Economy

‘Belt and Road’ for a ‘Better World’?: China-US relations and 50 years of the Shanghai Communiqué

(Photo: Xinhua)

Published

1 year ago

March 12, 2022

Cherry Hitkari

On the 50th anniversary of the Shanghai Communiqué this year, Chinese Foreign Minister and State Councillor Wang Yi made an interesting statement calling on the United States to jointly collaborate on the Belt and Road Initiative and the Build Back Better World (B3W) project. Initially perceived as rival projects of power assertion, the offer comes at an interesting juncture as Washington and Beijing prepare for the road ahead in the background of the Russian invasion of Ukraine.

The Handshake that changed the world

The saying ‘Only Nixon could go to China’ is well known among international relations circuits and perfectly sums up the build up to the Shanghai Communiqué.

It was at the height of brewing tensions between the United States and the Soviet Union pertaining to Moscow’s incursions in Czechoslovakia, its growing defence capacities and the Communist movement in Vietnam that pushed the American forces closer to defeat; as well as between the People’s Republic of China and the Soviet Union over border and ideological tussles after the death of Stalin that compelled a staunch anti-Communist of the like of the US President Richard Nixon to shake hands with an equally staunch ideologue, the Chinese Communist leader Mao Zedong, who had been bitter rivals since the establishment of the People’s Republic of China under the rule of the Communist Party in 1949 hence, giving birth to the said expression which points to how only someone with a clearly stated ideological leaning could act in contradictory ways without drawing criticism.

Staying true to the gravity that the expression carries, Nixon’s handshake with Mao proved to be a major breakthrough in geopolitics. It showed how common and pressing concerns could bring even the worst adversaries together, crossing ideological barriers which at the time were considered too sacrosanct to trespass. The result was the Shanghai Communiqué of 1972 which established diplomatic relations between the United States and China.

The Communiqué was as contradictory as historic. It did not just record the diametrically opposed positions of the two sides on issues of international concern such as supporting rival governments in Vietnam and Korea but also recognised that the socio-political systems of the two were very different from each other but must not become a roadblock in negotiations.

The status of Taiwan became a crucial question. While the Chinese side claimed the People’s Republic of China to be the ‘sole legitimate’ government of “One China” that existed on both sides of the Strait, the United States agreed that “Chinese on both sides of the Strait see themselves as belonging to One China”. It agreed to withdraw its military forces from Taiwan but did not clearly accept which side it recognised as the legitimate “One China”. The Shanghai Communiqué hence became an instrument where the two sides agreed only to disagree.

An Uneasy relationship

Fifty years on, the Sino-US relations remain strained at several levels, hitting an all time low during the latter days of former US President Donald Trump’s regime.

While the two sides have cooperated on several aspects including establishing sister cities and states for development; on the Iranian nuclear deal or the Joint Comprehensive Plan of Action; countering health crises such as Ebola; on climate change in the form of the Paris Agreement as well as in business with a whopping US$750 billion of bilateral trade; suspicions between the two remain high.

Contentions appear on several tangents including on the allegations of human rights violations in China; China’s attempts of devaluing its currency, the Renminbi (人民币),leading to an unfair ‘trade war’ against the US; China’s incursions and sovereignty claims over islands of the South and East China Sea; the alleged role of China behind the origins of the Coronavirus; the alleged US involvement in the Hong Kong protests; allegations of espionage and cyber attacks on both sides, etc.

The sovereignty of Taiwan still remains a thorny issue between the two nations. While China claims full sovereign rights over the island which has become more assertive since Xi Jinping assumed power in 2012, the United States has continued to extend support to the Taiwanese regime while coursing through the Six Assurances, the Three Joint Communiques, the Taiwan Relations Act which does not recognises Taiwan as a separate nation but promises arms and economic support and hence does not explicitly challenge China’s sovereign claims. Beijing, however, has protested against this stance which it has dubbed “illegal” and against the spirit of the Shanghai Communiqué.

Beijing has also called out expansionism of the North Atlantic Treaty Organisation (NATO) and the formation of the Indo-Pacific Quadrilateral Security Dialogue or Quad ( comprising India, US, Japan and Australia) which it alleges to be an “exclusive” organisation and an “Asian NATO“.

