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The US Trade War: How China Should React

Dr. Bawa Singh

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During the presidential campaign 2016, Donald Trump had made more than 280 promises. However, the pollpromises were formalized through the “Contract with the American Voter,” on October 22, 2016, listing out about the 60 promises for action, the day President would be in office. Out of these promises, currently the plan to curtail Chinese trade was put in practice by the initiating the trade war with China to bridge up the trade deficit with China. In this context, the new trade war has already been set in by imposing a higher tariff against China, particularly its steel and aluminum. It will remain interesting to see how the trade war will unfolds and how China would react?

Out of the  280 poll promises made during the presidential campaign (2016), Donald Trump formalized the same through the “Contract with the American Voter,” issued on October 22, 2016. Realizing the drastic consequences out of trade deficits with China, Trump rolled out a  plan to curtail Chinese trade was the key plank of “Make US Great Again” policy. At the domestic front, the US administration has repeatedly acknowledged that economic slowdown and unemployment in the country are attributed to the trade deficit with China.Trump criticized frequently the North American Free Trade Agreement (NAFTA). He has taken it as, “the worst trade deal the US has ever signed.” He has also called Trans-Pacific Partnership (TPP) as “the death blow for American manufacturing.” Donald Trump in a video message (November 21, 2016), introduced an economic strategy of “Putting America First.” The main focus of the strategy would be to negotiate  the “fair, bilateral trade deals that bring jobs and industry back to American shores.” Only after the three days after becoming president (January 23, 2017), the President Trump withdrew the US from theTrans-Pacific Partnership with the conviction to strengthen the U.S.economy.

The most serious concern for Donald Trump is China and hence he avowed to turn the trade balance in the US favourby imposing high tariffs and other non-tariff trade barriers to resuscitate its economy and creation of job opportunities.

Trade Between the US and China

As per the office of US Trade Representative (USTR),China is the largest trading partner of the US. China is the largest goods trading partner of the US, the quantum of whichwas standing at $578.2 billion in two way during 2016. The trade in services between the US and China is stood at an estimated quantum of  $70.3 billion (2016). The exports of the services on part of the US is $54.2 billion while the imports of the same were $16.1 billion having services trade surplus in its favour of the value of $38.0 billion (2016).The exports of goods on part of the US is totaled at $115.6 billion, whereas the imports of the same is  $462.6 billion. Therefore, as far as the trade balance is concerned, it is in favour of China,totaled at  $347.0 billion in 2016.

As far as the US export of goods is concerned since 2001, it has shown exponential growth i.e., 503%. In 2016, it was reached to $115.6 billion, however, the same has shown somewhat minor slump i.e., 0.3% ($330 million) during the year of 2015. The top goods include in the export category are agriculture ($ 21 bn); grain, seeds, fruit ($15 billion); aircraft ($15 billion); electrical machinery ($12 billion);  machinery ($11 billion) and vehicles ($11 billion). In the services category, the export was estimatedat$54.2 billion (2016). It is said that it was increased roughly 908% since 2001. The leading services exports from the U.S. to China are intellectual property (trademark, computer software),travel, and transport sectors.

The US is the largest destination for Chinese exports. The Chinese goods export to the US is totaled $462.6 billion (2016). However, it has shown somewhat decline at the rate of 4.3% ($20.6 billion) from 2015, but it has shown continuous increased growth at the rate of  60.8% since 2006. The Chinese contribution in the overall US goods import accounts for 21.1% (2016). The Chinese goods export list included electrical machinery ($129 billion), machinery ($97 billion), furniture and bedding ($29 billion), toys and sports equipment ($24 billion) and footwear ($15 billion). China is the 3rd largest agricultural goods exporter to the US i.e., $4.3 billion (2016).

The major concern on part of the US is the trade deficit, which is in favour of China. In 2016, the same was stood at $367 billion (2015), however, it was decreased at the rate of 5.5% decrease ($20.2 billion) totaling at $347 billion in 2016. Again, the trade deficit reached $375 billion (2017). The US exports to China were only $130 billion, whereas its imports from China were $506 billion. Moreover, China is the largest lender to the US. The debt of the US from China as of January 2018, is $1.17 trillion. The leadership of the US percieved that it gives a massive political leverage to China over the US fiscal policy.

