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The Chinese success at the G20 Summit of Hangzhou

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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.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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East Asia

Importance of peace in Afghanistan is vital for China

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image source: chinamission.be

There are multiple passages from Afghanistan to China, like Wakhan Corridor that is 92 km long, stretching to Xinjiang in China. It was formed in 1893 as a result of an agreement between the British Empire and Afghanistan. Another is Chalachigu valley that shares the border with Tajikistan to the north, Pakistan to the south, and Afghanistan to the west. It is referred to as the Chinese part of the Wakhan Corridor. However, the Chinese side of the valley is closed to the public and only local shepherds are allowed. Then there is Wakhjir Pass on the eastern side of the Wakhan corridor but is not accessible to the general public. The terrain is rough on the Afghan side. There are no roads along the Wakhjir Pass, most of the terrain is a dirt track. Like other passages, it can only be accessed via either animals or SUVs, and also due to extreme weather it is open for only seven months throughout the year. North Wakhjir Pass, also called Tegermansu Pass, is mountainous on the border of China and Afghanistan. It stretches from Tegermansu valley on the east and Chalachigu Valley in Xinjiang. All of these passages are extremely uncertain and rough which makes them too risky to be used for trade purposes. For example, the Chalagigu valley and Wakhjir Pass are an engineering nightmare to develop, let alone make them viable.

Similarly, the Pamir mountain range is also unstable and prone to landslides. Both of these routes also experience extreme weather conditions. Alternatives: Since most of the passages are risky for travel, alternatively, trade activities can be routed via Pakistan. For example, there is an access road at the North Wakhjir that connects to Karakoram Highway.

By expanding the road network from Taxkorgan in Xinjiang to Gilgit, using the Karakoram Highway is a probable option. Land routes in Pakistan are already being developed for better connectivity between Islamabad and Beijing as part of CPEC. These routes stretch from Gwadar up to the North.

The Motorway M-1, which runs from Islamabad to Peshawar can be used to link Afghanistan via Landi Kotal. Although the Karakoram highway also suffers from extreme weather and landslides, it is easier for engineers to handle as compared to those in Afghanistan.

China is the first door neighbor of Afghanistan having a common border. If anything happens in Afghanistan will have a direct impact on China. China has a declared policy of peaceful developments and has abandoned all disputes and adversaries for the time being and focused only on economic developments. For economic developments, social stability and security is a pre-requisite. So China emphasizes peace and stability in Afghanistan. It is China’s requirement that its border with Afghanistan should be secured, and restrict movements of any unwanted individuals or groups. China is compelled by any government in Afghanistan to ensure the safety of its borders in the region.

Taliban has ensured china that, its territory will not use against China and will never support any insurgency in China. Based on this confidence, China is cooperating with the Taliban in all possible manners. On the other hand, China is a responsible nation and obliged to extend humanitarian assistance to starving Afghans. While, the US is coercing and exerting pressures on the Taliban Government to collapse, by freezing their assets, and cutting all economic assistance, and lobbying with its Western allies, for exerting economic pressures on the Taliban, irrespective of human catastrophe in Afghanistan. China is generously assisting in saving human lives in Afghanistan. Whereas, the US is preferring politics over human lives in Afghanistan.

The US has destroyed Afghanistan during the last two decades, infrastructure was damaged completely, Agriculture was destroyed, Industry was destroyed, and the economy was a total disaster. While, China is assisting Afghanistan to rebuild its infrastructure, revive agriculture, industrialization is on its way. Chinese mega initiative, Belt and Road (BRI) is hope for Afghanistan.

A peaceful Afghanistan is a guarantee for peace and stability in China, especially in the bordering areas. The importance of Afghan peace is well conceived by China and practically, China is supporting peace and stability in Afghanistan. In fact, all the neighboring countries, and regional countries, are agreed upon by consensus that peace and stability in Afghanistan is a must and prerequisite for whole regions’ development and prosperity.

