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Europe and China in a Globalized World: The Geopolitical Impacts of Belt and Road

Dr.Katja Banik

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Donald Trump’s rise to power, his “America first” policy and the announcement by Chinese President Xi Jinping of the Belt and Road Initiative (BRI), designed to revitalize the Silk Road, are the three mile- stones demonstrating a radical shift in globalization.

Our globalized world is in fact going through a decisive moment in its history, something that can be seen in the creation of the cult of personality surrounding the Chinese President, the introduction of China’s Social Credit System (SCS) and, finally, the crisis of confidence that has taken hold among the European Union’s (EU) member states,  resulting in the United Kingdom’s decision to leave the EU (Brexit), among other developments.

G-2, G-Zero and the Multipolar World

By putting in place protectionist measures, the world’s two superpowers, the United States and China, have begun a trade war. The announcement by the US that it would impose tariffs on imports of steel and aluminum, among other goods, has prompted China to impose its own tariffs on more than 100 products from the US. By mid-July 2018, the value of the taxed products traded between China and the United States had reached US$100 billion. According to experts, this will reduce world trade by 0.5% and economic growth in China and the United States by between 0.1% and 0.3% (Le figaro and AFP Agence, 2018).

Caught between these two powers, the European Union is responding in a similar fashion, i.e. by imposing customs duties worth €2.8 billion on certain US products (Reuters, 2018). Less united than ever, the EU must contend with Brexit and its impacts throughout the Union. The dissatisfaction Europe’s citizens feel about the EU’s lack of effectiveness continues to grow. The future of Europe, the European identity and the Union’s role in today’s globalized world are all being called into question.

It seems we are living in a G-Zero world, a world in which no country, region or group is able to play a leading role on the international scene. On the contrary, G-Zero means a “free-for-all” in which multiple political strategies are being implemented. Each country or region is trying to find its own effective solutions to the challenges of globalization, very often putting others at a disadvantage.

Will this G-Zero world ultimately lead to a G-2 world in which all depends on how relations between the United States and China develop? More than ever, the EU must formulate common strategies vis-à-vis the two superpowers. Alternatively, will multipolarity prevail? A multipolarity characterized by peaceful cooperation among countries?

If so, the result could be a world in which the various players take action, certainly in competition with each other, but in a complementary manner. New international regulations and standards would provide a framework for this “cosmopolitical” (Nida-Rümelin, 2017) global govern- ance while avoiding military conflicts. This would be a world in which the EU, above all, could define its geopolitical strategy in a way that prevents it from finding itself at the mercy of China and the United States.

After reviewing the main characteristics of globalization, internationalization, the competition among nation-states and transnational forces (see the following Introduction section), this paper analyzes BRI   as a geopolitical instrument within China’s overall strategy, which is designed to manage developments and exert power (see the section BRI: A “China First” Strategy). It then explores the impacts of BRI and the “China first” strategy on Europe (see the section BRI and the EU: An Opportunity for Europe). Finally, it discusses the importance of bridging differences and cultivating an “identity of the heart” in keeping with the geopolitical vision of Jacques Ancel.

Introduction: Globalization, Deterritorialization and Transnationalization

Geopolitics — the study of territory and power — is at the heart of this paper. Globalization means the cross-border movement of people, goods, services, capital and information. It is not a new phenomenon. What is new is the increased interdependence between nation-states and the impact of various non-governmental actors (e.g. international companies, interest groups, NGOs) at the international level. In addition, there is greater competition between the national forces that arose from the old world order produced by the Treaty of Westphalia and the new trans- national forces resulting from globalization.

Political responses to globalization, i.e. internationalization, have been very varied, sometimes even conflicting. On the one hand, protectionist measures have been put in place, such as customs duties, border controls and, in Europe, a return to the logic of nation-states. On the other, measures promoting economic openness and expansion are being undertaken, from the re-conquest of the old Silk Roads to the harmonization of European trade and defense policies (e.g. the Common Security and Defence Policy, an integral part of the Common Foreign and Security Policy).

