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101. On U.S.-China Relations & Climate

Author:
Kate Logan and Li Shuo
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
Climate change, and how to confront it, is one of the most politicized issues in the American political system. Regardless of how U.S. politicians talk about climate change, its effects are increasingly dire for Americans and the entire world — including many vulnerable populations in Asia. With the United States and China accounting for around 40% of annual greenhouse gas emissions globally, the speed and scale of their collective emissions reductions will largely determine the future magnitude of economic and human damages. Moreover, how the United States and China implement climate policy and interact will also shape geopolitics, especially for Asian economies that depend on fossil fuels or those rich in minerals and technologies needed for clean energy. The nature of climate change as a common global challenge previously enabled the United States and China to forge a uniquely cooperative relationship on the issue. U.S.-China joint action famously laid the groundwork for the landmark Paris Agreement in 2015, while tempering bilateral tensions. Former President Donald Trump’s subsequent withdrawal from the Paris Agreement, however, irrevocably damaged this cooperation, along with global trust in the United States as a climate leader. And the recent emergence of U.S. economic competitiveness with China as a rare area of bipartisan consensus has further complicated the issue, as U.S. policy responses aiming to limit China’s global dominance in essential clean technologies including solar panels and electric vehicles are seen as counterproductive to the global clean energy transition. Despite this, President Joe Biden and his vice president, Kamala Harris — now the Democratic presidential nominee — have supported climate cooperation as a critical area of U.S.-China convergence. This is the backdrop against which this year’s U.S. election is playing out: two parties that largely align in their view of China as the top U.S. competitor, but who hold starkly polarized views toward climate policy as an economic enabler, in Harris’s and the Democrats’ case, or as a barrier to growth that must be dismantled, as Trump and his supporters contend. The stakes are high — for U.S.-China relations, as well as for the health and safety of our planet.
Topic:
Climate Change, Politics, Bilateral Relations, Carbon Emissions, and Vulnerability
Political Geography:
China, Asia, North America, and United States of America

102. On Science & Tech Diplomacy

Author:
Akshay Mathur and Helen Zhang
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
A new era of intergovernmental science and technology cooperation has emerged, driven by the United States and its Asian partners in the Indo-Pacific such as Japan, South Korea, Taiwan, Australia, Singapore, and India. As science and technology take primacy in the modern economy, countries are introducing laws and policies to build new sovereign capabilities, protect sensitive innovations and industries, and govern cross-border cooperation. This essay examines the key trends we have observed in the United States and select Asian countries in the Indo-Pacific, the nature of agreements being inked, and the likely direction of cooperation under the next U.S. administration.
Topic:
Diplomacy, Economics, Science and Technology, and Trade
Political Geography:
Japan, India, Taiwan, Asia, South Korea, Australia, Singapore, United States of America, and Indo-Pacific

103. On U.S.-China Relations & Political Economy

Author:
Lizzi C. Lee and Neil Thomas
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
Communist leaders may not like electoral democracy but there are few events they will pay more attention to this year than the U.S. presidential election on November 5. General Secretary Xi Jinping says U.S.-China ties are “the most important bilateral relationship in the world,” and Chinese officials, scholars, and netizens are anxious to glean insights about Republican Party candidate and former President Donald Trump and Democratic Party candidate and current Vice President Kamala Harris. For Beijing, the stakes are high. The presidencies of first Trump and now Joe Biden saw the United States adopt a posture of “strategic competition” toward China that has significantly impacted the ruling Chinese Communist Party’s external environment and domestic priorities. Trump imposed tariffs on most Chinese imports to the United States, which Biden ramped up in key industries including electric vehicles. Biden introduced extensive export controls aimed at curbing China’s chip industry, which could be expanded to other sectors. Trump and Biden have both elevated U.S. support for Taiwan; strengthened restrictions on inbound and outbound investment with China; and sanctioned hundreds of Chinese government agencies, state-owned enterprises, private firms, and individuals. Biden has further prioritized working with U.S. allies and partners on economic, political, and security policies to blunt China’s influence. Both countries seek “guardrails” against crisis and conflict, but bilateral diplomacy is increasingly fraught and multilateral cooperation on global challenges is increasingly difficult. This essay analyzes the China policies of both candidates, focusing on the diplomatic and economic dimensions of U.S.-China relations, highlighting how a second Trump administration could deliver acute shocks but potential openings while Harris would likely bring continuity with Biden’s approach. It argues that Beijing has no clear preference between the two candidates. Therefore, neither election outcome would fundamentally change China’s international strategy, although the result would produce different tactical responses. It concludes with recommendations for how both Washington and Beijing can safeguard global stability while preserving national sovereignty regardless of who succeeds Biden.
Topic:
Foreign Policy, Political Economy, Sovereignty, Bilateral Relations, Elections, and Donald Trump
Political Geography:
China, Asia, North America, and United States of America

