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  • Author: Nicola De Blasio, Fridolin Pflugmann
  • Publication Date: 05-2021
  • Content Type: Policy Brief
  • Institution: Belfer Center for Science and International Affairs, Harvard University
  • Abstract: President Xi Jinping’s pledge during the 2020 United Nations General Assembly, that China would reach peak carbon dioxide emissions by 2030 and achieve carbon neutrality before 2060, is a significant step in the fight against climate change. Since China is the world’s top contributor of greenhouse gases, there is no doubt that Beijing needs to be front and center of any effort to curb global emissions. In 2019, China accounted for almost 30 percent of global emissions, about twice as much as the second largest emitter, the United States.1 But while U.S. emissions have been on an overall decline since 2007,2 China’s have increased, raising concerns over whether Beijing can actually deliver on its targets. This reality should not distract from the fact that China is also the world’s top developer of renewables and other clean energy technologies. For example, China was the world’s largest installer of photovoltaics (PV) by 2013 and, in less than two years, also became the global leader in solar module manufacturing. At the same time, China leveraged its industrial might and economies of scale to drive down modules’ costs—which, by the end of 2018, were 90 percent lower than only ten years before. In this context, renewable hydrogen could significantly accelerate China’s transition to a low-carbon economy, increasing the likelihood of meeting its carbon neutrality goal. Renewable hydrogen offers significant advantages for China. It can help Beijing meet its climate and pollution goals—at a time when coal continues to dominate—while avoiding increased reliance on imported fuels. As a readily dispatchable means of storing energy, hydrogen can help to address intermittency and curtailment issues as renewable energy increases its share of China’s energy mix. As a sustainable mobility energy carrier, it can power fuel-cell electric vehicles or be the base for synthetic fuels. Finally, renewable hydrogen can open new avenues for developing clean technology manufactured goods for both internal and export markets. Today, most of China’s hydrogen is produced from coal via 1,000 gasifiers, accounting for 5% of the country’s total coal consumption. Hydrogen costs vary significantly as a function of production technology and prices of fossil fuels and electricity. Production from coal remains the lowest cost option: about 30 percent cheaper than hydrogen from natural gas. Therefore, reducing the carbon footprint of coal-based hydrogen will be critical in a low-carbon economy. In the medium term, coal-based hydrogen with carbon capture, utilization and storage will likely remain China’s lowest-cost clean hydrogen production pathway. Hence, the underlying question is whether Beijing will prioritize cost considerations or put its full industrial might behind the development and deployment of renewable hydrogen. In March 2019, the Chinese government took a significant step forward by announcing measures to promote the construction of hydrogen facilities for new energy vehicles. Wan Gang, who is known as China’s “father of the electric car,” called for China to “look into establishing a hydrogen society” and “move further toward fuel cells.”3 Given that Gang made a similar call two decades ago on vehicle electrification, which played a key role in China’s current battery electric vehicles market dominance, close attention is warranted.
  • Topic: Security, Energy Policy, Environment, Natural Resources, Renewable Energy, Hydrogen
  • Political Geography: China, Asia-Pacific
  • Author: Malcolm Cook
  • Publication Date: 05-2021
  • Content Type: Policy Brief
  • Institution: Lowy Institute for International Policy
  • Abstract: China will not agree to a South China Sea Code of Conduct (COC) that is consistent with the 2016 South China Sea arbitral tribunal ruling, and therefore any COC which China agrees with the Association of Southeast Asian Nations (ASEAN) will harm Australia’s interests. But a lack of Australian support for such a Code would aggravate relations with Southeast Asian states and ASEAN, and with China. Australia should use the time afforded by the drawn-out Code of Conduct negotiations to coordinate with the five littoral Southeast Asian states affected by China’s unlawful maritime claims. Australia should emphasise the need for consistency with international law, especially the 2016 arbitral ruling. The Biden administration is likely to increase pressure on Australia to conduct freedom of navigation operations (FONOPS) in the South China Sea. Such action may risk a significant Chinese response against Australia.
