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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…

Russell Whitehouse is Executive Editor at IntPolicyDigest. He’s also a freelance social media manager/producer, 2016 Iowa Caucus volunteer and a policy essayist.

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Power is a drug – What China is the U.S. fighting against?

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At the basement floor of the Chinese National museum in Beijing, there’s a curated collection of China’s imperial history from antiquity to the fall of the Qing Dynasty. The basement is where a multitude of visitors from around the country gather, entry is free for foreigners. At the end of the collection, is a British “waist sword” presented to Emperor Qianlong in 1793 by the London expedition, as a symbol of friendship. According to the archives, during a court etiquette kerfuffle a young British boy stepped forward and resolved it with his plucky antics, the Emperor gifted a scented pouch to the child.

The British child became a lifelong learner of Chinese court etiquette, culture and language. A predecessor to the thousands of “China Hands” plying their trade in Shanghai, Hong Kong and Beijing from the 1990s onwards. In 1839, the British Parliament enraged by the Chinese incineration of Opium stocks and the Chinese court’s refusal of “free-trade” based on narcotics smuggling, debated on a military reprisal. The young child had become a distinguished statesman and became the prime supporter of a naval strike. He stated that a nation that coerced others to kneel in their presence, would grow accustomed to kneeling in the presence of their superiors. This hawkish Lord, the son of the original Secretary of the British Mission in 1793 (Sir George Staunton), was the plucky child who had neutralized the initial diplomatic embarrassment. The British sword is placed at the end of the gallery, in a massive national museum at the heart of Beijing. Five millennia of immense material progress and near suicidal collapses, human frailties merged with ingenuity. And at the end of the imperial age, a colonial sword hangs in the balance.

The primal lesson that China learned from its disastrous encounter with modernity, was to criminalize all forms of narcotics and adopt Victorian rectitude against leisure. China has had two disastrous encounters with synthetic drugs, between the fall of the Han Dynasty and the establishment of the Sui when large volumes of the elite became addicted to a mineral hallucinogen and its Century of Humiliation during the 19th Century. Most Western observers consistently italicize the latter, by extension disputing this version of history that the Communist Party purports, as a form of self-victimization that the state narrates to itself as an excuse for “expansionism”. But the proof lies in the other former colonial territories in Asia, Hong Kong and Guangzhou boomed when the East India Company (EIC) secured favorable trade terms, the British possessions in India and South East Asia, became narcotics production and repackaging centers to satisfy the China market. “Bukit Chandu” in Singapore literally translates into “the hill for storing packaged opium” right beside the mega-port’s historical Telok Blangah district. The Qing Dynasty smuggled correspondence to London in the hope of appealing to Queen Victoria’s morality on the opium epidemic, only to be intercepted by Lord Melbourne and erased from memory.

But the British Empire is history, its sins expunged. Not exactly, the second historical lesson that modern China learned was the Western self-belief in exceptionalism; it’s habitual for Washington and the EU to utilize moral language in the service of their ends. Washington inherited Britain’s global empire through the Atlantic Charter and utilized moral metaphors for its global causes since 1945. The Cold War, the neo-liberal rollout in the 1990s, the War on Terror, all these utilized universalist values in the service of American corporates, security aims and commodities expansion. Since the 1980s, American political scientists and anthropologists have globally preached against the sins of otherization. But unironically, the rollout continues. The modern resurgence of a Post-Capitalist China that organically merged Maoism with corporatized industrialism, is considered an abomination that the post-Fukuyama American elite finds abhorrent. Having proven incapable of neutralizing Islamic terrorism, the internal decline of the American economy and its multifaceted problems must be blamed on an “other”. It is heretical that the Chinese state, the most exoticized possession subjected to almost two centuries of evangelization and persuasion, is out competing the colonial metropoles. There is growing realization in the US elite that the military industrial complex in the US is exhausting national resources and over-extending American power at a point where domestic needs are being over-looked. There is a massive community of lobbyists, academics, columnists and politicians gearing up for a “civilizational clash” with Beijing and profiting from it. To the extent that ideological nemesis like the Koch Brothers and George Soros can find common ground and establish a diplomacy-focused institute to counter the American blood lust.

