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China’s great geostrategy for trade and defense

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The primary policy line of the People’s Republic of China, above all at sea level, is to defend its strategic and military interests, but anyway without undermining the trade routes and economic relations between China and its neighbouring countries.

 Just think about the Spratly issue, but also about the Chinese position on the ownership and nationality of the Senkaku Islands, as well as about the pressure made on China by India in 2017 to block the road that China had planned and designed on the border with Bhutan.

 From this viewpoint, China’s tensions in its neighbouring countries have immediately affected Japan, the Philippines, Malaysia and Vietnam.

 We should also recall, however, the naval confrontation with the United States in May 2009, especially with the USNS Impeccable and Victorious, for the right to operate in the 200 nautical miles off the Chinese Special Economic Zones.

 The United States does not like at all China’s protection of its regional seas, but it will be hard to change China’s mechanism of full protection of its coasts, which partly inhibits the use of old and traditional checkpoints, from Malacca to the Paracel and Ryuku Islands – all areas in which the United States could impose a blockade on the  trade and military flows of China’s vessels.

 This is still the first goal of China’s regional naval security.

 This is one of the primary strategic features of the Belt and Road Initiative, i.e. to get out of the Eastern maritime region and, hence, credibly offset the inevitable imbalance of the Chinese strategic formula on its regional seas with a significant geo-economic presence on Central Asia’s Heartland.

 As well as to provide China with a possibility of military (but also geo-economic) countermove capable of blocking the opponent on the sea or, alone, on its land borders.

 Therefore the aim pursued by China is its full security and absolute freedom of manoeuvre, within the “first circle” of peripheral islands, but with the possibility of projecting a significant interdiction power beyond this limit.

 One of the essential strategic meanings of President Xi Jinping’s Belt and Road Initiative is that, at geo-financial and economic levels, the Chinese leaders are well aware that the global financial crises – the past ones, but also those looming large – make the Chinese economy too vulnerable to global flows.

  This is even more severe if you have planned a neo-mercantilist and export-oriented economic development, as the Chinese leaders have done since Deng Xiaoping’s Four Modernizations.

 At that time there was no other alternative option.

 We also need to consider the tensions in Tibet and Xinjiang, which have also a geo-economic significance.

 It should be recalled that in 2000 the Chinese government launched a “Great Development Program for Western Regions” to finally establish a close connection between the land areas of Xinjiang and the Tibet region – which is essential for China’s nuclear defence and intelligence -and the coastal areas’ economic development.

This is also a very useful logical pathway to understand the Belt and Road Initiative well.

 Also at military level, which – in the Chinese logic – is closely linked to political decision-making, so far all the 2008 and 2009 “White Papers” of the Chinese Armed Forces have always emphasized the rule of the “three functions and a role”.

 It is a rational and operational criterion, which envisages that the Armed Forces should: a) provide the strength to enhance the Party’s leading role, which has always been  the first aim of the People’s Liberation Army (PLA); b) provide support to take advantage of this period of great strategic opportunities for China; c) also provide support for the defence of China’s national interests; and, finally, d) play an important role in maintaining world peace and promoting global economic development.

 These are not empty words. These are programs.

 Reading between the lines, it is said that – beyond the regional seas and networks outside its borders – China will operate in such a way as not to create definitive tensions with its competitors or allies.

 Therefore what we need to know is that currently the CPC has the urgent need to define a stable economic development for China.

 Thirty years ago the CPC leaders argued – and history has proved them right – that the war between the superpowers would never occur, in line with Mao Zedong’s thinking, whereby imperialism “was a paper tiger”.

 A regional, Soviet, Euro-American and partly Middle East paper tiger, in which no one had any interest in firing the first shot.

 At the time, however, China was already thinking about  Asia, Africa, the “Third World” devoid of “capitalists” or Soviet “revisionists”, left as breeding ground for a new growing great power, which had not been ruined by the crazy Cold War, namely China.

 Now – and this is also implicit in the Belt and Road Initiative – the current Chinese leaders obviously think that additional 30 or 40 years of peace and development are needed to enable China to really become a stable and great power.