104. On Alliances in Northeast Asia

Author:
Emma Chanlett-Avery, Duyeon Kim, and Yuka Koshino
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
Over the past two years, delegations to Washington from Japan and South Korea have one predominant question for their interlocutors: What would a Trump 2.0 administration mean for their countries and for U.S. global leadership more broadly? Both Asian capitals appreciate the upgrades to their bilateral pacts with the United States under the Biden administration’s alliance-centric foreign policy, and express anxiety about the possible return of Trump as commander-in-chief. Even before his election in 2016, Trump had expressed open disdain for U.S. alliances and that skepticism could be amplified in a second term by his “America First” approach. With Kamala Harris now at the top of the Democratic ticket, Washington analysts assume broad continuity in her foreign policy approach, although nuances may yet emerge. But while a Harris election and a second Trump presidency contrast sharply on policy and style, the views from Seoul and Tokyo point to enduring elements of American foreign policy that are likely in either outcome. In many ways, Trump and Harris share an approach to U.S. economic engagement in the Indo-Pacific. Upon taking office in 2017, Trump fractured the Obama administration’s core economic pillar of the so-called rebalance to Asia by withdrawing from the Trans-Pacific Partnership. This divorce drew dismay particularly from Japan; Tokyo had seen the 12-nation free trade pact as its primary tool to blunt China’s rising economic sway over the region and to reinforce its Free and Open Indo-Pacific strategy (FOIP). The Biden-Harris administration has similarly expressed little enthusiasm for re-joining the reformed version that Japan salvaged after the U.S. withdrawal, and its signature regional economic policy, the Indo-Pacific Economic Framework (IFEP) lacks the market access that the region’s economies crave. Japan and South Korea also had misgivings about the passage of domestic economic legislation such as the Inflation Reduction Act that would have penalized South Korean and Japanese investment in the United States. “Friend-shoring” rhetoric aside, both Seoul and Tokyo see either leader forging an industrial policy that defaults to protectionist trade practices. Both Japan and South Korea are also concerned about diminishing American leadership of the world and the ascendance of illiberal, authoritarian blocs. Biden and the Democratic Party have generally promoted U.S. alliances as underpinning a world order that promotes stability and the rule of law. Yet during Biden’s presidency, wars in Europe and the Middle East have flared, threatening to distract Washington from its Indo-Pacific priorities and driving deep divisions in public opinion both domestically and internationally. Trump and his Republican colleagues, on the other hand, mostly disapprove of U.S. military involvement in international conflict and fidelity to international alliances, particularly NATO. A Trump administration could undermine the rules-based system by brokering deals with authoritarian leaders, neglecting multilateral institutions that seek to quell conflict, and reinforcing the rising ideological isolationism in U.S. politics. Trump and Biden policy convergences aside, Seoul’s and Tokyo’s experiences with each president are starkly different. A Trump presidency would almost certainly present deeper challenges to each country and disrupt the web of security partnerships that both countries view as broadly stabilizing. How Trump would approach the China challenge is likely to be the central question: Will he be relatively supportive of U.S. alliances in the Indo-Pacific if he sees them as amplifying U.S. power and deterrence? Or will he seek to cut his own deals with Beijing that excludes allies’ interests? Would he demand multifold increases in the burden-sharing agreements supporting the U.S. military presence in the region that allies would resist? A separate set of questions arises considering a Democratic victory. Would Harris opt to continue Biden’s approach to alliances? Would her administration see the Indo-Pacific as equally important to the trans-Atlantic partnership? Would Harris’s foreign policy team have a different view of how to handle strategic competition with China? All of these yet-unanswered questions loom large for Japan and South Korea over the coming months.
Topic:
Foreign Policy, Domestic Politics, Alliance, Donald Trump, Strategic Competition, Presidential Elections, and Kamala Harris
Political Geography:
Japan, Asia, South Korea, and Northeast Asia