But there is no American decline, the NYSE and NASDAQ are posting record highs and employment continues to spike. The abovementioned are just instances of bad Chinese propaganda. The Trump tax cuts have energized corporate performance since 2017 and real-estate speculation has revived across the US. This is the classic bubble model of economic expansion that the US system has relied upon since Reaganomics in the 1980s. But the signs of decay are numerous, the American elite is not acting on a position of strength against Beijing. Infrastructure decrepitude, education and income inequality are at their worst since the 1920s. The public trust in electoral officials erodes daily from the latest Trump scandal while the frequently touted calls to reindustrialize America are not actualizing. The American middle class continues to be squeezed by high personal debt and the rapid vaporization of industrial employment. Reagan’s America triumphed against Moscow while riding on an economic high in 1989,Trump’s America buys most of its iPhones from Beijing because Tim Cook still can’t find enough industrial engineers to redo designs at a moment’s notice.

Both Beijing and Washington are rushing to embrace 5G technology to gain dominance over the heart of development in the next decade. You can see the signs in America where there is a general reluctance to discuss anti-Trust action against Google, Facebook and Amazon because they collectively form the best chance against China’s BAT consortium on a global scale. AI and industrialization are globalized technologies that rely on layers of legal specialization, patents and distributed supply chains. These are classic outcomes of the neo-liberal world that Washington wanted since 1991. But the crux lies in the fact that the US has to enjoy market dominance over these fields, or else. The prospect of impoverished peasants building multinational corporates that out-compete is abhorrent. The possibility that the Friedman/Hayek consensus of turbo-charged laissez faire, is less efficient that industrial policy and greasy Chinese engineers who don’t fully open their markets cannot be countenanced. As mentioned in previous articles, the US targeted Tokyo and Seoul respectively in 1985 and 1998 under similar circumstances. But the Chinese example is simply too massive for the US to contemplate, an entire middle class larger than the US national population that is partially denied to Wall Street or Silicon Valley. And therein history returns to haunt, substitute opium for social media, what do you get?

Why do you think the Chinese placed that sword at the end of a national gallery?

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Ecology and productivity in today’s China

Giancarlo Elia Valori

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As a political decision maker, the Chinese Minister of Natural Resources, Lu Hao, is at the centre of a great transformation of today’s China.

 Former Governor of Heilongjiang from 2013 to 2018, he was also First secretary of the Communist Youth League and later vice-mayor of Beijing.

 He is also a full member of the Central Committee of the Communist Party of China (CPC), although he was born only in 1967, in Shanghai or probably in Xi’an.

  The effective political systems favour and foster the careers of the best young people.

 As President Xi Jinping has often pointed out, this is the right time for a comprehensive and in-depth ecological analysis of Chinese development.

 Once the economic development of a country that initially hosted the “second processing activities” of global economy was over, China is now getting ready to be a large global economy, an advanced economy having no obligations towards “old” technologies and markets – hence also fully ecological.

 Since the 18thCPC Congress, President Xi Jinping has been vigorously supporting the idea of a fully Chinese “ecological civilization” and certainly the choice of Lu Hao as Minister of Natural Resources goes in this direction.

 As both President Xi and Minister Lu Hao underline, now also soil erosion has become a very severe phenomenon in China.

 Currently the annual soil erosion of both agricultural and non-agricultural land totals approximately 5 billion tons.

 The area currently down to agriculture in China is worth about a third of the available land.

 The desertification area is now equal to 2,622,000 square kilometres, i.e. 27.3% of all the land surface available.

 Despite the many efforts made to reverse this trend – and not only recently -currently China is the country with the lowest per capita share of forests in the world.

 Pollution is still heavy, especially in the case of water, but President Xi (and Minister Lu Hao) have quickly got to work.

 President Xi Jinping stated: “Clean waters and green mountains are as valuable as mountains of gold and silver”.

 The President not only wants a high GDP, but above all a strong and stable “green” GDP.

 The First World markets pollute the Second but, above all, the Third World – and today China is not Third World for anyone.

 Being subject to pollution is like being subject to foreign powers.

 Hence President Hi Jinping’s fundamental idea is that protecting the environment and increasing productivity are mutually reinforcing goals.

 Just like Minister Lu Hao, President Xi Jinping believes that there is a scientific and rational connection between environmental protection and economic development and that the purpose of the CPC action is to enhance the people’s quality of life and their happiness index.

 Hence President Xi Jinping’s fundamental idea is to strictly follow the scientific and technological criteria, by increasing the use of natural resources and – precisely for this reason – also developing the blue economy, while respecting the objective laws of nature and, hence, also the laws of socialist and rational economic development.

