Call/text: (617) 682-9697 | e: [email protected] | f: 617-391-3067

China Rise Bad Answers

Turn: China ties with Europe inevitable, Pressure on China just isolates the US

Michael Shuman, April 25, 2019, https://www.theatlantic.com/international/archive/2019/04/us-allies-washington-china-belt-road/587902/, The Atlantic, The U.S. Can’t Make Allies Take Sides Over China

All this makes for a very messy world. As Khanna pointed out, the economic bonds between China, Europe, and the rest of Asia have already been forged, and are not likely to be reversed. As a result, Washington’s attempt to contain China might prove self-defeating. “You can’t isolate China,” he told me. “The U.S. will end up isolating itself.”

Turn: New limits on China’s financing. New BRI initiatives could force government spending trade-offs

Chang, August 6, 2019, Felix K. Chang is a senior fellow at the Foreign Policy Research Institute. He is also the Chief Strategy Officer of DecisionQ, a predictive analytics company in the national security and healthcare industries, Unequal Sequel: China’s Belt and Road Initiative, https://www.fpri.org/article/2019/08/unequal-sequel-chinas-belt-and-road-initiative/

Will China’s revitalization of the BRI succeed? It might. Many countries still seek foreign direct investment for new infrastructure. But a better question may be whether China is still in a good position to provide that investment, at least in the quantities it did in the past. One of the factors driving Chinese interest in investment abroad—the recycling of its foreign exchange reserves—has waned in importance. While China’s reserves still total over $3 trillion, they are no longer growing. In fact, in 2019, China might run a current account deficit for the first time in decades. That means Beijing should be more interested in holding onto the foreign currency it has, rather than lending it out, if China is to hold its foreign exchange rates steady. Moreover, China’s banking sector has come under more stress. Big Chinese banks have their hands full managing the heavy debts of China’s local governments and state-owned enterprises. Meanwhile, small Chinese banks have recently become wobblier, as the government takeover of Baosheng Bank and bailout of Shengjing Bank have demonstrated. Such stresses could lower the incentive to do more international finance deals. As a result, more of the funding for the BRI may have to come from China’s national government budget. But that would mean the initiative would have to compete against other government priorities, like economic growth, defense, and social stability. The BRI could lose out in those budgetary battles.

Turn: Exports on the BRI don’t help the economy. China subsidizes them, so expansion undermines the economy

https://www.scmp.com/economy/china-economy/article/3021457/can-belt-and-road-plan-reverse-sagging-fortunes-chinas-trade

The sea-to-rail service could reduce delivery time from Dalian port to Moscow to just 12 days, a quarter of the 50 days needed for goods to be shipped by sea to northern European ports, according to Xia Ting, a manager with Liaoning Port Dalian Container Development. On paper, this makes the belt and road proposal seem like a winner for Liaoning’s ports to expand their business and reduce reliance on US trade, but it has not worked out that way so far. Japanese and South Korean companies, the major suppliers of electronic goods, equipment, cars and car parts to Europe and China, have been lukewarm about using the sea-to-rail freight service. What is more, the service has required heavy subsidies from local governments in the region, many of which are already burdened by falling revenues and high debt. Almost all of the services to Europe were subsidised by local government coffers, according to a December research report by the Institute of Geographical Sciences and Natural Resources, a unit of Beijing sponsored think tank Chinese Academy of Social Sciences. It said the subsidies varied from US$2,000 to US$3,000 for every two 20ft equivalent unit (TEU) containers, with some going to as high as US$7,500 if the goods were locally made. As of now … promoting the development of China-European trains through subsidies at the initial stage as a policy guide or to cultivate a market is permissible. However, it is ultimately unsustainable Institute of Geographical Sciences and Natural Resources “As of now … promoting the development of China-European trains through subsidies at the initial stage as a policy guide or to cultivate a market is permissible. However, it is ultimately unsustainable,” the report said. The difficulty in sustaining these operations is already showing in Dalian. Without a consistent supply of goods moving through the port on the sea-to-rail freight system, traffic had slowed substantially from the estimated 35,000 TEU of goods shipped at its peak in 2016 and 2017, Xia said, without giving comparative numbers. According to the Ministry of Commerce, there were a total of 6,300 freight trains going between China’s ports and Europe in 2018, estimated to equate to around 600,000 TEU of goods shipped. But these figures paled in comparison to the total 42 million TEU of goods that came through China’s biggest port in Shanghai last year. Since 2018, the mature coastal ports of Shanghai and Xiamen and inland heavyweights like Chongqing in the southwest and Xian in the west are also fighting for pieces of the same pie. “The overall volume has gone up, but everyone is in on it,” said Xia. The belt and road strategy, the cornerstone of President Xi Jinping’s foreign policy, seeks to build infrastructure projects to connect Asia with Africa and Europe, and in doing so boost trade. However, the strategy has attracted a barrage of criticisms from China’s biggest trading partners, complaining that the country’s state firms have an unfair advantage over foreign players. China’s state-dominated port and shipping sectors have been integral to the Belt and Road Initiative, and would benefit most from increased global trade. But that has not been the case for the northeastern rust belt – Liaoning, Jilin and Heilongjiang provinces – which has seen profits decline in its traditional heavy industries like ship building, steel making and coal mining over the years. And Liaoning, the region’s biggest economy, has yet to see a strong resurgence of investment from Japan and South Korea, which has gradually declined since 2014. It’s not yet reached the point [where Japanese and South Korea firms are thinking that] the routes are efficient and the prices are reasonable when it comes to foreign companies investing and building facilities here Yuan Zhenhe According to government statistics, foreign direct investment into Liaoning plunged more than 80 per cent from US$27.42 billion in 2014 to US$4.9 billion in 2018, due in large part to cuts from Japanese and South Korean firms. There are signs that foreign investment is stabilising at a low level, while the provincial government has stepped up its efforts to improve relations with Japan and South Korea to promote the belt and road plan. “It’s not yet reached the point [where Japanese and South Korea firms are thinking that] the routes are efficient and the prices are reasonable when it comes to foreign companies investing and building facilities here,” said Yuan Zhenhe, deputy general manager of Liaoning Shenha Hongyun Logistics Company, the sea-rail business platform for Yingkou Port, the second port controlled by Liaoning Port Group. “Right now the competition is fierce and, as far as I understand it, there are 29 cities all over China [offering sea to freight services]. So foreign companies will carefully consider local policies and costs to start with [before deciding where to invest their money].”

