As mentioned in my previous posts the concessions Trump asked China for: the reduction of trade deficit, equal treatment between foreign and Chinese enterprises, protection of intellectual property and decision of Chinese currency’s exchange rate by the market were the major content of Chinese President Xi Jinping’s predecessor Hu Jintao’s further reform and opening-up.
Hu had realized that China could no longer achieve economic growth with its old approaches of heavy investment to increase exports. First, the international market for China’s labor-intensive industries and products with low technology is saturated. Second, as CCP has raised workers’ living standards, their wages have been much increased to cause great reduction in the profit margins of China’s labor-intensive industries. China has to switch from export- and investment-geared economic growth to innovation-, creation- and consumption-led economic growth. The above-mentioned further reform and opening-up are indispensable for such a transformation.
China has to upgrade the technology of its labor-intensive enterprises. It has attained that goal in some enterprises but the workers unable to learn the technology have to be laid off to be replaced by employees with better education and skill.
Most of enterprises in labor-intensive industries are unable to upgrade their technology so that they have to move to areas with lower labor costs. They have to lay off their Chinese workers and employ local workers withe lower wages in the areas they have moved to so as to reduce their labor costs. There will be quite serious unemployment as a result.
The further reform, therefore, encountered serious opposition from the vested interests in those industries. The resulting unemployment problem also greatly worries the reformists.
Moreover, in order to urge enterprises, scientists, engineers and skillful workers to conduct innovation and creation, China has to treat state-owned, private and foreign enterprises equally to enable competition to force enterprises to improve. Xi knows that protectionism can only protect backward enterprises and cause them to lose the incentives for innovation and creation. However, that also encounters opposition from vested interests. Hu was unable to make progress in his further reform and opening up. Xi has also been unable to make progress fast enough due to the opposition and unemployment problem.
Under such circumstances, Trump’s trade war forces labor-intensive enterprises to upgrade or move to areas with lower labor costs. The misery of unemployment will be caused by Trump instead of the reform and opening-up
The introduction of competition with foreign enterprises and protection of intellectual property to satisfy Trump’s and other Western countries’ demand are what China has promised when its joined the WTO. Since China enjoys such treatment in Western countries, it certainly shall reciprocate. Chinese intellectuals are clever and hardworking. The pressure of competition will force them while the protection of intellectual property will encourage them to innovate and create.
Trump’s trade war provides Chinese President Xi Jinping with golden opportunity to speed up his further reform and opening-up. Xi certainly will delay the deal to end the trade war in order to keep the pressure until he has succeeded in moving abroad or upgrading labor-intensive industries, making Chinese enterprises accustomed to competition and have the urge for innovation and creation.
Article by Chan Kai Yee
28 May 2019 | By GCR Staff
China’s Belt and Road Initiative (BRI) is set to boost global gross domestic product (GDP) by more than $7 trillion a year by 2040, and benefit the US most even though it is not directly participating in it, a report has found.
Each of up to 56 countries will see their annual GDP boosted by more than $10bn a year by 2040 thanks to the BRI, which is China’s intensive overseas infrastructure programme intended to facilitate trade between it and the rest of the world.
Roads, railways, airports and sea ports in Europe and central, south and southeast Asia feature in the BRI, which has become China’s all-encompassing diplomatic priority.
The study by global economic consultants Cebr, and sponsored by the Chartered Institute of Building (CIOB), looks at the BRI’s global economic impact on 10 regions of the world and on 25 leading economies.
Other than China, which by 2040 will be the world’s largest economy, the biggest single potential beneficiary of the BRI is likely to be the US, because the sheer size of its economy means it gains from the indirect effects of world GDP growth.
Even though the boost to US GDP is forecast to be only 1.4%, the size of the US economy means it benefits the most in net gains, apart from China.
The UK is forecast to be among the top 10 beneficiaries of the project, sitting seventh in the table of nations that will see the largest economic impact.
