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Demilitarization between the two Koreas

Giancarlo Elia Valori

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At domestic level, Kim Jong-Un is pursuing two original and interesting policylines within North Korea: the rise of a new generation to power and the evident and stable economic expansion.

Under Kim Jong-Un’s leadership, the private segment of the North Korean economy has undergone great development and the new class of young people rising to power – who epitomize the general rejuvenation of the North Korean society – is also an unknown factor for the forthcoming talks between the two Koreas and the talks between the United States and North Korea.

Certainly Supreme Leader Kim Jong-Un rules without problems, but he shall consider the new climate prevailing within his Party.

At military level, according to the data provided by the US intelligence services, North Korea has an arsenal of 36 nuclear warheads.

Only in 2017 did North Korea fire 23 missiles.

During the bilateral talks with South Korea, however, Kim Jong-Un also said he wanted to impose a moratorium on North Korea’s nuclear missile launches between March and April 2018.

Complex signs hard to decode, but certainly designed to creating a new perception of North Korea in South Korea and in the rest of the world.

The summit meeting will take place on April 27, 2018, south of the demilitarized area of Panmunjom, in the Peace House, near the “Truce Village”- the site where the Korean Armistice Agreement was signed in 1953.

An area belonging to South Korea – and indeed, this is a further sign conveyed by the North Korean leader.

The meeting will take place between the two Presidents, namely Kim Jong-Un for North Korea and Moon Jae-In for South Korea.

Two inter-Korean summits had already been held in 2000 and 2007.

The summit meeting held in 2000 took place when the Sunshine Policy had been ended abruptly by the South Korean President, Lee Myung Bak, a politician and businessman recently arrested on charges of bribery, embezzlement and tax evasion alleged to have occurred during his presidency.

The summit meeting held in 2007 focused on the 1953 armistice between the two sides and on the economic relations between North and South Korea, as well as on the issues regarding “human rights”.

For the next summit meeting scheduled for April 2018, North Korea has clearly stated its willingness to denuclearize the whole peninsula, maintaining that there is no need for nuclear weapons when the survival of North Korea is fully ensured.

Nevertheless, the United States has the weapons in South Korea – with 23,468 US soldiers and five divisions -as well as the greatest ability to oppose North Korea militarily.

Moreover, US commands in South Korea often organize exercises against North Korea after its hypothetical invasion of South Korea, with evident results for the South Korean population.

Within negotiations, this shall obviously be followed by the cessation of any nuclear threat to North Korea, regardless of its origin -that is from the United States and, with the conventional threat alone, from Japan.

The South Korean President has also said that North Korea wants to have “frank and candid” talks with the United States, especially on the denuclearization of the entire peninsula and on the future mutual recognition between the two countries.

The more we go forward, the less pro-American South Korea will be – not for the influence of North Korea, but for the same effect suffered by Western Germany during the “cold war”: the Federal Republic of Germany maintained it was against the German Democratic Republic’s regime, but it was aware that if the nuclear conflict had started, it would have been the first and only one to suffer from its consequences.

Hence if results are achieved in the talks with the United States, North Korea will stop any missile or nuclear test in that period.

As reported and certified by all South Korean sources, North Korea really wants to advance quickly along the path of dialogue with South Korea, which is therefore a stable direction of the North Korean strategy.

Hence, regardless of the choice made by the United States, this is a progressive and inevitable decoupling between South Korea and the United States.

Once Kim Jong-Un’s offer of dialogue is also made to the United States, the latter can respond in two ways: US adherence to the full denuclearization of the Korean peninsula or the persistence of a “cold war”, with hot phases between the United States and North Korea.

In the former case, the strategic transformation of the Asian peninsula would create a severe military void for the United States, which could respond by increasing its forces in the South Pacific Ocean or in Japan, thus maintaining a serious threat to North Korea.

A serious albeit remote threat, posed by countries that are not willing to bend to US wishes, such as Japan.

In the latter case, the constant presence of US nuclear weapons in South Korea – which would be hard for South Korea to manage from a political viewpoint – would cause a not too much symbolic escalation by North Korea.

At political level, the choice for the United States is very sensitive and not devoid of side effects: South Korea could stop granting some bases to the United States or increase the rent significantly. Or it could make the United States understand that it does not want to become a nuclear target for North Korea.

Japan, which is already continuing its autonomous rearmament, could tell the United States that, beyond the current limit of the US military presence, there is no longer room for it, or that the independent Japanese missile and naval apparatus could have very different strategic aims.