Trade War Between the US and China

The major root of the trade war been the US and China has been embedded in the trade deficit. Even being a major power, the US has not been able to bridge up the gap of trade deficit. It has been argued that trade war originates from Chinese trade and industrial policies. Apart from these policies, Chinese currency manipulation has further put the both countries on confrontational mode. However, Trupms’s being one plus year in office, the trade deficit has not been showing any positive sign in the US favour. Ultimately, hehad  to launcha salvo of tariffs against China as in the year of 2017, the U.S. trade deficit with China is stood at US$   375 billion in 2017. The  U.S. exports to China is only $130 billion, whereas it imports stood at $506 billion.

The trade deficit of the US vis-a-vis China has been percieved as a consequence of the latters’restrictive trade practices. The restrictions include a wide array of barriers to foreign goods and services. Although, China has introduced its open market economy in 1978 and even expanded the scope of the same after becoming the member of the WTO (2001). However, China  has introduced the market economy but its trade and industrial policies are aimed at protecting the state-owned enterprises by levying the high tariffsover the imports. Moreover, the other restrictions such as theindustries required special permission to import goods, inconsistent application of laws and regulations, transfer of technology from the foreign firmsfor the Chinese market access etc. Apart from these restriction, the lack of transparency and currency manipulation on part of China have been emerging as major concerns for the Trumps’regime. Therefore, it has become a major compulsionon part of the Trump regime to take a hard-line stance against China.

Within the seventy-day in administration, the President Trump  in his administration’s annual trade policy report to Congress (March 2017), had openly challenged the World Trade Organization (WTO)particularly for “China’s unfair advantage.” He went further with the accusation of  Chinese dumping of  steel,  aluminum and chemical products. In the same month, the US Department of Commerce had announced two antidumping (AD) and countervailing duty investigations (CVD)against China. Even the pre-Trump regimes have also been engaged with China over the dumping casesin the WTO. The Obama administration had become frustrated over Chinese economic reforms and increasingly skeptical about the prospect for future reforms. Till date, the US has registered 16 cases against China, to address its concerns such as Chinese Ads, CVDs, industrial policy and the dominance of state-owned enterprises.In this background, China has turned to the Dispute Settlement Mechanism (DSM) of the WTO to address such perceived unfairness use of such investigations. China had filed 11 cases against the US at the WTO as the former percieves per se the leading target of the USs’ AD and CVD investigations. Robert ELighthizer (United States Trade Representative) has also givenan indication that the U.S. may take action against the WTO for its alleged failures not to check the Chinese unfair trade practices.

President Trump has aired portentous signals with the beginning of the year of 2018. The salvo of high tariffs had launched against its trade deficit with China. President Trump by using the Section 301 of the US Trade Act of 1974, had unilaterally imposed trade tariffs on China. In January, he imposed tariffs on solar panels and washing machines. In a tweet issued on March 2, 2018, Trump asserted that “Trade wars are good and easy to win.” President Trump had signed an executive memorandum on 22 March 2018 to enforce  25 percent tariff on steel and a 10 percent tariff on aluminum imports. The measures have been designed to counter the Chinese unfair trade practices as the administration believes that it involves stealing of the US companiesintellectual property. Trump gave signals that the tariffs would cover at least cover  $60 billion in tariffs on Chinese goods.