Washington does not view China’s economic rise favourably and claims that it intends to turn the liberal democratic global world order upside down in its quest to attain hegemony. Even after fifty years, the ice has not completely thawed.

The Belt and Road Initiative

The One Belt, One Road (一带一路) or the Belt and Road Initiative (BRI) stands as China’s most ambitious project so far. It is a long term transcontinental infrastructure and investment project which seeks to connect China with Africa, Asia and Europe through land based Silk Road Economic Belt (丝绸之路经济带) comprising of 6 development corridors and the 21st century Maritime Silk Road (21世纪海上丝绸之路). The official map also shows the Polar Silk Road (极地丝绸之路) which connects Chinese ports to the seas across Moscow to Scandinavia, which forms a part of China’s Arctic policy.

Launched in 2013 by Chinese President Xi Jinping, the BRI is open to all countries that wish to join and focuses on intergovernmental cooperation on policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds through culture and academic exchanges as well as media cooperation. Apart from extending China’s diplomatic and economic network, the project has also been perceived as China’s stint at Major Country diplomacy (大国外交) through which it seeks an international leadership role.

So far, 130 countries have endorsed the initiative. The BRI however has been criticised on several fronts. Skeptics have termed it an instrument of extending Chinese political and economic hegemony by pursuing a debt trap diplomacy where developing countries are granted loans beyond their capacities to repay which leads to cessation of ports and land by China. The project has also been called out for its alleged lack of transparency. Moreover, the BRI is also said to benefit China in terms of capital returns and employment opportunities more than the host countries.

Washington has sought to counter Beijing’s BRI through several initiatives such as the Free and Open Indo Pacific Strategy, the Blue Dot Network, and the most elaborative, the Build Back Better World (B3W) initiative.

Build Back Better World (B3W)

The B3W project was launched in June 2021 at the Group of 7 (G7) meeting as an alternative to the BRI launched by the world’s richest 7 democracies which promised to develop $40 trillion worth of infrastructure for low and middle income countries by 2035.

Although similar in blueprint, US President Joe Biden highlighted fundamental differences between the BRI and the B3W as he stated that unlike the former, the latter was a “value-driven, high-standard, transparent financing mechanism” which would focus on four key areas- climate, health, digital technology and gender equity. As a product of democracies, the B3W in Biden’s words is far more “equitable” than the BRI which stems from “autocratic” forces like China.

The lending and private investment based initiative which builds on Washington’s Blue Dot Network has received a welcome response from many Asian countries such as Thailand.

What can collaboration bring?

The United States has not issued any official response to China’s offer of collaboration. The two mega projects retain several flaws.

While the B3W still remains a rough skeleton and has not been fleshed with details, the Belt and Road Initiative seems to be in deep waters.

The enormous investments often in unprofitable markets threaten to be a resource drain for China. Similarly, facing their own economic downturn, it is skeptical how much and how long the G7 economies would be able to sustain the B3W.

The two rival projects might also cement divisions between Chinese and American allies and threaten a return to the bipolar world of the Cold War era. Such a scenario would only flare political differences and fan animosity. Moreover, changes in regime in the host countries which might not be favourable to the projects also keep the future of the mega projects at stake.

The environmental costs of the two separate projects cannot be overlooked. As the world inches closer to the disastrous consequences of climate change, the aggressive depletion of natural resources in a competitive spree between the two is the least desirable of all. The rival projects might also threaten military build up.

Collaboration between the two projects would not only solve these issues but would also act as a confidence building measure between the two superpowers, not to forget nuclear powers, which makes interaction even more important to avert any unforeseen disaster.

Interestingly, the offer also closely follows Russia’s invasion of Ukraine. While Washington has staunchly criticised Russia and slapped it with fresh sanctions, Beijing has cautiously abstained from voting against Russia in the United Nations Security Council (UNSC) while at the same time referring to the act as an “invasion” which renders it offensive by the United Nations Charter and not a “special military operation” as Moscow claims, as well as called for mediation. Though Russian invasion challenges American hegemony and hence appears beneficial for Beijing, China’s actions show that it is somewhere aware that such unilateral invasions will not fare well, neither for itself nor for others and would only add up to the instability to the loss of everyone. The offer to collaborate with Washington in this regard might be read as a positive sign but the intention and commitment remains questionable.

