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82. Early Warning in the Taiwan Strait
- Author:
- Mark Stokes and Eric Lee
- Publication Date:
- 04-2022
- Content Type:
- Working Paper
- Institution:
- Project 2049 Institute
- Abstract:
- Shows of force from China’s People’s Liberation Army exist on a continuum from peace to war and can be characterized as coercive or annihilative. In this report, Executive Director Mark Stokes and Associate Director of Programs Eric Lee examine kinetic and non-kinetic threats posed to Taiwan by the People’s Liberation Army. The authors explore the history of Taiwan’s early warning infrastructure and radar order of battle. They then assess how these capabilities support Taiwan’s air sovereignty missions of surveillance and control around its territories. They conclude by suggesting ways the United States can bolster Taiwan’s early warning capabilities.
- Topic:
- Security, Defense Policy, Sovereignty, Surveillance, and Army
- Political Geography:
- China, Taiwan, Asia-Pacific, and United States of America
83. Off Track – The role of China’s CRRC in the Global Railcar Market
- Author:
- Oxford Economics
- Publication Date:
- 07-2022
- Content Type:
- Working Paper
- Institution:
- Oxford Economics
- Abstract:
- With $35 billion in total revenue in 2021, CRRC, the Chinese state-owned railroad rolling stock manufacturer, is the largest player in the $71 billion global railroad rolling stock industry. Like other Chinese state-owned enterprises (SOEs), CRRC is the beneficiary of both implicit and explicit government subsidies. According to its annual reports, CRRC received $271 million in explicit Chinese government subsidies in 2020, and nearly $1.3 billion total between 2015 and 2020. Implicit government subsidies to SOEs like CRRC are harder to quantify and come in a variety of forms. For example, an SOE may obtain production inputs, such as financing or land, at below market-rate prices. It may also sell its outputs at above market-rate prices, a possibility that is particularly relevant to rail manufacturing, where much of the output is sold to government entities. Estimates by other researchers show that explicit government subsidies represent only about a quarter of the total government subsidies that Chinese SOEs receive. Since the 1990s, China has pursued a policy towards SOEs of “grasping the large, letting go of the small,” investing in national champions to dominate their respective industries. Under the management of the State-owned Assets Supervision and Administration Commission (SASAC) since 2003, SOEs have been encouraged to “go big and go global” through domestic consolidation and expansion, as well as through foreign mergers and acquisitions. The effect of these policies, which are fundamentally mercantilist in nature, has been for these national champion SOEs like CRRC to capture their domestic markets, using the economic rents so generated to finance global expansion. Between 2006 and 2018, SOEs’ share of the assets of the largest global firms has increased from approximately 6% to 20%, with Chinese SOEs accounting for essentially all of this increase. While SASAC has targeted specific industries for its national champion, the overall trend in recent years has been towards continued government divestment from legacy SOEs. SOEs’ share of national industrial employment fell from 60% in 1998 to 38% in 2003 to 20% in 2010. Thus, as reflected in planning documents, the selection of industries for the fostering of national champions is anything but random and reflects the strategic interests of the Chinese government. In the case of rail, the government’s strategic interest is transparent and is laid out in the Belt and Road Initiative (BRI)—China seeks to dominate an integrated global rail transportation network based on Chinese technical standards. China expects to obtain significant financial and geopolitical benefits from this outcome and may be willing to absorb losses on individual foreign rail projects in order to break into foreign markets.
- Topic:
- Infrastructure, Hegemony, Railways, and Air Travel
- Political Geography:
- China and Asia
84. China’s increased presence in Latin America: Win-win relations or a new dependency? A state of the art
- Author:
- Daniel Agramont Lechín
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
- Abstract:
- The rise of the Popular Republic of China (PRC) is one of the most significant events in contemporary international relations. However, at the global level, the “reemergence of China as a major global power has led to a considerable debate over the likely consequences for the rest of the world” (Jenkins, 2010: 810). China’s growing power raises questions as to the meaning of its superpower status as a nation, and the impact of its newfound influence in not only the Asia-Pacific region, but also the Global South (Dessein, 2015). In the specific case of Latin America and the Caribbean (LAC), the debate centers on the potential disadvantages that China’s vast supply of financial resources might bring for the region. Accordingly, the current paper is intended to examine the debate that has arisen in recent literature around the impact of China’s increased economic presence on Latin America –with win-win relations on the one hand and new dependency on the other.