Chinas Reactions

China has reacted very aggressively to the US’s new trade war. It has been seen that China is in assertive mode and not going to budge to the US pressure. The Chinese Foreign Ministry spokeswoman Hua Chunying said, “We don’t want a trade war, but we are not afraid of it.”If we unfold the statement, it clearly conveyed the message to the US, how China is likely going to take the sanctions? Moreover,  the Chinese Commerce Ministry has  also used the same tone and tenor while asking  the Trump regime on 28 March not to go ahead with such planned tariffs. It can be taken as a warning signal to the Trump regime as China could set off a same chain of  reactions. Moreover, the Xi governemnt has given clear signal that China would,“fight to the end.” Although, the US economically and militarly is in stronger position but at the same time China has also been following the suit. China has been emerged a stronger economy, moreover, it is a major lender to the US which gives its stronger position vis-a-vis the US. If the trade war lingers on, the losses or gains are not unilateral. One can percieve  that the US has to suffer more losses as compared to China. The developing countries have already opened up and messed up their economies under the global instituions’ pressure. In this milieu, loss of employment opportunities, health services and education, suicides of the farmers, loss of local industries and many more challanges have become the part and parcel of the people’s life.  In this miliu, it should be left to the individual countries’ decision, how much its economy is to be opened? Moreover, if any country is asked for the same, it should be under the international laws, not as per the invidual countries’s whimsical and impulsive actions.

Dr. Bawa Singh is teaching in the Centre for South and Central Asian Studies, School of Global Relations, Central University of Punjab, Bathinda, India-151001. bawasingh73[at]gmail.com

East Asia

Deeper meanings of the Hong Kong protests: Is China a gamechanger or yet another winner?

Anis H. Bajrektarevic

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Does our history only appear overheated, while it is essentially calmly predetermined? Is it directional or conceivable, dialectic and eclectic or cyclical, and therefore cynical? Surely, our history warns. Does it also provide for a hope? Hence, what is in front of us: destiny or future?

Theory loves to teach us that extensive debates on what kind of economic system is most conductive to human wellbeing is what consumed most of our civilizational vertical. However, our history has a different say: It seems that the manipulation of the global political economy – far more than the introduction of ideologies – is the dominant and arguably more durable way that human elites usually conspired to build or break civilizations, as planned projects. Somewhere down the process, it deceived us, becoming the self-entrapment. How?

One of the biggest (nearly schizophrenic) dilemmas of liberalism, ever since David Hume and Adam Smith, was an insight into reality: Whether the world is essentially Hobbesian or Kantian. As postulated, the main task of any liberal state is to enable and maintain wealth of its nation, which of course rests upon wealthy individuals inhabiting the particular state. That imperative brought about another dilemma: if wealthy individual, the state will rob you, but in absence of it, the pauperized masses will mob you.

The invisible hand of Smith’s followers have found the satisfactory answer – sovereign debt. That ‘invention’ meant: relatively strong central government of the state. Instead of popular control through the democratic checks-&-balance mechanism, such a state should be rather heavily indebted. Debt – firstly to local merchants, than to foreigners – is a far more powerful deterrent, as it resides outside the popular check domain.

With such a mixed blessing, no empire can easily demonetize its legitimacy, and abandon its hierarchical but invisible and unconstitutional controls. This is how a debtor empire was born. A blessing or totalitarian curse? Let us briefly examine it.

The Soviet Union – much as (the pre-Deng’s) China itself – was far more of a classic continental military empire (overtly brutal; rigid, authoritative, anti-individual, apparent, secretive), while the US was more a financial-trading empire (covertly coercive; hierarchical, yet asocial, exploitive, pervasive, polarizing). On opposite sides of the globe and cognition, to each other they remained enigmatic, mysterious and incalculable: Bear of permafrost vs. Fish of the warm seas. Sparta vs. Athens. Rome vs. Phoenicia… However, common for the both was a super-appetite for omnipresence. Along with the price to pay for it.

Consequently, the Soviets went bankrupt by mid 1980s – they cracked under its own weight, imperially overstretched. So did the Americans – the ‘white man burden’ fractured them already by the Vietnam war, with the Nixon shock only officializing it. However, the US imperium managed to survive and to outlive the Soviets. How?

The United States, with its financial capital (or an outfoxing illusion of it), evolved into a debtor empire through the Wall Street guaranties. Titanium-made Sputnik vs. gold mine of printed-paper… Nothing epitomizes this better than the words of the longest serving US Federal Reserve’s boss, Alan Greenspan, who famously quoted J.B. Connally to then French President Jacques Chirac: “True, the dollar is our currency, but your problem”. Hegemony vs. hegemoney.

