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OPINION

As Biden embraces Trump’s America-first protectionism, foreign investors give up on the US and bet big on China. Power has shifted

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By backing globalization and free trade, Beijing is outmanoeuvring an inward-looking US, overtaking it to become the world’s No1 destination for foreign investment & creating a dilemma for the new man in the White House.

Donald Trump is gone, but many aspects of his legacy are here to stay. On trade, absolutely it seems. Biden’s team members have pledged a “new look” on international trade and investment which will involve a renewed emphasis on putting American jobs first as opposed to simply opening up international markets for US companies, a line which could potentially out-Trump Trump himself.

Not surprisingly, as it has sought to get into the driving seat and handle domestic crises, it has “put trade on the backburner” and effectively relegated it as a priority, showing indifference, for example, towards a potential new trade deal with the UK of which Trump and Boris Johnson had pursued.

 China won the trade war with the US. Business trumps politics, and China is a cornerstone of the global economy

In the midst of it all, an astonishing new development has taken place: In the year 2020, China has overtaken the United States to become the biggest destination for foreign direct investment (FDI) in the world, obtaining over $140 billion across the year. Although varying fortunes in the pandemic is partially the reason why, the move follows a trend that has seen investment into the US slump dramatically under Trump across a four-year period, a product of political unfavorability, his ‘America First’ policy and also pushing out Chinese companies and investors.

When these two factors are considered together, liberal talk of a Biden comeback against China and building “trade coalitions” seems highly unlikely. The Democrats have absorbed Trump’s protectionist legacy and do not have the political space to economically empower other countries against Beijing. Things such as rejoining the Transpacific Partnership (TPP) remain a non-starter. Given this, with China containing its strategy of raking up new free trade agreements, Biden doesn’t really have the answer to Beijing that many hoped he would, and the evidence is continuing to grow that China has the upper hand economically.

When Biden was elected, it was the hope of mainstream liberals in the US that Trump and his era of ‘America First’ was over. The new president was pitched as a credible, reliable and respectable figurehead who would restore America’s ‘altruistic’ vibes and counter China via a swing back to multilateralism, as opposed to Trump’s unilateralism. It was assumed that the only reason the US had failed via China under the previous administration was because he was awful, therefore under a ‘respectable US’, countries would immediately swing back to their true interest, with the new president having called for “trade coalitions” against China. But the question is, how exactly?

Herein lies the contradiction awaiting the Biden tenure. He talks about combatting Trump, but also is seemingly inclined to follow Trump’s presidency in the bid to shore up American jobs, and its underlying assumption that rushing into free trade agreements with lesser developed countries will be detrimental to the domestic political interest unless those nations primarily buy goods from America rather than sell to them.

The biggest and most obvious route to countering Beijing would be to join the TPP and counter the Regional Comprehensive Economic Partnership (RCEP) that China is a part of. However, due to its domestic unpopularity, this is seen as increasingly politically untenable and a “hard sell.” In light of this background, Biden’s ability to resolve trade disputes with the European Union are not about to go away easily either, especially given that the EU demonstrated its strategic independence through its new investment treaty with China, which his administration explicitly opposed.

The US has a broken political system & is about to be usurped by China – what Europeans really think about America is telling

In this case, what Biden and his supporters aspire to is easier said than done, and China is undoubtedly going to keep up the pace of its own free trade game and add to its successes. Recently, the country’s Foreign Ministry set out its priorities for 2021, which involves seeking new trade deals with Israel, the Gulf Cooperation Council, the South Korea-Japan trilateral agreement, and Norway. In comparison to the ‘America first’ and ‘American jobs first’ rhetoric, Beijing has persistently pitched itself as a defender of multilateral free trade, openness and matched its words with actions by gaining more and more deals.

Trump put the US on the backfoot with this, and Biden’s willingness to embrace aspects of his agenda, even if not in as destructive a manner, will likewise further damage its position. China is advocating globalization, America protectionism.