The transnational forces resulting from de-territorialization are competing with traditional national forces, especially when it comes to securing natural resources. This is attributed to the Internet and networking; moreover people all around the world have much more knowledge at their disposal, particularly about globalization’s harmful effects. Indeed, there have been losers in addition to winners. Some countries or regions have massive international trade surpluses, while others are experiencing large deficits. In addition, cross-border economic crime, illicit transactions and money laundering are commonplace. There has been an accumulation of wealth in some regions, often controlled by political–economic elites. This injustice is increasingly fueling citizens’ mistrust of the prevailing political classes. This, in turn, is leading to an increase in social conflicts and protest movements, causing the effectiveness of the democratic system to be questioned.

There are shared challenges, however, that unite all the actors involved in this geopolitical issue: international terrorism; the effects of climate change including on food production; competition for natural resources; chronic economic, social and political crises, due, in particular, to the rise of an illegal and opaque global economy; widespread political apathy; and, finally, digitization, which is leading to a radical change in how people work. Current international institutions and organizations no longer offer effective solutions. The old world order, an after-effect of the Second World War, is in decline, while a new world order has yet to take shape.

BRI: A “China First” Strategy

Xi’s announcement in 2013 that China intended to revitalize the ancient Silk Roads marked a turning point in the country’s national policy.

Indeed, this vast project targeting infrastructure and commercial net- works will extend throughout Eurasia, an area of great geopolitical and commercial importance. The project is strengthening the links between China and countries all along the “belt”. It is, in fact, not a single project, since there is no master plan, but is comprised of a multitude of roads, railways and waterways. It includes the Pacific Silk Road, which passes through the Arctic Ocean, and the Digital Silk Road, which covers cyber- space (The Economist, 2018). BRI is also considered “the road of Xi Jinping” which only reinforces the cult of personality surrounding him. BRI focuses on major infrastructure projects (Figure 1). The 2015 action plan presented the Silk Road Economic Belt (SREB) and the Maritime Silk Road Belt (MSR) with a total of six corridors. According to the initiative, roads and sea routes are to connect China to Central Asian countries, Russia and, ultimately, Europe — but especially to Africa, in order  to secure natural resources, particularly oil.  In Eurasia, BRI covers more than 65 countries with a population of more than three billion, in keeping with the leitmotif advanced by the Communist Party of China (CPC) of “developing the region’s wealth and preserving peace, friend- ship, trust and understanding”.

In order to ensure financing for this vast infrastructure project, China has established two institutions that are complementary to, as opposed to competitors of, the International Monetary Fund (IMF), the World Bank (World Bank) and the Asian Development Bank (ADB):

-The Asian Infrastructure Investment Bank (AIIB): The Asian investment bank for infrastructure projects, with 57 member countries (in addition to European countries such as France, Germany, Italy and Luxembourg).

-The Silk Road Fund: A Chinese sovereign fund.

Many political leaders in the countries along this belt are welcoming this vast project with open arms, since it will improve infrastructure, ensure connectivity and, subsequently, promote economic development. However, as with any Chinese investment, compliance with standards and regulations is not a priority for Beijing. The corruption and opacity relating to the investments flowing from China are likely to benefit political elites more than the populations of the respective countries.

Figure 1. Belt and Road Initiative.Source: Société de Stratégie

In addition, dependence on the investment flows generates an imbalance    in China’s favor, preventing recipient countries from maintaining their economic autonomy.