Let us imagine that Kim Jong-Un has analysed very well all these logical connections of the negotiations between the United States, South and North Korea.

Nevertheless, the political climate between the two Koreas has changed and some analysts have spoken about the end of the “1990 spirit”.

In the previous relations between the two Koreas for this year’s Olympic Winter Games, the primary goal of the South Korean leader was above all holding peaceful Games without political tensions.

There had been, at first, Kim Jong-Un’s end-of-year speech aimed at peace with South Korea which, however, appeared to everybody as a usual charm offensive, typical of North Korea’s foreign policy.

Moreover, South Korean President Moon Jae-In had been elected by a vast majority of voters who wanted peace with North Korea and, above all, wanted to avoid nuclear or conventional war on the Korean peninsula.

This also counted.

In the New Year’s Day of 2018, the North Korean leader had mentioned his country’s victory in the field of nuclear weapons, saying that by now the optimal standard for a nuclear response or attack had been achieved.

This could make us think that, from now on, the North Korean leader wants to underline the purely economic side of the “Byungjin Line” developed by Kim Jong-Un to pursue the parallel goals of economic development and a robust nuclear weapons program, thus making them interdependent.

Hence, once stabilized national defence, North Korea wants to deal simultaneously with the United States and South Korea.

There had been a diplomatic “offensive” towards the United States a few months ago, but no results were reached.

The “olive branch” offered to South Korea was instead immediately accepted.

The visit of Kim’s younger sister and of the President of the Presidium of the Supreme People’s Assembly of North Korea, Kim Yong Nam, to South Korea had already taken place – the powerful symbol of a new North Korean policy line, with a subsequent visit paid by some South Korean leaders to North Korea, received by Kim Jong-Un in person.

This happens very rarely.

A first hypothesis is the following: North Korea wants to suspend nuclear and missile tests for a certain period of time and plans to use this period of time to improve relations with South Korea.

Hence North Korea may not be interested in the full disarmament of the country and of the whole peninsula.

China, however, could later play a decisive role in inter-Korean negotiations.

In fact, if the process of dialogue between the two Koreas and between North Korea and the United States continued long enough, China could propose to the UN Security Council a Resolution aimed at lifting at least some of the sanctions on North Korea.

The Resolution could be rejected by the United States and, possibly, by France and Great Britain, but this would enable China to unilaterally reopen its markets to North Korea, by later accepting to act as a broker for other countries wishing to trade with North Korea.

The Russian Federation would follow Chinese operations closely.

In this case South Korea would have two options available: to definitely close the Kaesong industrial zone or accept China’s proposal, which would certainly be very attractive from the economic viewpoint.

In this case the United States could not do much more than exert military and political pressure on South Korea.

Another hypothesis is the following: South Korea may not want to go beyond the limit of current sanctions on North Korea – and China would not show any reaction.

Hence we would have the full reactivation of North Korea’s missile and nuclear program, with equal and opposite reactions by the United States.

Nevertheless, South Korea must be careful, because military tension could stop also its economic development, not just North Korea’s.

Conversely, if the negotiations between South and North Korea thrive, for the United States this will mean a radical rethinking of its military and strategic presence in Asia, from support to Taiwan up to the acceptance of Korean reunification under the auspices of the People’s Republic of China.

Therefore, the United States should take part and play an active role in the Korean bilateral negotiations, without preconceived close-minded attitudes towards North Korea which – once new friend of the United States – could influence also the Chinese and Russian policies in a pro-US direction.

The real danger for the United States is nuclear proliferation.

As Kissinger said recently, “if North Korea keeps nukes, other countries will seek them”.

The real danger for the United States is a mass of small countries with so many nuclear weapons as to prevent the US military and commercial transit through some very important areas, which could be denied to relations with the United States.

This would mean the end of US global power.

This is the reason why the United States has always and almost obsessively opposed nuclear proliferation outside the traditional China-Russia-India-Pakistan-USA context.

Hence if the negotiation on the freezing of North Korean nuclear power were successful, the United States would gain a free and uncontrolled right of passage to Southeast Asia and the Straits of Malacca, which are still essential for the world market and for the military and intelligence control of the whole South Pacific region.

Will the United States be able to use every aspect of the negotiations between North and South Korea, which will soon extend to the United States?

What role will be played by the selective maintenance of sanctions or by their removal, with subsequent economic negotiations between the United States, China and Russia?