Therefore, it is not a stretch at all to argue China has the upper hand economically, and that this will only grow. As I have repeatedly noted, 2020 and the global pandemic shifted the balance of power. Beijing will continue to respond to the US, not by confronting it, but by diplomatically outmanoeuvring it on trade.

This comes in addition to China being the only major global economy to register growth in 2020, the world’s largest recipient of foreign direct investment in the same year, and subsequent forecasts of it overtaking the US in gross domestic product by 2028. In this case, Biden has no easy answer to China when it comes to trade, and the lockstepping of national protectionism is only going to inhibit Washington’s bid to compete globally.

OPINION

Disgraced ex-PM Liz Truss seeks to ruin any hopes for normal UK-China ties

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The former premier’s Taiwan trip is nothing but a provocation for Beijing to lash out at London, sinking any constructive dialogue

Liz Truss will always be remembered as a disastrous prime minister who spent only a month in office and was outlasted by a head of lettuce.

Her disastrous budget plans sent shudders through the UK economy, eliciting criticism from the British people, MPs and foreign leaders alike. Her ideology-driven political decisions found little sympathy with the public, which repaid her with abysmal approval ratings.

You’d think someone like that would have little credibility as a political adviser, but that apparently isn’t the case. Taiwan, which frequently pays washed-up Western right-wing fanatics to come and visit them as a political stunt, invited Liz Truss to Taipei on Tuesday and Wednesday.

Truss then gave a hawkish speech where she called for an end to all cooperation and dialogue with Beijing and the preparation of Russia-style sanctions in the event of a Taiwan conflict. She also repeated her suggestion of an “Economic NATO” – despite a track record that makes her the last person you’d want to listen to for economic advice.

‘Economic NATO’ needed to counter China – Truss

Since her brief stay in Downing Street, she has rebranded herself as a full-time anti-China hawk, and now uses her party position and credentials as a former prime minister to try to undermine her successor’s attempts to carefully edge back towards engagement with China. Truss was always a fantasist, a pro-Brexit zealot who embraced a confrontational stance during her time as foreign secretary.

However, as you can imagine, all you need to do to reinvent yourself these days is to become a China basher. It doesn’t matter how much of a joke you otherwise might be. Hence, the UK media made sure that her stay and words in Taiwan were given widespread coverage without the context of her political failures. The UK government has already distanced itself from her trip – a fact that Beijing should take careful notice of (and no doubt has).

The British Conservative Party has always been rife with that sort of factionalism. While the opposition Labour Party tends to hard-line suppress the more ideological wing of its MPs (hence the purge of the left-wing Corbynite faction), Tory ideologues have long held power as a “disruptive” force on the government itself, undermining its foreign policy. It’s a fracture which emerged during the Margaret Thatcher era, where following the breakdown of the “post-war consensus” of economic pragmatism, ideology gained ascendency in the party and soon manifested into Euroscepticism.

This tug of war lasted 30 years, making it harder for Conservative prime ministers to maintain a working relationship with the EU, and eventually culminating in Brexit itself. Once that was out of the way, these ideologues found a new target: China. While Truss has opportunistically jumped on this bandwagon, former arch-Brexiter Iain Duncan Smith had already made himself the UK’s Sinophobe-in-chief. Their common goal is simply to undermine stable ties with Beijing and provoke conflict by spurring on backbench rebellions, making them a challenge for the government to handle.

Taiwan predicts timeline for conflict with China

Consequently, while Truss may be a national laughingstock thanks to her disastrous tenure as prime minister, this new role she is taking on enables her to cause disruption on this issue. Taiwan, of course, knows this, because its entire foreign policy is premised on trying to undermine the ties of other countries’ relationships with Beijing by spending large amounts of money on inviting figures such as Truss. The timing of the trip was deliberate, coming immediately after the British foreign secretary’s engagement with a senior Chinese official following the coronation of King Charles III.

Taipei hopes that Beijing’s backlash over the Truss visit will target the UK government as a whole and punish the country. China has a record for being abrasive like this, having done so with the Czech Republic in the past and not winning any friends there as a result. If Truss is therefore allowed to dictate the flow of UK-China relations, she wins. Besides her, the UK has never been provocative on Taiwan at a senior level such as with former Speaker of the House Nancy Pelosi’s visit last year for the US.

