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62. Could Biden construct a new world order through détente with Russia?
- Author:
- Efraim Inbar
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Jerusalem Institute for Strategy and Security (JISS)
- Abstract:
- Such a scenario would give the US a leg up against China’s totalitarianism and expansionist aims, and bridge the age-old schism with Russia
- Topic:
- Diplomacy, Hegemony, Rivalry, and Strategic Interests
- Political Geography:
- Russia, China, Europe, Asia, North America, and United States of America
63. Japan’s Expanded Regional Security Role: The Challenge of China
- Author:
- Eyal Ben-Ari
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Jerusalem Institute for Strategy and Security (JISS)
- Abstract:
- Japan’s steady build-up of its substantial military power is based on a realistic view of meeting current security challenges, especially those presented by China.
- Topic:
- Security, Military Strategy, Conflict, and Strategic Interests
- Political Geography:
- Japan, China, and Asia
64. Chinese Mining Companies and Local Mobilization in Myanmar
- Author:
- Xue Gong
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Since the 2010s, China has invested enormous amounts of capital in major infrastructure construction projects in developing countries around the world, including in Southeast Asia. Many argue that China aims to export its development model to the world, but Chinese actors have also at times sought to address project concerns at least to some degree. The question is this: how are Chinese business actors adapting to the local contexts, legal and regulatory requirements, technical standards, and community norms in the places where they operate? To answer that question, it is important to focus on the interactive dynamics between Chinese players and local civic actors (such as local nongovernmental organizations (NGOs), faith-based organizations, community groups, government-owned NGOs, activists, associations, and other networks in exile) in Myanmar that can collectively be termed local societal actors. By tracing Chinese local engagement activities involving a major Chinese-backed resource-extraction project, the Letpadaung copper mine, this paper argues that the past few decades of China’s deep embeddedness and interests in Myanmar’s political economy forced Chinese businesses to adapt to Myanmarese societal demands, by way of a local community-based approach. Beijing knows that projects supported by Myanmar’s government today might not have the same traction tomorrow. Therefore, when pressure has built, Chinese actors have paid greater heed to demands from local residents in projects’ host countries, even at times integrating these demands to adjust existing Chinese strategies, choices, and behaviors. That said, these concessions have not caused these disputes to entirely disappear, and the staying power of these Chinese adaptations is open to question, particularly amid the political upheaval Myanmar has weathered since the 2021 coup. A key variable in these changes is the power of the local societal actors: when they are strong and supported by local institutions, Chinese business actors often are more adaptive to local demands and take greater steps, including with local partners, to win support from local societal actors. Because the interactions between local institutions and local societal actors vary by place and time, Chinese responses to local actors and practices also do vary in different periods. In sum, it is clear that Chinese actors are making progress at the local level by showing their adaptability not just in terms of the Letpadaung copper mine case but also on other shared development projects in Myanmar. Nonetheless, Chinese actors’ approach to local community engagement is subject to the local context and specifically to what extent local institutions have the capacity and will to support local societal demands.
- Topic:
- Civil Society, Infrastructure, Institutions, Coup, and Mining
- Political Geography:
- China, Southeast Asia, and Myanmar
65. Negotiating Local Business Practices With China in Benin
- Author:
- Folashade Soule
- Publication Date:
- 04-2022
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Commercial negotiations between Benin and China demonstrate how both sides navigate the dynamics of Africa-China business-to-business relationships. In Benin, Chinese and local Beninese officials engaged in drawn-out negotiations on a deal to construct a business center aimed at deepening business links between Chinese and Beninese merchants. Strategically located in Cotonou, Benin’s principal economic city, the center aims to promote investment and wholesale businesses by serving as a hub for China’s business-to-business relations not just in Benin but regionally in West Africa, especially in the large and growing neighboring market of Nigeria. This paper relies on original research and fieldwork conducted in Benin from 2015 to 2021 and the author’s access to draft and final contracts from the negotiations, which allow for a side-by-side comparative textual analysis, as well as initial field interviews and follow-up interviews with key negotiators, Beninese businessmen, and former Beninese students in China. The paper shows how Chinese and Beninese authorities negotiated the establishment of the center and, above all, how Beninese authorities made Chinese negotiators adapt to local Beninese labor, construction, and legal norms and put pressure on their Chinese counterparts. This strategy meant that negotiations took longer than usual to complete. China-Africa cooperation is often characterized by speedy negotiations, an approach that in some cases turns out to be harmful—since this can allow vague and unfair clauses to be featured in final contracts. The negotiations over the Chinese business center in Benin is a good example of how well-coordinated negotiators that take their time and work in coordination with various counterparts throughout the government can help facilitate better outcomes in terms of high-quality infrastructure and compliance with prevailing construction, labor, environmental, and business norms, while also preserving a good bilateral relationship with China.
- Topic:
- Foreign Policy, Development, Bilateral Relations, and Business
- Political Geography:
- Africa, China, Asia, and Benin
66. How Huawei’s Localization in North Africa Delivered Mixed Returns
- Author:
- Tin Hinane El Kadi
- Publication Date:
- 04-2022
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa. The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure. Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa. Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students. However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading. North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.
- Topic:
- Development, Science and Technology, Telecommunications, Huawei, and Digital Space
- Political Geography:
- China, Asia, Algeria, North Africa, and Egypt
67. The Digital Silk Road and China’s Influence on Standard Setting
- Author:
- Alex He
- Publication Date:
- 04-2022
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- China is striving to become a leader in international standard setting, and the Digital Silk Road, part of China’s Belt and Road Initiative to expand its global infrastructure and markets, is key to realizing this goal. Both roads depend on standard connectivity, fuelled by Chinese private companies that are the driving force behind China’s growing role as a leader in technology development and shaping standards in both domestic and global markets. However, China faces strong competition to gain more influence in international standard-setting bodies, which are dominated by the European Union and the United States.
- Topic:
- Infrastructure, Digital Economy, Trade, Digital Culture, Silk Road, and Digitalization
- Political Geography:
- China, Europe, Asia, North America, and United States of America
68. 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
69. 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
70. 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
71. 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
72. 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
73. 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
74. 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
75. 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
76. 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
77. 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
78. 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
79. 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
80. 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