China’s meta-strategy

The driver behind this commercial project is, above all, a new ideology being advanced by the CPC. Indeed, the main purpose of BRI is to secure and control transport routes for natural resources, particularly oil and gas. This basically means the transport routes that connect African resource-producing countries to production sites in China. The most important corridor is the China–Pakistan Economic Corridor (CPEC). This route connects the city of Kashgar in China to the port city of Gwadar in Pakistan and is an integral part of China’s overall strategy. Almost 80% of all Chinese imports of oil pass through the Strait of Malacca (Figure 2). As a result, CPEC will significantly reduce transport time. In addition, it will improve Pakistan’s infrastructure due to the massive Chinese investments it entails. Not only will this help develop Pakistan’s economy, reduce the country’s energy shortages and boost its productivity, it will also increase Pakistan’s dependence on China. At the same time, the infrastructure projects are being financed through concessional and commercial loans, which will fuel the corruption already prevalent in Pakistan (Luchnikava-Schorsch, 2018; Hussain, 2017).

Figure 2. China–Pakistan Economic Corridor (CPEC).Source: South China Morning Post

It is therefore necessary to view BRI not only as an instrument for asserting China’s power but also as a global meta-strategy that proposes an alternative world order, at least at the commercial level, to the liberal order established by the West. It is also why geopolitical, strategic and military aspects should be considered more than economic aspects. New waterways and port construction serve more than just commercial ends. Ports can serve as military bases for the Chinese navy. For example, the People’s Liberation Army (PLA) inaugurated its first overseas maritime naval base in Djibouti in 2017 (Lagneau, 2017). Dispatching 400 troops, the PLA stated that it wants to support  UN  peacekeeping operations and its own naval operations, particularly in the Indian Ocean. China’s military presence, however, is of concern not only to the United States but to India as well. China–India relations are already tense due to disagreements over territories in the Himalayas, among other issues. CPEC passes through high-risk areas such as the autonomous region of Xinjiang and the northwest Pakistan–Afghanistan border region. The Chinese army is therefore securing infrastructure construction sites, transport roads and ports all along the corridor. In this context, BRI is a strategy that primarily serves Chinese interests. Certainly, this new Silk Road offers business opportunities to companies both in Asia and in Europe. Nevertheless, two aspects are important here: BRI is an ideological tool designed to maintain China’s internal stability, i.e. control by the CPC, while also serving as a strategy that brings together civil and military interests under the rubric of “security”.

Ideology

While Europe tries to identify a new vision, China has provided its geopolitical strategy with a second wind. Capitalism got its start in modern China when the country opened to foreign investment in 1978 and when peasants were granted permission to keep their surplus production. By unleashing its citizens’ entrepreneurial spirit, the country hoped to overcome its technical and technological backwardness. Mobilization of the often-inactive Chinese population ensured national unity in keeping with the motto of “becoming rich”. After years of economic growth and accumulated wealth, the CPC is using BRI, among other activities, to give itself not only new justification for maintaining its power but also a new ideology capable of ensuring party unity, internal stability and national cohesion. President Xi is strengthening his position, supported by the Chinese people. The country’s authoritarian regime, moreover, is tightening its grip.  Internationally, the Chinese economy is an integral part of global production chains.  Remarkably, China is also increasingly becoming a source of innovation, especially digital innovation.

Externally, China is flexing its muscles in a number of locations, including in the South China Sea, transforming “a number of islets in the Paracel and Spratly archipelagos into military bases, where the government is building ports and airstrips” (RFI, 2017).

Assured by its strong position on the geopolitical  level,  the Chinese government is embarking on a more assertive foreign policy. Domestically, the country’s government manages the country as a global enterprise. Five-year plans are a  management  tool  used  to  set the economic strategies of Chinese state-owned enterprises (SOEs), both internally and externally, to ensure  that  standards  of  living  increase  for the Chinese population. This legitimizes the CPC’s ongoing rule. The BRI vision thus mobilizes the nation, safeguarding the unity, stability and harmony of China as a whole. At the same time, however, the growing cult of personality means that China is increasingly becoming a revisionist power.

New security strategy

As mentioned above, BRI is above all a “geostrategic–military” initiative since it brings together civil and military interests under the rubric of “security”. Indeed, these interests are at the center of all decisions and actions on the political and economic levels. Using the term “security”, China’s political strategy aims to safeguard national interests both domestically and internationally. Several dimensions of “security” are differentiated: national sovereignty and national unification, along with military, economic, cultural, social, scientific and technological security, as well as the security of information, security of environment and resources and, finally, nuclear security (State of Council Information Office of the People’s Republic of China, 2015). The main objective of this major security strategy is to preserve the country’s unity, prevent social unrest and legitimize the power of President Xi and the CPC.