 At the 18th CPC Congress, President Xi Jinping – and certainly also Minister Lu Hao – spoke of building a “beautiful China”.

 As written in the documents of the 18th CPC Congress, “To meet the people’s desire for a better life is our mission” – hence President Xi Jinping (and Minister Lu Hao) maintain that “building an ecological society and civilization, which is connected to the people’s well-being, is our goal and the true future for the Chinese nation”.

President Xi Jinping’s policy line is – first and foremost – to “first protect, then scientifically demarcate the use and protection of nature, and later adhere to the red line of environmental and ecological protection”.

 Here the primary concept is “protection first”.

 The old industrialist and productivist criterion, whereby “merely keeping pollution under control” is enough, is now meaningless.

 Therefore, whoever is in charge of the area where pollution has occurred must be considered – to all intents and purposes – liable both legally and practically.

 We know that every year at least eight million tons of plastic are thrown into the oceans, and over half of this quantity comes from five Asian countries: China, Indonesia, the Philippines, Thailand and Vietnam.

 This problem can be slowly solved with better collection, wider information and what President Xi Jinping precisely calls “ecological civilization”.

 Furthermore, as early as 2017 China has begun its “action against air pollution, with the closure of over 150 coal-fired steel factories to reduce particulate matter in the air by at least 15% a year.

 Again as from 2017, China has already achieved the 2020 target for the use of solar energy, with the even more ambitious goal of soon reaching the production level of 213 GW, five times higher than the current US annual production.

 Considering the current technology data, it is like covering – only with solar panels – a surface larger than the Greater London area, namely 1,500 square kilometres.

 Furthermore, also thanks to Minister Lu Hao’s action, in 2019 China rose from the 41stto the 33rd place in the world list of nations that are actively involved in climate change.

 A great leap forward, although the greenhouse gas emissions increased in China both in 2017 and in 2019.

 China, however, can currently meet the Paris Agreement criteria by stopping its greenhouse gas emissions within 2030, but only by increasing its renewable energy production by 20% and by using greater nuclear energy sources – a policy of which little is still said in the silly West.

 Hence tripling the share of non-fossil fuels by the end of 2030 and establish a full market for Chinese emission trading.

 If – as is very likely thanks to President Xi Jinping and Minister Lu Hao – China manages to do so, the global project to reduce the global temperature increase to “much less” than two degrees Celsius will be successful.

 China is therefore fundamental for the ecology of the whole planet.

 Moreover, China plans to increase the area of forests absorbing carbon dioxide by 45,000 square kilometres and it is slowly succeeding in reaching this goal, also thanks to the organization of natural parks, considering that China currently has over 12,000 perfectly organized natural parks and reserves.

 There is a public health problem adding to the challenges outlined so far.

 In China about 2.8 million children -mainly newborn babies – die due to pollution-related problems.

 If we do not want to change the balance between generations – and certainly President Xi Jinping and Minsiter Lu Hao are very careful not to do so – the pollution issue becomes pivotal.

 Just think about the retirement, employment and demographic transition between generations, with a burden of newborns’ deaths equal to 2.8 million a year.

The Chinese Climate and Ecological Policy System introduced in 2017, which Minister Lu Hao is greatly expanding, also provides for the careful monitoring of over 1,700 energy-producing companies and for the further final control of over three billion tons of greenhouse gases.

 The size of China is still an outstanding issue and has led the country to have – in spite of everything – as many as 10 billion tons of CO2 released into the environment – about a quarter of the world total amount.

 In any case, however, they are less than 23% compared to the Chinese CO2 production in the previous year.

 As to water pollution, the State will spend as much as 30 billion for “cleaning” and purifying springs and water flows.

 China will also improve its basic price system, with a view to fostering environmental protection and rural areas –  a policy for the total cleaning of urban water and major springs, organized by Minister Lu Hao and supported by President Xi Jinping.

 The first goal is to purify urban waste water, the major source of stable pollution of springs. Then China plans to “ecologizing” the Yangtze River and Lake Bohai, two other water flows that affect China’s whole rural and urban water system.

 The project, however, will be completed and the cleaning of the big rivers and major water basins and reservoirs will go ahead.

 There is a project to reduce the use of industrial water by 23% within 2020, when the first large national share of renewable energy will be massively used in China.