Is collaboration possible?

Much water has flowed down the bridge in the last 50 years since the Shanghai Communiqué was signed and the Sino-US relations have seen both ups and downs but have largely remained cold, weakening any chances of collaboration that too on projects as massive as the BRI and the B3W. More than any development plans, the two projects are instruments of power assertion which focus on building allies and countering the threat which stems from the other side.

Though strained, the Sino-US relations are too important for either party to fail. The economies of the two countries are closely enmeshed which make decoupling let alone isolation, difficult. Collaboration on the two projects might not be possible but the two nations can start by cooperating on softer issues such as cultural and academic exchanges, state visits as well as trade which would eventually build a path for discussing harder and more contentious issues and might lead to greater political cooperation. Both Washington and Beijing must realise that their own interests and that of the larger international community lie in cooperation rather than confrontation. They do not just owe responsibility to their own people but to the world at large. The Ukrainian crisis has proven how disastrous a lack of cooperation can get which takes the ugliest forms of humanitarian crisis.

Fifty years later, whether Washington and Beijing recognise or not, they are faced with the same crises in the form of non-traditional security threats such as climate change and health crises which demand immediate cooperation.

While a return to the spirit of Shanghai Communiqué might be a long road for the two to walk, they must review their policies towards each other and take to the diplomatic route of negotiation.

Related Topics:Belt and Road China Geopolitics USA

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Cherry Hitkari

Non-resident Vasey Fellow at Pacific Forum, Hawaii. Cherry Hitkari is an Advisory Board member of 'Tomorrow's People' at Modern Diplomacy. She holds a Masters in East Asian Studies specialising in Chinese Studies and is currently pursuing an advanced diploma in Chinese language at the Department of East Asian Studies, University of Delhi, India.

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Economy

Evaluating the Impact of Minimum Support Price (MSP) on Agricultural Productivity and Efficiency

Published

7 hours ago

May 17, 2023

Azeem Hakro

The Minimum Support Price (MSP) mechanism is a policy tool used by governments, especially in the agricultural sector, to protect farmers from market price fluctuations and ensure they receive a minimum income for their produce. The MSP is the guaranteed minimum price at which the government agrees to purchase certain agricultural commodities from farmers.

Before the sowing season, the government announces the MSP for various crops such as wheat, sugarcane, cotton, and oilseeds. The MSP is determined based on factors like production costs, market trends, and demand-supply dynamics. It is generally set higher than the production cost to provide farmers with a reasonable profit margin. Government agencies, such as PASSCO and provincial governments, are responsible for procuring crops from farmers at the MSP. They establish procurement centers where farmers can sell their produce. The government sets specific specifications regarding the quantity and quality of crops eligible for MSP procurement. These specifications may include factors like moisture content, size, and weight to ensure that only high-quality produce is purchased. If the market price for a particular crop falls below the MSP, farmers have the option to sell their produce to the government at the guaranteed price. The price differential between the MSP and the market price is intended to compensate farmers for any losses incurred due to low market prices.

The Agriculture Policy Institute (API), formerly known as the Agriculture Prices Commission, was established in 1981 and reconstituted in 2006 under the Ministry of National Food Security & Research. It plays a crucial role in formulating and evaluating the MSP mechanism. The API conducts research, analyzes market trends, studies production costs, and recommends appropriate MSP levels for various crops. It actively engages with stakeholders such as farmers’ associations, agricultural commodity boards, government procurement agencies, and policymakers, organizing consultations and workshops to gather feedback and foster dialogue on MSP-related policies.

Before 2006, the API was responsible for formulating the MSP for 12 crops including minor and major crops. However, they later shifted their focus primarily to major crops for several reasons. Major crops such as wheat, rice, sugarcane, and cotton have a significant impact on food security and the overall agricultural economy, and thus received more attention and resources compared to minor crops. Limited resources, including financial, administrative, and logistical capacities, may have constrained the government’s ability to cover a wide range of minor crops under the MSP mechanism. Minor crops also face challenges in terms of smaller production volumes, limited market demand, and establishing efficient procurement and marketing systems. The lack of comprehensive data and research on minor crops further complicated the formulation of MSP policies. Additionally, the priorities and interests of stakeholders, including farmers and industry associations, may have influenced the emphasis on major crops within the MSP framework.