105. On U.S.-China Relations & Security

Author:
Lyle Morris and Wu Xinbo
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
In the run-up to the November 2024 U.S. presidential election, national security issues are playing a key role in the campaigns of the two candidates — Democrat Kamala Harris and Republican Donald Trump. In particular, since China has been identified as the United States biggest “strategic competitor” during both the Trump and Biden administrations, a key question is how will the trajectory of U.S.-China relations will be affected under a Harris or a Trump presidency? This article explores how both candidates will approach China if elected president. In particular, both authors will present U.S. and Chinese perspectives of how both candidates will influence bilateral relations, with a particular focus on national security. The central question to be considered is this: Will there be any discernible changes to U.S. policy towards China under a Harris or a Trump presidency? If so, what changes might be expected? Both authors agree that there will be few differences at the macro level in the China strategies of Harris and Trump: “strategic competition” has become deeply ingrained as the guiding principle within the U.S. national strategy towards China. Furthermore, national security has seeped into U.S. trade and investment policy toward China in recent years, to include greater U.S. export controls on high-technology commodities. Thus, it is likely that both candidates will continue policies that nest national security considerations within an overall economic approach toward China. However, we may expect tactical differences in both candidates’ policies regarding trade and U.S. approaches to alliances. Harris will likely continue policies under a Biden administration that prioritize the central role that U.S. alliances in Asia and Europe play in the world. While Trump will likely inject uncertainty into the role of alliances within strategic competition with China. He will also likely adopt a much more aggressive stance on trade, to possibly include heavy tariffs on China, that may destabilize an already unstable bilateral relationship.
Topic:
Security, National Security, Bilateral Relations, Strategic Competition, and Presidential Elections
Political Geography:
China, Asia, North America, and United States of America

106. On the Road of Excess: How Startups Are Driving China’s Electric Vehicle Boom

Author:
G. A. Donovan
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
A complex mix of ingredients came together to create China's electric vehicle boom, but government subsidies alone cannot explain the emergence of the industry's sophisticated ecosystem and vast manufacturing capacity. An alternate explanation is that Chinese carmakers could scale up and rapidly expand production of electric vehicles because they have access to the deep pools of flexible financing provided by capital markets, sovereign wealth funds, and private equity and venture capital investors, both in China and from overseas. China’s electric vehicle startups have raised billions from investors eager to finance potential unicorns in innovative, environmentally friendly industries. Taking inspiration from Tesla, Google, and other Silicon Valley pioneers, the founders of these startups have relied on rising valuations to attract new investment to sustain their operations despite years of losses. However, many of China's electric vehicle startups now find it hard to raise funds as their valuations have plummeted, and the market forces that drove the industry's breakneck growth may now be slowing it down.
Topic:
Investment, Manufacturing, Subsidies, and Electric Vehicles
Political Geography:
China and Asia