In conclusion, we can see that the countries interacting with the European Union are pursuing a strategy that places national interests at the center of their respective political actions. The United States and Trump’s “America first” vision, the strengthening of the authoritarian regime in China, the new cult of personality surrounding Xi Jinping, the return of Mao’s personality cult and BRI are all ultimately driven by national ideologies. On the international level, the global community could thus be dominated by superpowers such as China, the United States and Russia. Due to the weakness of international organizations, ideologies are prevailing, determining the world order. The failure of the European project could become a cruel reality if Europe does not quickly find a new vision while avoiding ideological tendencies — formulating its interests as it does so.

BRI and the EU: An Opportunity for Europe?

Diplomatic relations between Europe and China began in 1975. Since then, there have been regular ministerial meetings and Sino-European summits. More than 60 sectoral agreements have been concluded. China and the EU trade goods are worth more than €1.5 billion each day (Eurostat, 2018). The EU is China’s main trading partner; for Europe, China is second only to the United States.

For years, the EU’s trade balance (Figure 3) with China has been in deficit, with the shortfall reaching €176.4 billion in 2017. This has been a constant conflict between Europe and China. Despite numerous discussions between Beijing and Brussels, the imbalance persists for most member states, although not for Germany, Finland and Ireland (Eurostat, 2018).

Figure 3. The Trade Balance between the EU and China (2008–2017).Source: Eurostat 2018

In 2016, the EU adopted a new strategy on China that tries to respond more effectively to the scale of China’s economic power and its role as an increasingly important global player (Joint Communication to the European Parliament and the Council, 2016). The strategy complements the EU-China 2020 Strategic Agenda for Cooperation, which marked its 15th anniversary in 2018 (Press and information team  of the Delegation to CHINA, 2016). In addition, the EU is negotiating an investment agreement with China to ensure fair opportunities for both sides. The EU also wants to encourage China to give a greater role to market mechanisms and reduce state intervention. The 2020 agenda does not seem to be succeeding. China is not really interested in accepting European norms and standards and is pursuing a “divide and rule” strategy in Europe instead. Indeed, BRI further amplifies the 16+1 meetings, which China is using to negotiate with Eastern European countries. The 16+1 format risks are loosening the ties between Eastern Europe and Brussels. China is pursuing this tactic by negotiating on three levels: with European institutions, with individual member countries and with Eastern Europe as a whole (16+1). An examination of Chinese foreign investment shows that the government continues to invest massively in Europe, always to some extent in “freeloader” style. China’s preferred targets are the United Kingdom (financial sector), Germany (Mittelstand/machine-tool, automotive sector), France (tourism, cosmetics, leisure, wine), Greece (infrastructure) and Portugal (real estate). Trade is growing steadily and with it the interdependence between EU member states and China.

Investment flows into Europe from China amount to €10.2 billion (2016) with EU investments in China totaling €12.8 billion in 2016 (Eurostat, 2018). Yet even if China is investing more and more in Europe, the scope must be put into perspective: of China’s total FDI, only 5–6% has been made in Europe. The majority of Chinese investments still take place in Asia — notably Hong Kong (75.5%), Singapore (3.7%), Taiwan (3.6%), South Korea (2.8%) and Japan (2.5%). The United States accounts for 2.4% of total Chinese FDI, the Netherlands 1.7% and Germany 1.2% (Otte, 2018). In the Asian region, BRI infrastructure projects will have a very significant impact in coming years. Even if Europe is more or less at the end of this new Silk Road, Eastern European nations have become, since BRI, the center of China’s interest. Especially Poland and the Baltic countries can serve as a point of entry for goods transported via the      Silk Road. BRI can then serve as a catalyst to rebalance trade relations in favor of Europe as a whole, but only if the EU finds a common strategy for this initiative. It is therefore important not to fall into the trap of intra-European competition, or to be divided by China. On the contrary, common European interests must be identified in order to protect key EU sectors and give priority to European actors.

