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  • Author: Scott Lincicome
  • Publication Date: 01-2021
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Labor market and cultural disruptions in the United States are real and important, as is China’s current and unfortunate turn toward illiberalism and empire. But pretending today that there was a better trade policy choice in 2000—when Congress granted China “permanent normal trade relations” (PNTR) status and paved the way for broader engagement—is misguided. It assumes too much, ignores too much, and demands too much. Worse, it could lead to truly bad governance: increasing U.S. protectionism; forgiving the real and important failures of our policymakers, CEOs, and unions over the last two decades; and preventing a political consensus for real policy solutions. Indeed, that is happening now.
  • Topic: International Relations, Economics, Markets, Bilateral Relations, Trade, Protectionism
  • Political Geography: China, Asia, North America, United States of America
  • Author: Kam Hon Chu
  • Publication Date: 01-2021
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: In addition to foreign investment absorption, Hong Kong plays a pioneering role in the internationalization of the renminbi (RMB). Despite the lack of comprehensive statistics on the volume of offshore RMB transactions, Hong Kong is for sure one of the largest, if not the largest, global centers for offshore RMB businesses. According to the Triennial Central Bank Survey (BIS 2019), for instance, Hong Kong was the largest global offshore RMB foreign exchange market, with an average daily turnover of US$107.6 billion as of April 2019, considerably higher than the US$56.7 billion for London and the US$42.6 billion for Singapore.
  • Topic: Economics, Markets, Investment, Financial Development
  • Political Geography: China, Asia, Hong Kong
  • Author: Martin Chorzempa
  • Publication Date: 06-2021
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Digital currency and fintech have been some of the most powerful forces for freedom and personal liberty in China for the past decade, but their future influence is uncertain. Starting as a disruptive force that gave Chinese unprecedented autonomy in their financial lives, connected either to global cryptocurrency networks or local tech ecosystems built by private firms, a new chapter is beginning. In this new era, one speech urging an emphasis on innovation instead of regulation can seemingly bring the full force of the Chinese state to bear onto a firm that once disrupted state banks with impunity. Technologies like blockchain first embraced by libertarians and cryptography enthusiasts as freeing money from dependence on the state look poised to become tools for governments to increase their ability to monitor and shape financial transactions. Meanwhile, disruptive fintech tools have become symbiotic with the major state banks, which will retain their role as the core of the financial system.
  • Topic: Economics, Science and Technology, Finance, Digital Currency , Transactions
  • Political Geography: China, Asia
  • Author: Scott Lincicome, Huan Zhu
  • Publication Date: 06-2021
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: In the wake of the COVID-19 pandemic and rising U.S.-China tensions, American policymakers have again embraced “industrial policy.” Both President Biden and his predecessor, as well as legislators from both parties, have advocated a range of federal support for American manufacturers to fix perceived weaknesses in the U.S. economy and to counter China’s growing economic clout. These and other industrial policy advocates, however, routinely leave unanswered important questions about U.S. industrial policy’s efficacy and necessity: What is “Industrial Policy”? Advocates of “industrial policy” often fail to define the term, thus permitting them to ignore past failures and embrace false successes while preventing a legitimate assessment of industrial policies’ costs and benefits. Yet U.S. industrial policy’s history of debate and implementation establishes several requisite elements – elements that reveal most “industrial policy successes” not to be “industrial policy” at all. What are the common obstacles to effective U.S. industrial policy? Several obstacles have prevented U.S. industrial policies from generating better outcomes than the market. This includes legislators’ and bureaucrats’ inability to “pick winners” and efficiently allocate public resources (Hayek’s “Knowledge Problem”); factors inherent in the U.S. political system (Public Choice Theory); lack of discipline regarding scope, duration, and budgetary costs; interaction with other government policies that distort the market at issue; and substantial unseen costs. What “problem” will industrial policy solve? The most common problems purportedly solved by industrial policy proposals are less serious than advocates claim or unfixable via industrial policy. This includes allegations of widespread U.S. “deindustrialization” and a broader decline in American innovation; the disappearance of “good jobs”; the erosion of middle‐​class living standards; and the destruction of American communities. Do other countries’ industrial policies demand U.S. industrial policy? The experiences of other countries generally cannot justify U.S. industrial policy because countries have different economic and political systems. Regardless, industrial policy successes abroad – for example, in Japan, Korea and Taiwan – are exaggerated. Also, China’s economic growth and industrial policies do not justify similar U.S. policies, considering the market‐​based reasons for China’s rise, the Chinese policies’ immense costs, and the systemic challenges that could derail China’s future growth and geopolitical influence. These answers argue strongly against a new U.S. embrace of industrial policy. The United States undoubtedly faces economic and geopolitical challenges, including ones related to China, but the solution lies not in copying China’s top‐​down economic planning. Reality, in fact, argues much the opposite.
