Posts tagged ‘United States’

21/12/2016

China seizes an underwater drone and sends a signal to Donald Trump | The Economist

IT WAS an operation carried out with remarkable cool. On December 15th, less than 500 metres away from an American navy ship, a Chinese one deployed a smaller boat to grab an underwater American drone. The object was then taken to the Chinese ship, which sailed off with it. Point deftly made.

The incident occurred in the South China Sea, in which China says the Americans have no business snooping around. By seizing the drone, it has made clear that two can play at being annoying. Mercifully no shots were fired. After remonstrations by the Americans, China agreed to give the drone back “in an appropriate manner”. It chose its moment five days later, handing the device over in the same area where it had snatched it. The Pentagon, though clearly irritated, has downplayed the drone’s importance, saying it cost (a mere) $150,000 and that most of its technology was commercially available. The drone was reportedly carrying out tests of the water’s properties, including salinity and temperature.

But it may turn into less of a game. Relations between the two nuclear powers, never easy at the best of times, are under extra strain as Donald Trump prepares to take over as president on January 20th. Mr Trump has already angered China by talking on the phone to Taiwan’s president, Tsai Ing-wen, and challenging China’s cherished “one-China” policy, crucial to which is the idea that Taiwan is part of it.

The capture of the drone took place on the outer perimeter of China’s expansive claim to the sea, about 50 miles (80km) from the Philippine port of Subic Bay, which was once home to a large American naval base (see map).

It appeared calculated to show China’s naval reach, with only minimal risk of any conflict—the American ship that was operating the drone, the Bowditch, is a not a combat vessel. Once in office, however, Mr Trump could face tougher challenges, exacerbated by China’s growing presence in the South China Sea: it appears to be installing weapons on islands it has been building there.

His two predecessors were each tested by a dangerous military standoff with China in their first months in office. With George Bush it involved a mid-air collision in April 2001 between an American spy-plane and a Chinese fighter-jet off China’s southern coast. The Chinese pilot was killed and the disabled American plane made an emergency landing at a Chinese airfield. There the crew of 24 was released after 11 days of painstaking diplomacy. The aircraft, full of advanced technology, was returned—in pieces—months later.

In March 2009 it was Barack Obama’s turn. According to the Pentagon, an American surveillance ship, the Impeccable, was sailing 75 miles from China’s coast when it was buzzed by Chinese aircraft and then confronted by five Chinese ships. First the Chinese forced it to make an emergency stop, then they scattered debris in front of the American ship as it tried to sail away. They also attempted to snatch sonar equipment it was towing. The Impeccable soon returned—this time in the reassuring company of an American destroyer.

For now, feuding between Mr Trump and China is less nail-biting. In Twitter messages, Mr Trump bashed China for taking the drone and later said China should keep it. Chinese media have in turn bashed Mr Trump. One newspaper said he had “no sense of how to lead a superpower”. Global Times, a nationalist newspaper in Beijing, said that China would “not exercise restraint” should Mr Trump fail to change his ways once in the White House. He would be wise to study the form.

Source: China seizes an underwater drone and sends a signal to Donald Trump | The Economist

18/12/2016

China to return seized US underwater drone, Pentagon says – BBC News

The Pentagon says it has “secured an understanding” with China that it will return an underwater drone seized in the South China Sea.China captured the US vessel in international waters on Thursday. It has not explained why and accused the US of “hyping-up” the incident.US President-elect Donald Trump accused the Chinese of “stealing”.

“We should tell China that we don’t want the drone they stole back – let them keep it!” he tweeted.

The incident is among the most serious military confrontations between the two powers for decades.

The Pentagon said the drone, known as an unmanned underwater vehicle (UUV), was being used to carry out scientific research at the time it was captured and demanded its immediate return. It warned China not to repeat such a move in the future.

But a spokesman said later on Saturday that an agreement had been reached.”Through direct engagement with Chinese authorities, we have secured an understanding that the Chinese will return the UUV to the United States,” Pentagon spokesman Peter Cook said in a statement.

The Chinese defence ministry said the vessel would be returned in an “appropriate manner”. It is not clear when this might happen.

It criticised the earlier US response, calling it “inappropriate and unhelpful”.

Source: China to return seized US underwater drone, Pentagon says – BBC News

15/12/2016

PepsiCo CEO Indra Nooyi Is Latest Indian American to Sign Up to Help Donald Trump – India Real Time – WSJ

Chairman and CEO of PepsiCo. Indra Nooyi is the latest Indian American to be hand-picked by U.S. President-elect Donald Trump to advise him and help him run the country.

Ms. Nooyi’s appointment to his strategic and policy forum was announced Wednesday by Mr. Trump’s transition team as one of three new appointments to the 16-member group. SpaceX Corp’s Elon Musk and Uber Technologies Inc.’s Travis Kalanick were the other two appointments.

The forum will be called upon to meet frequently with Mr. Trump to discuss his economic agenda.“America has the most innovative and vibrant companies in the world, and the pioneering CEOs joining this Forum today are at the top of their fields,” Mr. Trump said in a news release. “My Administration is going to work together with the private sector to improve the business climate and make it attractive for firms to create new jobs across the United States from Silicon Valley to the heartland.”

Seema Verma, president and founder of SVC Inc. arriving at Trump Tower on November 22, 2016 in New York City.