Thus, rather than causing a crisis, China should wait until the upcoming Taiwan elections take place and hope that the more pro-China Kuomintang Party (KMT), which once governed the whole country, will take power and stabilize cross-strait ties again. The Democratic Progressive Party (DPP) thrives off creating crises, as does the US with its military deployments, and amidst it all there is no intention for cool heads to prevail. While Pelosi was a blatant violation and huge provocation of the One China policy and US commitment to it, the Truss trip is an opportunistic PR stunt by a washed-up has-been who almost ran her country into the ground in a month. Ignore, move on and forget.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of TSFT.

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OPINION

India facing challenge to steer SCO agenda away from Western-dominated frameworks

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The Shanghai Cooperation Organisation is looking at ways to address the most pressing global issues without being a disruptive influence

The upcoming Shanghai Cooperation Organization (SCO) summit promises to be a watershed moment in the bloc’s history, coming amid unprecedented global challenges and new, emergent tensions.

While the SCO Foreign Ministers meeting, which took place on May 4 and 5, was tasked with preparing the agenda for the July 3-4 summit in New Delhi, there is still much work to do to ensure that India’s chairmanship will be a success.

The West has broken virtually all links with Russia because of the Ukraine conflict. Western sanctions against Russia are unprecedented in scope, carrying significant ramifications also for the developing world, including the economic disruptions caused by the weaponization of the US dollar. The European security architecture is in tatters. For the West to seek Russia’s strategic defeat while the country possesses formidable military and material resources makes no sense. Risking a potential nuclear conflict in particular is totally irresponsible.

The European Union has lost its already limited capacity to play an independent role, especially with Germany losing clout and Brussels appropriating more power. The doors of dialogue and diplomacy are being kept closed as NATO seeks military advantage over Russia, and uses Ukraine as a proxy.

At the other end of Eurasia, US-China tensions are rising over Taiwan, regional maritime disputes, strengthening of US-centered regional alliances and NATO overtures to Japan and South Korea. The US and the EU are warning China against supplying lethal arms to Russia under pain of sanctions, even as they seek China’s support in persuading Russia to end its military intervention in Ukraine, and this in the background of the high-level dialogue between the US and China having virtually broken down.

Can Eurasia’s rising political bloc show a united front against the West’s encroachment?

Both Russia and China, the principal pillars of the SCO, are at loggerheads with the West to different degrees, and the summit agenda will inevitably reflect this reality. The SCO represents a building block of multipolarity within the global system at the political, economic and security levels, a goal reiterated at the Foreign Ministers’ meeting.

While the other SCO members have robust links to both Russia and China, their connections with India are not as strong, despite mutual goodwill and shared interests. This is largely due to a lack of contiguity and direct access to Central Asia. With Iran and Belarus joining as full members, the SCO will achieve greater Eurasian depth. Both of these countries have been politically and economically targeted by the West. The SCO Foreign Ministers meeting also agreed on May 5 to grant dialogue partner status to Kuwait, the Maldives, Myanmar and the UAE, in addition to the nine existing dialogue partners. The growing interest demonstrates the appeal of the SCO as a grouping of non-Western countries that provide an alternative platform for nations to pursue their interests outside the Western-dominated international system.

Association with the SCO increases their margin to maneuver, primarily at the political and economic levels. Diplomatic support, hedging against Western sanctions, access to non-Western development banks, benefits from connectivity projects and infrastructure development, cooperation against terrorism, extremism and separatism, are obvious advantages.

India has taken its current presidency of the SCO seriously, organizing and hosting more than 100 meetings and events, including 15 ministerial level meetings. Indian Foreign Minister Subrahmanyam Jaishankar has also stressed the great importance for India of developing multifaceted cooperation. He introduced the term ‘SECURE’ SCO on the basis of Security, Economic Development, Connectivity, Unity, Respect of sovereignty and territorial integrity, and Environmental protection.

