In a letter written in December 2015, Xi Jinping proposed some national and global objectives for the G20 Summit of September 4-5, 2016. For the CCP Secretary the aim of the G20 system – which he recalls was born at the beginning of the 2008 financial crisis – would be to develop concrete goals leading to a multipolar and shared global economy.
In that letter Xi Jinping said that, if said goals were reached, China would provide its decisive contribution, even partially changing its production system.
The win-win strategy is the declared goal of the Chinese Secretary. Over and above the wording of this concept, this has a very specific meaning.
As shown by statistics, 77% of all the goals set at the previous G20 Summit held in Antalya have been achieved.
Furthermore, considering that data shows that the G20 countries account for approximately 90% of the world GDP, we can realize that, over and above declarations of principle and set phrases, for China the Hangzou Summit was the ideal forum to start redesigning its place in the world.
In his opening speech at the G20 Summit in China, Xi Jinping clarified – in modern terms – a concept of the old Maoist tradition, whereby each country must take its own specific path to development.
In other words, there are no models to be imported in an already globalized world, possibly after a long and ruinous war for “democracy”.
Each country has its own vocation, its system, its shih, namely its natural form, just to use a term of Taoist philosophy.
While recalling the effort – a true “Great Leap Forward”, unlike Mao’s autarkic line of the 1950s – which has led China to be the second largest economy, Xi Jinping clarified – always between the lines – another important point.
According to the CPC Secretary, China will not slow down the pace of its reforms, which means that today it will still tend to strengthen its internal market and its fight against corruption.
According to the latest data, the Party has sanctioned as many has 300,000 officials this year only.
Xi Jinping’s fight against corruption wants to convey the message that the Party is resuming the central role it has always played in Communist China and intends to open itself to foreign markets in the best possible way.
Hence without foreign entrepreneurs’ actions manipulated by the corruption of State’s and Party’s cadres, executives and leaders.
In addition, Xi Jinping wants to change the old equation of China’s development, with a view to increasing competitiveness on an equal footing with the most technologically advanced Western economies.
In other words, so far China has made social and industrial dumping towards the West’s “mature” productions, characterized by low growth rate and average value added.
Thanks to this system, China is overcoming underdevelopment and is “standing up” – to use again Mao Zedong’s terminology.
Currently the strategy is changing: China will play on equal terms in the global technology and capital market.
In that way, over the years, China had become what some US economists called “the global sweatshop”, thus using for the Chinese factories a terminology reminding us of Charles Dickens’ novels.
According to the CPC Secretary, Xi Jinping, now the Chinese capital will be used, on the one hand, to create a supply-side economy within the country and, on the other hand, to enter the new labour-saving technological sectors, which will be the majority in future productive systems.
Hence, with a view to avoiding the huge Chinese population creating problems of internal political stability which could not be solved, even by force, Xi Jinping is enlarging the Chinese domestic market.
This is the reason why, however, he wants the West to keep on contributing to the upgrade of the Chinese economy.
Globalization is still one of China’s primary goals.
Hence the reference made by Xi Jinping to the renewal of the technological drivers of this global production phase is particularly significant.
And this is the reason why China still requires an open and competitive global market.
Instead of absorbing “old” productions, as in the days of the “Four Modernizations”, China wants to participate in the creation of the new technologies – not only the digital ones – which will characterize the economy in the coming years.
Initially Deng Xiaoping wanted to compete with Hong Kong in attracting foreign companies.
Now Xi Jinping will participate, on an equal footing with the West, in the definition of the next economic growth cycle.
A cycle in which, incidentally, Italy will participate only marginally.
Its current leadership has not even the faintest idea of the issues raised by Xi Jinping in his speech delivered to the G20 Summit.
Therefore the Chinese leader’s line is even clearer: in the near future, development will be based on a range of tax, monetary and geopolitical tools, of which Xi Jinping’s China is fully aware.
Hence it will maintain a flexible fiscal policy and it will support some tax cuts. It will also increase government spending, in contrast to the private capital crisis, while it will maintain and increase the yuan-denominated funds deposited abroad.
