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1. China’s Response to Climate Change: A Study in Contrasts and a Policy at a Crossroads

Author:
David B. Sandalow
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Asia Society Policy Institute
Abstract:
China is the world’s leading emitter of heat-trapping gases, by far. In 2019, Chinese emissions were greater than emissions from the United States, the European Union, and Japan combined. There is no solution to climate change without China. China’s response to climate change is a study in contrasts. China leads the world in solar power, wind power, and electric vehicle deployment, but also in coal consumption. The Chinese government has adopted some of the world’s most ambitious energy efficiency and forest conservation policies, but is financing a significant expansion of coal-fired power plant capacity at home and abroad. China’s leaders are strongly committed to the Paris Agreement, but appear to attach less priority to climate change than in years past. This Asia Society Policy Institute issue paper, China’s Response to Climate Change: A Study in Contrasts and a Policy at a Crossroads, written by former senior policymaker and current Columbia University fellow David Sandalow, explores these contrasts. It does so at an important time in Chinese climate change policy. During the next 18 months, the Chinese government will spend heavily on economic stimulus measures, release its 14th Five-Year Plan (for 2021–2025), and develop short- and long-term climate action plans (known as its “updated nationally-determined contributions” and “mid-century strategy” in the terminology of the global U.N. climate process). Decisions by the Chinese government will reverberate globally, including in the United States. A potential Biden administration’s ambition in addressing climate change would be reinforced by ambition in China. This issue paper also provides an up-to-date snapshot of China’s climate policies, drawing on data from 2019 and the beginning of 2020 (during the height of the COVID-19 economic lockdown), as well as recent remarks by Chinese leaders. It starts by examining Chinese emissions of heat-trapping gases. It then discusses China’s principal climate policies, explaining the main tools the Chinese government uses to address climate change and related topics. The issue paper concludes with a discussion of processes that will shape Chinese climate change policy in the years ahead. This paper is the second in a series of policy products that the Asia Society Policy Institute will publish as part of a project exploring the possibilities around U.S.-China climate cooperation.
Topic:
Climate Change, Energy Policy, Governance, Renewable Energy, and Carbon Emissions
Political Geography:
China, Asia, and United States of America

2. Curbing State-Driven Trade Policies: How to Craft New & Effective Approaches to Counter Distortive Practices

Author:
Wendy Cutler
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Asia Society Policy Institute
Abstract:
Much attention has been focused on China’s unfair intellectual property practices and the imbalance in the U.S.-China trade relationship, but equally troubling are large-scale Chinese industrial subsidies, the behavior of state-owned enterprises (SOEs), and in general, the oversized and opaque role of the Chinese state in the economy. While the U.S-China phase one trade deal tackled some important sources of bilateral tension and aimed to boost Chinese purchases of U.S. goods and services, it was silent on industrial subsidies and related matters, leaving them for the next phase of negotiations, the fate of which is now in question. U.S. concerns on these matters are shared by other trading partners including the European Union (EU) and Japan. Yet despite widespread disapproval of such practices, building new global rules to combat subsidies has proven challenging. This is due to several factors, ranging from gridlock at the WTO, differences of views among like-minded countries on the required level of ambition, and uncertainty as to how best to approach the enormous complexities in China’s subsidies and related policies. The Organization for Economic Cooperation and Development (OECD) has sought to unpack this complexity, conducting recent studies of Chinese subsidies in two key sectors: aluminum and semiconductors. Both studies illustrate how Chinese subsidies are not simple cash handouts from the state to protected firms so that they can sell at favorable and distorting prices. The OECD finds subsidies can take various forms, including downstream or upstream help that trickles up or down to the firm that’s intended to benefit. They can take the form of favorable equity or debt purchases or bonds provided at below-market rates. And with interconnected global value chains, subsidies can effectively be granted covertly, intended to benefit one firm that might be several links away along the chain. In China, the problem is compounded by an opaque “party-state” structure that obscures not only the recipients of subsidies, but also the source. According to Mark Wu, a Harvard Law School professor who previously served as the Director for Intellectual Property in the Office of the U.S. Trade Representative, subsidies not only flow directly from government bodies in Beijing, but also indirectly through informal responses to directives — sometimes even left unsaid, but understood — from the Chinese Communist Party. Against this backdrop, the Asia Society Policy Institute (ASPI) convened two roundtables in the fall of 2019 and the spring of 2020 to discuss how best to build a new rules-based infrastructure that might combat such subsidies and prevent trade-distorting results such as unfair competition, market access barriers, and, above all, overcapacity in global markets. Experts from the private sector, think tanks, governments, and academia weighed in with possible solutions, which included: Negotiating new rules in the WTO; Using the WTO dispute settlement system, despite its often-discussed flaws; Forming ad hoc rules-based approaches, where possible, like the U.S-EU-Japan trilateral initiative; Plurilateral negotiations conducted on a sector-by-sector basis; Forming coalitions of like-minded trading partners to establish an alternative model, much in the way that the Trans-Pacific Partnership (TPP) was framed. During the roundtables, most experts agreed that there is no silver bullet that solves the subsidy and related issues on its own. And most agree that, left unaddressed, the problem is likely to deepen. The COVID-19 pandemic might even exacerbate it by leading to more state involvement in economies around the world and making it hard to discipline Beijing’s practices. Recognizing all of these real challenges that the international trade community faces, the roundtables reached the following key conclusions: Transparency on the scope, level, and nature of industrial subsidies is vital; Efforts to publicize the ongoing work in these areas, particularly that being done by the OECD, should accelerate; Turning research into tangible new policies is a key step; and Persuading China to agree to updated rules will be necessary, given that China is a singular contributor to overcapacity.
Topic:
International Trade and Finance, Treaties and Agreements, Trade, Industry, and WTO
Political Geography:
China, Asia, North America, and United States of America