The MSP plays a crucial role in the agricultural sector for multiple reasons. Firstly, it offers income security to farmers by guaranteeing a minimum price for their produce, shielding them from financial hardships caused by market fluctuations. This stability encourages farmers to continue their agricultural activities confidently. Secondly, the MSP acts as a powerful incentive for farmers to increase production. With the assurance of a minimum price, farmers are motivated to invest in quality inputs, adopt modern techniques, and expand their cultivation areas, contributing to agricultural growth and food security. Additionally, the MSP allows the government to build buffer stocks, ensuring a steady supply of essential commodities during scarcity or emergencies. It also enables market intervention to prevent sudden price falls caused by oversupply, promoting fair prices for both farmers and consumers while maintaining market stability.

Critics argue that the MSP can distort market dynamics by creating an artificial price, leading to market inefficiencies. Government procurement operations under the MSP can reduce competition and discourage private buyers, hampering market efficiency and private investment in agriculture. Moreover, the MSP imposes a significant financial burden on the government, especially when market prices fall below the MSP, requiring the government to procure surplus produce, manage storage and distribution, and bear associated costs. This strain can negatively impact public finances and the overall fiscal health of the government.

In Pakistan, the MSP for wheat saw a significant increase in the year 2022-23. It rose by 100 percent, reaching Rs 3,900 per 40 kg in Punjab and Rs 4,000 in Sindh, compared to the previous year’s MSP of Rs 1,950 per 40 kg. The significant increase in the MSP was required due to the rising costs of fertilizers, pesticides, machinery rates, fuel and electricity, transportation charges, and labor expenses. These escalating expenses left farmers with no savings under the MSP. Some experts express concern that these high support prices may contribute to inflation and food insecurity among consumers in Pakistan.

Timely announcement of the MSP for crops can have a positive effect on crop production. When the MSP is announced before the cultivation season, farmers can make informed choices about whether to grow wheat or opt for other crops.

Economy

The Future of Work and Skills in 21st Century Economy

Published

1 day ago

May 16, 2023

Nidma Bukhari

In today’s fast-paced and competitive economy, being specialized in one skill may not be enough to achieve success in your career or personal life. Having specific expertise is essential but it is also crucial to develop a broader set of skills to adapt to changing circumstances, to communicate with diverse people, and to avail new opportunities. The 21st-century economy is evolving swiftly, and along with it, the nature of work and the skills required to succeed are changing. The COVID-19 pandemic has accelerated these changes, ushering in an increased focus on remote work and gig economy. The pandemic has also highlighted the importance of adaptability and agility in the face of disruption. As we navigate this post-pandemic landscape, it is critical to understand the skills that will be in demand in the future and how the current generation can prepare themselves for the challenges ahead.

One of the most significant shifts in the 21st-century economy is the rise of artificial intelligence. We live in a world of self-driving cars, chatbot assistants, and robot servers and cleaners. This transformation is already underway, and it is expected to accelerate in the coming years. The introduction of ChatGPT and Bard has revolutionized everything from education to business to daily life. Since machines are becoming increasingly capable of predictable tasks, human workers will need to focus on skills that machines cannot replicate, such as creativity, critical thinking, and emotional intelligence. According to a report by McKinsey Global Institute, around 375 million workers worldwide may need to switch occupations or learn new skills by 2030 due to workforce disruptions caused by automation and AI.

Another important trend is the growth of the gig economy and remote work. The pandemic has shown that many jobs can be done from any place, and this trend is likely to continue. The COVID-19 pandemic has increased the trend toward remote work and the gig economy. According to Future Workforce Pulse Report by Upwork, 41.8% of the American workforce was working remotely as of January 2021, up from 30% pre-pandemic. The report anticipated this to rise to 65% in the next 3 years. Due to the lockdown, an increasing amount of people turned to these platforms to continue earning. In its 2020 report, Forbes wrote that the value of a Fiverr share has increased by 356% in 2020 and Upwork recorded a 40% increase in its revenue in the third quarter of 2020. The post-pandemic popularity of platforms like Fiverr & Upwork shows that workers who can adapt to a flexible, remote work environment and have the skills to manage their own time and workload will be in high demand. Meanwhile, the gig economy is anticipated to grow by 17% over the next decade, according to a report by Intuit in 2020.