107. Lai Ching-te’s Inauguration Speech: Reactions from China, Civil Unrest in Taiwan

Author:
Simona Grano
Publication Date:
06-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
After winning Taiwan’s presidential election with 40% of the vote in January,1 Lai Ching-te faced his first major test on May 20, 2024: his inaugural address. The speech incited a strong military reaction from the People’s Republic of China (PRC). Meanwhile, the largest civil protests since the Sunflower Student Movement2 have gripped the island in reaction to a bill passed by opposition parties — a bill that some fear could expand the legislature’s power and undermine the Democratic Progressive Party (DPP) presidency. For a number of reasons, Lai’s address, the protests, and his cross-Strait policies are crucial to understanding the continuing evolution of cross-Strait relations as well as the PRC-U.S.-Taiwan triangle. First and foremost, cross-Strait relations are at an all-time low; second, the U.S. presidential election in November could shift U.S. policy toward Taiwan; and third, Lai will govern with a divided Legislative Yuan, presenting challenges to his domestic agenda. This paper will first deal with President Lai’s address and how it framed cross-strait issues, Taiwan’s relationship with the PRC, and other important topics. It will then cover China’s response and likely posture in the upcoming months. The paper then analyzes the current civil protests in Taiwan and how a divided legislature will impact politics over the next four years. The penultimate section looks at the expected differences between a Biden presidency and a Trump presidency for Beijing, Taipei, and the world. A conclusion sums up the paper’s key points.
Topic:
Protests, Presidential Elections, Regional Politics, and Cross-Strait Relations
Political Geography:
China, Taiwan, and Asia

108. Politics First: The Key to Understanding China’s Third Plenum

Author:
Neil Thomas and Jing Qian
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
Anticipation is growing for one of the most important events in Chinese politics this year. On June 27, General Secretary Xi Jinping chaired a meeting of the 24-man Politburo that announced the 20th Central Committee of the Chinese Communist Party (CCP) will hold its Third Plenum in Beijing on July 15–18. A plenum is a plenary meeting of the committee’s 205 members and 171 non-voting alternate members. The meeting is important because the Central Committee will issue an authoritative “decision” (jueding) that will guide policymaking for years to come. The document will center on “further comprehensively deepening reform and advancing Chinese-style modernization” amid concerns both at home and abroad about the Party’s ability to steward China’s economic, geopolitical, and social development. However, expectations should be modest. Historically, third plenums are often overrated as catalysts for transformational change and instead introduce plans that expand on existing policy themes. Xi’s first third plenum in 2013 appeared unusually ambitious, raising hopes for economic and political liberalization, but its true significance was in enabling Xi’s centralization of power. The policy signals for this month’s plenum suggest a strong emphasis on Xi’s goals of achieving technological self-reliance, addressing financial risks, streamlining central-local relations, and improving social welfare. There are also hints that Beijing may try to ease conditions for private firms and foreign investors in high-tech sectors, as well as efforts to enhance internal Party governance. Additionally, several previously sacked officials are expected to lose their seats on the Central Committee. This article analyzes the historical context, policy signals, personnel movements, and key documents related to the upcoming Third Plenum.
Topic:
Government, Politics, Domestic Politics, and Chinese Communist Party (CCP)
Political Geography:
China and Asia

109. The Twentieth Century, the Global South, and China’s Historical Position

Author:
Tricontinental: Institute for Social Research
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Tricontinental: Institute for Social Research
Abstract:
Chinese scholar Wang Hui looks back at the twentieth century, which was born out of the multiple revolutions in the peripheral areas of the world, including China.
Topic:
History, Global South, and Revolution
Political Geography:
China and Asia

110. New War in the South China Sea: Framing China's Unrestricted Warfare and the Role of the US Indo-Pacific Strategy

Author:
Rhisan Morales
Publication Date:
12-2024
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
China’s gray zone campaigns in the South China Sea (SCS) are characterized by incremental advances that do not directly cause war but aggregate tensions to shift the status quo in favor of Chinese territorial claims. These advances include constructing Chinese facilities in uninhabited or unhabitable areas and using nonmilitarized coercions to establish control over maritime territories and enhance China’s national interests. China’s gray zone campaign began in 1987 when UNESCO requested China's assistance to build an observation outpost in Fiery Cross Reef. China took its involvement as an opportunity to establish a sovereignty marker on the reef in the form of a military outpost. Between 1994 and 1995, China continued its gray zone campaigns in the Mischief Reef, which further escalated in 2012 during the Scarborough Shoal standoff.
Topic:
Military Strategy, Territorial Disputes, Gray Zone, and Regional Security
Political Geography:
China, Asia, North America, United States of America, Indo-Pacific, and South China Sea

