Arthur Waldron, Lauder Professor of International Relations at the University of Pennsylvania; in re: History speeding up, in the context of China. Wuhan coronavirus: Without governmental legitimacy there’s no transparency; without transparency in a crisis, there’s panic. An illegitimate Chinese dictatorship that won’t protect its population from pandemics.
China Critics Rewrite Basic Economics to Fit a Declinist Narrative. . . . The article author, Roger W. Robinson, wrote that “the Chinese state is pursuing a ‘Made in China 2025’ strategy designed to dominate key technology sectors—from artificial intelligence and quantum computing to hypersonic missiles and 5G.” [Ronald] Reagan would have had a field day with this. One reason he was so confident in the Soviet Union’s eventual collapse was because he knew state-planning of its economy would fail by definition. State planning of economic activity doesn’t work on all too many levels, but the main reason it doesn’t is that technological progress is as a rule a consequence of endless failure on the way to breakthroughs that are only arrived at after endless mistake realization.
The Seven Trends That Will Define China In The 2020S
mentioning Elizabeth Economy via South China Morning Post
What can the world expect from China in this new decade? Besides US-China tension, slower Chinese economic growth, vertical integration and the tilt towards Chinese domestic consumption are all likely to have an effect on the rest of the world.
Joseph Sternberg, WSJ, in re: Trade with China: we always assumed China was operating from a position of economic strength. However, in a lot of matters it’s weak: the population is ageing; the working-age proportion is shrinking, which will have big implications for the “factory to the world.” Is China ready to become a net importer? I’m not sure it is. . . . The problem with China is that it's not set up to operate in the global environment: it needs to make its currency convertible, open financial markets to attract capital, and reform corporate governance. A main reason that the US attracts investments to the enormous degree that it does is that we operate under the rule of law. To attract global capital, need to make investors comfortable, yet Xi Jinping seems to be working in the opposite direction. Will have to surrender a lot of political control, which will let their own citizens send capital overseas. Otherwise, China is in for a really rocky ride.
Bond defaults rise as China lifts credit allocationThe trend of rising defaults in China’s domestic bond market will extend its run in the foreseeable future as the allocation of debt becomes more disciplined amid Beijing’s growing tolerance for such episodes, writes Umesh Desai. Bond defaults in China rose to a record 130 billion yuan in 2019 from less than 1 billion five years ago, according to S&P Global, which said issuers from inland provinces had higher default rates due to weaker operating performances and tight funding conditions.
Dollar shortage crisis in Lebanon spills into Syria
The Syrian pound's value plummeted against the US dollar after the Lebanese pound depreciated.
Syrians struggle to survive amid pound crisis
The Syrian pound has significantly declined against the dollar, which has affected the purchasing power of citizens and led to many stores shutting their doors.
The Big Hole in the China Trade Agreement by Gordon G. Chang •
A Promise of Stability
The USMCA trade deal offers relief from economic uncertainty.
Xi Jinping’s Annus Horribilis
By Minxin Pei, The Strategist (ASPI): "China’s strongman leader can’t seem to catch a break. From the trade war with the United States to the crisis in Hong Kong to international criticism of his human rights record, President Xi Jinping suffered major setbacks in 2019, and his prospects for 2020 appear even worse."
The China trade deal: Death knell for Chinese high-tech structural reform?
Claude Barfield | AEIdeas
While President Trump touted the "phase one" trade agreement with China as a triumph, in reality it represents a victory for China and its hard-liners. The limited deal signals that the Trump administration has given up on the legitimate demands made over the past three years for changes to Chinese protectionist and mercantilist behaviors. This result introduces the dangerous possibility that the Chinese learn that no US president will persevere in a struggle for Chinese structural reform.
The information we have about the US-China deal is promising, writes Derek Scissors. While Chinese concessions will almost surely fall short, the US didn’t give up leverage (as some wanted) and can respond to either meaningful progress by China or the lack.
When we reject progress: China edition
James Pethokoukis | AEIdeas
The idea of progress — that through actions and agency humanity can make the world a bit better tomorrow than it is today — is a fairly recent concept. And as Chinese history proves, nothing about progress is inevitable.
