Greetings from Singapore, which is a fine place to weather a once-in-a-century global pandemic but, alas, does not have a proper foreign correspondents’ club.
I was on the board of Hong Kong’s world-famous FCC more than a decade ago, back when Hong Kong was still Hong Kong. One of the pleasures of helping to run the club in those halcyon days was its frequent interactions with the Chinese foreign ministry’s representatives in the territory.
These interactions sometimes revolved around a speaker the foreign ministry did not like — a human-rights activist critical of Beijing’s policies in Tibet, for example, or an advocate of independence for Hong Kong.
The communication pattern usually went something like this. Said speaker arouses a moderate level of interest for his or her talk. The ministry’s sometimes public objection to said speaker draws far more attention — and a much bigger audience — than he or she would otherwise have attracted.
My question for the foreign ministry was always the same: “Don’t you guys ever do a cost-benefit analysis?” If they had simply ignored the speaker, few people would have noticed the event. Why help garner publicity for a speaker they object to? Their response was always some variation of “yes, that’s true, but we have lots of red lines”.
We’ve changed the timing of this week’s Asia briefing to take into account Friday’s big news on China applying for membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Another cost-benefit conundrum, if you like.
Joining the CPTPP would be a real coup for Beijing in its global competition with the US. But it may also be impossible because of a series of vindictive actions the Chinese Communist party has directed over recent years at CPTPP members whose support it now needs to join. If only those vindictive measures had first been subject to a rigorous cost-benefit analysis, the Chinese government might not have pulled the trigger on them and would now be in a much better position to steal a march on the US.
Charted waters looks at just how close economic ties between China and Germany are.
A brilliant riposte, but will it succeed?
As ripostes go, China’s formal application to join the CPTPP was brilliant. It came just a day after the US announced a new partnership to supply Australia with advanced submarine and missile technology, allowing it to project power into waters where China currently has to contend with only the US and Japanese navies.
The Chinese government insisted there was no connection between the two announcements, but few people believe that. As significant as the new Aukus alliance is, China’s response was a pointed reminder that the US is good at coming up with political and military initiatives in the world’s most important region — Barack Obama’s “pivot to Asia”, Donald Trump’s “free and open Indo-Pacific” — but seems completely bereft of any economic ideas.
Nguyen Khac Giang, a scholar at New Zealand’s Victoria University of Wellington, said President Xi Jinping’s CPTPP gambit, if it comes good, would be “a disaster” for the US. “How will the US engage with the region without an economic agenda?”
Not everyone agrees. “I don’t think China joining CPTPP would be a disaster for the US,” countered Drew Thompson, a former Pentagon China specialist at Singapore’s Lee Kuan Yew School of Public Policy. “It would be a disaster for the other members who will have serious compliance and credibility problems if China joins and blatantly violates the agreement, which Beijing is wont to do when they have inevitable political differences.”
Thompson admires the boldness of Aukus but agrees with Giang that “if only the Biden administration had a trade strategy for Asia, then we’d be talking competition”.
China, however, may ultimately end up snatching defeat from the jaws of victory, much as it did when it sealed an ambitious investment agreement with the EU in December.
That agreement had been opposed by the incoming Biden administration to no avail. But a few months later Xi’s administration rashly imposed symbolic sanctions on EU parliamentarians who had criticised its policies in Xinjiang. The European parliament promptly suspended its deliberations on the agreement, which it must pass before the deal can take effect.
Joining the CPTPP, which was finalised three years ago, has been a theoretical option ever since Trump withdrew the US from its predecessor agreement in January 2017. Yet Beijing took its eyes off the prize, unleashing a series of punitive trade measures against Australia and Canada during various diplomatic disputes. Now it needs their support to join CPTPP.
China now argues that Australia and Canada should do what it never does — make trade and economic decisions on their own merits, without reference to political considerations.
“If China meets [CPTPP’s] conditions, why won’t Australia and Canada agree to China’s application?” asks Zhu Feng, an influential international relations scholar at Nanjing University. “No matter what disputes there are now, regional economic co-operation is a common interest.”
“Taking revenge” on China’s CPTPP application, he added, would be tantamount to an “abuse of power”.
Stephen Jacobi, a former New Zealand trade negotiator, argued that China’s — and the UK’s — applications to join CPTPP were evidence that it was “working, in unusual times admittedly”.
“It was always designed to be a pathway to a bigger free trade agreement among all members of Apec,” he said, referring to the 21-member trans-Pacific forum. “The alternative is very dismal — increasing militarisation.”
At the outset of the almost two-year trade war between his administration and Trump’s, Xi famously said that rather than “turn the other cheek, in our culture we punch back”.
Unfortunately for Beijing, Australia and Canada increasingly have the same instinct when it comes to dealing with China. Last week Rex Patrick, an independent Australian senator, told the FT that his countrymen were tired of China “exercising [punitive] trade powers without proper cause . . . as part of a geopolitical play”.
After all the penalties China has dished out over recent years on exports ranging from Australian wine to coal, he noted: “Why would Australia just acquiesce to the ask of China?”
Additional reporting by Emma Zhou in Beijing, Edward White in Seoul, John Reed in Bangkok and Anthony Klan in Sydney
Charted waters
Much has been written about Berlin’s cosy relationship with Beijing. As regular readers know, we’ve been critical of the Merkel government’s willingness to ignore the rather problematic aspects of China’s behaviour in order to maintain trade links.
Despite the imminent departure of the chancellor, we also don’t think Merkantilism is going anywhere any time soon. The chart below helps explain why. Claire Jones
Trade links
Nikkei has an excellent piece ($) looking at the rise of the fake chip. The global shortage is pushing electronics manufacturers to unconventional procurement, opening a door for dodgy wares to slip into the supply chain.
Today’s FT Big Read: Beijing’s economic power is pushing Middle Eastern states to rethink their ties with the US.
Want to know the cost of fractiousness between Beijing and DC? Here’s an example: cross-investment between the US and China fell 75 per cent in the past five years as trade tensions grew, with the tech sector alone plunging 96 per cent. Ouch. (Nikkei, $)
The World Economic Forum and Clifford Chance have a report out today looking at how to set a climate-friendly agenda for trade. Claire Jones and Francesca Regalado
Source: Economy - ft.com
