz
The Chinese government spends millions to develop the Tibetan areas of China. But what can investment achieve in these remote regions? Can it create sustainable jobs and change people’s lives? In this MERICS Experts Podcast, the economist Carsten Holz of Hongkong University of Science and Technology accounts his research trip on the Tibetan plateau in Western Sichuan.
China’s party-and-state leader tries to bring government officials under the reach of the legal system. But the purpose of this approach is less about ensuring compliance with the law than about ensuring the top leadership’s control over its bureaucracy.
After turbulences in the stock and real estate markets, China’s next speculative asset bubble might be building in the Fintech sector. Stricter regulation won’t solve the underlying problem: the lack of attractive investment options caused by low interest rates and capital controls will keep producing new bubbles.
Turkey’s flirt with the China-dominated Shanghai Cooperation Organization casts doubt on Ankara’s commitment to Euro-Atlantic integration. So far, Beijing has remained cautious, but it may decide that closer cooperation with Turkey is in its long-term interest. This is a joint blog post with the German Marshall Fund of the United States.
The expansion of the Shanghai Cooperation Organization aligns with Beijing’s geostrategic ambitions. Drawing India closer into China’s orbit serves as a check against US influence, while Pakistan’s inclusion could help fight security threats. China’s Belt and Road Initiative, which aims to connect Eurasia and South Asia, could also benefit from the new members.
The Trump administration is committing a grave mistake by using Taiwan and the South China Sea as bargaining chips to secure China’s help with North Korea. Trump’s transactional approach to security policy risks damaging Sino-US relations at a time of high strategic uncertainty.
The global fight against climate change will continue after the US withdrawal from the Paris Agreement. Participants at a MERICS conference agree that Germany and China can play a decisive role in keeping the topic on the G20 agenda.
Tiffany G. Wong
On the 20th anniversary of Hong Kong’s return to the People’s Republic of China, the city is grappling with an identity question that threatens its relationship with the mainland. Chief Executive Carrie Lam’s political career will depend on how she deals with this challenge.
France’s new president will need China’s cooperation on issues like climate change to balance the US and Russia. But while Macron might open up new channels for Sino-European cooperation, he could also push Europe towards a tougher stance on trade and security issues.
Rolf J. Langhammer
The evasion of VAT for the import of digital services from China is a growing problem for the EU. Rather than waiting for the completion of a European single digital market, loopholes for non-EU suppliers should be closed now.
International students in China have become the latest target in Beijing’s campaign to ensure thought control and political stability. The party-state’s obsession with “ideological security” clashes with its efforts to promote people-to-people exchanges as a key part of China’s global outreach.
Their concern over an increasingly erratic US foreign policy is bringing the EU and China closer together. Yet last weeks’ EU-China Summit also illustrated that this partnership remains limited to selected issues.
China aims to fight growing risks in its financial sector with restrictions on shadow banking assets and interbank lending. But a sudden reduction of liquidity could increase rather than reduce the risk of a financial panic and dampen growth.
Beijing’s modern sister city will be a symbol of political power rather than economic development. In many ways, Xiongan is designed as an antithesis of Shenzhen and Pudong.