Turn: Belt and Road reduces China’s insecurity, reducing war risks

Cavanna, July 2019, https://tnsr.org/2019/07/unlocking-the-gates-of-eurasia-chinas-belt-and-road-initiative-and-its-implications-for-u-s-grand-strategy/, Thomas P. Cavanna is a visiting assistant professor at the Fletcher School of Law & Diplomacy in the Center for Strategic Studies. He writes on U.S. grand strategy and U.S. foreign policy toward China and South Asia. He holds a French “Agrégation” and a Master’s degree and doctorate in history from Sciences Po. He was also a Fox Fellow at Yale. Dr. Cavanna is currently working on a book on the Belt and Road Initiative and U.S. grand strategy., Unlocking the Gates of Eurasia: China’s Belt and Road Initiative and Its Implications for U.S. Grand Strategy

However, the impact of these dynamics on American security should not be overestimated. In the first place, although the possibility of imposing a blockade against China has decreased, such a move would have always been highly complex and dangerously escalatory.116 In reality, the decline of Beijing’s insecurity reduces the risk of war. Moreover, although they have given America some influence, military interventions in the Middle East since the early 1990s have incurred severe costs, destabilized local countries, diverted Washington’s attention away from East Asia, and allowed China to free-ride.117 Admittedly, the United States retains an interest in the free flow of oil, but so does Beijing. More broadly, America has enough military assets in the region and beyond to deter misbehavior. Therefore, Belt and Road, rather than exclusively posing a threat, might in fact offer Washington an opportunity to rethink how it engages in the Middle East and to cooperate with China in efforts such as countering terrorism and fighting piracy. As for the Chinese challenge in domains like food security, access to key metals and minerals, and influence on other states, a determined geoeconomic response would go a long way toward preserving key American interests.

Turn: China-EU cooperation will reduce proliferation, climate change, and strengthen economic development, and reduce dangerous unilateralism.

China Daily, March 29, 2019, http://www.chinadaily.com.cn/a/201903/29/WS5c9d58c4a3104842260b32fb.html

China and EU should team up in BRI to propel connectivity Almost as a proof, German Chancellor Angela Merkel on Tuesday described the BRI as an important project that Europeans still wanted to participate in. French Foreign Minister Jean-Yves Le Drian, during the opening of the China-France Forum on Global Governance on Monday, talked about project cooperation under the BRI and the European Union‘s strategy of connecting Europe and Asia. China and the EU do not see eye-to-eye on everything. No two economies do. But that should not prevent them from seeking and expanding cooperation wherever and whenever possible. From climate change and global governance to nuclear nonproliferation and economic development, China and Europe should join hands in playing a larger role in a world overshadowed by protectionism and unilateralism championed by the US. Foreign Minister Wang Yi was spot on when he said in Brussels on March 18 that “between China and Europe, competition is inevitable, but cooperation remains the mainstream and win-win outcomes are the goals”. On Tuesday, European Commission President Jean-Claude Juncker dismissed the concern over the EU’s recent use of the word “rival” for China, saying that it was meant to be a “compliment”. During its four decades of reform and opening-up, China has learned a great deal from the Western world, including many European countries. That will and should be a continued process as China, despite being the world’s second-largest economy, still lags behind in terms of per capita GDP, human development index and many other criteria. By launching the BRI, China, the largest developing country, aspires to play a larger and more responsible role in the world. European countries could and should contribute their wisdom in helping connect Asia, Europe and Africa through the BRI, a boon to the regions and the world.