Mr. Trump last month nominated Indian-American Seema Verma, CEO and founder of SVC Inc ., a U.S.-based health policy consulting company to serve as Administrator of the Centers for Medicare and Medicaid Services. “She has decades of experience advising on Medicare and Medicaid policy and helping states navigate our complicated systems,” he said.In November, Mr. Trump picked South Carolina Gov. Nikki Haley who is Indian in origin to serve as U.S. ambassador to the United Nations.

Ms. Nooyi, who was born in Chennai, India and later went to Yale University to study public policy and management, will have a direct line, along with others in the group, to Mr. Trump to advise him on economic policy, job creation and productivity, said the release.

Source: PepsiCo CEO Indra Nooyi Is Latest Indian American to Sign Up to Help Donald Trump – India Real Time – WSJ

09/12/2016

China has gained hugely from globalisation | The Economist

LI DONGSHENG, who is 35, says he is too old to learn new skills and too old to get married. Construction and factory work used to be plentiful, he says, as he eats his lunch from a yellow plastic container while sitting on a wall outside a job centre in Hangzhou, a city on China’s wealthy eastern seaboard. But these days he can rarely find even odd jobs. He sleeps rough and has not visited his parents, who live hundreds of kilometres inland, for two years.

Millions of people like Mr Li have powered China’s rise over the past three decades, working in the boom-towns that have prospered thanks to China’s enthusiastic embrace of globalisation. Yet many are anxious and angry.Factory workers in America and Europe often blame China for stealing their jobs. There is no doubt that China has benefited enormously from its vast pool of people, like Mr Li, who are willing to work for a fraction of what Western counterparts might earn. Since 1979 China’s transformation into the workshop of the world has helped lift hundreds of millions of Chinese out of poverty.

Yet many of the worries that have recently animated Western voters are common in China, too. Working-class Chinese, as well as members of the new middle class, fret about rising inequality, the impact of mass migration from the countryside into cities and job losses. “China will not shut the door to the outside world but open more,” said the president, Xi Jinping, in November. But even globalisation is occasionally attacked. On December 6th Global Times, a jingoistic newspaper published in Beijing, ran an opinion piece blaming globalisation for China’s income inequality, housing bubbles and the ravaging of its environment.

China’s own policy failures are much to blame, too. But the government has sensed the danger of rising public anger created by the divide between rich and poor (in the 1980s China was among the most equal societies in the world; now it is one of the least so). A decade ago it switched its “chief task” from “economic construction” to establishing a “harmonious society”—ie, one with a more even distribution of wealth (as well as a beefed-up police force to keep malcontents in check). China is now becoming slightly fairer overall: thanks to a dwindling supply of cheap labour and government efforts to boost the minimum wage, blue-collar salaries are rising faster than white-collar ones.But many people feel that inequality and social mobility are getting worse in other respects. For example, members of the fast-growing middle class complain about the emergence of a new plutocracy. They say that the wealthiest owe their fortunes to corruption and personal relationships, not hard work. Mr Xi’s waging of the longest and most intense campaign against graft since the party came to power in 1949 is partly (as he admits) a sign of fear that anger over widespread and egregious corruption might imperil the party’s rule.

 

Among blue-collar workers, a structural shift in China’s economy, from labour-intensive manufacturing to higher-tech industries and services, is fuelling job insecurity. In 2013, for the first time, the contribution to GDP from services, such as transport, shops, restaurants and finance, pulled ahead of industry, including manufacturing, mining and construction (see chart).

In the past couple of years, jobs in manufacturing have been declining, partly because globalisation is beginning to play the same sort of role in China as it does in developed countries. Some factories have been moving to cheaper locations abroad.The impact is pronounced in many of the hundreds of towns that specialise in making certain products. Datang, China’s “sock city” near Hangzhou, is a good example: in 2014 it made 26bn pairs of socks, some 70% of China’s production, but many factories are closing as garment-making moves to cheaper countries in Asia. As a local boss explains, “People simply won’t pay more for a pair of socks.”

Millions more jobs are threatened by efforts to reduce overcapacity in bloated and heavily indebted state-owned enterprises (SOEs), such as steelmakers and mining companies. Nervous officials often prefer to prop up such businesses rather than risk an explosion of unrest among laid-off urban-born workers. The government worries more about such people than it does about unemployed migrants from rural areas: they stay in the cities rather than return to the countryside.

The official unemployment rate in urban areas has remained remarkably steady at around 4% for years, even during the worst of the global financial crisis. But those figures are highly misleading. For one thing they exclude migrants from the countryside, who often suffer the worst labour abuses, such as long periods of unpaid leave as well as of unpaid work: bosses often suffer the worst labour abuses, such as long periods of unpaid leave as well as of unpaid work: bosses often hold back wages for months. About 40 construction workers in Beijing protested last month to demand unpaid wages from a project three years ago (pictured above).