 Hence in terms of current strategic doctrine, so far China has adapted to fight what the Chinese strategists call “a war and a half”. This means that it can and must successfully wage a major war on its own borders, in addition to effectively resisting attacks carried out around other Chinese borders.

 We also need to consider the stable Indian garrison of 60,000soldiers in Southern Tibet, in addition to the very recent Quad 2.0 alliance between the United States, India, Japan and Australia, established precisely to counter the Belt and Road Initiative.

  In this case, we have the whole range of potentialities and contrasts facing the Belt and Road Initiative.

 Obviously it should also be recalled that at least 22% of Japan’s and Australia’s foreign trade currently depends on China.  Hence it is very unlikely that regional and military tension will turn into a real clash.

 In its future strategic planning, however, China is preparing to resist an Indian land invasion from the South-East and to simultaneously lead a victorious regional naval confrontation, especially in Taiwan’s peripheral area or in the South China Sea.

Certainly present-day China is simultaneously carrying out the Belt and Road Initiative (BRI) and the Regional Comprehensive Economic Partnership (RCEP), with the ten ASEAN countries and the six ones with which ASEAN has further free trade treaties, as well as with the China-ASEAN Free Trade Area. The United States, however, has already created its anti-BRI commercial and economic network with the US-Mexico-Canada Trade Agreement (USMCA), and then with the probable reformulation of a  proposal from the old Trans-Pacific Partnership (TTP) or with the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

 Hence, while the United States is rebuilding its geo-economic centre of gravity in Asia – that it considers to be of primary military and commercial interest – obviously China has turned to Africa, where currently the United States is not particularly engaged.

 A Zen game of void and full, where everyone represents both characteristics.

 At political and technological levels, the United States is causing severe trouble to China, particularly with the recent creation of a special agency called Review of Controls for Certain Emergent Technologies, an office for “dual use” control regarding biotechnologies, Artificial Intelligence, advanced navigation and positioning systems, data analysis and above all big data, robotics and biotechnology.

 This is, in fact, the broader scene of the clash on Huawei and 5G which, as we can imagine, is much more important than the simple organization of an evolved Internet network.

 For example, in the 2018 US Cyber Strategy it is argued that the USA must “win two cyber wars simultaneously”, which are clearly wars against the Russian Federation and, above all, against China.

 Hence, should the United States led by President Trump fail to fully win their current trade war with China, it could use the cyber leverage to redress the global balance of power, with a clear support action taken by the other NATO countries – an action which is necessary from the political and military viewpoints.

 One will be used in the absence of the other  – the greater the Chinese commercial presence in the leading sectors, the greater the tendency and likelihood of a cyber war against China.

 And the other way round.

 There is more, however, in relation to the clash between the United States and China and, hence, in relation to the necessary and logical shift of China to a closer bond with the EU, its individual Member States and the rest of the world.

 For example, The National Defense Authorization Act of 2019, published on August 13, 2018, focuses on the operations of the Chinese ZTE corporation, while the US government is prohibited from purchasing all Huawei’s materials –  as is now well-known – but also the products of Dahua, which deals with video surveillance, as well as the products of Hytera, which manufactures advanced radio systems and, finally, of Hikvision, the current largest producer of video surveillance systems in the world.

 As has long been happening, in all the US government official documents China is also seen as a dangerous competitor of almost equal rank and power.

 Is it a realistic project? The answer is both yes and no. At technological level, probably in the future. At financial and commercial levels, not yet.

Nevertheless the matter here is tuer dans l’oeuf, namely to nip in the bud.

 It should also be recalled that, again in August 2018, US President Trump announced 25% additional tariffs and duties on 50 billion US imports/year from China and later 10% additional tariffs and duties on other 200 billion Chinese goods exported to the United States. Last September further duties on Chinese exports to the USA were announced to the tune of additional 267 billion dollars.

 Last autumn, at the UN General Assembly, the United States made public the “alleged” China’s influence operations against the Republican Party (only?) in the midterm elections while, at the same time, Terry Branstad – the  US ambassador to China since 2017, a “friend of President Xi” and former Governor of Iowa twice –  published an article condemning China’s “influence operations” in Iowa.