Among the key points in the new report are:
•The BRI is likely to boost world GDP by 2040 by $7.1 trillion a year. This raises world GDP by 4.2% of likely GDP in 2040 (or 8.3% of GDP in 2019).
•As many as 56 different countries are forecast to have their annual GDP in 2040 boosted by more than $10bn as a result of BRI.
•The next largest impact is in Russia, followed by Japan, Indonesia, Korea and the UK.
•GDP is likely to be boosted in Western Europe by 5%.
Another key conclusion of the report is that as the BRI develops, it is likely to attract further countries; it is highly likely that Western Europe, which has largely stayed aloof so far, will join in as the project develops momentum.
It is even possible that it will result in significant investment, in the longer-term, in upgraded infrastructure for road and rail routes along the east cost of the UK. The BRI includes plans to reach Rotterdam, Europe’s largest port, and enhance links between north-western continental Europe, Scandinavia and the UK.
Chris Soffe, President of the Chartered Institute of Building, said of the report: “This report is a fascinating look at plans to build what is effectively a road halfway round the world, with impact way beyond its boundaries. The Belt and Road initiative is the most significant global infrastructure initiative ever seen. Looking at the potential outcomes for the global economy and the opportunities for our industry – and the future of our industry – is something we should all be interested in.”
Cebr Deputy Chairman Douglas McWilliams said: “This is a transformative economic project that will reshape the world’s geography by linking places that were previously unconnected. It will give a huge boost to the world’s economy not only through creating new infrastructure but more importantly by boosting trade.”
•The study, “From Silk Road to Silicon Road”, can be downloaded from the CIOB.
Source: Global Construction Review “America biggest winner from China’s Belt and Road, study finds”
Note: This is Global Construction Review’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
Bipartisan bill if passed will severely sanction a long list of Chinese entities and individuals involved in Beijing’s expansion and militarization in the South China Sea
By Richard Javad Heydarian, Manila
While the US Navy ramps up patrols near China’s claimed features in the contested South China Sea, American legislators are upping the ante with proposed sanctions on Chinese entities involved in Beijing’s expansionist militarization of the contested maritime area.
In a rare bipartisan move, US Republican Senators Marco Rubio and Tom Cotton along with Democratic Senator Ben Cardin last week formally re-introduced the South China Sea and East China Sea Sanctions Act, a punitive measure that aims to target Chinese individuals and companies.
The bill’s provocative language, which refers to China’s “illegitimate activities” to “aggressively assert its expansive” claims in the hotly contested sea, is certain to provoke a response from Beijing at a time bilateral tensions are already on a boil. It could also escalate trade tensions if top Chinese companies are targeted with South China Sea-related sanctions.
Significantly, the sanctions bill takes the legal high ground, saying that the US “opposes actions by the government of any country to interfere in the free use of waters and airspace in the South China Sea or East China Sea” while saying China should stop pursuing “illegitimate claims and to militarize an area that is essential to global security”
It also calls on the US government broadly to “expand freedom of navigation operations and overflights and respond to Chinese provocations with commensurate actions.” Many in the region believe that China is on the verge of declaring an Aerial Defense Identification Zone (ADIZ), a move that would give it de facto control over the sea.
The US aims to forestall any move in that direction. Earlier this month, a US Navy guided-missile destroyer deployed near the Scarborough Shoal, a sea feature occupied by China since 2012 but claimed by the Philippines as part of its exclusive economic zone (EEZ).
The freedom of navigation operation came against the backdrop of joint US-Philippine coast guard exercises held earlier this month near the shoal, representing the two sides’ first ever search-and-rescue exercise near the China-controlled feature.
China claims nearly 90% of the South China Sea through its so-called “nine-dash line” map and has consistently maintained that America’s freedom of navigation operations in the area are illegal and a violation of its sovereignty.
China has territorial disputes with the Philippines, Brunei, Malaysia, Taiwan, Vietnam and Indonesia in the highly trafficked waterway.