 The law on the “prevention of soil and water pollution” entered into force on January 1, 2019, but it also provides for the census-taking of all Chinese land – to be carried out every ten years – as well as the establishment of monitoring stations everywhere – with data that can be spread at every level – and also the checking of toxic and noxious substances in soils and waters, with data that must become public – at least partially. It finally provides for the creation of funds for cleaning land and water, which every local and regional authority must envisage in the budget.

  “Rehabilitation systems” for polluting agricultural or industrial companies are planned.

 With specific reference to the desalination of sea water for industrial and human use, it should immediately be noted that China is one of the 13 countries with the lowest water availability in the world.

 Moreover, most water resources are concentrated in the South, while Northern and Western regions tend to suffer from drought.

 As President Xi Jinping and Minister Lu Hao point out, population growth, mass urbanization, climate change and gradual reduction of water reserves are all conditions that make the water issue crucial for continuing China’s economic development.

 In addition to reorganizing national water reserves – as can be seen in projects such as the Diversion of Northern Waters – water is never really sufficient and, hence, the other fundamental issue of President Xi Jinping’s and Minister Lu Hao’s water scheme is desalination and the recycling-purification of waste water.

 Here the real problem is desalination, considering that 43% of the Chinese population lives in the 11 coastal provinces, which anyway account for 13.7% of the Chinese territory.

 In coastal areas, however, the water supply is even lower than the national average.

 Nevertheless, coastal areas account for over 65% of China’s national GDP.

However, the water resources of China’s coastal areas are only about 28% of the total national ones.

 Hence desalination is a solution.

 Currently over 150 countries use this system.

 Moreover, China’s desalination project has lasted for at least 60 years.

 Currently, however, after a series of regional and sectoral attempts, a real desalination industry has developed in the Hebei Province, as early as the first project in Datang Wangtang in 2005.

 The specific membrane technology is already well- developed, but also microfiltration is available – with a national production exceeding 10,000 square metres per day for each of the approximately 150 plants, but with additional 71 sea desalination plants, operating at a reduced pace, and with 35% of the total water resources used for people’s personal use.

 Only 35% of water resources, however, is used for energy production and for other industrial uses, including paper and metal production.

 The desalination plants are mainly located in four regions, namely Zhejiang, Shandong, Liaoning and Hainan.

 The main technologies are Reverse Osmosis (RO) with UF (Ultra Filtration) membranes and Multi-Effect Distillation (MED), which is thermal desalination.

 In China, 120 are RO plants and 7 are the largest ones with MED technology.

 With regard to soil protection, it has been ascertained that 402 industrial sites and 1,401 agricultural areas record a high concentration of heavy metals.

 36% of agricultural areas and 28% of industrial sites are contaminated.

 China defined the regulations carefully and made them even stricter in 2016, but the final regulatory framework was designed in August 2018.

 As already seen, the criterion used is prevention.

 The relevant authorities must therefore evaluate each project ecologically, before its implementation.

 The law lays down each party’s responsibility, with a sequence of obligations no one can escape.

 However, the real problem in China is the relationship between arable land and urban areas.

 New buildings have reduced the area down to agriculture by almost 60% compared to 1990.

 2.47 million hectares – equivalent to the surface of the US State of Vermont – were reclaimed on the basis of the new legislation on the rebalancing between agricultural land and housing areas.

 Nevertheless, only 37% of the land reclaimed on the basis of this legislation is reused for agricultural purposes, while 44% remains merely unploughed land and 19% becomes forests.

 Moreover, the climate and bio-chemical change of soils is often at the basis of China’s great internal migrations, which are a further structural distortion of an already anomalous – and now stable-concentration of people from internal towards coastal areas.

 According to the 2016 data, the Four Modernizations and the subsequent reforms pushed over 200 million migrants to the Chinese coasts.

 In the future, however, the real core of the issue for China will be harvesting electric power from the dynamics of ocean wave movements.

 Many energy market analysts believe that the market for this type of electricity will increase by 10.25% a year until 2023.

 The market is expanding especially in Europe, which was the first continent to develop this technology, but now the idea has spread to the United States, Australia and, above all,China.

Currently there is a device available for harnessing the power of ocean waves known as “Penguin”, which is moored to the seabed at 50 metres depth. Only 2 meters are visible above the sea water surface.

 This 1,600 ton device is around 30 m long.

 It is manufactured by a Finnish company.

 Devices for producing wave-based energy -with an average capacity of 40 MW – are already available in the Caribbean, Antigua, Bermuda and Curaçao, through a mechanism that will be operational in late 2019.