111. Time to say goodbye? The impact of environmental regulation on foreign divestment

Author:
Haiou Mao, Holger Görg, and Guopei Fang
Publication Date:
09-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We look at divestments by foreign firms – a topic that has received comparatively little attention in the literature – and investigate how changes in the regulatory environment in the host country may impact on such divestment decisions. We use the implementation of China’s Two Control Zone (TCZ) policy as a “quasi-natural experiment”, using detailed firm level combined with city level data for the empirical analysis. Our results show that the implementation of TCZ policy has led to higher probabilities of divestments by foreign firms in targeted TCZ cities and industries. The mechanism behind this seems to be a TCZ-induced increase in discharge fees and efforts to reduce SO2 emissions. Allowing for heterogeneity of effects, we find that the effect is particularly strong for firms from source countries with less stringent environmental regulation, and those using less advanced technology. We furthermore show that firms using intermediates from polluting industries also experience a higher probability of divestment.
Topic:
Climate Change, Environment, Foreign Direct Investment, Regulation, Business, and Divestment
Political Geography:
China and Asia

112. China as an International Lender of Last Resort

Author:
Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent.
Topic:
Debt, Emerging Markets, International Trade and Finance, Financial Crisis, Belt and Road Initiative (BRI), and Sovereign Debt
Political Geography:
Africa, China, and Asia

113. Enhancing small state preparedness: Risks of foreign ownership, supply disruptions and technological dependencies

Author:
Mikael Mattlin, Shaun Breslin, Elina Sinkkonen, Liisa Kauppila, and Annika Björkdahl
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The post-Cold War liberalist view, according to which interdependences supported a virtuous cycle of mutual gains, has given way to a realist-tinged view that regards economic interdependence as a cause of insecurity and an element in conflicts. In this new environment of increasing great power competition and technological decoupling, all states are not created equal. Major states such as the United States and China can be system shapers, whereas small states tend to be system takers. Unlike smaller states, they have a greater ability to use their investment leverage, supply chain dominance and control of core technologies. For smaller states with open economies, such as Finland and Sweden, these capabilities of major powers create vulnerabilities in the form of security risks of foreign ownership, supply disruptions and critical technological dependencies. The report explores how small states can mitigate such risks. A series of innovative Delphi backcasting exercises in Finland and Sweden brought together 113 sectoral experts and generalists to ponder ways to prevent dystopian scenarios from unfolding. The target years of the scenarios extended from 2027 to 2035, encouraging ideas on both short- and longer-term solutions. Instead of aiming for a consensus of expert views, the process sought to produce a variety of effective means and measures that a small state could choose to adopt. The exercise consisted of nine scenarios, presented as comic art. The narratives on the risks of foreign ownership focused on 1) acquisitions of gaming companies gathering personal data, 2) transfers of real estate ownership in Lapland and 3) venture capital investments in emerging technology start-ups. The scenarios on supply disruptions dealt with 4) discriminatory practices limiting access to antibiotics, 5) political retaliation limiting access to water treatment components and 6) sanctions on wind power materials, components and minerals. As for high technology dependencies, the cases included 7) the maintenance of military technology, 8) the cybersecurity of health technology and 9) the supply of chemicals for research and development activities. According to the report, small states have the least leeway in navigating the risk environments created by technological dependencies, whereas the toolkits to tackle the potential dangers of foreign ownership and supply disruptions are more extensive. Although different issues and insecurities require different bespoke solutions, all the risk categories call for active mitigation efforts. Most of the suggested Finnish and Swedish expert solutions can be clustered into three alternative approaches: protectionist/interventionist, liberal and technologically oriented. Protectionist/interventionist solutions would expand the state’s powers in controlling, guiding and limiting economic activities. Key suggestions included: covering acquisitions and greenfield investments in national foreign direct investment screening screening real estate acquisitions with a wide range of countries of origin imposing country-specific limitations to real estate acquisitions screening venture capital investments in emerging technologies initiating a national security act to limit foreign control rapidly imposing country- and company-specific limitations to bids in critical industries increasing tariffs supporting domestic or EU-level production through subsidies and industrial policy friendshoring the production of critical goods expanding the scope of supply stockpiling in pharmaceuticals and water treatment components The more liberal approach towards national preparedness would focus on solving the challenges primarily through carrots instead of sticks – to avoid limiting entrepreneurial freedoms and interfering with the dynamics of the capitalist market economy. The proposed solutions included: initiating value debates to guide individuals’ choices when accepting investments formulating a national innovation strategy to boost domestic companies’ operating conditions in emerging technology fields teaching “technology literacy” to guide the use of foreign-owned products engaging all stakeholders in making decisions on foreign ownership diversifying the sources of critical goods such as antibiotics enhancing awareness of risks and making “plan Bs” in supply chain management deepening the EU’s single market to offer genuine scalability opportunities for start-ups The third, more technologically oriented approach would rely on new innovations or technical solutions to enhance small state preparedness. Key ideas included: innovating new medicines to replace antibiotics prioritising non-conventional technologies such as small modular reactors (SMRs) enhancing domestic capacity to produce key components with 3D printing researching alternative materials to replace critical chemicals developing the recycling, recovery and transportation of critical chemicals adopting geofencing and coding solutions to enhance cybersecurity designating emerging technologies as focus areas in higher education increasing the adaptability of technical solutions through standardisation These three approaches prioritise different key solutions for enhancing small state preparedness. However, they represent generic policy preferences rather than ready-made policy recommendations. Ideally, states can formulate their own pick-and-mix toolkit by combining elements from the different approaches. The complementary nature of some of the expert views was also suggested by the fact that many – even most – respondents argued for diversification as a solution to various challenges. For example, and regardless of the chosen strategy, tendering rules could be improved by placing quality over price, taking geopolitical risks into account and allowing multiple winners in contrast to the currently dominant winner-takes-it-all logic, which leads to overly concentrated supply chains. Moreover, at least minor legislative tightenings were widely proposed to be made on foreign ownership – especially with regard to that of nationals of authoritarian states. These changes were, however, typically proposed to be complemented with such balancing acts as long-term leases and incentives to develop and acquire domestic products and companies. Ultimately, by highlighting alternative approaches to small state preparedness, this report seeks to encourage democratic discussion on a broader political choice: what type of state and economy do we want in the future? It is not only their identity that guides what states do; adopted policies and means also shape state identities over time.
Topic:
Security, Science and Technology, Supply, and Geoeconomics
Political Geography:
China, Finland, Asia, Sweden, and United States of America