First mooted in early 2017, the revived sanctions bill “requires the President to impose entry and US-based property sanctions” on “any Chinese person that contributes to construction or development projects” or “engaged in actions or policies that threaten peace and stability” in the South China Sea.
Given China’s holistic approach to the South China Sea disputes, whereby all relevant government and military as well as para-military agencies are involved in pushing its ever-expanding claims, the sanctions could extend beyond state-owned and influenced companies to target the People’s Liberation Army as well as local government units.
The bill includes an initial list of 25 Chinese companies that could be sanctioned under its provisions. They include CCCC Dredging Group, a subsidiary of the state-owned China Communications Construction Company that has been instrumental in artificial island-building in contested areas of the sea.
Other major Chinese companies mentioned include China Petroleum Group (Sinopec), China National Offshore Oil Corporation (CNOOC), China Mobile, China Telecom, and China Aerospace Science and Industry Corporation (CASIC). If sanctioned, they would all be barred from US-based or owned financial institutions, a potential blow major blow for the globally oriented firms.
Moreover, the sanctions could ultimately target no less than Chinese President Xi Jinping, who has personally overseen the country’s massive reclamation and militarization activities in the South China Sea. Some analysts see the bill as a potential diplomatic “nuclear option” against China as trade negotiations falter.
If passed, which seems increasingly possible as bipartisan support for confronting China coalesces, the sanctions will for the first time put America’s military might behind the claims of regional allies and strategic partners pitted against China in the sea.
The sanctions would also effectively nix America’s longstanding formal “neutrality” on the status of the disputed territories and resources in China’s adjacent waters, particularly in the South China Sea.
The Trump administration’s hardening stance in trade talks has gone hand-in-hand with a lesser noticed tougher defense policy against China, a strategic shift that could likewise soon require regional countries to take sides between the two superpowers.
This week, US Defense Secretary Patrick Shanahan is expected to announce a new Indo-Pacific Strategy at the Shangri-La Dialogue in Singapore, the world’s premiere gathering of defense officials and experts.
The new strategy is expected to contain new military, diplomatic and economic measures to deter and punish China’s maritime expansionism in adjacent waters.
It will also likely call on regional allies and likeminded partners to conduct more FONOPS and related operations in the area; step up defense aid to China’s rival claimant states such as the Philippines and Taiwan; and encourage expanded and increasingly coordinated naval exercises and other military cooperation in China’s adjacent waters.
The sanctions bill, some suggest, could be designed specifically to complement that soon-to-be-unveiled Asian security strategy. At the very least, Trump’s China hawks can dangle the possibility of sanctions to press Beijing into more acquiescence in the South China Sea.
US Secretary of State Mike Pompeo, who would be charged with reporting to Congress on which entities should be targeted under the sanctions, has expressed confidence in the utility of a maximum pressure strategy against China .
“I haven’t met anyone in Asia that believes there was a pivot from the previous administration,” Pompeo said in reference to Barack Obama’s “pivot” to Asia policy, which committed to deploy 60% of America’s naval assets to the theater, in a late May interview.
“But today they can see we are more engaged. We’re there. We’re not only attending meetings but we’re acting. We’re active. Our military is active,” America’s top diplomat said.
Source: Asia Times “US sanctions threaten to sink China at sea”
Note: This is Asia Times’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
National Interest speculates in its report “China Is In Love with Stealth (As In Lots of New Stealth Fighters and Bombers)” yesterday that China is developing a medium-range stealth fighter-bomber to supplement the stealth strategic bomber H-20 it has been developing. The following is the full text of the report.
China Is In Love with Stealth (As In Lots of New Stealth Fighters and Bombers)
Here is what we can tell you.
by David Axe May 27, 2019
Follow @daxe on Twitter
If there’s one thing that might hold back the JH-XX’s development, it’s the new plane’s engine, just as problems integrating a Chinese-built engine reportedly have slowed development of the J-20 and FC-31 fighters.