This project is reminiscent of the Eurasian project to be undertaken jointly with Russia.
The project consists in replacing the US dollar, or at least being side by side with it, as world exchange currency.
Again between the lines Xi Jinping conveys the message that globalization is perfect because it helps us to manage the still substantial Chinese overproduction.
In addition, China needs to cut production costs – and here the Western advanced management counts – as well as change its costly and unproductive real estate market.
Finally, China must improve the distribution network efficiency and avoid financial asymmetric shocks.
All this can be read between the lines in the speech delivered by Xi Jinping.
And it is also worth recalling the attention paid by the Chinese CPC Secretary to the “green” economy because it improves the whole economic performance and avoids the parallel health and infrastructure costs and even the cost of adapting the Chinese production to the world market.
According to Xi Jinping, who is still a serious expert of Marxism, it is the new climate of global collaboration which generates the new economic growth drivers, not vice versa.
Without a political decision on the new production formula there will be no transformation of the global economy.
Hence the issue lies in enhancing international cooperation and involving also the marginal countries we must rescue from the jihad or from the long fratricidal wars, as well as particularly ensuring a level playing field in the international system.
China has not appreciated the US policies of vast “ocean” alliance for trade globalization – the TTIP for the European Union and the TTP for Asia, namely the strategies put in place by President Obama.
Types of trade policies that – while speaking of the British economic growth – Carl Schmitt called “thalassocratic”.
In fact, China is both land and ocean.
It has not accepted the North American TTP because it suspects there is a US desire of leadership in global trade.
China wants to take advantage of the void of the US global policy – which has been blocked by the EU for the TTIP and has seen only 13 countries advocating the Asian TTP, clearly targeted against China – and fit in it, also to avoid becoming a regular purchaser of US goods and distorting its monetary policy, which is designed to promote the yuan internationalization.
Furthermore, so far neither Hillary Clinton nor Donald Trump have fully clarified their projects towards China.
Using again Taoist concepts, the “emptiness” of US policy must be replaced by the “fullness” of the new Chinese geoeconomy.
Moreover, the current European leaders attended the Huangzou G20 Summit having in mind the next EU Summit of Bratislava, which shall deal with the Brexit issue.
Currently no EU Head of State or Government has the ability, the culture and the strength to evaluate operations longer than six months.
Conversely the British Prime Minister, Theresa May, has already had confidential contacts with Xi Jinping and has spoken of a “golden age” in bilateral relations between Great Britain and China.
At the G20 Summit, Prime Minister May also met five other European countries to negotiate the new trade system after the Brexit.
The British Prime Minister wants to ward off the danger of a new US approach vis-à-vis Great Britain and is opening to China with a view to becoming a global hub, not only at financial but also at productive level.
China is expected to invest approximately 40 billion pounds in Great Britain, not to mention the building of the nuclear power plant Hinkley Point C and later of Sizewell in Sussex.
Great Britain wants to use China with a view to positively stepping up Brexit, thus decreasing its economic risks. Great Britain will replace the tired old Europe, with the rich, powerful and vibrant China.
This means applying to the European economy – that Great Britain is leaving – the “Four Is”, the four key priorities which provided the slogan of the Huangzou G20 Summit, in the most genuine and authentic Chinese tradition.
The future economy shall be “Innovative, Invigorated, Interconnected and Inclusive”.
In other words, China does no longer intend to support global growth only with financial means, as happened during the US-led globalization.
In fact, China founded the Asian Infrastructure Investment Bank (AIIB) in December 2015 and aims at including the nations marginalized from the first wave of globalization. The AIIB has already 57 members.
Indeed China aims at a global economy which will implement new value creation mechanisms, especially manufacturing and non-financial ones.
And here the link between the Russian Federation and China will be strengthened permanently.
The starting point will be the joint initiative for the Russian Far East and the Chinese North-East.
The G20 spoke about the new Russian-Chinese Eurasia and the Chinese leaders said to the leaders gathered for the Summit that this would lead to “big surprises.”
The systems and organizations on the basis of which the Chinese and Russian project will be implemented are the Shanghai Cooperation Organization and ASEAN, through the Eastern Economic Forum.