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East Asia

Shared Territorial Concern, Opposition to US Intervention Prompt Russia’s Support to China on Taiwan Question

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image credit: kremlin.ru

The situation around the island of Taiwan is raising concerns not only in Chinese mainland, Taiwan island or in the US, but also in the whole world. Nobody would like to see a large-scale military clash between China and the US in the East Pacific. Potential repercussions of such a clash, even if it does not escalate to the nuclear level, might be catastrophic for the global economy and strategic stability, not to mention huge losses in blood and treasure for both sides in this conflict.

Earlier this week, Russian Foreign Minister Sergey Lavrov stated that Moscow continued to firmly support Beijing’s position on Taiwan as an integral part of China. Moreover, he also underlined that Moscow would support Beijing in its legitimate efforts to reunite the breakaway province with the rest of the country. A number of foreign media outlets paid particular attention not to what Lavrov actually said, but omitted his other remarks: the Russian official did not add that Moscow expects reunification to be peaceful and gradual in a way that is similar to China’s repossession of Hong Kong. Many observers of the new Taiwan Straits crisis unfolding concluded that Lavrov’s statement was a clear signal to all parties of the crisis: Russia would likely back even Beijing’s military takeover of the island.

Of course, diplomacy is an art of ambiguity. Lavrov clearly did not call for a military solution to the Taiwan problem. Still, his remarks were more blunt and more supportive of Beijing than the standard Russia’s rhetoric on the issue. Why? One possible explanation is that the Russian official simply wanted to sound nice to China as Russia’s major strategic partner. As they say, “a friend in need is a friend indeed.” Another explanation is that Lavrov recalled the Russian experience with Chechnya some time ago, when Moscow had to fight two bloody wars to suppress secessionism in the North Caucasus. Territorial integrity means a lot for the Russian leadership. This is something that is worth spilling blood for.

However, one can also imagine that in Russia they simply do not believe that if things go really bad for Taiwan island, the US would dare to come to its rescue and that in the end of the day Taipei would have to yield to Beijing without a single shot fired. Therefore, the risks of a large-scale military conflict in the East Pacific are perceived as relatively low, no matter what apocalyptic scenarios various military experts might come up with.

Indeed, over last 10 or 15 years the US has developed a pretty nasty habit of inciting its friends and partners to take risky and even reckless decisions and of letting these friends and partners down, when the latter had to foot the bill for these decisions. In 2008, the Bush administration explicitly or implicitly encouraged Georgian leader Mikheil Saakashvili to launch a military operation against South Ossetia including killing some Russian peacekeepers stationed there. But when Russia interfered to stop and to roll back the Georgian offensive, unfortunate Saakashvili was de-facto abandoned by Washington.

During the Ukrainian conflicts of 2013-14, the Obama administration enthusiastically supported the overthrow of the legitimate president in Kiev. However, it later preferred to delegate the management of the crisis to Berlin and to Paris, abstaining from taking part in the Normandy process and from signing the Minsk Agreements. In 2019, President Donald Trump promised his full support to Juan Guaidó, Head of the National Assembly in Venezuela, in his crusade against President Nicolas when the government of Maduro demonstrated its spectacular resilience. Juan Guaido very soon almost completely disappeared from Washington’s political radar screens.

Earlier this year the Biden administration stated its firm commitment to shouldering President Ashraf Ghani in Afghanistan in his resistance to Taliban advancements. But when push came to shove, the US easily abandoned its local allies, evacuated its military personal in a rush and left President Ghani to seek political asylum in the United Arab Emirates.

Again and again, Washington gives reasons to conclude that its partners, clients and even allies can no longer consider it as a credible security provider. Would the US make an exception for the Taiwan island? Of course, one can argue that the Taiwan island is more important for the US than Afghanistan, Venezuela, Ukraine and Georgia taken together. But the price for supporting the Taiwan island could also be much higher for the US than the price it would have paid in many other crisis situations. The chances of the US losing to China over Taiwan island, even if Washington mobilizes all of its available military power against Beijing, are also very high. Still, we do not see such a mobilization taking place now. It appears that the Biden administration is not ready for a real showdown with Beijing over the Taiwan question.