For the time being forecasts are uncertain, apart from the evident goodwill of both Koreas.

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 "La Centrale Finanziaria Generale Spa", he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. 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 of "Honorable" of the Académie des Sciences de l'Institut de France

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The Implication of China’s Diplomacy in APEC and ASEAN

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It is truly unusual that the Chinese President Xi Jinping and its Premier Li Keqiang are visiting the same area during nearly the same time: Xi’s visit to APEC from15th to 21st November and Li’s visit to ASEAN on 15th November. Yet, if we look into China’s foreign policy towards this area over the past years since President Xi took power, it is not difficult to understand both Xi’s and Li’s official visits to the “larger Pacific” and the meaning beyond.

As we know, President Xi has reiterated that the Pacific is large enough for the countries involved to share the prosperity with each other. In order to achieve the inclusive rather than exclusive benefits for all, China’s diplomacy aims to reject any kind of unilateralism, trade protectionism and anti-globalization. Given this, Xi’s at APEC and Li’s at AEASN is defined as a signal of China’s diplomacy to further reform and bold openness.

As a rising great country, China is surely eager to expand its investment and trade with the south Pacific area, and Papua New Guinea (PNG) is the first country visited by Chinese president. What is more, PNG joined the Asian Infrastructure Investment Bank (AIIB) early 2018 and then became the first state of Pacific islands to sign the MoU on “The Belt and Road Initiative” construction. As the theme “Harnessing Inclusive Opportunities, Embracing the Digital Future,” the APEC summit will focus on Regional economic integration, digital economy, connectivity, sustainable and inclusive growth and so forth.

Also during Premier Li’s visit to the ASEAN, he highlighted the necessity of the collaboration and mutual benefit among the countries involved on the 21st China-ASEAN leaders meeting. This is also the 21st ASEAN Plus Three Summit (10+3) and the 13th East Asia Summit (EAS).

Quite understandable, since the 1960s, the center of world economy has shifted from North Atlantic to Asia-Pacific, its dynamic growth in the region create countless jobs and push the development of world economy. This is the reason that Asia-Pacific region has the most trade agreements and the most complicated economic architecture around world. APEC and ASEAN, as two institutions that possess most member states, are the very pillars of the tumbledown regional economic architecture. APEC was launched by Australia and later included 21 member states in the region, amongst are United States, China, Japan, the economic giant three of the world economy. ASEAN is an institution that consist of ten small and middle states. Though they are not strong enough to meet the challenges from the power politics alone, ASEAN is a core force that firmly facilitate the economic integration of the whole region of East Asia and the Pacific. No matter what the way they embrace, they are the de facto basic regionalism of Asia-Pacific. The withdrawing of United States from Trans-Pacific Partnership (TPP) and hard-achieved Regional Comprehensive Economic Partnership (RCEP) once brought the regional economic architecture a fig leave and strengthened the impact of APEC and ASEAN.

As a result, the two visits of Chinese top leaders to the same region at the same time definitely attract worldwide attention, because they not only represent China’s recent diplomatic focus but also mark the fact that Asia-Pacific region has become one of the vital fields where China’s diplomacy will be actively conducting in terms of the Belt and Road Initiative, and carry on the good-neighbor policy. Since China has argued for creating a peaceful development milieu, to enhance economic transformation and upgrading oversea markets and partners in Asia-Pacific region.

Consider these facets, China, as the second largest economy, aims to promote its well-articulated stance on multilateralism and inclusiveness and globalization. As both President Xi and Premier Li have strongly said that China is ready to work with Pacific island countries to endeavor together and sail for a better future for bilateral relations. For the sake of that goal, China always believes that as long as all the countries involved have firm confidence in each other’s development, cooperation and the future of East Asia, and work closely together and forge ahead, all sides would achieve more and reach a higher level in the next 15 years.

For sure, China belongs to the part of a larger Asia-Pacific family, and the Chinese government defines its goal as the shared prosperity of this region. Therefore, China will continue to work hard and constructively to promote the overall development of impoverished but promising Pacific island countries under the Belt and Road Initiative.

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An uncertain step in moving China-Japan relations

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Authors: Meshach Ampwera  & Luo Xinghuan

On October 26, Chinese President Xi Jinping met Japanese PM Shinzo Abe and praised that both China and Japan have pledged to strengthen bilateral ties amid continuous efforts made by the two nations. Xi said, “Bilateral relations have returned to the right track and gained positive momentum, which is something the two sides should cherish.” As the two largest economies in Asia, China and Japan are also the vital players in Asian security and the global development.