Above all, closer cooperation with pro-European countries is necessary, as is monitoring and guiding  Chinese  investments  throughout  the European continent. BRI will change the foundations of world trade in the medium term, and the EU risks granting even greater access to European high technology. This poses a real threat since China, as discussed, links its civil and military interests. China’s influence and geopolitical–military power could thus have an impact in Europe, especially in Eastern Europe. First and foremost, BRI is a Chinese ideology that is making it possible to pursue the Chinese dream, modernize state- owned companies and facilitate their financing by promoting access to international credit. Additionally, the increased prosperity of the countries along the BRI routes will ensure Chinese trade remains stable, a key aspect given that the Chinese economy is heavily dependent on exports.

Areas of action for the EU

In view of BRI, not only must European companies act, so must all EU institutions. A new vision for Europe must be articulated if Europe is      to avoid being taken hostage by Chinese interests. The strength of the European Union is directly linked to how it manages its diversity. In Europe, freedom of thought reinforces creativity, which is necessary for technological progress. The high quality of Europe’s companies is the result of their innovative power. Due to its democratic structures, respect for human rights, rule of law and  high  social  standards  and  norms,  the EU acts within a regulatory framework based on ethical and human values. On the commercial level, BRI offers many opportunities for European companies as investors, experts, consultants and managers. Potential activities include the following:

-Investing in infrastructure projects, such as construction of railways and roads.

-Supplying equipment, such as that needed for ports.

-Serving as partners in the areas of engineering, procurement and construction (EPC).

-Serving as consultants for project management, especially in the area of operational security and the application of international and local laws.

-Managing infrastructure operations (Wijeratne et al., 2018).

There are many opportunities and risks here. As with any transnational project of this magnitude, major differences in the relevant corporate cultures must be overcome. Above all, trust between the various international actors plays a crucial role.

In addition, different legal frameworks exist which can lead to conflicts between international and local laws. Moreover, the “time” factor should not be overlooked, since BRI is a massive project that will only be completed in the long term. In short, there are myriad factors which could hinder European companies from serving as partners within the framework of this initiative.

French President Macron — Hope for Europe?

The election of Emmanuel Macron as President of the French Republic gave, for a brief time, new momentum not only to France, but also to the EU. Macron’s visit to China was closely watched, especially by the French and German press. The French President was the first European leader   to welcome the initiative to create a “new Silk Road”. Yet a comparison  of the outcome of his visit to China with that of Chancellor Merkel’s in 2015 is less than satisfying. Only 39 of the 50 envisaged contracts have been signed and half are mere declarations of intent. Thus, the French President did not truly introduce a new approach to dealing with China. With all due respect, he only highlighted the importance of the historically friendly relations between China, France and Europe. Macron’s mistake was to invoke France’s rivalry with the United States. Alluding to the Chinese proverb “When the wind of change blows, some build walls, others build mills”, the French President referred to the con- struction of the wall between Mexico and the United States. From the perspective of a G-2 scenario, China will always measure itself against superpowers like the US and consider France and Europe medium-sized actors instead. In addition, Macron has not addressed the problems resulting from France’s and the EU’s lack of geopolitical impact given the overwhelming power of players such as China and the US. What future thus awaits the EU as a new era of global governance dawns?

Conclusion

As globalization’s pace slows, the need increases to belong to a territory, region or country. The dynamics of transnational flows erase neither borders nor the places delimited by those borders (Zajec, 2016). On the contrary, it is clear that the geopolitical powers of nation-states such as China, the United States and Russia are growing. This growth has been accompanied by resurgence of personality cults (e.g. those surrounding Xi and Putin) and of ideologies guided by national interests. BRI is a good example, since it is the ideological pursuit of the Chinese dream. The strategy behind Trump’s “America first” campaign follows the same logic, being a call to revitalize the American dream.