Hence, in this regard, we can say that, for Xi Jinping, the G20 held in China was a great success.
Twists and Turns in US -China Trade War
US Secretary of State Mike Pompeo’s stopover at Beijing on 08 October may not have been a pleasant experience, more so in the backdrop of accusation of US Vice President Pence about China attempting to interfere in U.S. elections. The agenda of North Korean denuclearisation, where US and China were broadly agreeing earlier, seems to have taken a back seat, and improvement of relations doesn’t seem to be realistic in near future. The ongoing trade war continues as both sides dig their heels despite being the biggest trading partners of each other, because it is also linked with global dominance, strategic and military posturing, diplomatic and information offensive.
China Braving Threat to its Vulnerabilities
China is putting a brave front despite being badly hit at some of its most vulnerable spots in the tit-for-tat trade war with both sides spiralling the slapping of tariffs on a wide range of each others’ trade items. Taiwan, which is another sensitivity of Beijing is witnessing visit of US officials after Taiwan Travel Act was signed by President Trump, with a promise to arm it further with latest weaponry. US continued military posturing in South China Sea, along with the appearance of UK warship ignoring Chinese repeated warning is another concern. A recent injection of over $110 billion by China into its banks and hardly any financial benefits coming out of BRI partners incapable to repay anything is tightening its financial freedom for global dominance. Some of its BRI partners want to get out of the ‘Debt Trap’ by refusing/reducing Chinese investments is adversely affecting Chinese dream project (BRI), after five years of its announcement like Philippines.
Not a Smooth Sail for US
US on the other hand cannot be celebrating either, with China digging it heals and refusing to give up either in trade war or South China Sea. On North Korean front, the policy of good optics continues with Kim managing to get a lot of goodies from South Korea (presumably at their cost), during the last summit of North and South Korea. Kim in fact has been an outright winner, managing to get another Summit with President Trump, which helps him in convincing his countrymen of his sound leadership, as well as boosting his status internationally. US sanctions on paper continue, but after the chest thumping at Singapore Summit, his friends like China automatically relaxed the sanctions on North Korea, without any worthwhile denuclearisation/reduction in his nuclear/missile arsenal. US realises that knocking out China financially is the key to its global dominance; hence is unlikely to soften up to China. US also faces another challenge of keeping its allies like Japan and South Korea satisfied while negotiating with North Korea and asking ASEAN to make choices of partners, besides continuing with CAATSA hurting some of its strategic partners who could be helpful in balancing China.
It will take some time to see that whoever has greater resilience to withstand the economic stand-off and appetite to take setbacks will have an upper edge, which seems to be US at this point of time. As per IMF assessment, China’s GDP size will be 1.6 per cent lower in 2019 than it otherwise would be, if the US slaps tariffs on all Chinese imports.
How is India affected?
The Indian economy has survived some global slowdowns earlier and should be able to sail through the present one. The bigger problem is the sanction under CAATSA in dealing with Russia for urgently needed military hardware like S-400 and Iran for cheaper crude oil being paid in rupee terms, for which India has adequate refineries. The US option of buying shale oil does not suit India as it does not have adequate refineries and will have to purchase finished product in dollar terms. The port of Chabahar is also crucial for India for connectivity to Afghanistan and CAR. The silver lining is that US being our strategic partner will like to have well equipped Indian Forces to balance China and Indian connectivity to Afghanistan, in case Pakistan does not serve their strategic interest. On both counts I am hopeful that US will find a way out not to hurt its strategic partner.
The talks held in September 2018 between Kim Jong-Un and Moon Jae-In
In less than one year three meetings have been held between the North Korean Leader and the South Korean President, Moon Jae-In.
In the initial meeting the two leaders had decided to put an end to the state of war between their two countries. They had also reaffirmed the goal of denuclearization of the entire peninsula, with the consequent destruction of the nuclear potential of South Korea and of the United States, in particular. They also decided to create an inter-Korean Liason Office between the two sides of the Demilitarized Zone and to bring together the families dispersed between the two Koreas. Finally, the idea was to create new communication infrastructure – railway lines, in particular – a project by which Russia has always set great store.