Clifford D. May — The Washington Times
Suppose you had a neighbor who beat his wife, abused his children, engaged in violent crimes, and routinely burgled your home. Would you invite him for Sunday brunch? Go into business with him? Share a bungalow at the beach? I don’t think so. So why are we still pretending that China is just one trade agreement away from becoming anything other than the nation-state version of the odious character I’ve described above? Read More
We Aid the Growth of Chinese Tyranny
Michael Brendan Dougherty, National Review
The surest way to lose to China is to disparage expertise
Oriana Skylar Mastro | Defense One
When China stumbles, the world economy will shudder
Desmond Lachman | The Hill
The Trump administration should not exaggerate China’s long-run economic challenge to the US and should take into account the impact of a slowing China on the rest of the global economy.
The broken China model
Matthew Continetti | Washington Free Beacon
China’s economic clay feet
Desmond Lachman | The Bulwark
South China Sea of troubles
Oriana Skylar Mastro | The Economist
In Beijing and Washington patience is waning and calls for action are escalating, making more direct and potentially dangerous encounters likelier. The world should pay more attention to one potential flashpoint in particular: the South China Sea.
IS THE CHINESE STATE COUNCIL STEPPING-UP TO MANAGE THE NATIONS CAPITAL/CURRENT ACCOUNT & MOVING SUPPLY CHAINS OUT OF CHINA
Washington can’t let concerns about China distract it from America’s need for a pro-innovation agenda
James Pethokoukis | AEIdeas
Egypt eyes new IMF deal
Egypt has entered into talks with the International Monetary Fund to discuss a new financing package for the country, whose current economic reform program expires this month.
We’ve all heard a lot about the pivot to great-power competition during this administration, but is it all talk? It’s looking that way. In a War on the Rocks op-ed, Mackenzie Eaglen poses five key questions about the US armed forces’ roles and missions that both civilian and military leaders need to consider. Eaglen concludes that the Pentagon will have to divest from various missions if it wants to get serious about better posturing the US military toward competition with China and Russia. Read more here.
Derek Scissors argues that the true failure is continuing to allow China to break our laws or even bending them ourselves for the sake of business. Instead, the US should target Chinese entities that benefit from intellectual property violations and tighten export controls, especially where advanced US technology is concerned. Keep reading here.
The defining geopolitical story of our time is the slow death of US hegemony in favor of a rising China, writes Michael Beckley in a Foreign Affairs op-ed. While Beijing appears to be a growing power and is a great threat to the US today, the approaching economic slowdown makes them a less competitive rival in the long term. As China becomes more repressive at home and more aggressive abroad, the US must contain the country’s outbursts with deterrence, reassurance, and damage limitation. Read more here.
China is placing a trillion-dollar wager that can transform its strategic geography from a constraint into a powerful geopolitical asset. In a Bloomberg op-ed, Hal Brands points out the difficulties that China’s Belt and Road Initiative will face in the long term. In addition to instability, financial viability, and political struggles, there is also the question of how the US will respond. Unfortunately, with the Trump administration pursuing harmful trade policies, the US is creating precisely the economic running room that China needs. Continue here.
Will Huawei Technologies build India’s 5G wireless networks? In the technological cold war between the US and China, India may be the biggest prize up for grabs, argues Sadanand Dhume in a Wall Street Journal op-ed. Washington wants India to reject Huawei and instead choose one of its Western rivals. Beijing, needless to say, is batting for its flagship technology firm. While India’s decision will likely depend more on national security concerns than economic factors, what Delhi decides will determine whether China will dominate the future of the internet. Finish here.
Trump's Trade Wars: A New World Order?
By Dr. James M. Dorsey, November 8, 2019
EXECUTIVE SUMMARY: President Donald Trump’s declared economic protectionism has taken the US’s international relations with several foes and allies into uncharted territory. His open-ended trade wars with several nations have triggered criticism among conservatives and liberals alike in the US. He has justified his actions by arguing for a downturn of America’s trade deficit, but the American people don’t seem to be on board with his logic. A recent Harvard CAPS/Harris Poll survey shows 63% of registered voters believe tariffs imposed on Chinese products ultimately hurt the US more than China, while 74% said American consumers are shouldering most of the burden of those tariffs.
Continue to full article ->
Turkish Central Bank suffers big credibility loss
The Turkish Central Bank’s obedience to the government, both in terms of monetary policy and interventions in the foreign exchange market, is badly damaging its credibility among foreign investors, the ultimate cost of which will be borne by the crisis-hit economy.