- Topic:
- International Relations, Economics, Investment, and Dependency
- Political Geography:
- China, Asia, and Latin America
85. Proceed with Caution: Israeli Research Collaboration with China
- Author:
- Casey Babb
- Publication Date:
- 09-2022
- Content Type:
- Working Paper
- Institution:
- Institute for National Security Studies (INSS)
- Abstract:
- For Israel, warming relations with China has, in large part, been driven by pragmatic and enticing economic prospects, with policies focused on seizing the economic opportunity. For Xi and the Chinese Communist Party, the rationale for strengthening relations with Israel has been equally pragmatic, if of a different nature. China has long sought access to Israel’s vaunted innovation and technology sector – one of the most advanced in the world. For these reasons, China-Israel relations have accelerated dramatically, in areas ranging from trade in goods, to investment deals, to diplomatic relations, and beyond. However, over the last few years, and partly in response to mounting US pressure on Israel to reconsider its relations with China, there has been a noticeable cooling of economic activity between the two countries. That being said, if Israel wants to solidify its relationship with the US while limiting the gateways China could conceivably use to access or acquire the country’s technology and innovation in certain dual-use domains, it must also ensure the country’s research, intellectual property, and expert knowledge in these areas is sufficiently protected.
- Topic:
- Security, Science and Technology, Bilateral Relations, Intellectual Property/Copyright, Innovation, and Strategic Interests
- Political Geography:
- China, Middle East, Israel, and Asia
86. China below the Radar: Israel-US Strategic Dialogue on Technology
- Author:
- Assaf Orion and Shira Efron
- Publication Date:
- 07-2022
- Content Type:
- Working Paper
- Institution:
- Institute for National Security Studies (INSS)
- Abstract:
- The statements issued by President Biden during his visit to the Middle East include little mention of China. However, close reading reveals that between the lines, China is quite present in the agreements reached by the President and Israel and Saudi Arabia. The dialogue on technology cooperation announced by Jerusalem and Washington, which is related directly to the Great Power competition, signals a new stage in partnership between the countries: Israel alongside the United States, even if not against China
- Topic:
- Diplomacy, Science and Technology, Bilateral Relations, and Rivalry
- Political Geography:
- China, Middle East, Israel, Asia, North America, and United States of America
87. The Race to Electric Vehicles: Technology, US-China Rivalry, and Big Money
- Author:
- Ariel Sobelman
- Publication Date:
- 06-2022
- Content Type:
- Working Paper
- Institution:
- Institute for National Security Studies (INSS)
- Abstract:
- In recent years Israel has become a leading player in auto tech, and China is interested in Israeli developments in a field that is expected to assume a significant role in the rivalry between Washington and Beijing. Therefore, it is important for Israel to define a national strategy on the issue, in order to avoid unnecessary involvement in the inter-bloc clash
- Topic:
- Green Technology, Innovation, Rivalry, and Electric Vehicles
- Political Geography:
- China, Asia, North America, and United States of America
88. After the Russian “Ruse,” China Looks for New Friends
- Author:
- Galia Lavi
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Institute for National Security Studies (INSS)
- Abstract:
- With the Russian invasion of Ukraine, it would seem that Beijing and Moscow should be a united front against the West. But in actuality, China has been surprised by the scale of the Russian aggression and is now rethinking its position in the geopolitical arena. How will this affect the Middle East?
- Topic:
- Foreign Policy, Military Strategy, Conflict, and Strategic Interests
- Political Geography:
- Russia, China, Europe, and Asia
89. Introducing Third Way’s US-China Digital World Order Initiative
- Author:
- Valerie Shen and Jayson Browder
- Publication Date:
- 06-2022
- Content Type:
- Working Paper
- Institution:
- Third Way
- Abstract:
- If it wasn’t clear three months ago, it is clear now: the next global era will be defined by democracy versus autocracy. In this competition, a new and decisive divide pits America’s approach of “digital democracy” against China’s approach of “digital autocracy.” This great divide places the US and allies on one side and China's unfettered access to sensitive data on the other. China’s digital authoritarianism has been described as "one giant QAnon" and is ubiquitous among the 1.4 billion inhabitants of the country. Moreover, one of the greatest threats to American national security interests is if China prevails in exporting and normalizing its model of digital supremacy. China’s global network of surveillance systems is antithetical to liberal democratic values, as it monitors, punishes, and conditions citizens, as well as influences them through automated disinformation campaigns. China’s ambition for global digital supremacy is real and supported by aggressive diplomatic efforts and massive financial investments. The effort by the United States and like nations to maintain a peaceful and prosperous world order will require a level of sophistication and commitment unrivaled in our history. China is not only an adversary. It is sometimes a partner whose massive economy is deeply entwined with that of the US and other friendly nations. This is not the zero-sum game of the Cold War conflict, and the hope is that it never becomes so. Will liberal democracies strengthen and proliferate or weaken and dwindle in the 21st century? The Chinese state intends to shape the global digital order in its image by redrawing technological norms and standards. Ultimately, the US-China national security competition may hinge on who sets the digital world order.