House of Cards

Conventional economic theory teaches us that money is a universal equivalent to all goods. Historically, currencies were a space and time-related, to say locality-dependent. However, like no currency ever before, the US dollar became – past the WWII – the universal equivalent to all other moneys of the world. According to history of currencies, the core component of the non-precious metals’ money is a so-called promissory note – intangible belief that,by any given point in future, a particular shiny paper (self-styled as money) will be smoothly exchanged for real goods.

Thus, roughly speaking, money is nothing else but a civilizational construct about imagined/projected tomorrow – that the next day (which nobody has ever seen in the history of humankind, but everybody operates with) definitely comes (i), and that this tomorrow will certainly be a better day then our yesterday or even our today (ii).

This and similar types of collective constructs (horizontal and vertical) over our social contracts hold society together as much as its economy keeps it alive and evolving. Hence, it is money that powers economy, but our blind faith in constructed (imagined) tomorrows and its alleged certainty is what empowers money.

Clearly, the universal equivalent of all equivalents – the US dollar – follows the same pattern: Bold and widely accepted promise. What does the US dollar promise when there is no gold cover attached to it ever since the time of Nixon shock of 1971?

Pentagon promises that the oceanic sea-lanes will remain opened (read: controlled by the US Navy), pathways unhindered, and that the most traded world’s commodity – oil, will be delivered. So, it is not a crude or its delivery what is a cover to the US dollar – it is a promise that oil of tomorrow will be deliverable. That is a real might of the US dollar, which in return finances Pentagon’s massive expenditures and shoulders its supremacy.

Admired and feared, Pentagon further fans our planetary belief in tomorrow’s deliverability – if we only keep our faith in dollar (and hydrocarbons’ energized economy), and so on and on in perpetuated circle of mutual reinforcements.

These two pillars of the US might from the East coast (the US Treasury/Wall Street and Pentagon) together with the two pillars of the West coast – both financed and amplified by the US dollar, and spread through the open sea-routs (Silicone Valley and Hollywood), are an essence of the US posture.

This very nature of power explains why the Americans have missed to take the mankind into completely other direction; towards the non-confrontational, decarbonized, de-monetized/de-financialized and de-psychologized, the self-realizing and green humankind. In short, to turn history into a moral success story. They had such a chance when, past the Gorbachev’s unconditional surrender of the Soviet bloc, and the Deng’s Copernicus-shift of China, the US – unconstrained as a lonely superpower – solely dictated terms of reference; our common destiny and direction/s to our future/s.

Winner is rarely a game-changer

Sadly enough, that was not the first missed opportunity for the US to soften and delay its forthcoming, imminent multidimensional imperial retreat. The very epilogue of the WWII meant a full security guaranty for the US: Geo-economically – 54% of anything manufactured in the world was carrying the Made in USA label, and geostrategically – the US had uninterruptedly enjoyed nearly a decade of the ‘nuclear monopoly’. Up to this very day, the US scores the biggest number of N-tests conducted, the largest stockpile of nuclear weaponry, and it represents the only power ever deploying this ‘ultimate weapon’ on other nation. To complete the irony, Americans enjoy geographic advantage like no other empire before. Save the US, as Ikenberry notes: “…every major power in the world lives in a crowded geopolitical neighborhood where shifts in power routinely provoke counterbalancing”. Look the map, at Russia or China and their packed surroundings. The US is blessed with its insular position, by neighboring oceans. All that should harbor tranquility, peace and prosperity, foresightedness.

Why the lonely might, an empire by invitation did not evolve into empire of relaxation, a generator of harmony? Why does it hold (extra-judicially) captive more political prisoners on Cuban soil than the badmouthed Cuban regime has ever had? Why does it remain obsessed with armament for at home and abroad? Why existential anxieties for at home and security challenges for abroad ? (Eg. 78% of all weaponry at disposal in the wider MENA theater is manufactured in the US, while domestically Americans – only for their civilian purpose – have 1,2 small arms pieces per capita.)