In addition to these broad trends, there are also specific skills that will be essential to excel in the 21st-century economy. One of the main ones is Digital literacy. As technology continues to play an increasingly central role in the workplace, workers must be comfortable with digital tools and platforms. A person must have sufficient mastery of basic apps and software like Microsoft Office, Canva, Adobe Illustrator, Teams, Zoom, etc. This includes not only technical skills like coding but also the ability to use digital tools to collaborate, communicate, and analyze data. The demand for digital skills is on the rise. A report by Burning Glass Technologies found that in 2020, 71% of middle-skill jobs required digital skills, up from 59% in 2014. McKinsey found out in their 2018 survey that “sixty-two percent of executives believe they will need to retrain or replace more than a quarter of their workforce between now and 2023 due to advancing automation and digitization”. This is evident in recent plans of big-tech firms. Google launched a program called “Grow with Google” to help Americans acquire the digital skills needed for the 21st-century workplace. In 2019, Amazon announced plans to spend $700 million to retrain 100,000 of its employees in skills for the digital age.

Another important skill not to be ignored is communication and collaboration. In a world where remote work and cross-functional teams are the new normal, effective communication and collaboration skills are critical. Workers must be able to communicate clearly and concisely, listen actively, and work effectively with colleagues from diverse backgrounds and cultures. Effective communication and collaboration skills are critical in today’s workplace. The list published by LinkedIn for the most in-demand skills of 2023, ranked communication at number 2 of most demanded skill by companies and hiring managers.

In a rapidly changing economy, workers must be prepared to continually upskill and reskill throughout their careers. This requires a growth mindset and a willingness to embrace new technologies and ways of working. Lifelong learning is becoming increasingly vital to thrive in a professional career. According to a report by the World Economic Forum, 50% of all employees will need reskilling by 2025, and the average employee will need to devote 101 days to reskilling by 2022. It also listed the top skills of 2025, all of them belonging to one of the following four categories: Problem-solving, Self-Management, Working with People, and Technology Use. Many companies are investing in employee training and development programs to meet this need, such as PwC’s “Digital Fitness” program.

The ability to pivot quickly in response to changing circumstances will be essential in the 21st-century economy. This has been reinforced by the pandemic and volatile global situation. Workers must be able to adapt to new roles, industries, and technologies as needed, and be comfortable with uncertainty and ambiguity. The speed of change in the current era is potentially faster. The major challenge confronting every economy, particularly advanced economies, will be to retrain and dispatch millions of mid-career, middle-aged workers which seems like a daunting task.

Preparing for the future of work will require a joint effort from the people, educators, and employers. People must take responsibility for their own learning and development, seek out opportunities to acquire new skills, and stay up-to-date with industry trends. Educators must adapt their curriculum to prepare students for the changing demands of the workplace, emphasizing digital literacy, communication, and critical thinking skills. Employers must create a culture of learning and development, providing employees with the tools and resources they need to succeed in a rapidly evolving economy.

The future of work is uncertain, but one thing is clear: the skills required to succeed in the 21^st-century economy will be different from those that have been valued in the past. Gone are the days when mastering one field guaranteed your professional success. By embracing lifelong learning, cultivating adaptability and agility, and developing the digital literacy and communication skills needed to thrive in a remote, technology-driven workplace, people can prepare themselves for success in the years to come.

Economy

The rise of electrical vehicles and its impact on green economy

Published

1 day ago

May 16, 2023

Ayesha Chaudhry

The world is going through a critical change in transportation as the reception of electric vehicles (EVs) speeds up. The ascent of electric vehicles isn’t just reshaping the manner in which we drive yet in addition affecting the worldwide economy and the climate. With the earnest need to moderate environmental change and decrease ozone harming substance discharges, electric vehicles have arisen as a promising answer for progress towards a greener economy.

Electric vehicles offer various advantages over customary gas powered motor (ICE) vehicles. By supplanting non-renewable energy source fueled motors with electric engines and batteries, EVs fundamentally diminish hurtful discharges, including carbon dioxide and air toxins. This decrease in discharges further develops air quality, relieve environmental change, and limit the unfavorable wellbeing impacts related with contamination.