Many of those who used to work in factories, such as Mr Li in Hangzhou, are ill-equipped to find new jobs in service industries. Official data show that more than two-thirds of workers laid off in recent years were poorly educated and around half were aged 40 or older. Those are big handicaps. The government has assigned 100bn yuan ($14.5bn) to pay for the resettling and retraining of workers laid off in the steel and coal industries. But the scheme’s details are unclear. Migrants, usually first out of the door, often cannot afford to stay in a city without a job. Those who do find work in service industries are not necessarily happier. In the third quarter of 2016, for the first time, labour unrest in such firms was more common than in manufacturing, according to China Labour Bulletin. The Hong Kong-based NGO recorded 2,271 protests by workers in all industries between January and November (see map). That is more than 14 times as many as in the same period of 2011.

Drawbridge up

As anxieties grow, migrants are likely to suffer. Like those in the West who resent foreign immigrants, Chinese urbanites often blame their cities’ problems on outsiders, albeit on people from other parts of the country (who often speak very different dialects and lack “civilised” city ways). The 280m such migrants in urban China feel marginalised and resented. Weibo, a microblogging site, has accounts dedicated to subjects such as “Beijingers safeguarding the city of Beijing”. In May, 12 city and provincial governments tried to broaden their pool of university entrants by reducing quotas for local students. Parents in three cities staged demonstrations, worried their children would lose a precious advantage (pictured is one such protest in the eastern city of Nanjing).

More often, migrants are subjected to a kind of apartheid, in effect excluded from subsidised urban health care and other public services because they have no urban hukou, or residence permit. Urban schools commonly (and illegally) require that parents of migrant children pay extra fees and produce documents such as rental or job contracts that few of them can supply. Children who do get places are sometimes taught separately from those of urban-born parents. The central government is making it easier for migrants to obtain hukou in small towns and cities where apartment blocks often lie empty but jobs are scarce. But it is getting harder for people from the countryside to settle in megacities such as Beijing and Shanghai, owing to measures such as the demolition of ramshackle housing where many of them live and stricter qualifications for local hukou.

The Communist Party has treated the presidential election in America and Britain’s vote to leave the European Union as propaganda victories. People’s Daily, the party’s mouthpiece, gleefully reported on the “dark, chaotic and negative” election campaign that had revealed the “ill” state of America’s “so-called democracy”. China Daily called the Brexit vote a “political earthquake”. Its message was clear: giving people the freedom to make such momentous decisions can have dangerous consequences. With the West plunged into uncertainty, China has seized the chance to present itself as a beacon of stability.

Yet the party knows that in China, too, the rise of inequality and loss of manufacturing jobs present big challenges. Mr Xi may talk confidently of keeping China open, but the case for doing so is not clear to many of China’s citizens, nor even to the government (ask foreign businesses in China about the difficulties they face). Since the country first launched its “reform and opening” policy in the late 1970s, arguments have never ceased over how far to go. In the 1990s, when the party launched its first wave of SOE closures, resulting in millions of lay-offs, some angry workers even began to embrace a neo-Maoist movement that harked back to the days of guaranteed jobs (and far firmer controls on internal migration). As he prepared to take over in 2012, Mr Xi engaged in a fierce struggle with another leader, Bo Xilai, who had gained huge popularity partly thanks to his Maoist rhetoric. Mr Bo is now in jail, but Mr Xi has adopted his Mao-loving style and has lashed out at Mao’s critics.

Parents want to take back control

Anti-elite sentiment, such as Britain and America are experiencing, is the party’s worst fear. Mr Xi is a member of the party’s upper class: his father was Mao’s deputy prime minister until he was purged. Many of his closest allies are also “princelings”, as offspring of the party’s grandees are often called. That is why he has tried hard to portray himself as a “common man”, highlighting his experiences of living in a cave and working in the fields during Mao’s Cultural Revolution. He is appealing to popular nationalism, too, with talk of the country’s “great rejuvenation” and the “Chinese dream” (shades of Mr Trump’s “Make America Great Again”).

China does not have the complication of free elections, much less referendums. But the party feels that it needs to appear responsive to popular opinion in order to stay in power. That is becoming more difficult as economic growth slows and the main public demand—for greater wealth—becomes harder to satisfy. Even with strong institutions, rule of law and freedom of the press, Britain and America are struggling to contain popular rage. China is dealing with many of these same forces with fewer outlets for discontent. Mr Xi is trying to keep anger from spilling over by locking up dissidents with greater resolve than any Chinese leader has shown in years. He knows that global elites are under attack. That is making him all the more determined to protect China’s.

Source: China has gained hugely from globalisation | The Economist

09/12/2016

Mr Trump’s backing of an admirable but neglected country is worrisome | The Economist

WHEN President-elect Donald Trump tweeted last week that he had spoken to Taiwan’s leader, Tsai Ing-wen—“The President of Taiwan CALLED ME”—almost all of Washington’s Asia hands suffered palpitations.

It was the first presidential-level contact between America and Taiwan since “normalisation” in 1979, when Jimmy Carter broke off diplomatic relations with “Free China”, as Taiwan was then often known, and recognised the Communist government in Beijing instead.

At the time Congress tried to reassure Taiwan by making provisions for continued weapons sales and hinting that America would step in should the island be attacked. But, under immense Chinese pressure, America has always kept Taiwan at diplomatic arm’s length. China regards Taiwan as one of its provinces, and refuses even to honour Ms Tsai with her title of president. It has long been assumed in Washington that any American move to alter the status quo would so infuriate China that it might wage war on the island, probably dragging in America. Didn’t Mr Trump know he was playing with fire? To Washington’s Asia experts neither possible answer to that question seemed encouraging.