The Chinese air force is expanding its fleet of J-20 radar-evading stealth fighters while also preparing to field FC-31 stealth fighters and H-20 long-range stealth bombers, the U.S. Defense Department warned in the 2019 edition of its annual report on Chinese military developments.
(This first appeared earlier in the month.)
China’s stealth expansion isn’t without hiccups, as Beijing’s engineers still struggle with certain key technologies. But the Pentagon doesn’t expect technological challenges to halt the Chinese air force’s transformation into a stealthy, “fifth-generation” force.
Modernizing the People’s Liberation Army Air Force, or PLAAF, is a top priority of Chinese military leaders. “The PLAAF, in particular, has received repeated calls from its leadership to become a truly ‘strategic’ air force, able to project power at long distances and support Chinese national interests wherever they extend,” the Pentagon reported.
The PLA’s planned fielding of a fifth-generation fighter force will bolster its air-to-air capability, adding to the air power of China’s fourth-generation Russian-built Su-27/Su-30 and J-11A, and the indigenous J-10A/B/C, J-11B and more advanced J-16 fighters.
The J-20 and FC-31 feature high maneuverability, stealth characteristics, and an internal weapons bay, as well as advanced avionics and sensors providing enhanced situational awareness, advanced radar tracking and targeting capabilities and integrated [electronic-warfare] systems.
A flight of J-20s performed a flyby at the PLA 90th anniversary parade in July 2017, and the J-20 may have begun active service in small numbers, possibly with a testing and training unit.
A modified FC-31 prototype made its first flight in late December 2016, although production is unlikely to begin until at least 2019. China is having difficulty with the engines and radars for these aircraft.
The Pentagon clearly has less information on the H-20 bomber than it does on the J-20 and FC-31.
Following PLAAF commander Gen. Ma Xiaotian’s 2016 public statement that China was developing a new generation of long-range bombers, a number of reports suggest the new bomber, likely named the H-20, could debut sometime in the next decade with the following features: a stealthy design, employing many fifth-generation technologies; a likely range of at least [5,300 miles]; a payload of at least 10 metric tons; and a capability to employ both conventional and nuclear weaponry.
A photograph of a possible H-20 prototype depicted a flying wing airframe akin to the B-2 bomber and X-47B stealth unmanned combat aerial vehicle.
China apparently is developing a fourth radar-evading warplane, a medium-weight fighter-bomber, that the Pentagon’s annual report does not mention. The new JH-XX fighter-bomber, however, did feature in a separate, January 2019 report from the U.S. Defense Intelligence Agency.
“The PLAAF is developing new medium- and long-range stealth bombers to strike regional and global targets,” the DIA reported.
Stealth technology continues to play a key role in the development of these new bombers, which probably will reach initial operational capability no sooner than 2025.
These new bombers will have additional capabilities, with full-spectrum upgrades compared with current operational bomber fleets, and will employ many fifth-generation fighter technologies in their design.
In service, the JH-XX could complement or replace existing JH-7 fighter-bombers while the larger H-20, which could be similar in size and capability to the U.S. Air Force’s own B-2 stealth bomber, flies alongside the PLAAF’s new, non-stealthy H-6K bombers.
It’s unclear whether the JH-XX also might carry nukes. That the JH-XX is a fighter-bomber, rather than a multi-role fighter, implies that it’s design emphasizes range and payload over maneuverability.
If there’s one thing that might hold back the JH-XX’s development, it’s the new plane’s engine, just as problems integrating a Chinese-built engine reportedly have slowed development of the J-20 and FC-31 fighters.
“China’s aviation industry has advanced to produce a developmental large transport aircraft, modern fourth- to fifth-generation fighters incorporating low-observable technologies, modern reconnaissance and attack UAVs and attack helicopters,” the DIA explained in its report.
“But China’s aircraft industry remains reliant on foreign-sourced components for dependable, proven, high-performance aircraft engines.”
David Axe serves as Defense Editor of the National Interest. He is the author of the graphic novels War Fix, War Is Boring and Machete Squad.