The effect of electric vehicles reaches out past the natural circle. The fast development of the EV market is reshaping different businesses, including car fabricating, energy creation, and framework advancement. Accordingly, this shift is animating monetary development, setting out new position open doors, and filling advancement in clean energy advancements.

In this article, we will dive into the ascent of electric vehicles and investigate their effect on the green economy. We will inspect the advantages that electric vehicles bring, like diminished discharges and further developed air quality. Moreover, we will examine how the auto business is adjusting to this change, including the development of new players and the speculations made in charging foundation. Moreover, we will examine the effect of electric vehicles on the energy area, especially concerning environmentally friendly power reconciliation and the improvement of shrewd network advancements.

While the ascent of electric vehicles presents promising open doors, it additionally presents difficulties. We will look at the hindrances upsetting their inescapable reception, for example, the underlying significant expense of EVs, range uneasiness concerns, and the requirement for an extended charging organization. By understanding both the likely advantages and hindrances, we can foster a thorough comprehension of the electric vehicle insurgency and its effect on the green economy.

All in all, the ascent of electric vehicles addresses a groundbreaking movement towards a more supportable and harmless to the ecosystem transportation framework. The development of this industry adds to moderating environmental change as well as presents monetary open doors and encourages mechanical advancement. By investigating the different parts of this change, we can all the more likely understand the significant effect of electric vehicles on the green economy and prepare for a cleaner and greener future

1. The advantages of electric vehicles:

– Decreased emanations: Electric vehicles produce lower or zero tailpipe discharges contrasted with regular vehicles. They assist with decreasing ozone harming substance outflows and battle environmental change.

– Further developed air quality: The reception of electric vehicles adds to cleaner air, as they produce no poisons, for example, nitrogen oxides and particulate matter that add to respiratory and medical problems.

– Diminished dependence on non-renewable energy sources: Electric vehicles decrease reliance on petroleum derivatives, which are limited assets and add to international contentions. They offer the potential for a more economical and energy-different future.

2. The effect on the vehicle business:

– New players: The ascent of electric vehicles has drawn in new participants to the auto business, including tech organizations and new companies, testing the strength of conventional automakers.

– Interest in foundation: Electric vehicle reception requires the improvement of charging framework, including public charging stations and home charging arrangements. This speculation animates work creation and business open doors.

– Fabricating changes: Electric vehicles have various parts and assembling prerequisites contrasted with customary vehicles. This shift requires changes in assembling cycles and supply chains, possibly prompting new position jobs and expertise necessities.

3. The effect on the energy area:

– Environmentally friendly power combination: Electric vehicles give a potential chance to coordinate sustainable power sources, for example, sunlight based and wind, into the lattice. They can act as versatile energy stockpiling gadgets, taking into account better use of irregular sustainable power.

– Framework modernization: The far and wide reception of electric vehicles requires an updated and keen matrix foundation to help expanded charging requests and oversee load adjusting successfully.

– Request reaction and vehicle-to-network (V2G) innovation: Electric vehicles outfitted with V2G abilities can go about as energy stockpiling units, considering bidirectional energy stream between the vehicle and the framework. This innovation offers valuable open doors for request reaction and framework adjustment.

4. The effect on the economy:

– Work creation: The development of the electric vehicle industry sets out new position open doors in assembling, innovative work, charging framework establishment and upkeep, and related administrations.

– Diminished reliance on unfamiliar oil: Electric vehicles decline dependence on imported petroleum products, improving energy security and decreasing import/export imbalances related with oil imports.

– Worked on general wellbeing: Electric vehicles’ lower discharges add to further developed general wellbeing results, diminishing medical services costs related with air contamination related ailments.

5. Difficulties and boundaries:

– Cost: The underlying price tag of electric vehicles can be higher than that of ordinary vehicles, despite the fact that declining battery costs are making EVs more reasonable.

– Range uneasiness: Worries about restricted driving reach and the accessibility of charging framework can hinder potential EV purchasers. Be that as it may, headways in battery innovation and the development of charging networks are reducing these worries.

– Charging foundation: The improvement of a strong and open charging framework network is vital for boundless EV reception. Guaranteeing satisfactory charging choices in metropolitan and rustic regions is fundamental.