In addition, since this is the first official visit to China by a Japanese PM in a seven-year “Cold Peace” period, it is widely assumed that Abe’s visit symbolizes the resumption of high-level visits and will be followed by an increasing rapprochement between China and Japan. True, the leaders of the two economic giants witnessed a wide range of agreements, including a 30 billion US dollar worth of currency swap pact, the establishment of a maritime and air liaison mechanism, and enhancing people-to-people exchanges.

Yet, three factors have to be considered seriously in looking into Japanese foreign policy given the current changing geopolitical landscape regionally and globally. First, Japan has still regarded itself as a “defeated” state during the WWII. Since then, Japan’s postwar posture has frequently described as a new pacifism; yet in fact it is considerably more complex. As Henry Kissinger put it: “Japan had acquiesced in the U.S. predominance and followed the strategic landscape and the imperatives of Japan’s survival and long-term success.” This means that the governing elites in Tokyo used to hold the constitution drafted by U.S. occupying authorities with its stringent prohibition on military action, and adapted to their long-term strategic purposes. As a result, Japan was transformed from the pacific aspects of the postwar order (that prohibited military action) into a nation that has focused on other key elements of national strategy, particularly using economic leverage regionally and globally, though not uncontroversial.

Second, in a recently-released paper written by the former US Secretary of Defense Ash Carter, he maintained that “Japan is a close ally of the U.S. and a rising military power, too, because of legal and constitutional changes of great significance championed by Prime Minister Abe.” In practice, the Japanese administration has engineered an expansion to enable its military to operate regionally and even globally in response to the rise of China, violent extremist activity in Asia, and the alleged North Korean belligerence.

Actually in 2013, Japanese Government White Paper revealed a desire to become a “normal country” with an active alliance policy. In a searching for a new role in the Asia-pacific region, Japan aims to act as an “anchor” of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) concluded in 2018 after the withdrawal of the United States. Now it involves 11 countries and representing 13.4% of global GDP ($ 13.5tri.). As the largest economy of the CPTPP, Japan has been active in moving it forward. Early this year when the British government stated it is exploring becoming a member of the CPTPP to stimulate exports after Brexit in 2019, Abe stated that the United Kingdom would be welcomed to join the partnership. It is said that even the U.S. reconsiders possibly rejoining the CPTPP if it were a “substantially new deal” for the United States.

Japan’s ardent involvement into the US-led strategy in Asia has also been endorsed to expand steadily as a normal power regionally and globally. For example, the Asia-Africa Growth Corridor (AAGC) is the result of the joint declaration issued by the India and Japan in 2016. Although it is premised on four pillars of development and cooperation, it is self-evident that the AAGC reflects a growing special “strategic and global partnership between India and Japan” in which both sides have viewed China’s growing, pragmatic and successful presence in Africa as a menace. There is no question that AAGC is a well-crafted vision and agenda of both India and Japan, linking with their own development priorities. But with increasing pressure from Washington and Brussels, Japan and India are in effect driven by the option for the AAGC to rebalance China’s Belt and Road Initiative (BRI).

From the inception of the BRI, they have more than ever before been concerned with being isolated in Africa by Beijing’s initiative. But, as Ampwera Meshach, a researcher at Jilin University put it, “Africa is on the growth trend and offers potential markets and raw materials. For this reason, Africa largely needs pragmatic and scientific, technological and development- oriented initiatives and these are clearly reflected in China’s BRI.” In light of this, the AAGC does neither reflect a novel nor pragmatic approach on how it fits within the African agenda. Instead, AAGC’s foundational pillars seem more inclined to the Western cooperation approaches that have for decades not been translated into development.

Controversially, two days before Abe’s visit to Beijing, Japan had decided to scrap official development assistance (ODA) to China, which is a program where Japan provides aids to developing countries starting back in 1954. Even though some people argue that Japan’s ODA is reasonably cancelled because China’s GDP is even 2.5 times larger than that of Japan, yet, it is necessary for Chinese to be aware of the reality that Japan is a longstanding ally of the United States. As Japan has long been an economic power, its impressive military capabilities would not be confined to a strict policy of territorial defense—no projection of Japanese power or the U.S.-Japan alliance to the region as a whole.