European identity crisis

The EU, on the other hand, lacks a dream. Following the massive inflow of refugees to the European continent, Europe’s citizens have been legitimately demanding that border controls be restored and strengthened. It is necessary to define the European identity as a result. The EU is also an arena where national and transnational forces (e.g. global companies, interest groups) interact. And precisely these transnational forces, especially international companies, often behave more or less autonomously, regardless of the regulations issued by nation-states. The EU is an inter- mediate actor, at best a forward-looking one. It is not a “United States of Europe”, neither can it boast of being a true global force. After all, European power is clearly limited in economic terms. Being a global player requires a shared vision on the economic, political, military, social and cultural levels.

Globalization in its current form has given rise to a kind of new, highly conflictual bipolar world, one that requires a redefinition of the world order. The resulting rivalry is playing out on several levels:

-Institutional: Democratic system versus authoritarian regime, even dictatorships.

-National versus transnational forces.

-Nation-states versus global companies, business alliances and interest groups (lobbying).

-Within the EU: Nation-states versus European institutions, and Western Europe versus Eastern Europe.

The identity of the heart, a nation of the heart and the strength of differences

The leaders of European institutions should not underestimate the national strengths of the member states and their respective populations. According to this logic, President Macron is wrong to want to pursue the strategy of “even more Europe” without taking into account legitimate feelings of belonging and national identity. Jacques Ancel (1879–1943) contributed the notion of identity to geopolitics. According to Ancel, groups of individuals take shape based on a common memory, history, culture and language, eventually defining themselves within a border: “He defends a nation of the heart in and of itself that is non-rational” (Gauchon and Huissoud, 2008, pp. 7–11). In this sense, the EU can act as an avant-garde player, questioning a power’s sustainability — values versus mercantilism. A new “cosmopolitical” order of this sort must ensure fair trade relations, transparency of transactions, social justice and, above all, a more equitable distribution of natural resources and goods on a global scale. More precisely, it is the human dimension and the application of moral and ethical values that are essential if there is     to be an evolution towards a cosmopolitics, a process that must respect borders and, thus, national sovereignty (Banik, 2016).

In our globalized world, neither the EU, China nor the United States is an isolated island paradise. No actor is privy to the absolute truth. The challenges of climate change, growing global competition (for natural resources, food, water, etc.), the rivalry between national and transnational forces and, above all, international terrorism are forcing us to face new realities. The illusions must be relinquished that underlie today’s ideologies (those found in Europe; patriotic Chinese-style capitalism;

 “America first”; personality cults; a return to revisionist power structures). We must bridge our differences and move towards a cosmopolitical global governance based on human values — towards an “identity of the heart”. As Europeans, let us begin evolving towards a “Europe of the heart” in keeping with Jacques Ancel’s geopolitical vision (Banik, 2016).

“It is the heart which is worthwhile and which must be considered above all.” (Jacques Ancel)

Notes: This paper was originally published in “China and the World: Ancient and Modern Silk Road, Vol. 2, No. 1, 1–18 DOI: 0.1142/S2591729319500032, reproduced with the permission from the author.

Dr. Katja Banik, since 2017, has been a speaker/guest lecturer on geopolitical and economic issues related to China, Europe and the USA and on different global governance scenarios. She is Membre Associé à Titre Secondaire at Intégration et Coopération dans l’Espace Européen — Etudes Européennes (ICEE), Université Sorbonne Nouvelle Paris 3, and a Member of GIS Réseau Asie et Pacifique/GIS Études Asiatiques in Paris. Katja Banik is the author of Les Relations Chine-Europe: À la Croisée des Chemins published by L’Harmattan (Paris) in 2016. Further, she is the Editor-in-Chief of PwC’s China Compass. Katja Banik has senior management expertise in the logistics (Shanghai and Hong Kong) and she is the founding member of ilkmade.com.

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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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East Asia

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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