114. Peninsula Plus: Enhancing U.S.–South Korea Alliance Cooperation on China, Multilateralism, and Military and Security Technologies

Author:
Jacob Stokes and Joshua Fitt
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Center for a New American Security (CNAS)
Abstract:
The United States–Republic of Korea (ROK or South Korea) alliance has entered a critical phase. In 2023, the two countries will commemorate the 70th anniversary of signing their bilateral mutual defense treaty. This year also marks the first full year under national leaders President Joe Biden and President Yoon Suk Yeol. After several challenging years in the two countries’ relationship, ties are improving. Better alliance relations have, unfortunately, coincided with a deterioration in the regional and global security environment, specifically due to threats from North Korea, China, and Russia. This report examines the U.S.-ROK alliance as it adapts to the new regional context by exploring how the United States and South Korea can sustain and deepen their relationship in three vital policy areas: coordination on China, alignment in minilateral and multilateral settings, and defense technology collaboration. Perhaps the biggest shift in alliance priorities in recent years has been the growing importance of the China challenge. During Chinese Communist Party General Secretary Xi Jinping’s decade in power, Beijing has adopted a more muscular foreign policy. Both the United States and South Korea have reshaped their approaches toward China in response. ROK concerns about China have grown as Beijing shields Pyongyang and acts aggressively elsewhere in the region, including toward Taiwan. But South Korea’s approach to China will continue to differ from that of the United States. The allies have divergent preferences regarding the speed, manner, and degree of partial decoupling with China. Moreover, South Korea’s deep trade ties with China will continue to make it vulnerable to Chinese political and economic coercion.
Topic:
Security, Science and Technology, Alliance, Multilateralism, Cooperation, and Military
Political Geography:
China, Asia, South Korea, and United States of America

115. Technological Innovation and the Development of the Fuel Cell Electric Vehicle Industry Based on Patent Value Analysis