- Topic:
- Science and Technology, Authoritarianism, Democracy, Digital Economy, Innovation, and Rivalry
- Political Geography:
- China, Asia, North America, and United States of America
90. Hidden Defaults
- Author:
- Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- China’s lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China’s loans, also the associated defaults remain “hidden”, as missed payments and restructuring details are not disclosed. We construct an encompassing dataset of sovereign debt restructurings with Chinese lenders and find that these credit events are surprisingly frequent, exceeding the number of sovereign bond or Paris Club restructurings. Chinese lenders follow a resolution approach reminiscent of 1980s Western lenders; they seldom provide deep debt relief with face value reduction. If history is any guide, multi-year debt workouts with serial restructurings lie in store.
- Topic:
- Development, International Cooperation, Finance, Bonds, and Influence
- Political Geography:
- China and Asia
91. Cutting through the Value Chain: The Long-Run Effects of Decoupling the East from the West
- Author:
- Gabriel Felbermayr, Alexander Sandkamp, and Hendrik Mahlkow
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- With ever-increasing political tensions between China and Russia on one side and the EU and the US on the other, it only seems a matter of time until protectionist policies cause a decoupling of global value chains. This paper uses a computable general equilibrium trade model calibrated with the latest version of the GTAP database to simulate the effect of doubling non-tariff barriers - both unilateral and reciprocal - between the two blocks on trade and welfare. Imposing trade barriers almost completely eliminates bilateral imports. In addition, changes in price levels lead to higher imports and lower exports of the imposing country group from and to the rest of the world. The targeted country group increases exports to the rest of the world and reduces imports. Welfare falls in all countries involved, suggesting that governments should strive to cooperate rather than turning away from each other. By imposing a trade war on Russia, the political West could inflict severe damage on the Russian economy because of the latter’s smaller relative size.
- Topic:
- International Cooperation, International Trade and Finance, European Union, Conflict, Trade Wars, Protectionism, and Rivalry
- Political Geography:
- Russia, China, Europe, Asia, North America, and United States of America
92. Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance
- Author:
- Lukas Wellner, Brad Parks, Axel Dreher, Andreas Fuchs, and Austin M. Strange
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006–2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries.
- Topic:
- Development, Bilateral Relations, Foreign Aid, and Influence
- Political Geography:
- China and Asia
93. Who Lends to Africa and How? Introducing the Africa Debt Database
- Author:
- David Mihalyi and Christoph Trebesch
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- Africa’s sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets and instead releases information on individual loans and bonds, in particular on the financial terms of each instrument. Taken together, we cover nearly 7000 loans and bonds between 2000 and 2020, with a total volume of 644 billion USD. Using this data, we study Africa’s record lending boom of the 2010s in detail. The debt boom was mainly driven by large sovereign bond issuances in London and New York, as well as growing lending by Chinese state-owned banks. The micro data also reveal a large variation in lending terms across countries, time, and creditors. Sovereign external bonds have interest rates of 6 percent, on average, Chinese banks charge 2-4 percent, and multilateral organizations just 1 percent. Strikingly, many governments in Africa simultaneously borrow large amounts from both private and official creditors, at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as cheap concessional loans can be used to pay the high interest to private or Chinese creditors.
- Topic:
- Economics, Foreign Aid, Credit, and Influence
- Political Geography:
- Africa, China, and Asia
94. Who wins and who loses from state subsidies?
- Author:
- Sourafel Girma, Holger Görg, and Ignat Stepanok
- Publication Date:
- 05-2022
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms.
- Topic:
- Governance, Business, Subsidies, and Competition
- Political Geography:
- China and Asia
95. A Primer on the 2022 National Security Strategy
- Author:
- Peter Juul and Heba Malik
- Publication Date:
- 10-2022
- Content Type:
- Working Paper
- Institution:
- Center for American Progress - CAP
- Abstract:
- The 2022 National Security Strategy introduces new ideas on navigating strategic competition with China and Russia, investing at home, and a renewed focus on the fight against climate change.
- Topic:
- Security, Climate Change, National Security, Rivalry, and Strategic Interests
- Political Geography:
- Russia, China, Europe, Asia, North America, and United States of America
96. Black Mirror Statecraft: Combating PRC Hostile Social Manipulation and Sharp Power in an Era of Great Power Competition
- Author:
- Jonathan Lushenko
- Publication Date:
- 02-2022
- Content Type:
- Working Paper
- Institution:
- Council on International Policy (CIP)
- Abstract:
- The Netflix television hit Black Mirror postulates a world in which personal mobile devices and other forms of interconnected infosphere technology produce alarming and increasingly animalistic human behavior. In the episode titled “Nosedive,” the main protagonist struggles to boost her social credit score – an algorithmic rating of all daily social interactions – to enhance her socio-economic status, earn special privileges, and sustain access to basic human resources through mostly contrived and inauthentic behavior. At first, this Twilight Zone-type plot seems unbelievable until realizing that a social credit system now exists in the People’s Republic of China (PRC).