Source: National Interest “China Is In Love with Stealth (As In Lots of New Stealth Fighters and Bombers)”
Note: This is National Interest’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
Four mega projects under CPEC launched
May 27, 2019
ISLAMABAD – Prime Minister Imran Khan and Chinese Vice President Wang Qishan Sunday launched four mega development projects in the fields of energy, technology and education under China-Pakistan Economic Corridor (CPEC).
Both the dignitaries unveiled the plaques of the four projects at a ceremony held here during the visit of the Chinese vice president who is here on three-day visit.
The ceremony was also attended by Minister for Foreign Affairs Shah Mahmood Qureshi, Planning Minister Khusro Bakhtiar, Finance Adviser Abdul Hafeez Sheikh and members of the Chinese delegation.
Under the first project, a transmission line of 660KV would be laid between Matiari and Lahore to transmit power from coal-based plants located at Thar, Port Qasim and Hub. The project would have the capacity to supply 2000MW with 10 percent overloaded capability for two hours.
The two leaders unveiled the plaque for Rashakai Special Economic Zone (RSEZ) project to promote industrialization through optimally priced, world-class industrial infrastructure in Khyber Pakhtunkhwa province.
The RSEZ is situated centrally in the CPEC at the junction of Karakoram Corridor and ML-1 development corridor. It is set to become, and will be designed, to be the key trade and logistics hub connecting Kashgar, Kabul and Gwadar on the Belt and Road, and be a high-end host of international commercial, technological and manufacturing activities.
The two leaders inaugurated the Confucious Institute at the University of Punjab. The institute mainly provides Chinese education, cultural promotion and cultural exchanges and other projects and activities.
The ceremony also marked the launching of Huawei Technical Support Center to be established in Pakistan as part of Chinese tech giant’s commitment to make massive investment in Pakistan.
The two leaders also witnessed the signing of MoUs/agreements between Pakistan and China and inauguration of several projects to enhance bilateral cooperation in diverse areas. The MoUs/agreements signed on the occasion include Framework Agreement on Agricultural Cooperation; Memorandum on the Requirements of FMD Free Zone; Letter of Exchange for Disaster Relief Goods; China-Pakistan Economic Agreement; Agreement between CMEC, Government of Balochistan and Lasbela University on Modern Agriculture Comprehensive Development in Lasbela.
Both the leaders yesterday resolved to further deepen their ‘all-weather strategic cooperative partnership’.
Islamabad and Beijing expressed this commitment at delegation-level talks held here between Prime Minister Imran Khan and Chinese Vice President Wang Qishan. The Chinese vice president arrived in Pakistan on three-day visit on invitation of the prime minister.
Reaffirming ‘all-weather strategic cooperative partnership’ between Pakistan and China, the two leaders exchanged views on the entire gamut of bilateral relations and expressed the resolve to further strengthen bilateral relations in all spheres – including political, economic and trade and people-to-people exchanges.
Recalling his visit to China last month to attend the 2nd Belt and Road Forum (BRF), the prime minister expressed satisfaction at results of the visit and highlighted significance of high-level exchanges in cementing abiding friendship between the two countries.
The prime minister appreciated President Xi’s Belt and Road Initiative and underscored its significance for greater regional connectivity and sustainable growth.
Reiterating Pakistan’s unwavering commitment to China-Pakistan Economic Corridor (CPEC), the prime minister highlighted the extension of CPEC into new areas of agriculture, industrial development and socio-economic uplift.
He also stressed the importance of further deepening bilateral economic and commercial interaction, industrial collaboration, and China’s investment in Pakistan’s special economic zones (SEZs).
Reciprocating the sentiments of the prime minister, the vice president thanked him for the warm welcome and hospitality.
He reiterated China’s strong support for agenda of socio-economic uplift and people-centred development.
He also expressed satisfaction at the increasing momentum of bilateral engagement between the two countries.
Among other things, the vice president underlined importance of frequent leadership-level exchanges, CPEC projects in diverse sectors, expansion of bilateral trade in a balanced manner, promotion of investments, and increase in cultural and people-to-people exchanges with a special focus on youth and the media.