Why the fall of Berlin Wall 30 years ago marked a beginning of decades of stagnant or failing incomes in the US (and elsewhere in the OECD world) coupled with alarming inequalities. What are we talking about here; the inadequate intensity of our tireless confrontational push or about the false course of our civilizational direction? 

Indeed, no successful and enduring empire does merely rely on coercion, be it abroad or at home. The grand design of every empire in past rested on a skillful calibration between obedience and initiative – at home, and between bandwagoning and engagement – abroad. In XXI century, one wins when one convinces not when one coerces. Hence, if unable to escape its inner logics and deeply-rooted appeal of confrontational nostalgia, the prevailing archrival is only a winner, rarely a game-changer.

To sum up; After the collapse of the Soviet Union, Americans accelerated expansion while waiting for (real or imagined) adversaries to further decline, ‘liberalize’ and bandwagon behind the US. Expansion is the path to security dictatum only exacerbated the problems afflicting the Pax Americana. That is how the capability of the US to maintain its order started to erode faster than the capacity of its opponents to challenge it. A classical imperial self-entrapment!!

The repeated failure to notice and recalibrate its imperial retreat brought the painful hangovers to Washington by the last presidential elections. Inability to manage the rising costs of sustaining the imperial order only increased the domestic popular revolt and political pressure to abandon its ‘mission’ altogether. Perfectly hitting the target to miss everything else …

Hence, Americans are not fixing the world any more. They are only managing its decline. Look at their (winner) footprint in former Yugoslavia, Afghanistan, Iraq, Libya and Syria – to mention but a few.

When the Soviets lost their own indigenous ideological matrix and maverick confrontational stance, and when the US dominated West missed to triumph although winning the Cold War, how to expect from the imitator to score the lasting moral or even amomentary economic victory?

Neither more confrontation and more carbons nor more weaponized trade and traded weapons will save our day. It failed in past, it will fail again any given day.

Interestingly, China opposed the I World, left the II in rift, and ever since Bandung of 1955 it neither won over nor (truly) joined the III Way. Today, many see it as a main contestant. But, where is a lasting success?

(The Belt and Road Initiative (BRI) is what the most attribute as an instrument of the Chinese planetary posture. Chinese leaders promised massive infrastructure projects all around by burning trillions of dollars. Still, numbers are more moderate. As the recent The II BRI Summit has shown, so far, Chinese companies had invested $90 worldwide. Seems, neither People’s Republic is as rich as many (wish to) think nor it will be able to finance its promised projects without seeking for a global private capital. Such a capital –if ever – will not flow without conditionalities. The Asian Infrastructure Investment Bank (AIIB) and the BRICS or ‘New Development’ – Bank have some $150 billion at hand, and the Silk Road Infrastructure Fund (SRIF) has up to $40 billion. Chinese state and semi-private companies can access – according to the OECD estimates – just another $600 billion (much of it tight) from the home, state-controlled financial sector. That means that China runs short on the BRI deliveries worldwide. Ergo, either bad news to the (BRI) world or the conditionalities’ constrained China.)

Greening international relations along with a greening of economy – geopolitical and environmental understanding, de-acidification and relaxation is the only way out.

That necessitates both at once: less confrontation over the art-of-day technology and their monopolies’ redistribution (as preached by the Sino-American high priests of globalization) as well as the resolute work on the so-called Tesla-ian implosive/fusion-holistic systems(including free-energy technologies; carbon-sequestration; antigravity and self-navigational solutions; bioinformatics and nanorobotics). More of initiative than of obedience (including more public control over data hoovering). More effort to excellence (creation) than struggle for preeminence (partition).

Finally, no global leader has ever in history emerged from a shaky and distrustful neighborhood, or by offering a little bit more of the same in lieu of an innovative technological advancement. (Eg. many see the Chinese 5G as an illiberal innovation, which may end up servicing authoritarianism, anywhere. And indeed, the AI deep learning inspired by biological neurons (neural science) including its three methods: supervised, unsupervised and reinforced learning can end up used for the digital authoritarianism, predictive policing and manufactured social governance based on the bonus-malus behavioral social credits.)