 Nowadays also the microgrid technology is available, i.e. a mix of energy sources, users and storage systems that, in this case, combines solar sources with those from the ocean wave cycle, as currently happens off the Australian coast.

 Today the energy available from waves, and hence from tides, is 8.2 GW for the whole China.

 It is a huge amount.

 China’s research for this type of technology is currently based on a vertical turbine, developed by the Harbin University, as well as on a horizontal axis turbine, studied by the University of Zhejiang, and on other prototypes.

 Hence the potential energy available from the Chinese wave cycle is probably much greater than expected – by over 25% – and this does not regard the technologies currently applied, but the physical potential of wave movements, which can be easily calculated.

 As early as the 1970s China has developed this sector, starting from Jangxia (3900 Kw), and later in the regions of Bachimen, Shandong and Maluan Bay, which are already active only partly.

 There have also been attempts – far from useless – to produce energy from the sea heat exchanges.

 But what are the structural limits of the Chinese marine renewable energy project?

 In general terms, a certain and stable lack of investment in the sector, which enables Western technologies to evolve more rapidly and, above all, more suitably for the future massive consumption of “sea wave-based” energy.

 We also need to consider the nature of places on the Chinese coast, with the spreading of typhoons and dangerous situations, and finally the use of oceans for security, desalination or fishing operations.

 Still today, a massive spreading of these wave-based energy technologies is needed, as well as a common base between universities, government, local authorities, Party and users to create a strong and stable market for this type of energy.

 The Inertial Sea Wave Energy Converter (ISWEC) could be the solution.

  It is a device placed inside a float, with an operating criterion based on an inertial system to exploit the sea wave movements to produce energy.

 The stability of the float and of the device is ensured by a gyroscopic inertial system, which works when the hull oscillations caused by the movement of waves induce the rotation of the gyroscope platform that is then converted into electricity by the power generator.

The additional aspect is that this system can be fine-tuned and adapted to the changes in sea conditions, which allows to relate the frequency of maximum productivity to the frequency of the incident wave.

 Everything is regulated by the spin engine of the gyroscope flywheel and by the real-time dataon the area’s weather conditions.

 You can also easily secure the system, if special sea conditions or other phenomena occur.

 The hull of the float has dimensions of 8 m width, 15 m length and 4.5 m height, as well as a draft of 4 metres.

 The two gyroscopes inside the “buoy”, i.e. the floating positioning system, have an installed electric power of 130 kW, as well as a sensor platform capable of immediately collecting data from the local sensors, to be related to the remote sensor data and the updated weather forecasts.

 They can also predict the wave characteristics and finally generate the short-term control signal for all the device operations and drives.

 The average annual productivity per each floating position system is 250 MWh, which allows to save 68 tons of CO2 emissions each year, and the structure will obviously occupy a sea area of approximately 150 square metres where fishing will be forbidden.

 The device is the result of research carried out by the Polytechnic of Turin, developed by a spin off and put into operation thanks to an agreement between ENI, CDP, Cassa Depositi e Prestiti, Fincantieri and Terna.

 As Arthur Rimbaud wrote in one of his poems, “Eternity.

It is the sea mingled with the sun.”

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The Belt and Road Initiative: Towards a New World Order

Igor Ivanov

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President of the People’s Republic of China Xi Jinping and President of the United States Donald Trump met on the sidelines of the G20 Summit in Osaka on June 29 to discuss the resumption of trade and economic talks between the two countries. The United States also promised that it would not introduce additional tariffs on Chinese goods. The world collectively breathed a sigh of relief, as the trade war between the world’s two largest economies is fraught with serious risks for global economic growth.

Time will tell whether these agreements will turn out to be the calm before the storm or whether the two sides will be able to find mutually acceptable solutions. However, no matter how the events that broke out between the United States and China in 2018–2019 occurred, the economic war gives us grounds to say that we have become witnesses to yet another manifestation of the gradual disintegration of the existing world order. This process is gaining momentum and directly affects almost every area of intergovernmental relations.

In these circumstances, we are witnessing the ever-increasing efforts of leading states, either by themselves or with other countries, to promote various integration mechanisms that would satisfy their immediate interests and at the same time create a platform for their participation in shaping the future world order. The biggest and most ambitious of these projects is, of course, the Belt and Road Initiative put forward by President of the People’s Republic of China Xi Jinping in the autumn of 2013.