  • Topic: Government, Industrial Policy, Manufacturing, COVID-19
  • Political Geography: China, Asia, North America, United States of America
  • Author: John Mueller
  • Publication Date: 05-2021
  • Content Type: Commentary and Analysis
  • Institution: The Cato Institute
  • Abstract: China, even if it rises, does not present much of a security threat to the United States. Policymakers increasingly view China’s rapidly growing wealth as a threat. China currently ranks second, or perhaps even first, in the world in gross domestic product (although 78th in per capita GDP), and the fear is that China will acquire military prowess commensurate with its wealth and feel impelled to carry out undesirable military adventures. However, even if it continues to rise, China does not present much of a security threat to the United States. China does not harbor Hitler‐​style ambitions of extensive conquest, and the Chinese government depends on the world economy for development and the consequent acquiescence of the Chinese people. Armed conflict would be extremely—even overwhelmingly—costly to the country and, in particular, to the regime in charge. Indeed, there is a danger of making China into a threat by treating it as such and by engaging in so‐​called balancing efforts against it. Rather than rising to anything that could be conceived to be “dominance,” China could decline into substantial economic stagnation. It faces many problems, including endemic (and perhaps intractable) corruption, environmental devastation, slowing growth, a rapidly aging population, enormous overproduction, increasing debt, and restive minorities in its west and in Hong Kong. At a time when it should be liberalizing its economy, Xi Jinping’s China increasingly restricts speech and privileges control by the antiquated and kleptocratic Communist Party over economic growth. And entrenched elites are well placed to block reform. That said, China’s standard of living is now the highest in its history, and it’s very easy to envision conditions that are a great deal worse than life under a stable, if increasingly authoritarian, kleptocracy. As a result, the Chinese people may be willing to ride with, and ride out, economic stagnation should that come about—although this might be accompanied by increasing dismay and disgruntlement. In either case—rise or demise—there is little the United States or other countries can or should do to affect China’s economically foolish authoritarian drive except to issue declarations of disapproval and to deal more warily. As former ambassador Chas Freeman puts it, “There is no military answer to a grand strategy built on a non‐​violent expansion of commerce and navigation.” And Chinese leaders have plenty of problems to consume their attention. They scarcely need war or foreign military adventurism to enhance the mix. The problem is not so much that China is a threat but that it is deeply insecure. Policies of threat, balance, sanction, boycott, and critique are more likely to reinforce that condition than change it. The alternative is to wait, and to profit from China’s economic size to the degree possible, until someday China feels secure enough to reform itself.
  • Topic: Government, GDP, Geopolitics, Economic Growth
  • Political Geography: China, Asia, United States of America
  • Author: Vijay Gokhale
  • Publication Date: 03-2021
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: China and India struggle to comprehend each other’s international ambitions. The misperceptions that follow lead to a lack of trust, border skirmishes, and potentially worse. On June 15, 2020, Indian and Chinese troops engaged in a brawl that left twenty Indian soldiers dead while causing an unspecified number of Chinese casualties. The clash is a part of a broader border standoff along the Galwan River between the two forces on the Line of Actual Control that is yet to be resolved. The Indian strategic community is broadly in agreement that this border dispute marks an implacable decline in India-China ties. They argue that the very basis of relations that emerged after former Indian prime minister Rajiv Gandhi’s visit to Beijing in 1988 has been shaken, if not destroyed. Yet, how did the two countries manage to reach this nadir in ties, and furthermore, what does the Galwan clash signify for the future of Sino-Indian relations? This paper argues that, long before the present border dispute occurred, Sino-Indian relations had been steadily declining due to rampant misperceptions of the other side, contributing to a lack of trust. The most fundamental misperception between the two countries is the inability to comprehend each other’s international ambitions, yielding the fear that their foreign policies are targeted against the other. This paper traces the impact and development of these misperceptions on Sino-Indian ties through three different phases before considering the future of the relationship after the Galwan dispute.