As SCO Chair, India initiated an unprecedented engagement with the organization’s Observers and Dialogue Partners by inviting them to participate in more than 14 socio-cultural events. Many of the events hosted by India occurred for the first time in the framework of the SCO, such as the Millet Food Festival, Film Festival, Cultural Festival, the Tourism Mart, and Conference on Shared Buddhist Heritage.

Moscow Region representatives conduct roadshows to entice Delhi and Mumbai investors

Jaishankar noted that as a result of the Covid-19 pandemic and geopolitical upheavals, global supply chains had been disrupted, leading to a serious impact on delivering energy, food, and fertilizers to developing nations. He viewed these challenges as an opportunity for SCO members to address them collaboratively, noting that with more than 40% of the world’s population within the SCO, its collective decisions would surely have a global impact.

Additionally, Jaishankar highlighted the unabated menace of terrorism, and that combating it was one of the original mandates of the SCO. He drew attention to the unfolding situation in Afghanistan where the immediate priorities included providing humanitarian assistance, ensuring a truly inclusive and representative government, combating terrorism and drug trafficking and preserving the rights of women, children and minorities. This was echoed by the Chinese foreign minister.

India expressed its willingness to share its expertise and experience in the field of startups having helped cultivate over 70,000, more than 100 of which were ‘unicorns’. Last year, it proposed the creation of a Startups and Innovation working groups as well as one focused on traditional medicines, and the SCO meeting approved plans to operationalize these initiatives.

India believes that the SCO should look at reform and modernization to keep the organization relevant in a rapidly transforming world, and noted that discussions on these issues had already commenced. It also sought support for its long-standing demand to make English the SCO’s third official language, as this would enable a deeper engagement with English-speaking members and would take the SCO’s work to a global audience.

India also proposed the New Delhi Declaration as an SCO Summit Declaration at the meeting, as well as four other thematic joint statements on cooperation in de-radicalization strategies, promotion of millets, sustainable lifestyles to address climate change and digital transformation. India sought support for a timely finalization of these documents for approval at the SCO Summit.

Indian delegation wraps up successful business tour in Russia

According to Chinese Foreign Minister Qin Gang, all participating parties considered the SCO as an important platform for joint combat against terrorism, separatism, drug trafficking, as well as cyber crimes. All favored more cooperation in such fields as transportation, energy, finance, investment, trade, the digital economy, regional connectivity, deeper cultural and people-to-people exchanges, environmental protection, climate change, sustainable development, and SCO’s strengthened cooperation with the United Nations and BRICS countries.

The meeting also offered the gathered foreign ministers an opportunity for intense bilateral meetings. For example, Russian Foreign Minister Lavrov met his Chinese counterpart to discuss the implementation of agreements reached between Vladimir Putin and Xi Jinping in March.

The SCO continues to enlarge its footprint, widen its agenda, and carve out a non-Western space in the international system, but some key points of friction remain between members especially China and India. The two countries are currently embroiled in a border dispute that has yet to be settled. Additionally, India stands in opposition to China’s Belt and Road Initiative due to India’s concerns about connected sovereignty issues.

The other, less important fault line, is India-Pakistan relations. Pakistan’s Foreign Minister Bhutto Zardari did not help matters by making indirect jibes at India during his speech at the SCO meeting and further criticism of New Delhi in his interviews to the media. His comments elicited a sharp response by the Indian Foreign Minister, but only after the SCO meeting was completed. Pakistan is currently in the throes of a major internal crisis, which may affect its participation in the SCO summit. However, India-Pakistan differences are not germane to the SCO’s growing stature. Far more important is the Russia-India-China triangle.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of TSFT.

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OPINION

China isn’t the biggest threat to Italy’s prosperity

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Rome is considering leaving the Belt and Road Initiative in a move which will place virtue signaling to other Western states above its own interests

Italy’s membership of China’s Belt and Road Initiative (BRI) is up for renewal at the end of this year, and Western media outlets are speculating that Rome may choose to leave the pact.