Indeed, Russia is betting many of its cards on a reunification between the two Koreas, capable of enabling it to keep its excellent relations with South Korea – which are essential for the economy – and to also support North Korea, which is Russia’s unavoidable strategic goal.
Now the two Koreas are dealing on their own, without the US brokerage and intermediation with respect to South Korea, although President Donald J. Trump has recently stated that President Moon Jae-In is his official “delegate” for the denuclearization of the Korean peninsula.
The United States is scarcely interested in the internationalization of the North Korean economy. It only wants denuclearization, while Kim Jong-Un wants denuclearization to develop his country’s economy and maintain its geopolitical and national autonomy.
A serious problem – both in talks and in the final or working documents – is also to define an effective mechanism to check denuclearization.
Indeed, between September 17 and 19, 2018, the signing of the Joint Declaration of Pyongyang has not fully clarified the mechanism of checks on the denuclearization of the Korean peninsula. Kim Jong-Un’s idea is to organise these checks with a series of “experts” appointed by the friendly powers, while the South Korean idea is to accept the maximum possible denuclearization to start the long process of reunification.
The two respective Defence Ministers, however -namely Song Young Moo for South Korea and Rho Kwang Chul for North Korea – have just signed a separate document from the rest of agreements.
In that text confidence-building measures between the parties are put first, with North Korea’s acceptance of dismantling a launch pad and a site for checking jet engines, with the presence of yet unspecified, but friendly international experts. From IAEA? We have some doubts, in this case.
Subsequently North Korea could also dismantle the Nongbyon site, if the United States does the same in South Korea.
It should also be recalled that most North Korean missiles are built to be launched by mobile vehicles, not from fixed bases.
In short, North Korea wants the United States to remove the nuclear umbrella protecting South Korea and Japan while, in the recent talks with North Korea, the United States thinks of a bilateral treaty regarding only the Korean peninsula and, at most, some classes of North Korean missiles.
In the US mind, the planned reduction of North Korean long-range missiles could be even equivalent to a nuclear and conventional decrease of its troops stationed in Guam.
On the basis of a new future agreement, both Koreas (and God only knows how and to what extent the North Korean conventional military potential would be useful for a South Korea unified with North Korea) would also define maritime and land buffer zones, as well as a no-fly zone over the old border, with a view to avoiding clashes or accidental air battles.
This is already partially clear, but much work shall be done to define all the details.
There would also be plans to cover or reduce artillery batteries along the coast.
Obviously, should these talks run aground, the only concrete political result would be the progressive divergence between South Korea and the United States, precisely on the problem of the peninsula’s denuclearization.
Furthermore, over and above the aforementioned sites, North Korea will dismantle the site of Dongchang-ri, in addition to the site of Yongbyon, while Kim Jong-Un is also very interested in the building of fast railway links between South and North Korea.
The two Koreas will get the industrial site of Kaesong back in shape and the old tourist project concerning Mount Kumgang back in track, besides planning new joint economic and tourist areas.
The inter-Korean agreement regards also collaboration for medical and environmental issues, as well as for the protection from epidemics.
In other words, both Koreas think of an economy of compensation between them, which could also develop at a later stage and become a need for the development of both countries.
An economic-political symbiosis that could get the United States out of play and later reinstate Russia, which is increasingly interested in the South Korean economy, as well as finally favour China, which has no intention of leaving the Korean peninsula to the hegemony of North Korea alone.
At the end of the Treaty, there is also the project of a joint participation in the Tokyo 2020 Olympic Games and a joint candidature for the 2032 Olympics.
A few days ago, North Korea also expressed its intention to join the International Monetary Fund and the World Bank – a sign that the internationalization of the North Korean economy is now a certainty.
Hence it is a de facto peace treaty between the two Koreas.
If North Korea continues along this line, it is very likely that South Korea will gain a tactical advantage over the sea while, if the relations between South Korea and the United States remain as they currently are, there should be no significant changes in bilateral relations between the USA and South Korea.
However, what is the current state of relations between the United States and North Korea?