 The United States has also put great pressure on El Salvador to avoid it breaking with Taiwan. Later, however, the United States exerted further very strong pressures on the IMF, with a view to stopping funds for Pakistan that would partly be used to repay old Chinese loans to the country.

 Also President Trump’s move to withdraw from the INF Treaty – which apparently concerns, above all, the Russian Federation – anyway puts also China under military pressure.

 Nevertheless, there is the stick and also the carrot for the future US friends in Asia: last August, in fact, US Secretary of State Mike Pompeo proposed a package of financial aid for Asia to the tune of 300 million dollars, to which other 133 million dollars would be added, albeit only for specific support to private companies operating in the region.

 The BUILD Act has created a new US government agency, namely the U.S. International Development Finance Corporation, with as many as 60 billion dollars of US funds  already available abroad, above all to Asia – a very evident response to the Belt and Road Initiative.

 Hence what will the United States do in the future, considering that the bilateral clash with China is now seen as structural?

 Surely, the battle over duties will continue and it is now possible that, in only two other moves, all Chinese imports to the USA will be heavily and selectively taxed.

 In any case, the United States will try to hit the companies that are most active in the Chinese project known as Made in China 2025.

 The current Chinese leaders’ project is modelled on the German one, known as Industry 4.0, and is already focused on the general technological upgrade of Chinese public and private companies, with the predetermined increase of components and spare parts manufactured nationally from 40% in 2020 to 70% in 2025.

 There is also the construction of centres for productive innovation – that is already at an advanced stage – which will be 15 in 2020 and 40 in 2025. There will also be a change and a significant strengthening of internal intellectual property rights.

Innovation will be mainly focused on: 1) a new information technology; 2) robotics and the automated production of consumer goods and capital equipment; 3) aerospace and aeronautics; 4) hi-tech shipping; 5) railways; 6) vehicles with new energy and motion systems; 7) energy; 8) agricultural technologies; 9) new materials; 10) biopharma and advanced biomedical technologies.

 In the official Chinese documents, there is no mention of “autonomous innovation “in all these sectors – as was the case in previous projects as from 2006 – and it is not here just a matter of innovation, but of entire production processes.

 Autonomous innovation is internal activity and here the Chinese government makes us understand that there is a global research and experimentation activity open to collaborations with the EU, Japan and Korea.

 Hence, where possible, the United States will hit exactly in these sectors, by avoiding – to any possible  extent – any kind of technology transfer or, in any case, any transfer ofad hoc scientific information.

 Furthermore, in the future, the United States will have the opportunity of convincing both Japan and the EU to implement practices against China featuring sanctions and open trade restriction, not only at technological level. Certainly Italy will harshly experience this kind of  operations, whether they are known or not to our intelligence Services.

 How will China respond to these practices? Probably with a hard and close dialogue, although with some significant concessions to the United States.

 Furthermore, in the framework of China’s technological upgrade program, its leaders will have the chance to increase the non-State sphere in China’s production system. Finally China will look for new foreign markets. This is the first CPC’s response.

 Most likely, the Chinese leaders will also avoid the additional burden of public debt on companies and, above all, they will largely limit the growth of real estate speculation.

 In all likelihood, China will spend a lot of money on productive investment – as already envisaged in its 2025 Plan – and will look for new external markets, above all (but not only) with the Belt and Road Initiative.

 It should be recalled that currently the BRI countries account for 27.3% of the total Chinese foreign trade with the United States alone.

 Moreover, China will soon develop excellent regional free trade agreements, such as with the Regional Comprehensive Economic Partnership and the enlarged ASEAN.

 Furthermore, nothing forbids to reach a great agreement with India.

  In the future, however, China’s trade interest will be, above all, in Japan and South Korea.

 Meanwhile, the United States can carefully assess the  military and commercial cost of an all-out economic war against China, which will certainly not be irrelevant.

 This is context in which we can see the weak and tired interests of the European Union, which does not know its destiny and hence will not have one. The same applies to Italy which could use the potential of the Road and Belt Initiative, but will not be in a position to do so and, above all,  will have no way out of the US strategic, military and financial pressure.