But then, something strange happened: nothing. No explosion of rage issued from Beijing, as many expected. The foreign minister, Wang Yi, dismissed Ms Tsai’s call as a “small step”, or “petty” as it might also be translated—a mild response by Chinese standards. In the lull, some Asia hands allowed themselves to breathe out. Perhaps, even, the breach was not wholly without precedent—Ronald Reagan had invited senior Taiwanese officials to his inauguration, after all, and got away with it.

Perhaps, even, Mr Trump gets grudging admiration for reminding the world that Taiwan deserves more recognition as a peaceful, prosperous democracy. For too long China has controlled the narrative over the island. Far from being a renegade part of China, it has in its entire history been ruled directly from the Chinese capital for not much more than a decade: briefly in the second half of the 19th century, and from 1945-49. Never have the Communists ruled Taiwan, so shouldn’t their bullying be decried more often? As for the “one China” idea that the Communist Party insists upon, America has never agreed to it; formally, it merely “acknowledges” that both China and Taiwan hold to the principle that there is but one China. That acknowledgment was made in the 1970s, with dictatorships in Beijing and Taipei both claiming to rule all of China. Today, a democratic Taiwan has no such pretensions. Why should American policy be set in stone?

For now, many Taiwanese are basking in Mr Trump’s attention. They hope for further gestures when he is president—a free-trade deal, perhaps, which Mr Trump’s advisers say they are keen on striking with Taiwan, and more American weapons. There have been rumours that Mr Trump is mulling another possible flourish before then: a meeting in New York in January with Ms Tsai, who will be travelling to Guatemala, one of a handful of countries that officially recognise Taiwan. Ms Tsai’s office dismisses talk of this as “excessive speculation”. But were such an encounter to happen, it would cause rapture in Taiwan. It would also trigger even greater palpitations in Washington.

China would still play things cool. For a country that craves predictability in its external environment, a Trumpian America has suddenly become the wild card. But, Chinese officials remind themselves, using an old saying, the way to deal with 10,000 changes is not yourself to change. Some Chinese policymakers are pessimistic about relations with America under Mr Trump, noting his staunchly protectionist views and his inclination to improve ties with Russia in ways that might leave China isolated. (Anti-China tweets from Mr Trump reinforce the downbeat view.) Others are more hopeful, seeing a transactional president minded to cut deals with China, America’s essential counterpart on everything from trade to security. The appointment of the China-friendly governor of Iowa, Terry Branstad, as ambassador to Beijing is a fillip. For now, the regime will bide its time.

Yet, far from diminishing, the risks will grow. One, in the near term, lies in the nature of Mr Trump’s team. Almost the entire Republican establishment of seasoned Asia experts has refused to serve under him. So those handling policy towards Asia are notable for their inexperience or for their ideological inclination to favour Taiwan over those once disparaged as “ChiComs”.

For all Taiwan’s virtues, this should be a worry. America’s relationship with China is broader, more complex and far, far more vital than its one with Taiwan. Making the running on Taiwan implies disregard for the bigger relationship. China’s help on many global issues, including counter-terrorism, is essential. And there is an urgent need for agreement over North Korea’s nuclear-weapons programme, which is developing dangerously fast. Only China can make North Korea change course. Finding the means to cajole or coerce China to act should be an American priority, from which much of the rest of Asia policy should flow. Yet Mr Trump’s team appears to be giving little thought to this.

Stop that tiger, I wanna get off

And then comes the risk of increased Chinese neuralgia over Taiwan during a Trump presidency. Years of propaganda and “patriotic education” have fuelled an irrational nationalism over Taiwan among ordinary Chinese. President Xi Jinping himself has said that the Taiwan “problem” can no longer be left to future generations. For now, the nationalism is in check. After all, officials claim that, for all the mischief by Taiwan’s splittist politicians, ordinary folk are true Chinese patriots. But should Mr Trump stir things up, it may dawn on the Chinese that the claim is not true, and that Taiwanese politicians promote de facto independence because that is what people want. If public anger grows, Mr Xi will be riding a tiger from which he will struggle to dismount. By then, it will no longer be possible to wait and see.

Source: Mr Trump’s backing of an admirable but neglected country is worrisome | The Economist

06/12/2016

Tsai says call with Trump does not reflect US policy change | South China Morning Post

Taiwanese President Tsai Ing-wen said on Tuesday her phone call with US president-elect Donald Trump should not be interpreted a significant shift in American policy, and stressed that both sides saw the value of maintaining regional stability.

“Of course I have to stress that one phone call does not mean a policy shift,” she told a small group of American reporters in Taipei. “The phone call was a way for us to express our respect for the US election as well as congratulate president-elect Trump on his win.”

Taiwan’s Tsai Ing-Wen initiated phone call with Donald Trump, says island’s presidential spokesmanTrump’s phone call with Tsai broke four decades of diplomatic protocol, alarming some commentators who feared it could spark a dangerous confrontation with Beijing.

Others though, especially US Republicans, have welcomed it as a sign Trump will not be bullied by Beijing, and believe the United States should offer more support to Taiwan’s democracy.

Sources in Trump’s team said the call was planned weeks in advance to establish the incoming president as a break from the past, although vice-president-elect Mike Pence described it as a “courtesy” call, not intended to show a shift in US policy on cross-strait ties.