  • Topic: Foreign Policy, Bilateral Relations, Territorial Disputes, Borders
  • Political Geography: China, South Asia, India, Asia
  • Publication Date: 04-2021
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: During the pandemic, Chinese medical and equipment supplies to Chile have come mostly from a diverse cast of Chinese players with local experience in Chile. They adapted to Chile’s unique system of emergency and disaster management. China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
  • Topic: Diplomacy, Disaster Relief, Health, Pandemic, COVID-19
  • Political Geography: China, Asia, South America, Chile
  • Author: Chunbing Xing
  • Publication Date: 06-2021
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the evolution of China’s industrial and occupational structure in the last two decades and its impact on wage inequality. We find that non-routine cognitive and interpersonal tasks have increased, while routine cognitive tasks first increased and then declined. Occupation structural change is accompanying rising wage inequality. The wage premium for educated workers rose sharply in the 1990s and remained high thereafter. Occupations with high routine task intensity are associated with lower wages. While the return to education has become the largest contributor to wage inequality, routine task intensities have yet to play a significant role.
  • Topic: Education, Labor Issues, Employment, Inequality, Work Culture
  • Political Geography: China, Asia
  • Author: Elliott Prasse-Freeman, Tani Sebro
  • Publication Date: 03-2021
  • Content Type: Special Report
  • Institution: Georgetown Journal of International Affairs
  • Abstract: Myanmar’s recent military coup has, for now, ended the country’s brief ten-year experiment with democracy. But the military junta did not anticipate a massive country-wide social movement against the brazen power-grab, in which millions have taken to the streets. As protests continue in urban centers, a trans-ethnic and pro-poor solidarity movement is emerging. Myanmar’s most excluded subjects, many of whom watch the protests from refugee camps, are now weighing both the possibilities and precariousness that the coup entails.
  • Topic: Civil Society, Migration, Minorities, Displacement, Conflict, Coup
  • Political Geography: Asia, Myanmar, Oceania
  • Author: Joshua Fitt
  • Publication Date: 02-2021
  • Content Type: Special Report
  • Institution: Georgetown Journal of International Affairs
  • Abstract: Many of China’s technology companies perfect their products in the domestic market by facilitating the party-state’s oppression and data control, and subsequently seek to export the technology to fledgling authoritarian states or nations with fragile democracies. This is part of Beijing’s strategy to enhance its digital instruments of national power, normalize illiberal uses of technology, and equip foreign governments with the tools to replicate aspects of the CCP’s authoritarian governance model. If Washington wants to blunt this strategy, the US government needs to implement a comprehensive strategy of its own to address this.
  • Topic: Science and Technology, Governance, Law, Authoritarianism, Grand Strategy, Multilateralism
  • Political Geography: China, Asia, North America, United States of America
  • Author: Jennifer A. Hillman, David Sacks
  • Publication Date: 03-2021
  • Content Type: Special Report
  • Institution: Council on Foreign Relations
  • Abstract: The Belt and Road Initiative (BRI), Chinese President Xi Jinping’s signature foreign policy undertaking and the world’s largest infrastructure program, poses a significant challenge to U.S. economic, political, climate change, security, and global health interests. Since BRI’s launch in 2013, Chinese banks and companies have financed and built everything from power plants, railways, highways, and ports to telecommunications infrastructure, fiber-optic cables, and smart cities around the world. If implemented sustainably and responsibly, BRI has the potential to meet long-standing developing country needs and spur global economic growth. To date, however, the risks for both the United States and recipient countries raised by BRI’s implementation considerably outweigh its benefits. BRI was initially designed to connect China’s modern coastal cities to its underdeveloped interior and to its Southeast, Central, and South Asian neighbors, cementing China’s position at the center of a more connected world. The initiative has since outgrown its original regional corridors, expanding to all corners of the globe. Its scope now includes a Digital Silk Road intended to improve recipients’ telecommunications networks, artificial intelligence capabilities, cloud computing, e-commerce and mobile payment systems, surveillance technology, and other high-tech areas, along with a Health Silk Road designed to operationalize China’s vision of global health governance.1 Hundreds of projects around the world now fall under the BRI umbrella.