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

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What prevents Japan from ratifying the recently assented Nuclear Ban Treaty?

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With the ratification of Honduras, a Central American country, on 24 October 2020, the Treaty on the Prohibition of Nuclear Weapons (TPNW), adopted in 2017 by the UN General Assembly, crosses the ’50 ratifications’ mark required for its entry-into-force, and is set to become effective on 22 January 2021. But, interestingly, how come Japan, the world’s only nuclear-attacked country, not among the 50 ratified states?

History remembers Japan as the only country in the world falling victim to a nuclear attack that happened 75 years ago, when the Japanese cities of Hiroshima and Nagasaki were attacked using air-dropped atom bombs by the United States with the aim of forcing a surrender from the then Empire of Japan in World War-II.

The U.S. factor in Japan’s security policy

Post-war era saw Japan evolving as a strong U.S. ally, including getting security protection under U.S. nuclear umbrella, a hard fact that prevents the Asian economic powerhouse to ratify the Nuclear Ban Treaty, often abbreviated as TPNW, recently assented for entering into force in January, next year.

Despite calls from anti-nuclear activists and Hiroshima-Nagasaki survivors, both living within the country and around the world, Japan’s ruling establishment faces a big conundrum, but limited in decisional autonomy with regard to a matter involving the United States.

A politician representing the ruling Liberal Democratic Party (LDP) said that even though his party share the idea behind the treaty, it would be too unrealistic to move in the direction of ratification, hinting at Japan’s difficulty to handle how US would perceive such a move that can translate into an open disregard for US-led security arrangements in the region.

Moreover, the perceived threat from across the Sea of Japan, arising from a dictator-ruled, nuclear-armed Pyongyang and a recently more assertive Beijing looms over the island state, something that naturally brings Japan closer to the US.

Moreover, for decades, the security alliance with Japan has been a significant factor in US foreign and defence policies in East Asia, and the wider Asia-Pacific region.

Japan’s post-war security arrangements with the United States

Signed in 1951, the early ‘US-Japan Mutual Security Treaty’ was a ten-year, renewable pact that envisaged how Japan would allow U.S. forces to remain on Japanese soil after the country regained its sovereignty, in light of a new pacifist constitution.

This pact combined with the ‘Yoshida Doctrine’, a postwar policy attributed to Shigeru Yoshida, former Prime Minister of Japan, which stipulated Japan’s reliance on the US for its security needs so the government could focus on economic re-building.

The 1951 agreement was revised in 1960, granting US the right to establish military bases on Japanese islands in exchange for a renewed commitment to defend Japan in the event of an attack. These bases gave the US its first permanent military foothold in Asia.

In 1967, PM Eisaku Sato unveiled the ‘Three Non-Nuclear Principles’ (no possession, no production, and no introduction)to cool down tensions surrounding nuclear arms on US bases in Japanese soil. Since then, Japan has relied on the US nuclear umbrella for deterrence capabilities.

Today, according to a US-based think tank Council on Foreign Relations, there are more than 80 US military facilities in Japan, including key ones in Okinawa and Yokosuka. More U.S. service members are permanently stationed in Japan than in any other foreign country.

The aforementioned close security ties of Japan with the United States act as a barrier for the island state to ratify the Nuclear Ban Treaty.

What does the TPNW entail?

The treaty is going to be the first legally-binding international pact to comprehensively ban nuclear weapons, with the ultimate goal of total elimination.

As it was agreed upon, in 2017, when at least 50 countries ratify the treaty, it will qualify for entering into force within the next 90 days i.e. 22 January, next year.

Many international security analysts, however, questions the efficacy of the treaty as an instrument of war-prevention and disarmament as it does not involve any of the strongest, five permanent members of the United Nations Security Council (P-5), namely, the United States, Russia, France, the United Kingdom, and China, all of them nuclear states along with India, Pakistan, North Korea, and sometimes ambiguously, Israel too.

However, over a quarter of local assemblies across Japan have adopted a written statement demanding that the national government should sign and ratify the TPNW, a difficult choice for Tokyo.