Ergo, it all starts from within, from at home. Without support from a home base (including that of Hong Kong, Xinjiang and Tibet), there is no game changer. China’s home is Asia. Its size and its centrality along with its impressive output is constraining it enough.

Hence, it is not only a new, non-imitative, turn of technology what is needed. Without truly and sincerely embracing mechanisms such as the NaM, ASEAN and SAARC (eventually even the OSCE) and the main champions of multilateralism in Asia, those being India Indonesia and Japan first of all, China has no future of what is planetary awaited – the third force, a game-changer, lasting visionary and trusted global leader.

Post Scriptum:

To varying degrees, but all throughout a premodern and modern history, nearly every world’s major foreign policy originator was dependent (and still depends) on what happens in, and to, Russia. It is not only a size, but also centrality of Russia that matters. It is as much (if not even more), as it is an omnipresence of the US and as it is a hyper production of the PR China.

Ergo, it is an uninterrupted flow of manufactured goods to the whole world, it is balancing of the oversized and centrally positioned one, and it is the ability to controllably destruct the way in and insert itself of the peripheral one. The oscillatory interplay of these three is what characterizes our days.

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Uyghur asylum seeker puts international community on the spot

Dr. James M. Dorsey

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Ablikim Yusuf, a 53-year old Uyghur Muslim seeking a safe haven from potential Chinese persecution, landed this week in the United States, his new home.

But Mr. Yusuf’s perilous search that took him from Pakistan to Qatar to Bosnia Herzegovina where was refused entry and back to Qatar highlighted China’s inability to enforce its depiction of the brutal clampdown on Turkic Muslims in its troubled, north-western province of Xinjiang as a purely domestic matter.

Mr. Yusuf’s case also spotlighted the risk of increased mass migration in a world in which ethnic and religious minorities increasingly feel existentially threatened by civilizationalist policies pursued by illiberal and authoritarian leaders as well as supremacists, racists and far-right nationalist groups.

By choosing Qatar Airways and making Doha his first point of landing after leaving his residence in Pakistan, Mr. Yusuf further underscored the fragility of Muslim acquiescence in the Chinese clampdown and called into question application of Qatar’s asylum law. With the adoption of the law, Qatar last year became the first Arab state to legalize asylum.

While Mr. Yusuf is fortunate to have ended his ordeal with his arrival in the United States, his case accentuated the hypocrisy of the Trump administration that has demonized migrants and refugees and “weaponized” US human rights policy.

Mr. Yusuf’s plight serves the United States as it fights an escalating trade war with China and has made the clampdown in Xinjiang one of the opportunistically selected cases of human rights violations it is willing to emphasize.

Mr Yusuf put Qatar and the international community on the spot when he last weekend posted online a mobile phone video pleading for help hours before he was slated to be deported from Doha’s Hamad International Airport to Beijing.

The plea generated thousands of retweets by Uyghur activists and won him assistance from an American human rights lawyer and ultimately asylum in the US.

If deported to China, Mr. Yusuf would have risked being incarcerated in a re-education camp which has been an involuntary home for an estimated one million Uyghurs in China as part of what amounts to the worst assault on a faith in recent history.

China said last month that the majority of the detainees in what it describes as vocational training facilities had been released and “returned to society” but independent observers say there is no evidence that the camps are being emptied.

Mr. Yusuf decided to leave his home in Pakistan for safer pastures after Pakistan became one of up to 50 countries that signed a letter in support of the clampdown.

Concerned that Pakistan, the largest beneficiary of Chinese Belt and Road-related investment, could deport its Uyghur residents, Mr. Yusuf travelled on a Chinese travel document rather than a passport that was valid only for travel to China. China’s issuance of such documents is designed to force Uyghurs to return.

The travel document provided cover for Qatar’s initial decision to return him to China rather than potentially spark Chinese ire by granting him asylum. International pressure persuaded Qatar to give Mr. Yusuf the opportunity to find a country that would accept him.