  • Topic: International Trade and Finance, Infrastructure, Hegemony, Conflict, Belt and Road Initiative (BRI), Regionalism
  • Political Geography: China, Asia, North America, United States of America
  • 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: Richard McGregor, Jude Blanchette
  • Publication Date: 04-2021
  • Content Type: Special Report
  • Institution: Lowy Institute for International Policy
  • Abstract: After more than eight years in office, Xi Jinping has made himself into China’s most powerful leader since Deng Xiaoping, but in doing so, Xi has destabilised elite politics and demolished the power sharing norms that evolved since the 1980s. By removing de jure and de facto term limits on the most senior position of power, and thus far refusing to nominate his successor, Xi has solidified his own leadership position but potentially pushed the country towards a destabilising succession crisis. There are various scenarios for what happens after Xi, ranging from a peaceful transfer of power to a split at the top if he is forced out of office in a coup or by illness or death.
  • Topic: Leadership, Domestic politics, Xi Jinping
  • Political Geography: China, Asia
  • Author: Arzan Tarapore
  • Publication Date: 05-2021
  • Content Type: Commentary and Analysis
  • Institution: Lowy Institute for International Policy
  • Abstract: The still-unresolved Ladakh crisis has created a new strategic reality for India, marked by renewed political hostility with China, and an increased militarisation of the Line of Actual Control. This new strategic reality imposes unequal costs on India and China. India is likely to defer much-needed military modernisation and maritime expansion into the Indian Ocean — which would impair its ability to compete strategically with China. In contrast, China incurred only marginal material costs; it was probably more concerned with the prospect of continued deterioration in its relationship with India. Even that cost was more threatened rather than realised, and largely reduced when the disengagement plan was agreed.
  • Topic: Crisis Management, Strategic Competition, Militarization, Disengagement
  • Political Geography: China, South Asia, India, Asia
  • Author: Patrick Porter, Michael Mazarr
  • Publication Date: 05-2021
  • Content Type: Commentary and Analysis
  • Institution: Lowy Institute for International Policy
  • Abstract: There is a growing bipartisan consensus in Washington on a tighter embrace of Taiwan, which may soon become a stronger implied US commitment to go to war in the event of a Chinese invasion. Taiwan matters to US security and the regional order, and the United States should continue to make clear that aggression is unacceptable. But those advocating a stronger US security commitment exaggerate the strategic consequences of a successful Chinese invasion. The stakes are not so high as to warrant an unqualified US pledge to go to war. American decision-makers, like their forebears confronting the seeming threat of communism in Indochina, may be trapping themselves into an unnecessarily stark conception of the consequences of a successful Chinese invasion of Taiwan. It would be irresponsible for the United States to leave itself no option in the event of Chinese aggression other than war. But nor should Washington abandon Taiwan. There is a prudent middle way: the United States should act as armourer, but not guarantor. It should help prepare Taiwan to defend itself, to raise costs against aggression, and develop means of punishing China with non-military tools.
  • Topic: Conflict Prevention, Foreign Policy, Territorial Disputes, Crisis Management
  • Political Geography: China, Taiwan, Asia, United States of America
  • Author: Greg Raymond
  • Publication Date: 06-2021
  • Content Type: Commentary and Analysis
  • Institution: Lowy Institute for International Policy
  • Abstract: China has land borders with mainland Southeast Asia and strong strategic imperatives to develop land routes to the sea. It has both potential and motivation to pursue an infrastructural sphere of influence in the Mekong subregion through Belt and Road Initiative (BRI) projects joining southern China and mainland Southeast Asia. The poorer states, especially Laos and Cambodia, have been receptive to the BRI and infrastructure investment, but Thailand and Vietnam, strong states and protective of sovereignty, have been more cautious. This means China’s impact is significantly varied across the subregion. China’s Special Economic Zones (SEZs) in Cambodia, Laos, and Myanmar are in some cases dissolving borders and in others carving out Chinese-controlled enclaves, all increasing the People’s Republic of China (PRC) presence and influence.
  • Topic: Infrastructure, Foreign Direct Investment, Regional Integration, Borders, Belt and Road Initiative (BRI)
  • Political Geography: China, Asia, Vietnam, Cambodia, Thailand, Southeast Asia, Laos, Myanmar
  • Author: Alice Politi
  • Publication Date: 04-2021
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: China’s Belt and Road Initiative (BRI) has been described as the largest infrastructure project in history, affecting around 60 per cent of the global population. Whilst promoting a narrative of connectivity, growth and “win-win partnerships”, the project has received opposing assessments regarding its wider impact, particularly in the environmental domain.
  • Topic: Climate Change, Infrastructure, Green Technology, Belt and Road Initiative (BRI)
  • Political Geography: China, Asia
  • 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