Lebanon central bank chief calls for immediate solution to avoid economic collapse
Lebanon’s central bank governor, Riad Salameh, warned Monday against economic collapse if a solution to the country’s crisis is not found soon. “I am saying we need to have a solution in a matter of days to regain confidence and avoid collapse in the future,” Salameh told Reuters. The interview comes as nationwide protests against decades of corruption and the government’s mismanagement of the economic crisis enter their 13th day. Banks, schools and some businesses have been closed throughout the protests.
(What’s Left of) Our Economy: Can Free Trade Nowadays Really Maximize Global Well-Being?by Alan Tonelson
Since 2011, the US has widened its wealth lead over China by trillions of dollars. In a new AEIdeas blog, Derek Scissors explains that, contrary to popular belief, what matters to prosperity is not gross domestic product (GDP), but wealth. While both GDP and wealth measures are imperfect, GDP receives too much attention and wealth — which enables countries and people to acquire what they want — not enough. Although the US wealth story is ugly, it shows an American economy outpacing China for seven years and counting. Read more here.
Is the US economy pulling away from China’s?
Derek Scissors | AEIdeas
Of course Chinese gross domestic product (GDP) rises; China is great at empty transactions. What matters to prosperity is not GDP — just try spending it — but wealth. The US has probably widened its wealth lead over China since 2011, by trillions of dollars.
Douglas J. Feith and Admiral Gary Roughead write: China is actively erasing the line between commercial and military activities. And President Xi has killed the longstanding theory that China would have to liberalize as it grows its economy. The good news, however, is that the Chinese challenge is recognized by Americans on both the left and the right — rare common ground in a generally polarized community. Meeting the challenge requires effort at home and abroad. – National Review
Zeynep Tufekci writes: Is China an integrated part of the global failure and corruption of elites, failing in its own way due to shortsightedness and incompetence? Or is it a confident new superpower that is just beginning to throw its weight around? I can’t say for sure which is true, and I don’t think it’s easy to quickly conclude one way or the other, but we should consider the question with the full gravity it deserves, because the answer will shape the fate of billions in the 21st century. – The Atlantic
Mercantilism: “the economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances, which a government should encourage by means of protectionism.” Public domain.
Veronique de Rugy, Mercatus Center, on Pres Trump and tariffs. “Debating trade issues with President Trump’s anti-trade supporters is a constant game of goal-shifting. If you point out that the Trump tariffs are raising revenue for Uncle Sam on the backs of American consumers, they reply that China is hurting the most. If you note that the trade war is the main reason the stock market is losing its mind, not actions by Jerome Powell, the Federal Reserve chairman, they reply that China is ‘a brutal Communist police state that abuses its own people and steals from the world.’” https://www.nytimes.com/2019/10/07/opinion/trump-trade.html
CHIMERICA ISN'T DEAD: HOW MANUFACTURING IS NOT RETURNING TO AMERICA & HOW CHINA'S COMPARATIVE ADVANTAGE IS DIMINISHING
China’s half-full glass
Paul Wolfowitz | AEIdeas
With US-China trade talks set to resume next month, the trade war still appears to have no end in sight. Claude Barfield evaluates China's past promises and whether they have been kept.
As US-China trade talks restart, a checklist of Chinese structural ‘reforms’ to date
Claude Barfield | AEIdeas
At the heart of US negotiating priorities are a series of structural reforms in the deeply embedded Chinese technology mercantilist protection system.
The ‘China hands’ got China wrong, but listen to them now
Hal Brands | Bloomberg
With some economic indicators flashing warning signs, are we on the verge of a global recession? Desmond Lachman evaluates the disconnect between global bond and risk markets.
What the global bond market is telling us
Desmond Lachman | The International Economy Magazine
The global sovereign bond market and global risk markets appear to be sending conflicting signals about the world economic outlook. While sovereign bond markets appear to be pointing to trouble ahead for the global economy, risk markets are much more sanguine. At a time when the world debt-to-GDP ratio is at a record level, a triggering of economic risks or major geopolitical event could have major repercussions for the global financial system. If bond markets are right and risk markets wrong, no one will be able to say they weren't warned.
Is a global currency war still possible?
Desmond Lachman | The International Economy Magazine
There is increasing cause for concern that we may be sleepwalking toward a world currency war. The main driver for concern is that the Trump administration’s policy actions are at odds with its policy objectives. When those objectives are not met, the administration might double down on its protectionist America First trade policy and respond in-kind to what it perceives to be Chinese and European exchange rate manipulation. There has seldom been as much need as there is today for responsible US international economic leadership to prevent a destructive currency war.