Meanwhile, the United States has been urging countries not to ratify the Treaty, and stated that itself and all the other NATO allies will stand unified in their opposition to the potential repercussions of the TPNW. Washington has also sent letters to the countries that have ratified the treaty, requesting their withdrawal from it.

TPNW requires that all ratifying states should never under any circumstances develop, test, produce, acquire, or possess nuclear weapons or other nuclear explosive devices. It also bans any potential transfer of nuclear materials among each other.

The other treaty to keep checks on horizontal spread

Year 2020 also marked 50 years since another pact aimed at preventing the horizontal spread of nuclear weapons entered into force, the Treaty on the Non-Proliferation of Nuclear Weapons or NPT, in 1970.

While Japan has managed to ratify the NPT in 1976, six years after signing the treaty in 1970, its decisional autonomy with regard to TPNW is much more complex.

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Do not panic, we are Chinese: China’s response to the pandemic

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In Europe, in the United States and in South America, the feared second wave of Covid-19 epidemic is spreading. It is generating not only panic among the public and the institutions, but it is beginning to put health systems and economies under stress. They were starting to recover with difficulty after the impact of the first wave of the epidemic which, between the winter and spring of this year, made the pace of industrial and manufacturing production and productivity rates in the trade, tourism and catering sectors plummet globally, with figures suggesting a decidedly dark future.

In Italy, faced with the increase in infections which, however, does not mean an increase in the number of sick people, the Government has decided to delegate to the Regions’ Governors the power to implement measures to limit individual and collective freedom in the name of a “state of emergency” which has been going on since last March and seems bound to accompany us also in the coming months. For the first time since the end of the Second World War, an ominous and worrying word, “curfew”, has reappeared in official communiqués and news reports.

Over the next few days, in the Campania and Lombardy Regions, it will be forbidden to circulate in the streets from 11pm to 5am, while the purchase of alcohol and the opening hours of shopping centres, bars and restaurants will be restricted. Just to complete an increasingly tragic scenario, on October 20 last, the Italian Health Minister, Roberto Speranza, urged Italians to “stay at home as much as possible” with a voluntary lockdown that seems to be a prelude to the adoption of measures that could bring us back to the situation of last spring with incalculable social and economic damage.

Curfews, lockdowns, targeted or generalised closures are now common practice also in France, Great Britain, Ireland and Spain which, like Italy, have suffered the devastating economic impact of the first wave and could be brought to their knees by the new pandemic emergency.

At this juncture we have to ask ourselves a question: what happened and what is happening in the country where it all began? How are things going in China that in our media, obsessively focused on domestic troubles, is mentioned only superficially and in passing?

“China is Near” was the title of a 1967 movie directed by Marco Bellocchio, that evoked the unstoppable expansion of the Maoist thinking. Today we must say that “China is far away”, encapsulated in the stereotypes developed by Western culture, which prevent us from seriously analysing its political, economic and social evolution and, above all, from drawing lessons from the political and health model that has enabled China to come out of the Covid-19 emergency with its head held high.

On September 22 last, in a blunt speech – as usual -at the United Nations General Assembly, President Trump accused China of being responsible “for spreading this plague throughout the world” and – to further underline the concept -he dismissed the coronavirus as a “Chinese virus”. In the same forum, Chinese President Xi Jinping soberly urged all countries affected by the epidemic to follow his country’s example and “to abide by the indications of science without attempting to politicise the problem”.

Figures clearly demonstrate that the Chinese model is important and worthy of attention. In China, where it all began in December 2019, out of a population of about 1.4 billion inhabitants, the Covid-19 epidemic has so far caused 4,739 deaths out of 90,604 sick people. In the United States, over the same period, out of a population that is about one fifth of China’s, 7,382,194 cases of infection were recorded that led to the death of 209,382 people (data provided by the English medical journal, The Lancet, October 8, 2020).

Great Britain, with a population twenty times smaller than the Chinese population, had to deal with five times more infections than China and ten times more deaths.