If the US does not put its whole weight behind the Taiwan island, the latter will have to seek some kind of accommodation with the mainland on terms abandoning its pipe-dreams of self-determination and independence. This is clear to politicians not only in East Asia, but all over the place, including Moscow. Therefore, Sergey Lavrov has reasons to firmly align himself with the Chinese position. The assumption in the Kremlin is that Uncle Sam will not dare to challenge militarily the Middle Kingdom. Not this time.

From our partner RIAC

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Russia-Japan Relations: Were Abe’s Efforts In Vain?

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Expanding the modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward.

One year after the end of Shinzo Abe’s long period of leadership, Japan has a new prime minister once again. The greatest foreign policy challenge the new Japanese government led by Fumio Kishida is facing is the intensifying confrontation between its large neighbor China and its main ally America. In addition to moves to energize the Quad group to which Japan belongs alongside Australia, India, and the United States, U.S. President Joe Biden’s administration has concluded a deal with Canberra and London to provide Australia with nuclear-powered submarines which in future could patrol the Western Pacific close to Chinese shores. The geopolitical fault lines in the Indo-Pacific region are fast turning into frontlines.

In this context, does anything remain of the eight-year-long effort by former prime minister Abe to improve relations with Russia on the basis of greater economic engagement tailored to Moscow’s needs? Russia’s relations with China continue to develop, including in the military domain; Russia’s constitutional amendments passed last year prohibit the handover of Russian territory, which doesn’t bode well for the long-running territorial dispute with Japan over the South Kuril Islands; and Russian officials and state-run media have been remembering and condemning the Japanese military’s conduct during World War II, something they chose to play down in the past. True, Moscow has invited Tokyo to participate in economic projects on the South Kuril Islands, but on Russian terms and without an exclusive status.

To many, the answer to the above question is clear, and it is negative. Yet that attitude amounts to de facto resignation, a questionable approach. Despite the oft-cited but erroneous Cold War analogy, the present Sino-American confrontation has created two poles in the global system, but not—at least, not yet—two blocs. Again, despite the popular and equally incorrect interpretation, Moscow is not Beijing’s follower or vassal. As a power that is particularly sensitive about its own sovereignty, Russia seeks to maintain an equilibrium—which is not the same as equidistance—between its prime partner and its main adversary. Tokyo would do well to understand that and take it into account as it structures its foreign relations.

The territorial dispute with Russia is considered to be very important for the Japanese people, but it is more symbolic than substantive. In practical terms, the biggest achievement of the Abe era in Japan-Russia relations was the founding of a format for high-level security and foreign policy consultations between the two countries. With security issues topping the agenda in the Indo-Pacific, maintaining the channel for private direct exchanges with a neighboring great power that the “2+2” formula offers is of high value. Such a format is a trademark of Abe’s foreign policy which, while being loyal to Japan’s American ally, prided itself on pursuing Japanese national interests rather than solely relying on others to take them into account.

Kishida, who for five years served as Abe’s foreign minister, will now have a chance to put his own stamp on the country’s foreign policy. Yet it makes sense for him to build on the accomplishments of his predecessor, such as using the unique consultation mechanism mentioned above to address geopolitical and security issues in the Indo-Pacific region, from North Korea to Afghanistan. Even under Abe, Japan’s economic engagement with Russia was by no means charity. The Russian leadership’s recent initiatives to shift more resources to eastern Siberia offer new opportunities to Japanese companies, just like Russia’s early plans for energy transition in response to climate change, and the ongoing development projects in the Arctic. In September 2021, the annual Eastern Economic Forum in Vladivostok did not feature top-level Japanese participation, but that should be an exception, not the rule.

Japan will remain a trusted ally of the United States for the foreseeable future. It is also safe to predict that at least in the medium term, and possibly longer, the Russo-Chinese partnership will continue to grow. That is no reason for Moscow and Tokyo to regard each other as adversaries, however. Moreover, since an armed conflict between America and China would spell a global calamity and have a high chance of turning nuclear, other major powers, including Russia and Japan, have a vital interest in preventing such a collision. Expanding the still very modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward. The absence of a peace treaty between the two countries more than seventy-five years after the end of the war is abnormal, yet that same unfinished business should serve as a stimulus to persevere. Giving up is an option, but not a good one.

From our partner RIAC

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