Author:
Yanfei Li, Jia Zhao, and Jianjun Yan
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Currently, major economies are competing on the technological and industrial development of fuel cell electric vehicles (FCEVs). This paper discusses the relationship between the patent value of FCEVs and the commercialisation of this technology. First, the patent data of FCEVs are analysed, focusing on data of China, Germany, Japan, the Republic of Korea, and the United States. Then, the paper constructs the FCEV patent value index framework based on the technological value and economic value of patents. Finally, this paper conducts an empirical study to analyse the influence of patent value on the development of the FCEV industry. It is found that, under the current situation, individual patent value can significantly promote the development of the FCEV industry, whilst the gross patent value of a certain country even has a negative impact. In addition, the increase of hydrogen infrastructure, research and development expenditure, and market demand will significantly promote the development of the FCEV industry. The development level of related industries such as the battery electric vehicle industry and the reduction of environmental pollution are also significant drivers of the development of FCEVs.
Topic:
Development, Science and Technology, Innovation, Industry, and Electric Vehicles
Political Geography:
Asia

116. What Japanese Tourism Amenities are Influenced in Terms of Affecting Inbound Tourist Demand?

Author:
Yoko Konishi and Takashi Saito
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Since 2012, the number of inbound tourists to Japan has increased every year, and new records of tourism-related economic indicators are being updated. On the other hand, the sudden inbound boom has led to a concentration of travel destinations, and over-tourism has become a problem. In this paper, we first statistically observe the concentration of tourists by accommodation type for each country of origin. Second, by identifying tourism amenities that contribute to inbound demand, we gain the knowledge necessary to shift demand from facilities with a high concentration of inbound tourists to facilities with lower occupancy. For the analysis, we utilised establishment data from the Online Travel Agency ‘Accommodation Travel Statistics Survey’ and data on tourism resources by region. The results show that the number of rooms, average price, membership of the hotel in a chain, internet availability, room type, number of World Heritage sites, and number of direct flights positively affect inbound demand. In particular, for ryokan (Japanese-style inns) with low occupancy rates and inbound guest ratios, their independence, internet availability, Western-style room availability, number of World Heritage sites, and hot spring facilities are effective in capturing demand.
Topic:
Economics, Tourism, Hospitality, and Travel
Political Geography:
Japan and Asia

117. The COVID-19 Pandemic and World Machinery Trade Network

Author:
Kozo Kiyota
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
In light of the importance of the machinery trade in global trade, this study examines whether the patterns of machinery exports changed significantly after the COVID-19 pandemic. Frameworks of network analysis and structural break analysis are applied to monthly level bilateral export data from January 2016 to March 2022. The main findings are threefold. First, positive structural change is found in exports in major machinery-exporting countries. Second, negative structural change in centrality is found in Japan and some ASEAN Member States (AMS), which implies a decline in the relative importance of these countries in the global machinery network. Third, the decline in Japanese centrality was not caused by the decline in export values or number of destination countries. Rather, it is attributable to the decline in the centrality of Japan’s export destination countries such as AMS. Noting that Japan has a relatively strong trade relationship with AMS, these results together suggest that the negative shock of the pandemic spread throughout the supply chain, which led to the decline in the relative importance of some countries – such as Japan – in the global machinery trade network.
Topic:
Exports, Trade, ASEAN, and COVID-19
Political Geography:
Japan, Asia, and Southeast Asia

118. The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam

Author:
Duc Anh Dang and Ngoc Anh Tran
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The trade war between the United States (US) and China has affected their bilateral trade as well as that with other countries. This study investigates how Vietnamese firms performed during the COVID-19 pandemic under the shadow of this trade war. The change in the log of Vietnamese exports to the US from 2017 to 2020 is used to measure the impact of the trade war, and the change in the log of Chinese exports to the US is then used as an instrument for the Vietnamese export change during the same period. It is found that firms that faced more trade war exposure increased their investment, profit, and value added, which may be due to the market exit of unproductive firms. Moreover, the trade war impact is more pronounced for large firms. Foreign-invested firms gained less from trade war exposure. The pandemic weakened the trade war effect on firm performances; however, it exacerbated the trade tension effect on foreign-trade firms.
Topic:
Bilateral Relations, Investment, Trade, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