These are the figures of October 20 last, referring to the whole of China: 19 cases of illness, all imported from abroad. 24 asymptomatic infections and 403 cases testing positive kept under observation. All, except one, imported from abroad(!). Figures which, as you can see, are globally lower than those recorded since the beginning of the emergency in one single Italian region!

Faced with these figures, it seems difficult to shirk a simple, dual question: how could China fight the epidemic and keep it under control? Hence why do we not follow its example by drawing on its experience?

China was accused of responding late to the first outbreak of the epidemic in December 2019 and notifying late the World Health Organization (WHO) of a new outbreak. Both accusations are completely false.

After the outbreak of the new virus in late December, Chinese scientists isolated and identified the genome sequence of Covid-19 on January 10, 2020 and a few days later, after alerting the WHO, the authorities started to take countermeasures.

China was ready for the emergency: since the SARS epidemic – a virus similar to Covid-19 – had caused just over 700 deaths in 2002, but very serious damage to the economy due to the stop of flights, tourism and exports, the government had given orders to prepare accurate contingency plans to be activated promptly in case of new epidemics. Those plans, which were not prepared and put in a drawer but updated and carefully tested, were activated immediately after the first alarm.

With its 12 million inhabitants, Wuhan – the epicentre of the first infections – was immediately imposed a total lockdown, while in the rest of the huge country the population was urged (without curfews or states of emergency) to follow the most elementary and effective prevention and self-protection measures: social distancing, use of masks and frequent hand washing. It has been said in the West that China has reacted so effectively because it is ruled by an authoritarian regime. Indeed, Confucius has counted much more than Mao for the Chinese. The Confucian social philosophy that not even 71 years of Communist rule have managed to wipe out, with its basic rules of respect for the natural hierarchical order, makes the Chinese a naturally well-behaved, orderly and obedient people. Suffice it to recall that since the beginning of the new pandemic emergency the protests in Hong Kong have decreased until disappearing, while in Europe we are witnessing massive demonstrations with diehard “no-mask” people.

It is, however, the quick response of the Chinese political and health authorities that is at the basis of the undeniable success in fighting the epidemic, at first, and later containing it.

As stated above, Wuhan was immediately isolated and subjected to total lockdown for 76 days, while targeted closures were imposed in the Hubei Province. Throughout the country, 14,000 health checkpoints were set up at the main public transport hubs and, within two weeks since the “official” outbreak of the pandemic, in the city of Wuhan alone 9 million inhabitants were tested.

As one of the main producers and exporters of health equipment, China was not caught unprepared in terms of hospital supplies and individual protection devices: in short, no mask crisis.

While in the United States and Europe, despite the lockdown, people did not seem to be inclined to wear masks (President Trump wore a mask in public only last September), the Chinese immediately followed the authorities’ guidelines with a great sense of discipline. All the municipal security cameras were “converted” to control citizens’ use of masks, while drones equipped with loudspeakers were flown over all areas of the huge country to check the inhabitants’ compliance with the rules. The Xinhua State agency released the footage taken by a drone in Inner Mongolia, showing an astonished Mongolian lady rebuked by the drone saying” Hey Auntie, you cannot go around without a mask. Put it on right away and when you go back home remember to wash your hands”. Probably media embroidered the episode a bit, but certainly in China they did not witness the summertime movida that took place in Rome, Naples or Milan, which is at the basis of the many troubles with which we are currently confronted.

On February 5, 2020 the first Fancang hospital was opened in Wuhan, a prefabricated structure dedicated to the treatment of non-severely ill people, while traditional hospitals were reserved for the treatment of severely ill people. The use of Fancang hospitals (dozens of them were built) made it possible to limit the staying at home of people with mild symptoms, but anyway sources of contagion, within their families – the opposite of what is happening in Italy where the people with mild symptoms are advised to stay at home -and prevent the quick spreading of the virus starting from families. The Fancang hospital network made 13,000 beds available and was dismantled as from May 10, 2020 when the first wave of the epidemic ended in China and was not followed by a second wave. To avert this danger, the Chinese authorities have relaxed “internal” checks and made the control measures for those coming from abroad very strict. At a time when in Spain and Italy the checks for incoming travellers are practically derisory, in China all those who enter the country, for whatever reason, are subject to tests and strictly controlled quarantine.