  • Topic: Foreign Policy, Territorial Disputes, Maritime, Alliance, Freedom of Movement
  • Political Geography: China, Australia, Southeast Asia, Asia-Pacific, United States of America, South China Sea
  • Author: Claire Young
  • Publication Date: 02-2021
  • Content Type: Policy Brief
  • Institution: Lowy Institute for International Policy
  • Abstract: Australia’s interests in Antarctica are better served by the Antarctic Treaty System (ATS) than anything we could negotiate today. We should redouble our commitment to its ideals of science-driven, rules-based management — and counter the narrative of ATS ‘failure’. China is pushing the boundaries of ATS practice by exploiting fisheries and tourism, and probably seeking access to Western technologies in Antarctica. And in the future, Beijing could lead a coalition of states seeking mineral riches that only China is likely to be capable of retrieving. Australia should watch China’s activities closely, but react cautiously. We should be wary of false analogies with the Arctic and not overreact to marginal military developments. We should shield the ATS from Australia–China tension and US–China competition.
  • Topic: Science and Technology, Treaties and Agreements, Natural Resources, Tourism, Geopolitics, Fishing, Coalition
  • Political Geography: China, Asia, Australia, Arctic
  • Author: Yang Jiang
  • Publication Date: 04-2021
  • Content Type: Policy Brief
  • Institution: Lowy Institute for International Policy
  • Abstract: Almost every governmental policy decision made today has a China angle, and building understanding of China has become more pressing for Australian policymaking than ever. Despite the urgent demand within the Australian public service for China expertise and language skills, the existing skills of many Chinese-Australians are being overlooked. Australia has a significant, diverse, and growing population of Chinese-Australians, but they are underrepresented and underutilised in the public service. A better harnessing of the skills and knowledge of this community — including via improved recruitment processes, better use of data, skills-matching, and reviewing and clarifying security clearance processes and requirements — would have substantial benefits for Australian policymaking in one of its most important bilateral relationships.
  • Topic: Foreign Policy, Government, Bilateral Relations, Public Service
  • Political Geography: China, Asia, Australia
  • Author: Luke Patey
  • Publication Date: 05-2021
  • Content Type: Policy Brief
  • Institution: Danish Institute for International Studies
  • Abstract: Recommendations: The US, South Korea, Japan, and the EU can pool resources to level the playing field with China and offer new finance options for developing countries seeking to upgrade their communications and technology infrastructure. The US should look to the India and Vietnam model and help other nations develop domestic capacities that lower dependencies on Huawei and other foreign tech providers over time. Open RAN is no silver bullet to compete with China. Its potential will only be fully realized in the mid and long run, after high integration costs, security gaps, and other problems are worked out.
  • Topic: Security, Foreign Policy, Development, Politics, Science and Technology, Power Politics, Economy, Cyberspace
  • Political Geography: Japan, China, Asia, North America, United States of America
  • Author: Mikkel Runge Olesen
  • Publication Date: 01-2021
  • Content Type: Policy Brief
  • Institution: Danish Institute for International Studies
  • Abstract: The Biden administration is likely to adopt a less chaotic US approach to the NATO alliance concerning China. European members should utilize this calmer time to develop viable strategies on how to tackle non-conventional threats from China within the Alliance in concert with the US. RECOMMENDATIONS: NATO members should: Continue to develop their own strategies and procedures against non-conventional Chinese threats in the domains of cyber, influence activities, and trade and investments. Resist the temptation to fall into inertia in determining how NATO should deal with China after the fear of a US withdrawal from NATO has subsided. Work with the Biden administration to develop NATO’s role in relation to China further on grounds that are acceptable on both sides of the Atlantic.
  • Topic: Security, Defense Policy, NATO, Diplomacy, International Organization
  • Political Geography: China, Asia, Denmark, United States of America
  • Author: Per Kalvig, Hans Lucht
  • Publication Date: 02-2021
  • Content Type: Policy Brief
  • Institution: Danish Institute for International Studies
  • Abstract: Rare earth elements (REEs) are vital for communications, the green energy transition and defense, but are produced almost exclusively in China. As the projected REE mines in southern Greenland inch closer to realization, Denmark and its EU partners remain sidelined from future supply chains for raw materials. Key findings: Rare earth elements (REEs) are vital to daily life, communications, green energy and defense. Yet, REEs and products containing REEs are almost exclusively controlled and produced by China. Significant long-term strategic state or supra-state support is required to challenge Chinese dominance of the REE sector and reduce the vulnerability of European and American energy supplies. In the absence of REE industries in Europe or America, the two REE projects in South Greenland, with their potential to become significant suppliers of REE, will most likely supply Chinese-controlled raw materials industries.