119. ASEAN Digital Community 2045

Author:
Lili Yan Ing, Yessi Vadila, Ivana Markus, and Livia Feliciani Nazara
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Over the last decade, the Association of Southeast Asian Nations (ASEAN) has undergone significant development in digitalisation. The rapid digital transformation in ASEAN, however, has brought forth risks and challenges encompassing data security, cybersecurity, competition, and the digital divide. To effectively address these challenges and leverage the potential of the digital realm, ASEAN developed nine frameworks during 2016–2023. Yet, the focus is primarily on digital trade. We suggest that ASEAN embrace digital transformation by establishing the ASEAN Digital Community (ADC) 2045. This vision could provide guidance to Member States, enabling them to overcome regional challenges and unlock their digital potential. It is crucial for ASEAN to nurture digital development across the three key pillars: political-security, economic, and socio-cultural dimensions. The three pillars should be built on four fundamental elements: data governance, value-added enhancement, improved digital connectivity, and digital inclusivity. Through the establishment of ADC 2045, ASEAN could position itself as a significant player in the global digital economy while ensuring that digital transformation aligns with its sustainable and inclusive development agenda.
Topic:
Science and Technology, Investment, Innovation, Trade, ASEAN, Connectivity, and Competition
Political Geography:
East Asia, Asia, and Southeast Asia

120. Restoring Competitive Politics: Electoral Contestation and the Future in Turkey and India, and Iran and Russia

Author:
Hugh Sandeman
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
The institutions and practices necessary for open and fair competition for political power are eroding across the world. In some countries, such as Turkey and India, the democratic dividend of electoral competition has been steadily undermined by majoritarian autocrats who have proved adept in campaigning for office and winning elections. In others, such as Russia and Iran, political leaders have marginalised or suppressed electoral processes, reducing them to closely managed performances that seek to demonstrate public consent. At least some traces of the mechanisms of electoral competition often remain in place, however, even where genuine public consent has been almost extinguished. This leaves open the possibility that the trend away from competitive electoral politics could be at least partially reversed in future, in the context of political succession or the electoral defeat of incumbents. In June 2023, LSE IDEAS brought together experts from the London School of Economics and Political Science (LSE) and other institutions to examine the potential for restoring the democratic dividend of competitive politics in four major countries. Turkey and India were selected for their timeliness—national parliamentary and presidential elections were held in Turkey in May 2023, and national parliamentary elections are due in India in April 2024—and for their similarities: both political systems are characterised by powerful elected leaders with a strong record of performance in national elections, each backed by large political parties based on an appeal to national and religious identity. Iran and Russia were chosen as examples of two states where competitive electoral politics had been temporarily enabled by significant political change—respectively, an impasse in Iran’s theocracy in the 1990s, and the end of the Soviet Union—only to be undermined by the reassertion of autocratic power. Two assumptions underlay the planning of this discussion on ‘Restoring Competitive Politics: Electoral Contestation and the Future’. The first is that the characterisation of political systems as either democratic or autocratic provides an insufficient basis for explaining many differences in the workings of political institutions, or for guiding policy. The second assumption is that while certain institutions and practices appear to be essential to maintaining open competition for political power—including for example, freedom and diversity of comment in major channels of communication like broadcast television, radio, newspapers, and social media—there is no useful empirical example or theoretical formulation of an ideal or perfect democratic political system. The exclusion from the discussion of countries with longer established forms of competitive politics, such as the United States or the United Kingdom, was not intended to suggest an implicit comparison with ideal types of functioning democracies. On the contrary, there are grounds for concern about the maintenance of open competition for political power in every country professing to be a democracy. As David Runciman has said of the future of democratic practices: ‘The question for the twenty-first century is how long we can persist with institutional arrangements we have grown so used to trusting, that we no longer notice when they have ceased to work.’ He warns that ‘democracy could fail while remaining intact’.
Topic:
Elections, Political stability, Autocracy, and Competition
Political Geography:
Russia, Iran, Eurasia, Turkey, Middle East, India, and Asia