Tsai echoed that line. “I do not foresee major policy shifts in the near future because we all see the value of stability in the region,” she said.Beijing has reacted with relative calm to the call, lodging what it called a “solemn protest” with the US government, but also underlining that its economic and diplomatic relationship with Washington depended on the US acceptance of the one-China principle, which recognises Beijing as the sole representative of the Chinese nation.

Beijing blocks Taiwan from taking part in almost all international bodies. Tsai’s office said she had told Trump during the phone call that she hoped the United States “would continue to support more opportunities for Taiwan to participate in international issues”.

Reacting to criticism of the call, Trump himself pointed out that the United States sold billions of dollars of arms to Taiwan.

Beijing has already increased the pressure on Taiwan since Tsai’s election, upset that she has not publicly endorsed the “one China” principle – although she consistently expresses the need for dialogue.

China’s Foreign Minister Wang Yi appeared to blame Taiwan for the phone call, calling it a “petty” move, and the nationalist Global Times tabloid initially recommended that Beijing should continue to talk to Trump but punish Taiwan.

Michael Cole, a Taipei-based senior non resident fellow at the China Policy Institute, University of Nottingham, wrote that this could include renewed efforts to deny Taiwan access at various multilateral organisations, the stealing of diplomatic allies, punitive economic measures and more intense or frequent military exercises aimed at Taiwan.

If that happens, the domestic support Tsai had received for her call could be countered by greater tensions with Beijing, he said, “What remains to be seen is what kind of ally Taiwan will have in Washington if and when such a shift occurs in the Taiwan Strait,” he wrote in The National Interest.

On Tuesday, there were also signs of growing concern in Beijing that Trump’s constant criticism of Beijing in his speeches and on Twitter might actually mean something. His latest salvo – complaining about China’s currency and trade policy, and its actions in the South China Sea – sparked a frustrated response in the Global Times.What does Donald Trump’s phone call with President Tsai mean for future US arms sales to Taiwan?

“Trump’s China-bashing tweet is just a cover for his real intent, which is to treat China as a fat lamb and cut a piece of meat off it,” it wrote. “China should brace itself for the possible fluctuations of the Sino-US relationship after Trump is sworn in. We must confront Trump’s provocations head-on, and make sure he won’t take advantage of China at the beginning of his tenure.

”The Communist Party mouthpiece People’s Daily took a more measured line, arguing that dialogue was vital to maintaining friendly relations and correct some of Trump’s “inaccurate” criticisms of Beijing.

“Trump’s recent demeanour has proved people’s doubts on his inexperience in diplomatic relations. In fact, Trump is not that ignorant on China and China-US relations, he has some sensible understandings and his own take on matters. But the problem is that Trump’s rhetoric shows that he only knows one side of China and China-US relations,” it wrote in a front-page editorial on its overseas edition.

“At the present, the peaceful transition of China-US relations is the key task that both countries face. It depends on joint efforts, not just good wishes from one side.”

Source: Tsai says call with Trump does not reflect US policy change | South China Morning Post

01/12/2016

As Trump retreats, Xi Jinping moves to upgrade China’s global power play | South China Morning Post

With US president-elect Donald Trump threatening to build a wall on the Mexican border and force Asian allies to increase defence spending, Beijing is busy luring countries across the eastern hemisphere into its orbit.

President Xi Jinping, who is consolidating his power at home, is planning to host a big “One Belt, One Road” summit in China next year, sources close to the central government told the South China Morning Post, adding that the event would match, if not exceed, the scale of this year’s G20 summit in Hangzhou, which attracted about 30 state leaders.

China plans US$2 billion film studio and ‘One Belt, One Road’ theme park

At a time when established world powers are struggling with domestic problems, Xi sees a chance to push ahead with his oddly worded brainchild, a geopolitical push to extend Beijing’s influence to remote corners of the globe.

The belt and road initiative encompasses 65 countries including China, stretching through Southeast, South, Central and West Asia to the Middle East, Africa and East and Central Europe.

However, with globalisation facing increasing scrutiny and electoral scepticism in developed countries, it’s doubtful whether a one-party state with its own deep-rooted economic woes will be able to bind countries together through a programme viewed by critics as a Chinese plot to export its infrastructure and influence.

In addition, China’s shrinking foreign exchange reserves, the falling value of its currency and a tightening of central government control on big overseas investments have raised questions about whether there will be sufficient funds to grease China’s ambitions.

Hong Kong trade presence needed in ‘One Belt, One Road’ cities

The belt and road initiative was launched by Xi in 2013 as an attempt to boost connectivity between China and other countries along the ancient land-based and maritime Silk Roads through trade and infrastructure projects, including high-speed railway lines and energy pipelines. But the wave of populist, anti-globalisation reflected in Trump’s stunning victory in last month’s US presidential election has put its smooth implementation in doubt.

Previous Chinese infrastructure projects overseas, including energy- and resource-related ones in Africa, have triggered resentment in local communities, with Beijing accused of exploitation and failing to benefit local workers.

Even though an increasing number of key US allies, such as Canada and Britain, have joined the Beijing-led Asian Infrastructure Investment Bank (AIIB), set up as part of the belt and road initiative, mistrust over Beijing’s efforts to extend its geopolitical influence are mounting.