  • Topic: Security, Defense Policy, Climate Change, Environment, Oil, Power Politics, Gas, Minerals, Rare earth elements (REEs)
  • Political Geography: China, Denmark, Greenland, Arctic, United States of America
  • Author: Jeffrey J. Schott
  • Publication Date: 01-2021
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: China’s policies in Xinjiang, Hong Kong, and the South China Sea and its ongoing support for Iran, North Korea, and Venezuela pose major challenges for the United States, where bipartisan pressure is growing to ramp up punitive sanctions against leading Chinese firms and financial institutions. Financial sanctions freeze the US assets or bar US entry of the targeted individuals and firms and prohibit US financial firms from doing business with them. Schott explains why US officials should carefully weigh the risks to international financial markets and US economic interests before imposing punitive sanctions on major financial institutions engaged with China. The collateral costs of such sanctions would be sizable, damaging US producers, financial institutions, and US alliances. By restricting access of major banks to international payments in US dollars and barring use of messaging systems like SWIFT, tougher US financial sanctions would effectively “weaponize” the dollar; friends and foes alike would be pushed to seek alternatives to dollar transactions that, over time, would weaken the international role of the dollar. Instead of doubling down on current unilateral financial sanctions, US policy should deploy sanctions in collaboration with allies and calibrate trade and financial controls to match the expected policy achievements.
  • Topic: Human Rights, Sanctions, Finance, Economy
  • Political Geography: China, Asia, North America, United States of America
  • Author: Robert Z. Lawrence
  • Publication Date: 03-2021
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: Afrequently voiced complaint from the Trump administration was that US firms have faced a competitive disadvantage in exports because the US market is open and US tariffs are low but US trading partners protect their markets with high tariffs. The administration used this concern to justify raising US tariffs whenever it could. Lawrence argues that these claims should be more nuanced and account for the extensive unilateral liberalization by many countries over the past 30 years and that the grievances that motivated the Trump trade policies are increasingly misplaced. Many developing countries have reduced their tariffs unilaterally to rates that are far lower than they applied three decades ago and far less than the bound rates reflected in their World Trade Organization (WTO) obligations. Globally, on average, tariffs were not raised during the global financial crisis of 2008 and continued to decline through at least 2018. Even when shocks from imports resulted in serious injury to domestic industries, several developing countries temporarily provided safeguard protection but at levels that were lower than their WTO bound rates. This evidence of import liberalization also suggests that rising protectionism was not responsible for the slow growth in world trade that has been evident since 2011. It remains uncertain whether countries will now respond to disruptions to global supply chains since 2018 caused by Trump’s trade policies and the COVID-19 pandemic by reversing their tariff liberalization stance, but the sustained enthusiasm for new megaregional trade agreements suggests many countries will not.
  • Topic: Emerging Markets, World Trade Organization, Trade Wars, Protectionism
  • Political Geography: China, Asia, North America, United States of America
  • Author: Martin Chorzempa, Adnan Mazarei
  • Publication Date: 05-2021
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: The COVID-19 shock has exacerbated the struggles of many emerging-market and developing economies (EMDEs) to repay their external debt. One of the most urgent challenges relates to debt owed to China, whose lending spree under its Belt and Road Initiative and other programs has played an outsized role in what amounts to a crisis for many countries. The scope of the problem is striking. China is owed more than $100 billion, or 57 percent of all debt owed to official creditors by the countries that need help the most. China is not a member of the Paris Club of official creditors, which coordinates, within a multilateral framework, the resolution of general sovereign illiquidity or unsustainable external debt of EMDEs. There is an urgent need to put in place more effective, long-term solutions to help durably lower the risks of prolonged debt difficulties in EMDEs. These problems could be partly addressed by creating creditor committees to coordinate debt relief with China. The Group of Twenty (G20) has taken some steps to include creditor committees in the context of the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI), but only for low-income countries that qualify for the DSSI and only for official creditors. To better address debt distress, it needs to extend the approach, especially to middle-income debtor countries.
  • Topic: Debt, Development, Emerging Markets, G20
  • Political Geography: China, Asia