In essence, China has first fought and later controlled the spreading of the Covid-19 epidemic, with drastic but rational measures and above all understood and accepted by a population educated by Confucius to respect hierarchies and discipline. China can currently be an example for the rest of the world and it is there to testify that with strict, but intelligent measures even the most dangerous situations can be tackled successfully.

It is an example that should be studied and followed without the typical arrogance of the “white man”, also considering an important fact: while the economy of Italy and of its European partners is hardly growing, China’s GDP growth rate is 4.9% higher than last year.

There is much to learn from China both in terms of managing a health emergency and in terms of protecting the economic system.

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Suga Faces A Tough Road Ahead Without Enough Political Juice

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image source: japan.kantei.go.jp

Authors: Alexandre Uehara and Moises de Souza

The quantity and dimensionality of problems inherited by a sober and discrete Yoshihide Suga as the first new Japanese Prime Minister in almost a decade will demand that “Uncle Reiwa,” as the statesman is known, employ the skills that he has so amply demonstrated in the past: the ability to negotiate and find elegant solutions to complex questions. Suga’s competence as a negotiator was recognized as an important factor behind the success of the Trans-Pacific Partnership (TPP), which entered into force on December 30, 2018. This agreement—considered doomed to failure after US President Donald Trump signed an executive order withdrawing the United States from the TPP in January 2017—succeeded largely thanks to the vital leadership and tenacity of Japan, with Suga playing a key role behind the scenes. Suga also took the lead during the EU and Japan’s Economic Partnership Agreement signed in 2019, considered by many as another example of outstanding negotiating performance. With such a resumé, these skills and experience proved critical in Suga’s victory in the Liberal Democratic Party (LDP) leadership race, enabling him to garner support from a wide array of sources, ranging from LDP Secretary-General Toshihiro Nikai to various factions within the Komeito, a partner in the coalition government.

The question now is whether his past performance can be replicated as Suga targets the current challenges that so recently have fallen into his lap. He is taking the helm at a delicate moment for Japan, with uncertainties that will force him to show, domestically and abroad, what kind of leadership Japan will enjoy after a larger-than-life figure like Abe Shinzo steps down. And these challenges are coming from all quarters: the economy, public health, and regional security, just to name a few. Each of them has the potential to shape the future of the nation and the reputation of its prime minister, and certainly Yoshihide Suga is no exception. On top of that, legacy problems remain. On the one hand, the implicit promise of continuity with Shinzo Abe’s policies played a crucial role in winning the LDP the elections: on the other, this very factor is an element of concern, since opinion polls were already detecting signs of decline in the popularity of Abe’s cabinet. If Suga has any political ambition left, he cannot afford to make any mistakes in the short- and medium-term.

On the domestic front, there are two important and interrelated problems: The COVID-19 pandemic and the upcoming Tokyo Olympic Games. These coterminous phenomena essentially represent a contradiction between uncertainty and reality. While few in Japan are clear about whether the current pandemic will turn into an ongoing ebb-and-flow in terms of virus contagion rates, the economic impact as a result of the response measures is already real. The profound effects have been translated into a new period of recession this year, an experience with which the Japanese a real ready very familiar, given their recent past. To make matters worse, the medicine intended to heal the wounds of economic recession was neutralized by the virus. Operating under the old adage that you have to spend money to make money, Tokyo expended over US$5 billion, with plans to spend US$2 billion more in 2020,to prepare the city to host the Olympic Games. Prospects showed that these investments would pay off. According to a report published in June 2020, it was projected that the Olympics would impact the Tokyo economy alone to the tune of almost US$190 billion, with a spill over effect on the overall Japanese economy of nearly US$300 billion and a potential impact of 0.2% of its GDP. Based on the same prospects, Japan signed an accord in 2013 with the International Olympic Committee (IOC), assuming total responsibility to bear all the costs alone in the (at that time improbable)event that the games would have to be postponed. Well, in what one might call the Forest Gump Effect, to wit: “life is like a box of chocolates: you never know what you’re gonna get,” the games were indeed postponed. Investors, according to reporting by Bridgestone, reported losses of around US$3 billion so far as a result of the postponement. It also affected the IOC, which registered losses of more than US$800 million. For Japan’s economy, Goldman Sachs is calculating losses of about US$5.1 billion in terms of domestic consumption alone. Suga will have to find a solution for this imbroglio, which even Abe could not or did not have time to figure out.