Without dwelling on the multitudinous interpretations of the Belt and Road Initiative, I will take the liberty of highlighting the international significance of this initiative. Let us recall that President of the People’s Republic of China Xi Jinping first put the idea forward when the established world order was only just beginning to show signs of its obvious failures. The global economy struggled to overcome the effects of the global financial crisis in 2008–2009. In the Middle East, the seemingly unshakable authoritarian Arab regimes started to fall one after another. The “reset” of the Russian-American relations was spluttering, and a serious conflict was brewing around Ukraine. In short, the international system had entered a period of increased instability marked by reduced manageability at the global and regional levels.

No less obvious was the fact that the deepening disagreements between the two great powers and the emerging fragmentation of the international system made it practically impossible to reach any kind of common agreement on restructuring the decaying world order. For example, the repeated attempts to reform the United Nations invariably fell flat. By the same token, it was impossible to even start a serious discussion about revising the rules of the game on the global financial markets following the crisis in 2008–2009. Arms control mechanisms have also stalled noticeably.

In this context, the Belt and Road Initiative should not be viewed as an exclusively economic project (or perhaps not even as an economic project at all), but rather as an attempt to find an alternative approach to reformatting the world order. Not “from above,” that is, through the radical transformation of the old and the creation of new global governance institutions, but rather “from below,” through the consistent implementation of specific regional and continental projects envisaging the most diverse and flexible formats for getting potential participants involved. It is no coincidence that President of the People’s Republic of China Xi Jinping has declared that the Belt and Road Initiative was intended to put his country’s idea of creating a community of common destiny for humankind into practice.

The Chinese initiative did not encroach on the fundamental principles of the liberal world order in any way. On the contrary, when delivering his keynote speech at the World Economic Forum in Davos, Switzerland in early 2017, President of the People’s Republic of China Xi Jinping stressed Beijing’s commitment to continuing the process of globalization and protecting the freedom of global trade from the looming protectionism.

Despite the cautious wording and the ostentatious flexibility and openness of the Chinese initiative, it nevertheless raised a great deal of suspicion. And these suspicions were voiced not only in the United States, but also in Europe, India and partly in Russia. Political leaders and corporate leaders across the globe felt that it was about more than just the implementation of a single, albeit extremely ambitious project, but rather about the onset of the reformatting of the entire world order. Sensing a threat to their interests and their positions in the world, some countries set out to boycott the Belt and Road Initiative, block the geographical expansion of the project and create a negative reputation surrounding it.

Such an obstructive approach appears counter-productive, primarily for those planning to boycott and sabotage the project. In the six years since the Belt and Road Initiative was launched, not a single significant alternative project has been put forward. What is more, over the years, the old Transpacific and Transatlantic integration projects have been shelved.

It is obvious that sabotage is not a constructive response to the implementation of the Belt and Road Initiative. Rather, a constructive response would be for other countries to develop their own projects, with the worthiest rising to the top. For example, Beijing’s far-reaching plans should push the European Union to finally move forward with concrete integration initiatives after years of fruitless discussions. On the other hand, critics and skeptics of the Belt and Road Initiative should become more involved in the project itself in order to lay down the rules of international cooperation together with China.

President of the Russian Federation Vladimir Putin welcomed the Belt and Road Initiative and noted that “combining the potentials of such integration formats as the Eurasian Economic Union, the Belt and Road Initiative, the Shanghai Cooperation Organization and the Association of Southeast Asian Nations could become the basis for a greater Eurasian partnership.”

Russia needs to clearly define its long-term priorities and interests within the project, taking its real possibilities and limitations into account, and then implement it together with China and the other participants in a coordinated manner. This task is far more complicated that any national project. But it is also far more important than any national project being implemented today.

Naturally, the foundation of the emerging new world order cannot be limited to the Belt and Road Initiative. This is just one example of the formats in which the new world order will develop. The main principle of building a new world order “from the bottom up” is the creation of regional and continental “coalitions of likeminded states” – states that share common approaches to various measures of international interaction. The Belt and Road Initiative meets these criteria, as do the Shanghai Cooperation Organization, the Eurasian Economic Union and many other entities. Maybe something will come of the resurgent Russia–China–India triangle.

Countries will find it easier to protect their own interests as part of flexible and fluid coalitions dealing with specific issues. On the other hand, these “blocs” may later form the basis of the future world order. This process will, by definition, be slow and unequal, but there is simply no other realistic way of overcoming the current crisis of how to control the global system.

From our partner RIAC

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