3. The Avoidable War: The Case for Managed Strategic Competition

Author:
Kevin Rudd
Publication Date:
01-2020
Content Type:
Special Report
Institution:
Asia Society Policy Institute
Abstract:
Throughout the recent 18 months of the U.S.-China trade war, which has landed in a “phase one” deal, and awaits the tackling of more difficult economic elements in phase two negotiations, there has been a slow and steady structural shift in the U.S.-China relationship as it continues to head in a more adversarial direction. Against the backdrop of this drift toward confrontation occurring in the absence of any common strategic understanding or high-level diplomatic mechanism to manage the mounting economic, security, and technological tensions into the future, Asia Society Policy Institute President the Hon. Kevin Rudd brings together a series of speeches delivered during 2019 in the collection, The Avoidable War: The Case for Managed Strategic Competition. This volume works to help make sense of where the U.S.-China relationship is heading in the current period of strategic competition, and follows on from Rudd’s 2018 collection, The Avoidable War: Reflections on U.S.-China Relations and the End of Strategic Engagement. In this new volume, Rudd focuses not only on the bilateral relationship, but also on China's domestic politics, economics, and its strategic vision. But on the bilateral relationship, Rudd writes that while there may be a truce of sorts on the trade front during 2020, that will not be the case across the rest of the economic, political, and security relationship. Challenges will continue in areas such as the future of 5G mobile telecommunications infrastructure, the Belt and Road Initiative, Xinjiang, Hong Kong, allegations of Chinese political influence and interference in foreign countries’ internal democratic processes, and China’s increasingly close strategic collaboration with Russia. Militarily, tensions will continue in the East China Sea, the South China Sea, and the wider Indo-Pacific, together with confrontations less visible to the public eye in espionage, cyber, and space. Against this backdrop, and the steady erosion of diplomatic and political capital in the overall relationship, Rudd asserts that the “2020s loom as a decade of living dangerously in the U.S.-China relationship.” The Avoidable War: The Case for Managed Strategic Competition includes six speeches from 2019 covering a range of critical challenges in the U.S.-China relationship, as well as a December 2019 conversation at the Harvard Kennedy School which begins to outline an approach to managing the growing tinderbox of tensions across the spectrum of the bilateral relationship.
Topic:
Diplomacy, Bilateral Relations, Trade, and Strategic Competition
Political Geography:
China, Asia, North America, and United States of America

4. Climate Diplomacy under a New U.S. Administration

Author:
Thom Woodroofe and Brendan Guy
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Asia Society Policy Institute
Abstract:
The United States is the world’s second-largest greenhouse gas emitter. For that reason, the outcome of the U.S. presidential election in November will have an undeniable impact on the future of the global climate change regime. This is especially the case now that the United Nations’ COP26 Climate Change Conference has been postponed to 2021 as a result of the COVID-19 pandemic. Indeed, as Asia and the rest of the world consider whether and how to step up their levels of ambition as part of the five-year ratchet mechanism of the Paris Agreement, the United States has the potential to be either a catalytic force for that effort going into 2021 or an even stronger spoiler of the Agreement’s ongoing effectiveness at a crucial juncture. No country will be watching more closely than China. The 2014 U.S.-China Joint Announcement on Climate Change between President Barack Obama and President Xi Jinping proved to be the watershed moment in the lead-up to the Paris Agreement, as the two countries signaled for the first time that they would act in a coordinated manner to combat climate change. Whether the United States and China can recapture that spirit of shared ambition in the future will have ripple effects on the positions of other major emitters as well — especially India, Japan, and Australia, which may not enhance their own levels of ambition without a stronger indication of further action by the United States and China. While President Donald Trump has begun the process of withdrawing the United States from the Paris Agreement and rolled back domestic and international measures to combat climate change, it is clear that if a Democrat is elected president in 2020, they would make combating climate change a defining priority of their administration. Therefore, a clearer understanding of the specific approach that would underpin the climate diplomacy of a potential new Democratic president can provide greater reassurance to the international community as countries consider their own levels of ambition in the lead-up to COP26 and beyond. This paper, therefore, assesses the international climate policies of both Vice President Joe Biden and Senator Bernie Sanders across six areas, including their proposals to reduce greenhouse gas emissions; engage with other major emitters, including China; use trade policy as a lever for climate action; increase climate finance and remove fossil fuel subsidies; take action across other sectors, and embed climate action as a core national security priority. The authors also lay out three cross-cutting considerations for a potential new Democratic administration to maximize their efforts in the global fight against climate change, including how they can best structure their administration; engage other major emitters most strategically; and use all tools in the toolkit to reduce emissions. This includes a number of specific recommendations for how the candidates’ existing policies can best be elaborated, including with regard to China; plans to host a world leader summit on climate early in a new administration; and the tabling of a new 2030 emissions reduction target. The likely constraints and choices that will confront a new U.S. administration as they determine their approach to climate action are also highlighted in the paper. This paper is the first in a series of policy products that the Asia Society Policy Institute will publish as part of a new project exploring the possibilities around U.S.-China climate cooperation.
Topic:
Climate Change, Diplomacy, Government, Treaties and Agreements, Donald Trump, and Carbon Emissions
Political Geography:
China, Asia, North America, and United States of America