James McGregor, greater China chairman of APCO Worldwide, a public relations and consulting firm, said the level of cooperation between Beijing and the incoming Trump administration would be crucial in determining the success of the belt and road initiative.

One of Trump’s policy advisers, former CIA director James Woolsey, has described the current Obama administration’s opposition to the AIIB as a “strategic mistake”.

How One Belt, One Road is guiding China’s football strategy

“Through OBOR and various diplomatic initiatives, China is seeking to lead peacekeeping and economic development efforts in the region,” McGregor said, referring to the belt and road initiative. “But this will be very difficult if the US and China are not aligned and working together in the region to help provide security and promote peace.“

So if Trump pushes an agenda of confrontation with China in regard to trade and security arrangements in Asia, China will have a more difficult time managing its investments in Afghanistan and elsewhere in the region.”

But Professor Wang Yiwei, from the school of international studies at Renmin University in Beijing, said Trump’s protectionist agenda, most notably with his vow to withdraw the United States from the 12-nation Trans-Pacific Partnership (TPP) trade pact, would provide an opportunity for the belt and road initiative to “fill the gap in the market”.

“For a long time, countries around the world have been following America’s standards and development model. But now even the US itself has suffered from its system,” he said. “The US has not learned its lesson from the financial crisis – it has failed to adjust and reform its industries – and it is now blaming the problem on globalisation.”

Wang said that with the belt and road initiative, China was becoming more resistant to the risk posed by the incoming Trump administration and the anti-globalisation trend sweeping the West.“

[The belt and road initiative] is designed to counter the risk posed by the market in the West,” Wang said.

Long-term planning: China’s 21st century Silk Road strategy will take time to reap rewards

The decrease in America’s purchasing power in the wake of the financial crisis had caused the surplus production capacity in China, he said, and the belt and road initiative was a new way to boost China’s exports.

AIIB president Jin Liqun said in early November that the AIIB was “on track” to meet its big first-year targets, including lending US$1.2 billion by the end of this year. So far it has lent US$829 million to six projects in Pakistan, Tajikistan, Indonesia and Bangladesh.

China invested about US$14.8 billion in 49 countries of the 64 other countries along the Silk Road last year, or 12.6 per cent of the country’s total outbound investment, according to the Ministry of Commerce. The US and the European Union remain the top destinations for Chinese outbound investment, which totalled US$146 billion in the first 10 months of this year.

Whether Chinese companies will be as enthusiastic as they used to be about pouring money into overseas projects remains to be seen, with Beijing banning overseas investment deals of more than US$10 billion until September next year and cracking down on overseas mergers, acquisitions and real estate deals involving more than US$1 billion because of concerns about capital flight.

But economists, citing the unsustainability of a strong US dollar, uncertainty about Trump’s policies and China’s need to push ahead with economic reforms, said the restrictions were more of a short-term constraint than a permanent hurdle.

“Restricting outflows is a step back, but it will not alter China’s long-term direction of capital opening,” said Tim Condon, chief Asian economist at ING.

Professor Zhang Jiadong, a belt and road specialist at Shanghai’s Fudan University, said the impact of foreign exchange controls on the belt and road initiative would be limited.

“Forex controls will mainly affect the speed of approval, but will have little impact on infrastructure investments, which usually involve lengthy preparations for feasibility studies and financing arrangements,” he said.

State-owned enterprises, with their capital size and building expertise, are major participants in the initiative. Foreign exchange clearance is just one of many long regulatory procedures they have to navigate, and they usually needed approval from the state asset watchdog and financial backing from state-owned banks.

“Overall, OBOR investment represents only a small proportion [of their activities],” Zhang said.

Chen Fengying, an economist at the China Institute of Contemporary International Relations, said the foreign exchange regulator did not cover belt and road projects.

“Investment in OBOR countries is groundbreaking and needs more government support,” Chen said. “They should be encouraged, rather than regulated.”

The biggest difficulty faced by the belt and road initiative is the need to ease suspicions among countries such as India and Japan, another big investor in Asian development projects, about Beijing’s strategic intentions.

Foreign Minister Wang Yi told a forum in Beijing on Wednesday that China would be accommodative to the needs of different nations in pushing ahead with the belt and road initiative. The AIIB is regarded as a rival to the Japan-led Asian Development Bank and the US-headquartered International Monetary Fund.

Zhang Jianping, an expert on belt and road policy at the National Development and Reform Commission’s Institute for International Economic Research, said mistrust remained a hurdle for China.

“Just because the US withdrew from the TPP doesn’t necessarily mean that its economic power is in decline,” he said. “All the major global financial and investment standards and institutions are still led by the US and Europe. Any attempt by China to rewrite those rules is bound to meet scepticism from the West.”

Observers said investors’ top concerns were returns on investment and safety, and that made developed countries the top destination for market, technology and management expertise, rather than developing countries . They faced bottlenecks in terms of capital, talent and management expertise in belt and road investment, which usually involved labour-intensive manufacturing or resource projects.

Beijing is pushing to build dozens of economic cooperation zones, which will be used to facilitate bilateral trade and investment and potentially draw more private firms. However, more government guidance in terms of policy and financing is needed to help private Chinese firms better integrate into economic development plans in other countries.