It is during the Abe’s administration which has recognized an environment of growing Chinese assertiveness, violent extremist activity in Asia, and North Korean hostility, and therefore, Japan has eagerly participated in Asian security, including training and exercising with other nations, beyond a purely passive, home-island defense role. This makes it an increasingly important player serving the US strategy in Asia but challenging the rise of China globally.

It is true that Abe tweeted about the trip — while recognizing the challenges in moving bilateral relations forward, he said that he would still work to “push Sino-Japan relations to the next level”. Given the two countries’ economic links, it is only understandable that there is a need for the two sides to come closer. Moreover, Japanese businesses has been an extremely active force behind the government’s shift of attitude on the Belt and Road Initiative (BRI).

Yet, all in all, we should never ignore that Japan’s ambitious foreign policy has gone beyond the economic goal.

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Red Flags: Why Xi’s China is in Jeopardy – Book Review

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George Magnus writes about the dangers of the Middle-Income Trap in the Middle Kingdom, among other issues, in Red Flags: Why Xi’s China is in Jeopardy. President Xi’s face adorns the book cover, with his name looming above.  Fitting, seeing as China has removed presidential term limits; China’s fate is thus likely to be tied to the decision making of Xi for the next couple decades.

Magnus writes about the dangers of Xi’s likely ascendance to President-for-Life.  Ever since the excesses of Mao’s one-man rule, China’s Communist Party has largely ruled by consensus, while provincial governments have served as a counterweight to federal authority via control of their land and many of their local State Owned Enterprises (SOEs).  Xi is challenging this staus quo.  So-called Xi Jinping Thought is now official party canon, being taught in schools and in the media.  The 2012 crackdown on corruption by Xi in his inaugural year was widely seen as a pretense for taking out political opponents and sending a message to his potential opponents.  Ever since, Xi has been working to centralize power to himself.  Magnus notes that being leader for life largely shields Xi from short-term popular discontent, but also means that every long-term decision, good or bad, will become part of Xi’s legacy.  Hence, the book informally reads as a personal policy checklist for Xi.

Red Flags lists four, well, red flags of likely impediments to Chinese economic development.  Firstly is debt.  China has been an unprecedented money-making machine for the past three decades or so.  However, signs are starting to appear of a possible economic slowdown.  Most significant is the debt-GDP ratio, which has skyrocketed over the past few years.  Magnus writes extensively about how China’s growth, up to this point, has largely been fuelled by credit (debt).  China’s much-maligned (by Trump, most notably) trade balance surplus has shrunk to no more than a few percent, statistically insignificant.  China could theoretically make up for shrinking foreign demand for goods and services with domestic consumers.  Magnus is unfortunately the bearer of bad news in this regard: “Household savings rose from about 5% of disposable income in the late 1970s to about 38% in 2016, or just over 25% of GDP. Savings by companies are also elevated, amounting to about 17% of GDP in 2016.”

Hence, the Xi regime has been trying to maintain economic growth via ever-greater sums of state investment funding.  Magnus explicitly warns against this: “The reason the investment rate has to fall is because the more China relies on it, the more inefficient that investment will become.”  Such a statement might seem self-evident, but Magnus backs it up with facts.  For instance, he points out, “Between 1978 and 2006, for example, China spent between 2 to 4 yuan of investment to get 1 additional yuan of GDP. Since then, the amount has risen steadily to reach about 9 yuan in 2015, corresponding to a marked fall in investment efficiency.”

Magnus writes a lot about the inefficiency of China’s thousands and thousands of SOEs.  “Officially, and according to some China-watchers, SOEs now account for just a fifth of output and a tenth of employment. The presumption though that the rest of the economy is in private hands, as we understand it in the West, is incorrect. Many private firms have large or majority state owners, who exercise significant control over senior appointments and corporate strategy, and state ownership is often disguised by multiple layers of investment companies ultimately owned by a state entity. Allowing for these opaque adjustments, the purely private part of the enterprise sector may actually be little higher than 20–30 per cent.”  SOEs have built much of modern China, but their efforts are increasingly being wasted on skyscrapers and airports that remain almost empty, Chinese Roads-to-Nowhere.  A blank check invites planners to ignore long-terms concerns of viability, blinded by short-term gains that go directly into the pockets of Party-affiliated contractors.  China’s financial services sector isn’t much better off.  Magnus writes about all the bailouts, takeovers and general heavy-handedness by the government of various Chinese banks and other related companies.  Due to a slowdown in trade and many other issues discussed in the book, state investment will figure to play an ever-larger role in China’s economy, inefficiency be damned.

