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51. The EU–China Comprehensive Agreement on Investment: Lessons Learnt for Indonesia

Author:
Yan Lili Ing and Junianto James Losarili
Publication Date:
08-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The European Union (EU) and China have recently reached an agreement: the EU–China Comprehensive Agreement on Investment (CAI). As one of the most recent investment agreements concluded by the EU, the paper aims to assess specific concessions made in the agreement, and provides lessons learnt for Indonesia on the ongoing negotiations of the Indonesia–EU free trade agreement, the Comprehensive Economic Partnership Agreement (IEU CEPA). The paper will present an overview of the main areas covered under the CAI, assess the potential impacts of the CAI on EU investment into Indonesia, and set out lessons that can be learnt from the CAI.
Topic:
Economics, International Cooperation, International Trade and Finance, European Union, and Investment
Political Geography:
China, Europe, Indonesia, and Asia

52. A Quantitative Analysis of Disaster Risk Reduction Investment Effects for Sustainable Development: Indonesia Case Study

Author:
Hiroaki Ishiwata, Hiroyuki Wada, Koji Suzuki, and Naoto Tada
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper analyses the long-term impacts of large-scale disasters on the economic growth of developing countries in the Association of Southeast Asian Nations (ASEAN) Community, by the scale of disaster risk reduction (DRR) investments. As a means of quantitatively analysing the optimal level and economic efficiency of DRR investments, a case study was conducted on Indonesia by using a dynamic stochastic macroeconomic model. The results showed that in Indonesia, although greater economic growth is expected when additional DRR investments are made, an excessive DRR investment may contrarily lead to a slowdown in economic growth: an optimal level of DRR investment exists and maintaining its level is essential for sustainable economic growth. Furthermore, it was confirmed that there is a break-even point when the amount of accumulated disaster damage mitigation benefits exceeds the amount of accumulated DRR investment. This demonstrated that the funds invested in DRR could be recovered. Additionally, the results also showed that even if no disaster damage is caused over a long period of time, DRR investments are by no means redundant as the ‘ex-ante risk reduction effect’ will be generated when the optimal level of DRR investment is made. Lastly, it was determined that providing a continuous DRR investment is important in achieving the global target set forth in the Sendai Framework for Disaster Risk Reduction. In addition, it is considered desirable to maintain a higher level of DRR investment than that which is currently being implemented.
Topic:
Economic Growth, Investment, Risk, and Disaster Management
Political Geography:
Indonesia, Asia, and Indo-Pacific

53. Why Canada Must Embrace a Free and Open Indo-Pacific

Author:
Jonathan Berkshire Miller and Stephen Nagy
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
How has Canada viewed the scope of its engagement in Asia? The traditional lens to look at such engagement has been through the Asia-Pacific framing – defining the region largely through our experience in the multilateral architecture such as the Asia Pacific Economic Cooperation (APEC) on the trade side, and the Association of Southeast Asian Nations (ASEAN) Regional Forum (ARF) on the political-security side. Canada was a founding member of APEC in 1990 and has been a dialogue partner in the ARF since its formation in 1994. Aside from these two main vehicles, Canada has been active in the international development space over the years through and is member of the Asian Development Bank, and more recently joined – while not before considerable internal debate – the Chinese-led Asian Infrastructure Investment Bank in 2017.
Topic:
Bilateral Relations, International Development, Multilateralism, Investment, Trade, and ASEAN
Political Geography:
Japan, China, Canada, Asia, North America, Korea, and Indo-Pacific

54. Deglobalisation in the context of United States-China decoupling

Author:
Alicia Garcia-Herrero and Junyun Tan
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
After decades of increasing globalisation on every front, from trade – pushed further by the growing role of value chains – to technology, movement of people and investment, there now seems to be a turn towards slower globalisation if not deglobalisation, at least in some areas. Deglobalisation is not a new concept but rather a megatrend which has been seen before, for example right before the First World War. Signs of deglobalisation, measured by decelerating trade and investment, and smaller global value chains, started to appear already in 2008. But this trend seems to have accelerated because of the United States’ push to contain China in the context of the strategic competition between the two. Such containment is apparent not only in bilateral trade and investment flows but also in technology. COVID-19 has been a second very important factor contributing to deglobalisation. The most obvious impact has been in movement of people. However, the trend towards deglobalisation is much less evident for finance, with the exception of foreign direct investment, though increasing attempts by the US and China to decouple particular types of financial flows are emerging, including the delisting of Chinese companies from US stock exchanges and the imposition of sanctions for transactions with certain Chinese companies and individuals. Overall, it is too early to confirm the depth and the sustainability of the current wave of deglobalisation, but an increasing number of signals suggest a trend of deglobalisation is underway.
Topic:
Globalization, Bilateral Relations, Geopolitics, Investment, Trade Policy, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

55. Chinese investments in India

Author:
Amit Bhandari, Aashna Agarwal, and Blaise Fernandes
Publication Date:
03-2020
Content Type:
Special Report
Institution:
Gateway House: Indian Council on Global Relations
Abstract:
Over the last five years, China has quietly created a significant place for itself in India – in the technology domain. While India has refused to sign on to China's Belt and Road Initiative (BRI), this map shows India's positioning in the virtual BRI to be strategically invaluable for China. Nearly $4 billion in venture investments in start-ups, the online ecosystem and apps have been made by Chinese entities. This is just the beginning; there is much more to come.
Topic:
Science and Technology, Business, Belt and Road Initiative (BRI), and Investment
Political Geography:
China, South Asia, India, and Asia