5. Silk Road Diplomacy: Deconstructing Beijing’s Toolkit to Influence South and Central Asia

Author:
Samantha Custer, Tanya Sethi, Jonathan A. Solis, Joyce Lin, Siddharta Ghose, Anubhav Gupta, Rodney Knight, and Austin Baehr
Publication Date:
12-2019
Content Type:
Special Report
Institution:
Asia Society Policy Institute
Abstract:
Many countries engage in public diplomacy—diplomatic instruments used to influence the perceptions, preferences, and actions of citizens and leaders in another country—as a means to win over foreign publics and advance national interests. In a new study and report published by AidData, in collaboration with the Asia Society Policy Institute, and the Center for Strategic and International Studies, the authors look at the past two decades of China’s relationship cultivation—including efforts to balance negative perceptions of its growing military and economic strength—within its greater periphery, specifically the 13 countries of South and Central Asia. This study collected an unprecedented amount of qualitative and quantitative data on Beijing’s public diplomacy in the South and Central Asian region from 2000 through 2018. In the report Silk Road Diplomacy, the authors analyze this data to illuminate which tools Beijing deploys, with whom, and to what effects within this subregion.
Topic:
Diplomacy, Regional Cooperation, Military Affairs, and Economy
Political Geography:
China, South Asia, Central Asia, and Asia

6. Trade in Trouble: How the Asia Pacific Can Step Up and Lead Reforms

Author:
Wendy Cutler, Peter Grey, Kim Jong-Hoon, Mari Pangestu, Yoichi Sozuki, and Tu Xinquan
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Asia Society Policy Institute
Abstract:
The U.S.-China trade dispute has dominated headlines over the past year, disrupting trade and investment flows and increasing uncertainty at a time when the global economy is already facing headwinds. The conflict has left many countries in the Asia Pacific feeling caught in the crossfire seeking to navigate the tensions without alienating either country. While the World Trade Organization (WTO) would ideally help reduce the frictions, it has not been up to the task. The paralysis at the WTO points to a deeper problem: it’s inability to keep up with the pace of change or address the challenges of new developments in advanced technologies and the digital economy. Simply put, the trade regime is in trouble and in need of reform. At this dynamic and uncertain time in trade, the Asia Society Policy Institute (ASPI) convened a group of leading trade experts and former trade officials from across the Asia Pacific, led by ASPI Vice President Wendy Cutler. In this issue paper, the authors examine the major developments in the international trading system, including the U.S.-China trade dispute, FTA activity in the Asia Pacific, and efforts to reform the WTO. In this challenging environment, the authors find that the Asia Pacific is uniquely well-positioned to lead reforms to get the system back on track. This paper is the latest product of the ASPI initiative, “Building a High Standard and Inclusive Asia-Pacific Trade Architecture.” It builds on the work of two previous reports published in March 2017 and January 2018.
Topic:
Economy, Trade Wars, Trade, and WTO
Political Geography:
China, Asia, North America, and United States of America

7. The United States, China, and Southeast Asia: Can ASEAN Find a New Strategic Equilibrium?

Author:
Kevin Rudd
Publication Date:
11-2018
Content Type:
Commentary and Analysis
Institution:
Asia Society Policy Institute
Abstract:
U.S.-China relations have now entered into a new structural phase. Officially, the Americans describe this as a change from 40 years of “strategic engagement” to a new period of “strategic competition.” The precise definition of strategic competition, as an operational rather than a declaratory strategy, has yet to fully emerge. But we would be foolish not to recognize that there has been a fundamental systemic shift in U.S. sentiment toward China
Topic:
Diplomacy, International Affairs, and Geopolitics
Political Geography:
China