- Topic:
- Science and Technology, Communications, Governance, and Public Opinion
- Political Geography:
- China and Asia
97. Arresting Nuclear Adventurism: China, Article VI, and the NPT
- Author:
- Henry Sokolski and Andrea Beck
- Publication Date:
- 06-2022
- Content Type:
- Working Paper
- Institution:
- Nonproliferation Policy Education Center
- Abstract:
- Given the current crisis in Ukraine, it’s tempting to consider focusing on Chinese compliance with the Nuclear Nonproliferation Treaty (NPT) to be an academic indulgence. Giving into this inclination, however, would be a mistake. As dangerous as Russia currently is, China will be more threatening in the long run. As we are learning with Russia’s violation of the 1994 Budapest Memorandum, enforcing binding understandings is critical lest violators run roughshod over law and good order. This is true with Russia’s behavior in Ukraine. It is no less so with China’s nuclear weapons buildup and its repeated refusal to join in good faith negotiations to limit its nuclear weapons activities, which is required by Article VI of the NPT. This buildup and refusal clearly flies in the face of China’s legal NPT obligations. The question is what might bring Beijing back into compliance. To get the answers, NPEC held a battery of workshops last fall, followed by a week-long diplomatic simulation. The game participants included U.S., Japanese, and Australian former and current officials and staff as well as outside experts. The group concluded that Beijing is unlikely to comply willingly with the NPT anytime soon, but that U.S. and international security would still be best served by spotlighting Beijing’s nuclear adventurism and suggesting diplomatic off-ramps to arrest its nuclear buildup.
- Topic:
- Arms Control and Proliferation, Diplomacy, Military Strategy, Peace, and Nonproliferation Treaty (NPT)
- Political Geography:
- Russia, China, Europe, Ukraine, and Asia
98. Not all political relation shocks are alike: Assessing the impacts of US-China tensions on the oil market
- Author:
- Yifei Cai, Valérie Mignon, and Jamel Saadaoui
- Publication Date:
- 08-2022
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- This paper assesses the effects of US-China political tensions on the oil market. Relying on a quantitative measure of these relationships, we investigate how their dynamics impact oil demand, supply, and prices over various periods, starting from 1971 to 2019. To this end, we estimate a structural vector autoregressive model as well as local projections and show that political tensions between the two countries pull down oil demand and raise supply at medium- and long-run horizons. Overall, our findings show that conflicting relationships between these two major players in the oil market may have crucial impacts, such as the development of new strategic partnerships.
- Topic:
- Security, Oil, Conflict, Rivalry, and Energy Crisis
- Political Geography:
- China, Asia, North America, and United States of America
99. The Belt and Road Initiative as Ten Policy Commandments: Review of Xi’s Kazakhstan and Indonesia Launch Speeches
- Author:
- Lauren A. Johnson
- Publication Date:
- 05-2022
- Content Type:
- Working Paper
- Institution:
- China Studies Centre, The University of Sydney
- Abstract:
- In 2019 Foreign Policy described China’s Belt and Road Initiative (BRI) as “the most talked about and least defined buzzword of this decade”. Given that confusion and the importance of leader political speeches in China, especially those of current President Xi Jinping, it is surprising that the BRI literature has little in-depth analysed the two launch speeches of 2013. This article seeks to fill that gap with study of those speeches and focus on the five cooperationoriented areas announced in each. In comparative context those ten pillars appear not to be descended from New Era Chinese heaven but rather demonstrate substantive thematic overlap with the ten pillars of what was once relatively mainstream macroeconomic development policy, the Washington Consensus. Yet, in the case of the BRI there is a relative implicit implementation emphasis also. In forward context of contemporary global political economy tensions, the need to recover from the COVID-19 pandemic, the G7’s Build Back Better and the European Union’s Global Gateway ambitions also, this article may offer a timely fresh and comparative lens on the BRI.
- Topic:
- Development, International Cooperation, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
- Political Geography:
- China, Asia, and Global Focus
100. The US–Italy Economic Relations in a Divided World
- Author:
- Adriana Castagnoli
- Publication Date:
- 05-2022
- Content Type:
- Working Paper
- Institution:
- Istituto Affari Internazionali
- Abstract:
- In 2021, bilateral trade returned to the sustained pace it had prior to the Covid pandemic. Direct investment also grew – crucially, not just Italian investment in the United States but the other way round too. While Italy’s economic ties with Russia and China remain potential hotspots, Rome has never questioned its Atlantic orientation. Nevertheless, possible austerity policies following sanctions against Russia could spread social discontent that populist parties can exploit for consensus purposes in the 2023 general election, rekindling anti-Americanism rooted in different segments of Italian society.
- Topic:
- Foreign Policy, Foreign Direct Investment, Economic Policy, Trade, and Energy
- Political Geography:
- Russia, China, Italy, and United States of America