In fact, while the inter-Korean relations are all in the framework of effective confidence-building measures, the clear purpose of the fourth round of talks between the two Korean leaders is to preserve a strong US engagement in the whole negotiation process.
Kim Jong-Un wants to engage the United States for his global economic projection and he certainly does not want to remain tied to a regional economy, albeit open and “reformed” according to China’s rules.
For North Korea, the procedure is simple: at first, bilateral talks with the US support for South Korea; later peace between the two Koreas and finally what is only interesting for the USA, namely denuclearization.
It is not even unlikely that the United States does not accept this timing, but it is also unlikely that it realizes the strategic and economic aspects of this timing.
North Korea wants a fundamental agreement with South Korea because: a) it is an unavoidable asset for the modernization of its economy; b) it is the fundamental strategic factor to have the support of both Russia and China, who want to avoid North Korea’s hegemony over the peninsula, but also want to keep it as a rampart for US forces in South Korea; c) it is only through South Korea that North Korea will eventually be in a position to be connected to the Chinese maritime economic and strategic system and reach up to the Mediterranean.
In fact, if the relations between the United States and North Korea improve further, the site of Yongbyon could be dismantled definitively.
Hence currently Kim Jong-Un wants to thoroughly test the US goodwill, rather than South Korea’s goodwill, in developing a long or very long-term peace policy.
In Kim Jong-Un’s mind, there is in fact a key factor: the US behaviour in the phase in which Muammar Gaddafi accepted its proposal to dismantle his nuclear project.
Kim Jong-Un thinks that not even the story of Saddam Hussein is a guarantee for the US long-term reliability and for the stability of its leaders’ word of honour.
This is the real important factor in the strategy of the North Korean Leader.
Moreover, the US immediate reactions to the last meeting between the two Korean leaders have been fast and positive, both by President Trump and by Secretary of State Mike Pompeo.
And North Korea’s autonomous foreign policy has been seen also recently, with the 70th Anniversary military parade.
North Korea’s military parade and its important national celebration, was attended by Li Zhansu, ranking third in the internal power hierarchy of the Communist Party of China (CPC); by Valentina Matviyenko, President of the Russian Federal Council, the third elected office in the Russian Federation; by a very significant figure, Mohamed Ould Abdel Aziz, President of Mauritania, and finally by Hilal al Hilal, deputy-General Secretary of the Syrian Baath Party.
With peace, North Korea will significantly develop its already multiple economic and political relations with Africa, which will be essential for its new economic development.
At the military parade staged on September 9, there were also authorities from Iran, South Africa and Singapore – which is the never forgotten model of the Chinese “Four Modernizations” -as well as other 60 delegations from “friendly” countries.
At economic level, in August, shortly before the big military parade of the 70th Anniversary, there was the International Fair of Razon, which hosted as many as 114 companies of which 52 North Korean ones.
The North Korean product lines mainly included pharmaceuticals, foodstuffs, textiles, electronics and cosmetics.
However, there were many Chinese large companies selling their products in North Korea despite the UN sanctions.
As from September 17, there was also the Autumn Fair which brought together 320 commercial companies from Russia, New Zealand, Australia and China.
This is in fact the new paradigm of North Korea’s foreign policy.
The dollar has also grown in the exchanges with the North Korean currency, both on the official and on the “parallel” markets.
If all goes well at geopolitical level, the North Korean project will be to further improve its light industry, in addition to the diversification and quantity of products, with a view to trying its own autonomous way on the market world, as was the way of the nuclear system.
It should be recalled that this was also Kim Il-Sung’s project.
China’s Imprint underneath the Pyongyang Joint Declaration
On September 18, the leaders of two Koreas met each other in Pyongyang, the capital of the DPRK. The world media focused on the meeting during which the two sides issued the “Pyongyang Joint Declaration”. If we see the Panmunjom Declaration serving as the cornerstone of the dialogue between two Korea, it is necessary to say that this joint declaration took a substantial step to the denuclearization of the Korean peninsula that is vital to the regional peace and beyond.