Liang Haiming, chief economist at the China Silk Road iValley Research Institute, said opportunities were opening up for China.

“The yuan’s depreciation against the US dollar will not affect China’s investment plans in OBOR countries,” he said. “The Chinese currency is actually strengthening against major Southeast Asian currencies.

“The capital flowing from emerging economies to the US will leave a good opportunity for Chinese capital to enter those countries.”

The Post’s annual China Conference in Hong Kong on Friday will bring business leaders and policy advisers together to share their latest insights on the business opportunities and challenges brought about by the belt and road strategy.

Source: As Trump retreats, Xi Jinping moves to upgrade China’s global power play | South China Morning Post

30/11/2016

All-American pick-up trucks aim to lure China’s wealthy | Reuters

Automakers Ford (F.N) and General Motors (GM.N) are aiming the pick-up truck, an iconic staple in the United States, at upmarket buyers in China, where most associate trucks with farmers and construction workers.

“The Chinese call it pika, pika – a very low-end worker’s (vehicle). But the (Ford F-150) Raptor is totally different,” said Wesley Liu, Ford’s Asia-Pacific sales director, ahead of this month’s Guangzhou autoshow.

Trucks are largely restricted to overnight driving in most Chinese cities, but four provinces – Yunnan, Liaoning, Hebei and Henan – have this year launched trial programmes allowing them into urban zones in an attempt to stimulate production as economic growth, and car sales, slow.

With those looser restrictions, U.S. pick-up makers aim to distance their trucks from local models made by Great Wall Motor (601633.SS), Jiangling Motors Corp (JMC) (000550.SZ) and others – and appeal to Chinese premium buyers, like Meng Shuo.

The 32-year-old founder of an investment consultancy, who already owned a Chevrolet Camaro when he bought an F-150 pick-up truck five years ago through an unofficial grey market importer. He has since traded it in for a Toyota (7203.T) Tundra, and also owns a Mercedes (DAIGn.DE) luxury sedan and Porsche (PSHG_p.DE) and Mitsubishi (7211.T) sports cars.

Ford said in April it would bring a high-performance version of its F-series – the best-selling vehicle in the U.S. for 34 years – to China, the world’s biggest auto market. A spokesman said the company is studying whether to also bring a mass-market model such as the F-150 or Ranger pick-up to China, depending on demand and future regulations.

“The people who buy the Raptor maybe own some other premium vehicle already. This is another toy,” Liu said.The truck is aimed at four types of buyers, he said – the wealthy, who want to stand out from the crowd; business owners, who want more than a traditional commercial vehicle; drivers who want a single car for all situations; and “gearheads”, who just like the mechanics.

Even as Chinese authorities throw vast subsidies at green, clean auto technologies, the growing wealth of Chinese consumers has driven a boom in larger cars and sport-utility vehicles (SUV). With margins now under pressure in the crowded SUV sector, automakers see potential profits in high-end foreign pick-ups.

Ford and GM – which displayed its Chevrolet Colorado and Silverado trucks around the Guangzhou show, with t-shirt clad urban cowboys and an all-leather rock band selling the trucks’ macho, all-American appeal – have not yet announced prices for their pick-ups, expected to be launched next year. But they should command a sizeable premium to locally made models as China slaps a 25 percent tax on imports.

PICKING UP

For now, pick-ups are a tiny fraction of China’s market.

IHS Markit sees sales increasing by 14 percent this year to 368,791 pick-up trucks, but that would still be only 1.4 percent of China’s light vehicle market.

By contrast, sales in the U.S. are forecast at 2.7 million pick-ups, about 15 percent of the market.

Yan Ningya, an official involved in the Hebei pilot project, said the province, home to Great Wall and other automakers, accounts for half of China’s pick-up production.

The trial has not yet resulted in higher production, he told Reuters, but the local government will need a year from the pilot project’s launch in May to gauge its impact.

After that, the central government may do more to drive production, possibly reclassifying pick-ups as passenger cars rather than commercial vehicles, he said.

The Ministry of Industry and Information Technology, which directed the provinces to launch the pilot projects, did not respond to a faxed request for comment.

“China’s pick-up truck market will be very large in the future,” said Yan, noting domestic brands would likely upgrade their trucks to meet the tastes of middle-class drivers.

Source: All-American pick-up trucks aim to lure China’s wealthy | Reuters

29/11/2016

Nissan Revs Up Connected Car Plans in India – India Real Time – WSJ

Nissan Motor Co. said Tuesday that it planned to accelerate the penetration of internet-connected vehicles by offering a connection device to existing customers in Japan and India starting next year.

Nissan has been among the most aggressive car makers in putting connection technology in lower-priced vehicles. Now, it is expanding the offering to owners of older models.

The device will allow car owners to get live updates on maintenance needs, make service appointments and order parts ahead of time. Nissan said it planned to bring the device to other countries eventually and install it in 30% of the 40 million Nissan vehicles on the road globally today.

The device contains a Global Positioning System tracker and can transmit information about the vehicle’s health to Nissan through mobile networks. The goal is to give customers a taste of connected-car services that will become available on new cars, Nissan said.

“In the coming years, customers will see sophisticated applications of software and hardware that will keep them connected with work, with friends and family. It will allow them to control their vehicles from their phones in their pockets,” said Kent O’Hara, who runs Nissan’s after-sales division.