The two sides also exchanged views on the regional situation, including recent developments in South Asia.
The vice president lauded Pakistan’s constructive approach and new initiatives for forging peaceful and cooperative relations in the neighbourhood.
Vice President Wang also expressed China’s appreciation for Pakistan’s sustained and successful efforts in the fight against terrorism and reaffirmed China’s steadfast support in this regard.
Earlier upon arrival on three day visit on Sunday, the Vice President of China Wang Qishan was accorded red carpet welcome at Nur Khan Airbase.
Foreign Minister Shah Mahmood Qureshi and Planning Minister Khusro Bakhtiar received the Chinese vice president.
Source: The Nation “Four mega projects under CPEC launched”
Note: This is The Nation’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
The conference, which runs through Wednesday, counts China tech giants, including Alibaba Group, Tencent and Huawei Technologies among its exhibitors.
May 26, 2019, 11.31 PM IST
Hong Kong: Countries should cooperate in developing the Internet, big data and artificial intelligence, China President Xi Jinping said in a letter to the China International Big Data Industry Expo that started Sunday in the southwestern city of Guiyang, Xinhua reports.
China attaches great importance to the development of the big data industry and is willing to explore a growth path with other nations for new technologies, Xi said in the letter, according to Xinhua.
The conference, which runs through Wednesday, counts China tech giants, including Alibaba Group, Tencent and Huawei Technologies among its exhibitors.
The US government has announced a ban on exports from Huawei and barred the Chinese company from buying components from American firms. Washington also threatened to ban five other Chinese video-surveillance businesses.
Shares of semiconductor and chip suppliers have plunged over the past month amid trade-war tensions. Raymond James analyst Chris Caso said in a note to clients this week that he expects “many, if not most,” chip companies may have to cut estimates.
Source: The Economic Times “Xi Jinping seeks global cooperation on technology after Huawei’s US ban”
Note: This is Economic Times’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
May 2019 News Navy Naval Maritime Defense Industry Posted On Monday, 27 May 2019 15:49
China’s first locally-made aircraft carrier, “Type 001A” headed out on Saturday, May 25, for its final sea trials before its formal induction into the People’s Liberation Army (PLA) Navy fleet later this year, local media reported.
“The likely sixth sea trial could feature comprehensive and final tests before the warship’s commissioning into the PLA Navy,” Li Jie, a military expert, told Global Times.
Chinese media on Saturday posted several unverified photographs and videos of the carrier leaving from the Dalian Shipyard in Northeast China’s Liaoning Province under the assistance of multiple tug boats.
A notice published Friday stated that a military mission is scheduled to begin on Friday in the Bohai Strait and in the northern part of Yellow sea, just outside Dalian where the Type 001A carrier is moored. The sector is now off limits for other ships, the report added.
The warship is said to have already successfully tested its avionics, radar and communication systems in previous trials, so it is likely fighter jets will conduct takeoffs and landings this time. Electronic warfare version of the J-15 warplane and a Z-18 helicopter were spotted on board the Type 001A as it embarked on the sea trial in March, according to reports published in that month.
After the completion of its fifth sea trial in March, the Type 001A stayed at in the Dalian Shipyard and underwent outfitting works including flight deck painting and conducted a replenishment drill within the shipyard with the supply ship Hulunhu in late April, media reported.
Li said the sixth sea trial could again test those problems that were encountered during previous trials and then solved during the past months. “If the ship can smoothly finish this trial mission, it indicates that it is basically fit to be delivered,” Li added.
Source: navyrecognition.com “Type 001A aircraft carrier of the PLA Navy in final sea trials”
Note: This is navyrecognition.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
By ALEXIS HOOI |chinadaily.com.cn |Updated: 2019-05-26 17:47
Initiative likely to raise world GDP by 4.2 percent in 2040, major economics report says
China’s Belt and Road Initiative is likely to boost world GDP by $7.1 trillion annually within the next two decades, involving up to $8 trillion of spending over the next quarter century via global infrastructure and other related projects, according to the latest figures from a major economics report.