Literally speaking, the Pyongyang joint declaration highlighted the key issues as follows. First, both sides are determined to achieve the denuclearization of the Korean peninsula. Second, they will work together to improve their relations with a view to the existing state of war, as the defense chiefs from the DPRK and ROK earlier signed a comprehensive agreement aiming to reduce tensions on the peninsula. Third, they will promote the peace talk process of the Korean peninsula. Given that Kim pledged to work toward the “complete denuclearization of the Korean Peninsula”, it would be seen as a political declaration that would mark a starting point for peace negotiations. If all goes well, a peace treaty would be sealed and then comes normalization of DPRK-US relations after it achieves complete denuclearization.
As a close neighbor to the Korean Peninsula, China always supports the DPRK and ROK as well in improving their relations through dialogue and consultation and promoting reconciliation and cooperation. This is the consistent and persistent position of Beijing, which has been playing a responsible role in politically resolving the Korean Peninsula issue and achieving the long-standing peace of the region.
In effect, prior to the leaders of two Korea met each other this week in Pyongyang, they have closely contacted their respective allies or strategic partners. Among them is China, dealing with both sides – Pyongyang and Seoul – in a unique way. It is true that China is the largest trading partner of the ROK while it is equally the only legal ally of the DPRK as well as its largest ideological partner now. If we review the bilateral relations between China and North Korea since last March, Kim Jr. has paid three significant, though unofficial, visits to President Xi of China. For example, during his March 25-28 visit, both sides vowed to continue their traditional solidarity in terms of their shared ideologies and common strategic interests. Xi especially proposed to strengthen the close ties between the two ruling parties. As he said to Kim, “party-to-party and state-to-state relations are the common treasure to both sides. And safeguarding, consolidating and developing China – DPRK relations are unswerving guidelines for China’s foreign policy and security strategy.
During his second meeting with Xi in Dalian summer resort, Kim vowed to terminate all the nuclear tests and to follow denuclearization if the United States took corresponding measures with good wishes. Then following his meeting with Trump in Singapore on June 12, Kim came to Beijing again on 19 to meet his Chinese counterpart. Xi confirmed China’s “3-no change” policy towards the DPRK, that is, political solidarity between the two parties remains unchanged, the friendship between the two peoples remains unchanged, and China’s support of a socialist Korea remains unchanged. Essentially, they serve as the foundation of the strategic consensus between Beijing and Pyongyang. In return, Kim reiterated his permanent shutdown of all nuclear tests and facilities if the US would respond sincerely and responsibly.
Given all the analysis above, it is understandable to conclude that China’s long-standing adherence to the goal of denuclearization of the Peninsula through dialogue and consultation is fully reflected in the Pyongyang Declaration. Meanwhile, China’s stance remains evident since it claims that the Korean issue must be resolved eventually by the Korean people rather than any external power. Therefore, peace not force is the only acceptable way. Also, as China and Russia have repeated that no coercive change of the regime by outside power is tolerated, North Korea can be confident and comfortable to proceed the permanent shutdown of the missile engine test site with international experts observing; and then a complete denuclearization is not too far in the future.
Here is necessary to argue that China has never claimed to play an exclusive role in the Korean Peninsula. Instead of that, China has always encouraged the DPRK to talk to the United States and other relevant parties. Since Kim has agreed to make a trip to Seoul for further talks and to meet the US high-ranking officials in Pyongyang soon, the summit between Kim and Moon marks a leap forward toward peace.
Yet, as the lessons in history show, it is better to approach realistically the Korean issue simply because it has involved too complicated concerns and memories and the overlapped interests. Therefore, we should be ready to accept trial and challenges lying ahead. China has insisted on diplomacy which means that all parties concerned should be brought to the negotiating table under the mandate of the UN Security Council.
Now, Beijing has navigated the course of denuclearization proactively to protect two sides’ common core security stakes when Kim reportedly promised to give up his nuclear program if the United States and South Korea respond to his proposal with good will. Due to this reason, China will do what it can to help ensure “no change of regime by force and denuclearization at the same time in the Korean Peninsula”. This is China’s influence or Beijing’s imprint on the Korean denuclearization issue and the regional peace.
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