The book’s second diagnosed problem for China’s future growth is its currency, the renminbi.  Xi mirrors the isolationist mindset of China’s ancient emperors with regards to cash inflows and outflows.  It’s very hard for Chinese investors to send renminbi out of the country.  Likewise, China restricts the ability of foreigners to own reserves of renminbi, or Chinese financial assets in general.  The renminbi is subject not only to this lack of liquidity, but also the confines of a planned economy.  China is infamous for its strict control of its currency valuation, as well as its monetary policy via diktats, investment and bailouts.  Its ownership of USD and other foreign currency reserves must always be flawlessly balanced to safely back up the value of the renminbi.  This resulted, for instance, in the selling off of a trillion of its USD reserves between 2014-2016.  The combination of currency illiquidity and over-management limits the ability of the renminbi to fuel Chinese economic growth.

Thirdly, the book mentions the so-called Middle Income Trap.  Once a country reaches a certain benchmark of development, it’s hard to maintain further momentum.  China’s already experiencing slowed growth due to factors such as increased global manufacturing competition.  As Magnus points out, China has already had its coming-out party to the world economy.  It can’t join the WTO again or eliminate mass hunger again.  Likewise, China has stalled in terms of rural development and education.  Rural China is increasingly falling behind the major cities and the hukou system of restricted movement and rights for migrant workers isn’t helping.  Students in China still attend far fewer years of school than students in developed countries like the US, especially in advanced fields like IT.  These issues of inequality and 21st-century education must be addressed if China is to fully develop.

Lastly, Magnus writes about the demographics crisis.  China has one of the highest ratios of elderly people in the world.  Combine this with China’s 1.45 birth rate and the gender disparity caused by the 1-Child Policy and you have a ticking time bomb.  The workforce is increasingly running out of youngsters who can take the place of retirees, causing a slowdown in economic output.  The higher the elderly population becomes, the more each working-age person will have to contribute to pensions and healthcare.  The economic burden that only-children will have to shoulder taking care of their aging parents will inevitably lower marriage rates and thus further lower the unsustainably low birth rate.

This is the most dire problem because there’s very little that society can do about it.  Xenophobia has prevented any meaningful amount of migration to China, but even if China were to let in tens of millions of foreign workers, that would be a drop in the bucket for a nation of 1.4B people.  Even after China ended its One-Child Policy, couples are still averaging well below 2 children, despite increasing prosperity.  The only real hope for China’s demography problem would be a literal ex machina: automation.  Robots may be able to generate untold wealth that could buoy a small nation like Singapore, but even an army of robots is unlikely to completely offset the gradual loss of hundreds of millions of working-age people to aging.  Even if AI is a magic bullet for all productivity woes, it take probably at least a century to meaningfully scale up, by which time China’s population will have substantially shrank.  It doesn’t help that China is, in many respects, barely keeping pace in the AI race with the US, Japan and the EU.  In the race for artificial intelligence, even being a year behind the competition can cost trillions of dollars; China’s tech sector will likely take a few decades to completely match Silicon Valley.  Lastly, it should be noted that not even innovation can overcome the limit resources of our planet.  We’re already running out of industrial resources like oil and lithium.  It would be foolish to place all of one’s eggs in the basket of a sci-fi utopia.

Red Flags is a very detailed and interesting book about the future of China.  Magnus isn’t anti-China by any means; he gives credit to China’s marvelous successes and doesn’t moralize.  If anything, the book was too generous by barely mentioning the unrest in Xinjiang and not mentioning the occupation of Tibet at all.  In an objective fashion, he succinctly explains China’s problems and offers possible solutions.  China has shown an unprecedented ability to adapt to change.  This flexibility may wind up being undone not external adversaries or limitations, but by increasing autocracy.  Dictatorship has rarely resulted in long-term, across-the-board growth.  One can look at a fellow Communist country for an example: the Soviet Union.  Though the USSR made impressive leaps in technology, manufacturing and agricultural output and human longevity, it was ultimately undone by its ideological rigidity.  A lack of accountability for its leaders meant that the USSR was forever a captive to bad policy.  Likewise, a lack of freedom stunted innovation.  If Xi is to avoid the pitfalls of the USSR, he must avoid letting his power get to his head and embrace a flow of ideas from both fellow Party members and private citizens.  Xi’s consolidation of control and crackdown on dissent would point otherwise, unfortunately.  Only time will tell if China will continues to beat the odds…

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