The initiative is likely to raise global gross domestic product by about 4.2 percent in 2040, or 8.3 percent of GDP this year, with up to 56 countries forecast to have their annual GDP in 2040 boosted by more than $10 billion as a result, the report from the London-based Center for Economics and Business Research consultancy showed.
Laying out some of the most detailed benefits of the BRI so far, the center’s 40-page report, “From Silk Road to Silicon Road: How the Belt and Road Initiative will Transform the Global Economy”, was written for the Chartered Institute of Building worldwide professional body representing construction and property professionals. It was provided to China Daily ahead of its public release this week.
The BRI “is the most ambitious and largest infrastructure project arguably in history and will eventually touch more than two-thirds of the world’s population across some 65 or more countries. Its impact and effect will be felt for generations”, the institute’s president, Chris Soffe, wrote in the report.
“Although currently the BRI has about $2 trillion of projects already on the drawing board, we believe that as it succeeds it will expand to encompass many other projects,” reported the center, which analyzed the economic impact of transport and infrastructure, as well as trade frictions in its study.
The center identified a wide range of additional projects that seemed likely to link with the BRI, including a “green belt and road” global network of renewable energy sources and storage, upgraded highway links catering to autonomous vehicles, and an academic network connecting universities and scientific research with potential long-term impacts on technology and productivity.
Other than China, which by 2040 will be by far the world’s largest economy and which will therefore benefit from any boost to the world economy, the “biggest single potential beneficiary” of the initiative “is likely to be the US, even though it isn’t participating directly in the project. This is because of the sheer size of the US economy, which means that it gains from the indirect effects of world GDP being boosted”, according to the center.
“So bizarrely, despite the opposition of at least the Trump administration, the United States is positioned, potentially, to be the second-biggest beneficiary of the Belt and Road Initiative,” CEBR Founder and Deputy Chairman Douglas McWilliams told China Daily.
Amid a “rebalancing of global power”, McWilliams said he would expect the US to “come to terms” with the impact and success of the BRI and “may eventually want to participate in it”.
The regions that will most be transformed by the initiative are likely to be Central Asia and Russia, where GDP in 2040 is forecast to be 18 percent higher, and likely to be boosted in Central Europe (6 percent), Western Europe (5 percent) and East Asia (5 percent), according to the report. The largest proportional impacts are expected to be in Mongolia, Kyrgyzstan and Russia, it said.
It is also highly likely that the Western European end of the BRI, which has, other than Greece and the recent accession of Italy, “largely stayed aloof so far”, will join in as the project gains momentum and attracts more countries, according to the center.
But the center also identified risks and obstacles for the projects. Other than “the normal economic, political and military risks, which always have to be taken into account”, there also were risks that “relate specifically to the projects themselves. They are at the cutting edge of technology and as a result who can tell what technological obstacles might emerge”, it said.
There also were economic obstacles — if the global economy “develops more slowly than expected, there is a risk that either lenders or borrowers might face debt obstacles which would constrain the pace of spending”, according to the center.
Peter Frankopan, professor of global history at Oxford University, told China Daily that the challenge for the BRI at the moment “is to focus on the detail of each project in turn as each can and should be measured by different metrics. Some projects are more complicated than others because of geography, scale, length of completion and outcome, and of course some carry higher levels of risk too”.
There was also the obvious concern about “the over-dependence and even the perception of over-dependence on China”, said Frankopan, whose new book, The New Silk Roads: The Present and Future of the World, looks at the links and interconnections along the routes today.
“All countries like to have options and choices, and one of the difficulties at the present is finding a way that international relations between states does not become a question of division. In my opinion, this is why greater collaboration, greater integration and greater multilateral cooperation is not just useful but essential as BRI develops — which is something President Xi Jinping often talks about,” Frankopan said.