Why Egypt's construction boom creates ghost towns
Egyptian leaders from Anwar to Sisi have attempted — and failed — to build lavish cities to relocate dense urban populations.
As pound improves, Egypt floats customs dollar rate
The Egyptian Ministry of Finance recently floated the customs dollar rate, after having imposed a fixed rate in 2017 in an attempt to contain prices after floating the pound.
The interplay between exchange rates and inflation in Iran
While the Iranian rial has strengthened against the dollar, inflation remains high, and the budget deficit is not helping the matter.
James Pethokoukis | AEIdeas
Anti-China hawks in the US are eager for a New Cold War that would disentangle the two mega-economies, especially their technology sectors.
The IMF's (New) China Problem
Posted on August 13, 2019
by Brad W. Setser
Andrew Collier, managing director of Orient Capital Research in Hong Kong and author of Shadow Banking and the Rise of Capitalism in China, in re: the Hong Kong protests. Carrie Lam’s offer to withdraw the original extradition bill was widely well received; but large numbers of young people are angry. This looks as though it’ll drag on for a while. Companies have been hurt: airlines, tourism, rentals to tourists, and retail sector all have diminished, but the big multinationals are all right, Investment banks, retailers, and the like, if damaged financially, may have to leave. Carrie Lam’s earlier effort to quit and its having been denied by Beijing, which has hit back against a wall and doesn't know what to do. Will this affect Mainland in any way? Not much.
In a new AEI report, Derek Scissors puts China’s economic “miracle” in context by comparing the country’s various stages of reform to Japan and Korea at analogous stages. Scissors reveals that historical comparison to Japan and Korea across a range of indicators shows that China’s miracle has faded prematurely, leaving the country far from rich and with little prospect to become so. Learn more here.
China may be losing its influence over the North Korean denuclearization process, writes Oriana Skylar Mastro in a Foreign Policy op-ed. North Korea has become more of an independent actor, adeptly playing each country off another. While this strategy is nothing new, Kim Jong Un’s provocative diplomacy certainly is, and it is creating challenges for China, which wants to ensure that any resolution to North Korea favors its own interests. Continue here.
In a Hill op-ed, Gary Schmitt explains that it is time for Western democracies to take the security threat the rise in Chinese military power poses seriously. China is no longer satisfied with being simply an Asian power, and Beijing has made it clear that it intends to be a serious player in the Arctic and Africa, which are the backdoors to Europe. Read more here.
CHINA'S BELT TIGHTENING CONTINUES, THE DECOUPLING OF US FROM CHINA MOVES FORWARD & HOW BEIJING IS WINNING THE TRADE WAR?
The US can play China against Russia
(The Hill) A strategically astute American policy would encourage competition and conflict between Moscow and Beijing from which the West would benefit.
(What’s Left of) Our Economy: New U.S. Trade Figures Show More Decoupling – of Growth from Soaring Deficitsby Alan Tonelson
Why the China trade war is justified
Derek Scissors | The Hill
It’s Not About the Soybeans
Security and power are at issue between China and America.
Trump Plays Long Game On China
By CONRAD BLACK, Special to the Sun | August 8, 2019
China Is a Rival, Not an Enemy
By Bonnie Kristian, The Hill: "China has one-fifth of the planet's population; the world's second largest economy; a small but significant nuclear arsenal for deterrence; and an increasingly repressive government which combines elements of market economics with single-party totalitarianism, incredibly invasive surveillance, mass internment camps; and a newly minted “president for life,” Xi Jinping. Should it also be the recipient of Washington's antagonism?"
Unjustified China madness
Derek Scissors | AEIdeas
CHINA'S WORST ECONOMY YET, WHY EVERY PRESIDENT SINCE REAGAN GOT CHINA WRONG & CHINA'S PUSHING DRUGS INTO USA
Every president since Reagan was wrong about China’s destiny
Hal Brands | Bloomberg Opinion
We are unlikely to meet the profound challenge China poses unless we first come to grips with what was tried, and what failed, before.
China has a master economic plan. Is it better than America’s?
James Pethokoukis | The National Interest
Sleepwalking toward a currency war?
Desmond Lachman | InsideSources
China tariffs, trade, and public opinion today
Karlyn Bowman | Forbes
Bond market madness wrought by the central banks
Desmond Lachman | AEIdeas
Trump’s bad idea of dollar intervention
Desmond Lachman | The Hill
China will find it hard to cut fentanyl trade
Roger Bate | AEIdeas