Italy became the first and only G7 nation to join China’s multi-billion-dollar infrastructure vision, signing a memorandum of understanding (MoU) just before a tidal wave of anti-China sentiment was unleashed on the world. Indeed, the country’s leadership was in a very different place then, with Italy being led by Giuseppe Conte of the Five Star Movement, whose populism faulted the Euro-Atlantic establishment for decimating the Italian economy through the 2008 debt crisis and the brutal austerity measures which followed. It is little wonder that Italy had decided to look eastwards.

Even 15 years on from the events of 2008, Italy’s economy still has not fully recovered. It was worth $2.4 trillion at the end of that year, but is only at $2.1 trillion now, and barely growing at all. New and concurrent economic crises have taken a toll. Italy’s current leadership no longer believes all roads lead to Rome, let alone to China’s modern-day Silk Road – rather, they lead to Washington. As pressure on the country has grown, its successive leaders, Mario Draghi and Giorgia Meloni, have sought to reset its foreign policy back to transatlantic-oriented goals, ending its rebellion against the establishment and thus contemplating quitting China’s grand initiative.

Italy may exit ‘New Silk Road’ – FT

Oddly enough, the truth remains that it is the EU and US that stand as the biggest threat to Italy’s prosperity, not China. While dumping the BRI will receive plaudits from the US-dominated commentary circles in these countries, the reality is that they offer no alternative, no plans, and no incentives to make Italy a wealthier country. It is the “sick man” of the G7, an advanced economy that has increasingly lost its competitiveness, but also one that has been thrust into decline by being a southern EU country and a net loser of Eurozone policies.

It is precisely because of the economic upheavals that the country has faced over the past 15 years and widespread political dissatisfaction, that radical and populist politics have gained ground. China was rightfully seen as an alternative, a country that could rapidly expand Italy’s exports and invest in crumbling public infrastructure. However, this has quickly become politically incorrect. Italy’s leaders argue that BRI participation has been a waste of time. However, the reality is that when Eurocrat Mario Draghi came to office, he sought to reset Italy’s foreign policy and began using new “golden powers” to veto and cancel Chinese investments in Italy on a large scale. In 2021 alone, he blocked three Chinese takeovers, including a seed and vegetable producer.

Following Draghi, Giorgia Meloni, despite her outward populism, has been even more prone to pledging Rome’s loyalty to the transatlantic cause, having decided to become vocal in support of Ukraine in its conflict with Russia and even visit Kiev. At this stage, it is very little surprise that her country is contemplating canceling participation in the BRI, something which can score political points and help dispel doubts about her loyalty to Brussels and Washington. Predictably, the mainstream media narrative readily depicts the BRI in predatory and malign terms, ignoring the obvious empirical truth that it is the EU that has saddled Italy with a national debt larger than its GDP, and not China. Of course, there is no alternative scheme or plan for Italy on offer should it leave the BRI, meaning it is cutting its nose off to spite its face.

EU defenseless against China – Berlusconi

By forfeiting its BRI membership, Italy will undoubtedly lose the opportunity to massively enhance its trade competitiveness, namely by opting out of projects such as Chinese-owned ports and railway links. As an example of this, Greece, to the southeast, has positioned itself as a “gateway to Europe” through Chinese ownership of Pireaus port and its connecting railways, which allows cargo to go up through the Suez Canal into the Mediterranean, into the port and then across Europe. Italy could have competed for a share of this, but it has chosen not to, and it’s not like it will be selling anything additional to the US with its protectionist “America first” policies, is it?

In doing so, Italy has chosen to stop being a leader pursuing its own path in the world to better strengthen its global clout, but instead to be a follower, to play second fiddle to the transatlantic establishment which doesn’t see it as a particularly prominent partner to begin with. Italy joined the BRI precisely because it was sick of being a “rule taker” from Brussels, in a similar vein to what Greece has experienced. Now it appears happy again to hold up the political orthodoxy of the elitist, US-led G7. In doing so, it can kiss goodbye any hopes of becoming a powerful and influential country again anytime soon. Italy is admired mostly for its past, as opposed to what it offers to the world presently, and if its current leadership has its way, that will likely remain the case.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of TSFT.

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