In its report, the CEBR likened the BRI to the vast road network of the Roman Empire that “eventually mainly existed to support and enhance trade”.
“The key point of the BRI is not just the physical and electronic infrastructure but the extent to which it makes trade around the world easier,” it said.
Through the BRI, China will be “continuing to drive world economic growth” by “helping the building of infrastructure throughout the world and through reducing both transport and other frictions that hold back world trade”, according to the center.
Given China’s financial capabilities, willingness to invest in other countries, and its capacity to encourage cooperation, “there are many benefits to populations not numbering in millions or even tens of millions, but in hundreds of millions and billions if successful projects that are financially, socially and environmentally sustainable are implemented”, Frankopan said.
“That will not just change the world for the better now, but will do so for future generations too,” he said.
Source: Global Times “Belt and Road set to ‘transform’ global economy”
Note: This is Global Times’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
This blogger’s comment: Investments in BRI, though accompanied with political, economic, military, debtors’ insolvency risks, are much better than in US treasury bonds that funds US weapon development for attacking China.
Even if some debts may not be repaid, the prosperity brought by such infrastructure investments to participating nations will greatly expand China’s market there.
That is why CEBR says in its report, “The key point of the BRI is not just the physical and electronic infrastructure but the extent to which it makes trade around the world easier“. That will benefit China that pursues globalization but not the US that pursues protectionism and isolation.
Reuters May 27, 2019
(Reuters) – Huawei Technologies’ founder and Chief Executive Ren Zhengfei told Bloomberg https://bloom.bg/2HT7DUY that retaliation by Beijing against Apple Inc was unlikely and that he would oppose any such move from China against the iPhone maker.
When asked about calls from some in China to retaliate against Apple, Ren said that he would “protest” against any such step if it were to be taken by Beijing.
“That (Chinese retaliation against Apple) will not happen first of all and second of all, if that happens, I’ll be the first to protest,” Ren said in the interview with Bloomberg.
He conceded that export curbs from the administration of U.S. President Donald Trump will cut into a two-year lead built by Huawei over its competitors, but added that the company will either ramp up its chip supply or find alternatives to stay ahead in smartphones and 5G.
(Reporting by Kanishka Singh in Bengaluru; Editing by Susan Thomas)
Source: Bloomberg “Huawei founder says he would oppose Chinese retaliation against Apple: Bloomberg”
Note: This is Bloomberg’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
BEIJING (Reuters) – The United States has called on China to curb the development of its state-owned enterprises (SOEs), a demand that China sees as an “invasion” on its economic sovereignty, Chinese state news agency Xinhua said on Saturday.
Trade tensions between Washington and Beijing escalated sharply earlier this month after the Trump administration accused China of having “reneged” on its previous promises to make structural changes to its economic practices.
Washington later slapped additional tariffs of up to 25% on $200 billion of Chinese goods, prompting Beijing to retaliate.
As trade talks stalled, both sides have appeared to be digging in. China has denied it had walked back on its promises but reiterated it would not make concessions to “matters of principles” to defend its core interests, although no full details were given.
“At the negotiating table, the U.S. government presented a number of arrogant demands to China, including restricting the development of state-owned enterprises,” Xinhua said in a commentary.
SOEs in China enjoy not only explicit subsidies but also hidden benefits such as implicit government guarantees for debts and lower interest for bank loans, analysts and trade groups say.
“Obviously, this is beyond the scope of trade negotiations and touches on China’s fundamental economic system,” Xinhua said.
“This shows that behind the United States’ trade war against China, it is trying to invade China’s economic sovereignty and force China to damage its core interests.”
The commentary added the United States has made unfounded accusations including that Beijing had forced technology transfers from foreign firms operating in China, saying this is all evidence that the U.S side is “forcing China to change its development path.”
Reporting by Yawen Chen and Ryan Woo; Editing by Frances Kerry
Source: Reuters “China says U.S. demand on its state-owned enterprises is ‘invasion’ on economic sovereignty”