China’s clampdown in Xinjiang is but the sharp edge of a global trend fuelled by the rise of leaders across the globe in countries ranging from the United States to China, Russia, India, Hungary, Turkey and Myanmar who think in civilizational terms, undermine minority rights, wittingly or unwittingly legitimize violence, and risk persuading large population groups to migrate in search of safer pastures.

Hate crimes have gripped the United States with critics of President Donald J. Trump charging, despite his explicit condemnation this week of white supremacism, that his hardline attitude and language when it comes to migrants and refugees has created an enabling environment.

Violence against Muslims in India, home to the world’s second largest Muslim community, has increased dramatically with 90 percent of religious hate crimes in the last decade having occurred since Narendra Modi became prime minister.

Some 750,000 Rohingya linger in Bangladeshi refugee camps after fleeing persecution in Myanmar while Islamophobia has become part of US, European and Chinese discourse and Jews in Europe fear a new wave of anti-Semitism.

Italy took efforts to counter migration that are likely to aggravate rather than alleviate a crisis a step further by adopting a law that would slap fines of up to US$1.12 million on those seeking to rescue migrants adrift at sea.

The Chinese clampdown that bars most Uyghurs from travel and seeks to force those abroad to return has so far spared the world yet another stream of people desperate to find a secure and safe home. The risk of an eventual Uyghur exodus remains with the fallout of the Chinese re-education effort yet to be seen.

Mr. Yusuf could well prove to be not only the tip of the Uyghur iceberg but of a future global crisis as a result of an international community that not only increasingly has turned its back on those in need but also pursues exclusionary rather than inclusionary policies.

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China’s risky bets

Dr. James M. Dorsey

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China’s infrastructure and energy driven US$1 trillion Belt and Road initiative involves risky bets across a swath of land populated by often illiberal or autocratic governments exercising power without independent checks and balances.

Seeking to reduce risk, China is bumping up against the limits of its own long-standing foreign and defence policy principles, foremost among which its insistence on non-interference in the domestic affairs of others, the equivalent of the United States’ preference for stability rather than political change.

If popular revolts in Algeria and Sudan as well as smaller, issues-oriented protests elsewhere in the Middle East and North Africa are anything to go by, China appears to be betting against the odds.

Anti-corruption sentiment fuelled the 2011 popular Arab revolts that toppled the leaders of Tunisia, Egypt, Libya and Yemen and are at the root of current anti-government protests across the globe in countries as far flung as Brazil, Haiti, Jamaica, Puerto Rico, Russia, Zambia, the Czech Republic, Albania and Romania

China’s risks were evident in the wake of the fall in 2011 of Col. Moammar Gaddafi when the post-revolt Libyan authorities advised China that it would be low on the totem pole as a result of its support of the ancien regime.

The risks are also evident with Baloch militants targeting Chinese assets and personnel in Pakistan.

To minimize the risk and expand its aggressive domestic anti-graft campaign, China’s top anti-corruption body, the Communist party’s Central Commission for Discipline Inspection (CCDI), is embedding inspectors in Belt and Road projects, who will be based in recipient countries.

The move helps China counter allegations that it exploits corruption in recipient Belt and Road countries to further its objectives.

Anti-corruption is a signature policy of president Xi Jinping and has allowed him to purge senior Chinese leaders as well as tens of thousands of low-level bureaucrats.

The CCDI is building on the success of a pilot project in Laos where it embedded in late 2017 inspectors in a US$6 billion railway project being built by state-owned China Railway Group. The anti-graft officials, working with the Chinese company, established a joint inspection team with their Laotian counterpart.

The question is whether the anti-corruption effort in countries like Laos or Central Asian nations that consistently rank in the bottom half of Transparency International’s corruption index will bump up against China’s non-interference principle.

Or in other words, can China successfully guard against corruption in Belt and Road projects without pressuring recipient countries to adopt broader transparency and anti-corruption measures?

How can you strike hard on corruption here at home and give a free hand to Chinese people and business groups [that are] reckless abroad?” CCDI’s director-general for international co-operation La Yifan asked in a Financial Times interview.