In the international arena, Suga—like all Japanese Prime Ministers before him—will have to walk a tightrope, executing a delicate balancing act between Beijing and Washington. So far, his biggest challenge is to find his place amid the rising tensions between Japan’s two most important trading partners. On paper, the logic is simple: Tokyo has developed initiatives to strengthen its alliance with Washington concerning security, without hurting its bilateral trade with Beijing. In recent decades, the latter has become increasingly economically important to Japan. In practice, this is not an easy job for two reasons: First, the erratic temperament of Donald Trump and the tendency of his administration to play hardball even when negotiating with partners. The trade deal negotiated in 2019 stands as a case in point: Essentially, Japan walked away from the negotiating table with a commitment to give the United States access to its agricultural market in exchange for a vague promise that the Trump administration would not consider Japanese auto imports a “national security threat.” On top of that, Trump made it clear that he still wants Japan to pay for the American military bases on Japanese soil.

The second reason comes from Japan’s powerful neighbour, with an increasingly assertive China under Xi Jinping. In November 2019, after China proudly displayed its new ballistic and hypersonic cruise missile system, Taro Kono (then foreign minister and now the minister for administrative reform and regulatory reform) publicly demanded that Beijing make its military budget and strategic goals transparent, to avoid raising the level of alarm and anxiety in the region. In addition, a few weeks after taking the center seat, Suga had to deal with the presence of two Chinese ships in the disputed waters of the East China Sea—a practice that has been taking place more and more frequently since Xi became chairman of the Chinese Communist Party in 2012. It is exactly these episodes of Chinese assertiveness that motivated Yoshihide Suga to choose Vietnam and Indonesia as the destinations for his first official diplomatic trip as prime minister. As much as Abe did, Suga intends to strengthen security ties with both Southeast Asian nations. This, tempered with a degree of restraint in the use of strong anti-Chinese rhetoric, is intended as a clear signal to Beijing: the rules of the game haven’t changed, with or without the presence of Abe Shinzo.

Using the same logic, Suga did not alter the basis of Japan-Taiwan relations that developed so fruitfully on Abe’s watch. In fact, besides working for close relations with Taipei, Abe also developed a friendship with Taiwan’s current President Tsai Ing-wen. Suga’s decision to appoint Abe’s brother, Nobuo Kishi, as defense minister was a clear signal to China that, with regards to Taiwan, it will be business as usual in Tokyo despite the transfer of power. It a secret to no one in Japan (or in China, for that matter) that Kishi enjoys close ties with Taiwan, a place he has visited several times over the years, including meetings with President Tsai, as representative of the ruling Liberal Democratic Party (LDP). The last visit took place on the occasion of the funeral of former Taiwanese President Lee Teng-hui in August 2020. Such proximity makes Kishi the most trustworthy channel of communication between conservative Japanese leaders and Tsai, as well as with the Taiwanese elite itself. In response to Nobuo Kishi’s appointment, the Chinese Ministry of Foreign Affairs spokesman Wang Wenbin said in a statement that the new minister of defense of Japan must “abide by the one-China principle and refrain from any form of official exchanges with the Taiwan region.”

Few specialists in Japan believe that Yoshihide Suga will have as long a mandate as his predecessor Abe Shinzo. Despite being technically qualified, Suga still lacks enough political juice to retain the position of prime minister beyond the general elections that must take place in one year’s time. The tide may eventually turn in favour of Suga-san, depending on how well he and his new cabinet manage the daunting challenges that they inherited from the previous administration. More than mere negotiation skills are needed, however, and there is no doubt that Suga will have to make some tough decisions that will come to define, in a large measure, his political future post-2021.

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