Source: Nissan Revs Up Connected Car Plans in India – India Real Time – WSJ

25/11/2016

China battles foreign influence in education | The Economist

CHINA has long oscillated between the urge to equip its elite with foreign knowledge and skills, and an opposing instinct to turn inward and rebuff such influences.

In the 1870s the Qing imperial court ended centuries of educational isolation by sending young men to America, only for the Communist regime to shut out the world again a few decades later. Today record numbers of Chinese study abroad: over half a million people left in 2015 alone, many for America (see chart).

The Communist Party officially endorses international exchanges in education while at the same time preaching the dangers of Western ideas on Chinese campuses. A new front in this battlefield is emerging, as the government cracks down on international schools catering to Chinese citizens.

Only holders of foreign passports used to be allowed to go to international schools in China: children of expat workers or the foreign-born offspring of Chinese returnees. Chinese citizens are still forbidden from attending such outfits, but more recently a new type of school has proliferated on the mainland, offering an international curriculum to Chinese nationals planning to study at foreign universities. Their number has more than doubled since 2011, to over 500. Many are clustered on the wealthy eastern seaboard, but even poor interior provinces such as Gansu, Guizhou and Yunnan have them.

Some international schools are privately run, including offshoots of famous foreign institutions such as Dulwich College in Britain or Haileybury in Australia. Even wholly Chinese ventures often adopt foreign-sounding names to increase their appeal: witness “Etonkids”, a Beijing-based chain which has no link with the illustrious British boarding school. Since 2003 some 90 state schools have opened international programmes too, many of them at the top high schools in China, including those affiliated with Peking University and Renmin University in Beijing.

New laws are making it harder for such schools to operate. In 2014 Beijing’s education authorities stopped approving new international programmes at public high schools. Several other cities, including Guangzhou, Shanghai, Shenzhen and Wuhan, have also tightened their policies on such institutions. Some have capped fees for international programmes. The Ministry of Education says it is pondering a law that would require public high schools to run their international programmes as private entities (fearing this event, a few schools have already begun doing so).

Earlier this month a new law banned for-profit private schools from teaching the first nine years of compulsory education. That came only days after Shanghai started to enforce an existing ban on international schools using “foreign curriculums”. Some such institutions already offer a mixture: Wycombe Abbey International, which is based in Changzhou in eastern China and affiliated to a British girls’ boarding school, teaches “political education”, a form of government propaganda, and follows a Chinese curriculum for maths. But the new regulations threaten to nullify the very point of such institutions for most parents, which is to offer an alternative to the mainstream Chinese system, in which students spend years cramming for extremely competitive university-entrance exams that prize rote learning over critical or lateral thinking.

Lawmakers say the rules are prompted by concerns about the quality of international schools. The expansion of international programmes within regular Chinese schools also spurred a popular backlash against the use of public facilities and funds to teach pupils who plan to leave China. Since the number of people attending public schools is fixed, the elite high schools are accused of squeezing out regular students to feed their lucrative international stream. Local governments often provide capital for private schools, too.

The move to control international schools is “the next logical iteration” of a wider campaign against Western influences, reckons Carl Minzner of Fordham University in America. In 2015 China’s education minister called for a ban on “textbooks promoting Western values” in higher education.

This mission extends far beyond the educational realm: the government has called for artists and architects to serve socialism, clamped down on video-streaming sites that carry lots of foreign content and even proposed renaming housing developments that carry “over-the-top, West-worshipping” names. Chinese organisations that receive foreign funding, particularly non-governmental ones, face increasing scrutiny.

The Communist Party is instead seeking to inculcate young Chinese with its own ideological values: the new directive on for-profit schools calls on them to “strengthen Party-building”. After pro-democracy protests in Tiananmen Square in 1989, nationalistic “patriotic education” classes were stepped up in schools, a move that Xi Jinping, the president, has taken to new levels since 2012, seeking to infuse every possible field with “patriotic spirit”. “Morals, language, history, geography, sport and arts” are all part of the campaign now. Unusually, he also seeks to include students abroad in this “patriotic energy”.

But lashing out against international schools could prove risky. Any attack aimed at them essentially targets China’s growing middle class, a group that the ruling Communist Party is keen to keep onside. Chinese have long seen education as a passport to success, and it is not just the super-rich who have the aspiration or means to send their offspring abroad to attend university. Some 57% of Chinese parents would like to do so if they could afford it, according to the Shanghai Academy of Social Sciences. Even Mr Xi sent his daughter to Harvard, where she studied under a pseudonym.

Since school is optional after 15, and parents must pay for it, even at public institutions, the state will find it tricky to prevent high schools from teaching what they want. Moreover, constraints on international schooling in China are likely to swell the growing flow of Chinese students leaving to study abroad at ever younger ages. This trend is the theme of a 30-episode television series, “A love for separation”, about three families who send their children to private school in America.

Restricting for-profit schooling also risks hitting another growing educational market: urban private schools that cater to migrant children who cannot get places in regular state schools because they do not have the required residence permits. A law that undermines educational opportunities for the privileged and the underprivileged at once could prove far more incendiary than a little foreign influence.

Source: China battles foreign influence in education | The Economist

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