Mr. La said China had organized seminars with more than 30 countries to link up anti-corruption regulators. “That is my dream, that we create a network of law enforcement of all these Belt and Road countries,” he said.

Imposing transparency and anti-corruption in Belt and Road partners would be the equivalent of all kinds of environmental, safety and human rights criteria that the United States haphazardly and opportunistically maintains in dealings with foreign countries that have been severely criticized by China.

China has long prided itself on what it terms win-win economic situations in which it imposes commercial terms that often primarily benefit the People’s Republic.

The terms, coupled with the clampdown on Turkic Muslims in China’s province of Xinjiang, has fuelled anti-Chinese sentiment in Turkey and Central Asia with their close ethnic and cultural ties to the troubled Chinese region.

Turkish officials highlighted these sensitivities by denying Chinese media reports that president Recep Tayyip Erdogan had praised the success of Beijing’s brutal approach in Xinjiang during a recent visit to China.

Muslim nations have largely remained silent about the clampdown that amounts to the most frontal assault on a faith in recent history or in some instances even tacitly endorsed it.

In the absence of democracy, “governments can manage their pro-Beijing stance without informing their public, but a pro-Beijing policy over the Uyghur issue can barely be sustained in Turkey. Turkey is still a functioning democracy and total control of the public is not possible. Besides, there is a very strong Uyghur lobby and public sentiment towards the Uyghurs in Turkey,” said Turkish Centre for Asia-Pacific Studies director Selcuk Colakoglu.

Taking its anti-corruption campaign global, raises the broader question of whether it would threaten a pillar of autocracy that China’s non-interference principle has de facto sought to perpetuate.

Political scientists Alexander Cooley and John Heathershaw argue that what they call the instruments of global authoritarianism — an army of largely Western bankers, lawyers, brokers and intermediaries that park illicitly gained monies in off-shore accounts and manage the investment of those funds – help keep autocrats in power.

The success of the globalization of China’s anti-corruption effort as well as its campaign to significantly reduce graft at home, would establish autocrats’ ability to satisfactorily deliver public goods and services alongside brute power as the cornerstone of their sustainability.

In doing so, it would give greater meaning to China’s assertion that it does not want to fundamentally alter the established multi-lateral world order but rather make it more equitable and more a reflection of a world that is multi- not unipolar.

It would also cement China’s model of economic reform and state capitalism without political liberalization as the example autocratic and authoritarian regimes want to emulate even if the jury is out on whether autocrats can remain relatively clean without a system of independent checks and balances.

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Defense2 hours ago

In a Dark Time: The Expected Consequences of an India-Pakistan Nuclear War

Twenty-one years ago, in 1998, Dr. Louis René Beres, Professor Emeritus of International Law at Purdue University, published an authoritative...

South Asia4 hours ago

Kashmir Once Again Playing out as Diplomatic Theatre at the United Nations

Friday’s closed-door meeting of the UN Security Council on Jammu and Kashmir marked the first time in over 50 years...

Southeast Asia6 hours ago

In Myanmar, Better Oversight of Forests a Vital Step in Transition to Rule of Law

Authors: Art Blundell and Khin Saw Htay For the first time, the Myanmar Extractive Industries Transparency Initiative (MEITI) has opened...

Americas8 hours ago

Presidential elections – 2020, or does Trump have “federal reserve”?

On July 31, the US Federal Reserve’s Open Market Committee cut interest rates – the first such move in 11...

Russia10 hours ago

Short Letter vs. Long Telegram: US Ambassador Huntsman Departs Moscow

The resignation of US ambassador to Russia Jon Huntsman is a good occasion to take stock of one of the...

Economy12 hours ago

Internship tips from an intern who became an owner and CEO

Internships can be a valuable opportunity to start your full-time working career, and change your life. Fatih Ozmen went from...

South Asia15 hours ago

Abrogation of Article 370 and Indian Plan for Plebiscite in Jammu & Kashmir

Since 2014 India is being ruled by a Hindu ultra-nationalist party of Bhartiya Jannta Party (BJP) and extremist Narendra Modi...

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