Turn: BRI’s economic and political ties stop conflict from China from escalating

Cavanna, July 2019, https://tnsr.org/2019/07/unlocking-the-gates-of-eurasia-chinas-belt-and-road-initiative-and-its-implications-for-u-s-grand-strategy/, Thomas P. Cavanna is a visiting assistant professor at the Fletcher School of Law & Diplomacy in the Center for Strategic Studies. He writes on U.S. grand strategy and U.S. foreign policy toward China and South Asia. He holds a French “Agrégation” and a Master’s degree and doctorate in history from Sciences Po. He was also a Fox Fellow at Yale. Dr. Cavanna is currently working on a book on the Belt and Road Initiative and U.S. grand strategy., Unlocking the Gates of Eurasia: China’s Belt and Road Initiative and Its Implications for U.S. Grand Strategy

Finally, Belt and Road works in tandem with China’s rising military influence. Beijing has already leveraged U.S. fears of escalation to assert its claims, deploy its assets, and display an image of inevitability in the South China Sea.173 But Belt and Road complements these dynamics by providing more instruments to pressure or incentivize other states to follow China’s interests without reaching escalatory thresholds.174 Moreover, the global spread of its national assets requires Beijing to deploy its military and its private defense companies, and to partner with host nations in the arenas of law enforcement, intelligence, and defense. Despite the opening of a base in Djibouti in mid-2017, the dredging of fortified artificial islands in the South China Sea beginning in 2014, reports of covert military outposts in Tajikistan since 2016, news coverage of a secret agreement for facilities in Cambodia in spring 2019, and rumors about future installations on various sites, such as Pakistan’s Gwadar port, a large base network seems unlikely for now, as it would contradict Beijing’s “anti-imperialist” ideology and risk controversies.

Turn: China’s expansion to Europe avoids great power conflict with the US

Horia Curtin, 2017, A PIVOT TO EUROPE: CHINA’S BELT-AND-ROAD BALANCING ACT, http://ier.gov.ro/wp-content/uploads/publicatii/Final_Policy-Brief-5_Horia-Ciurtin-A-Pivot-to-Europe_web.pdf, Mr Horia Ciurtin is a legal adviser in the field of international investment law and international arbitration; Managing Editor of the EFILA Blog which appears under the auspices of the European Federation for Investment Law and Arbitration (Brussels). He is also an Expert for New Strategy Center (Bucharest), a prominent Romanian think-tank in the field of strategy and international relations. In 2017, he co-founded DAVA | Strategic Analysis, a think-tank providing indepth strategic, cultural and geo-economic analyses.

Therefore, driven by precaution (and fear)10 over a concerted United States intervention in the Pacific and (South) East Asia, Beijing prepares for the worst. But it also hopes for the best. The economic best. Not surprisingly, following a path of minimum tensions, the Chinese “westward” strategy appears to be driven by a dual motivation, as it seeks to simultaneously: (a) lower the possibility of direct collision on its maritime flank and de-escalate frictions with the United States, (b) expand commercially and geopolitically in an area very much hegemon-free. And that is an approach fuelled both by fear and profit. In a certain sense, the path to the West is long, but faces less great-power rivalry and offers a higher financial reward at the end of the route. The European Union is – indeed – an economic giant, but, as a mainly normative power, it lacks offensive capacities and does not engage in Realpolitik. And, thus, China can prepare to deal with it on a more transactional basis, without fear of getting toestepped in a claustrophobic area. Distance is not necessarily an impediment, but also a geopolitical recipe for successful collaboration: less overlapping areas of interest, less chances for conflict

US can’t push allies away from China because they are economically dependent on China

Michael Shuman, April 25, 2019, https://www.theatlantic.com/international/archive/2019/04/us-allies-washington-china-belt-road/587902/, The Atlantic, The U.S. Can’t Make Allies Take Sides Over China

This is not the case anymore. While Washington and Beijing have different political ideologies, akin in some ways to the former Cold War divide between the “free” and “unfree” worlds, their economies are tightly intertwined with each other’s, and with the rest of the world’s. Longtime security allies of the U.S., such as Japan, South Korea, and Germany, also have strong trade and investment links with China that are crucial to their economic future. So while they are not prepared to ditch their alliance with Washington, they can’t afford to unduly alienate Beijing, either. Add in other divisions—the strained relations between the U.S. and Europe, for instance, or within the European Union itself—and the global picture becomes even fuzzier.