56. U.S.-China Technological Rivalry and Its Implications for Korea

Author:
Wonho Yeon
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Recent developments in advanced technology are changing the concept of hegemonic competition. The key feature of technologies in the 4th Industrial Revolution is dual-use. Emerging technologies such as 5G, AI, big data, robotics, aerospace, supercomputers, and quantum computer-related technologies can be used for both civilian and military purposes. The more you invest in the development of advanced technologies, the closer you will be to economic and military hegemony. Therefore, it is no wonder that the U.S. harbors great concerns facing the rise of China in these advanced technologies. To estimate and compare the innovation productivity of the U.S. and that of China, this study constructs a structural estimation model in which each country produces international patents using R&D expenditures and R&D researchers. Empirical results have presented novel findings indicating that China’s innovation productivity has surpassed that of the U.S. since 2015. At the same time we can observe that the U.S. has the world’s largest intellectual property surplus and keeps expanding it, while China’s intellectual property deficit has been growing every year. Given the two contradictory facts - China’s high innovation productivity and low intellectual property balance - we can conclude that China is strong at “innovation” but weak at “invention.” Knowing this, the U.S. eventually began to target this vulnerability. This is the U.S.’ Tech-Decoupling strategy. To achieve U.S.-China tech decoupling, the U.S. has been strengthening trade and investment sanctions against China. In specific, the U.S. has been utilizing the Export Control Reform Act (ECRA), Section 889 of the 2019 National Defense Authority Act, and the Foreign Investment Risk Review Modernization Act (FIRRMA). In return, China is responding to the U.S. sanctions with the new “Long March” strategy rather than a tit-for-tat strategy. In other words, China has been setting long-term aims and responding to the U.S. sanctions by improving institutional arrangements, refining industrial policies, and developing its own technologies such as “Dual-circulation strategy” and “New Infrastructure Plan.” Ironically, increasing pressure from the U.S. is expected to further strengthen China’s R&D capabilities in advanced technology and accelerate its competitiveness in emerging industries. With the onset of the 4th Industrial Revolution, China is rapidly closing the quality gap and technology gap in major industries where Korea has a comparative advantage. If Korea does not adequately respond to changes, it may be difficult to maintain a comparative advantage over China. Thus, now that U.S.-China tensions are intensifying, Korea is facing a pivotal moment in determining the future path of its economy.
Topic:
Science and Technology, Sanctions, Investment, Innovation, Trade, and Strategic Competition
Political Geography:
China, Asia, North America, Korea, and United States of America

57. The Importance of the Western Balkans in China’s Foreign Policy

Author:
Marcin Przychodniak
Publication Date:
06-2020
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
China’s cooperation with the Western Balkans through the “17+1” format and Belt and Road Initiative (BRI), among others, is primarily political. In the economic sphere, Chinese investments are to a large extent only declarations, and trade is marginal in comparison to cooperation with the EU or others. China’s goals are to gain political influence in future EU countries and limit their cooperation with the U.S. Competition with China in the region requires more intense EU-U.S. cooperation, made more difficult by the pandemic.
Topic:
Foreign Policy, International Trade and Finance, Belt and Road Initiative (BRI), Investment, and Strategic Competition
Political Geography:
China, Europe, Asia, and Balkans

58. The cross-border impacts of China’s official rate shocks on stock returns of Chinese concepts shares listed on U.S. market

Author:
Dong Weijia
Publication Date:
02-2020
Content Type:
Working Paper
Abstract:
This paper examines a new cross-border effect of an emerging country’s interest rate changes on the stock returns of its domestic firms listed overseas. First, we discover that the increase in China’s official interest rate greatly affects the NYSE-listed Chinese stocks, thereby suggesting that similar to Chinese domestic investors, the institutional investors in a mature market sometimes exhibit irrational sentiment driven by an emerging economy’s unexpected monetary policy shocks. Second, we highlight some novel asymmetric impacts of China’s official rate changes on Chinese concepts stock prices and reveal that these effects differ from the conventional nonlinear effects of monetary policies. For instance, a bull and bear regime has no statistically significant asymmetric effect on NYSE, whereas interest rate rise has different cross-border impact on Nasdaq and NYSE markets. These interesting findings are mainly driven by the smart investors in the U.S. stock market who are knowledgeable about the differences between NYSE- and Nasdaq-listed stocks and carefully analyze the different impacts of China’s official interest rate changes on the fundamentals of different types of Chinese concepts stocks.
Topic:
International Trade and Finance, Bilateral Relations, and Investment
Political Geography:
China, Asia, North America, and United States of America

59. China’s global investment vanishes under COVID-19

Author:
Derek Scissors
Publication Date:
07-2020
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
As expected given COVID-19, China’s construction and, especially, investment around the world plunged in the first half of 2020. The decline may be exaggerated by Chinese firms not wanting to report global activity, but Beijing’s happy numbers are not credible. From what little can be discerned, the Belt and Road Initiative is becoming more important, primarily because rich countries are more hostile to Chinese entities. American policy needs to shift. Incoming Chinese investment is now extremely small, but technology is still being lost due to lack of implementation of export controls. Growing American portfolio investment in China is unmonitored and may support technology thieves, human rights abusers, and other bad actors.
Topic:
Foreign Policy, Investment, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

60. China’s global investment in 2019: Going Out goes small

Author:
Derek Scissors
Publication Date:
01-2020
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Chinese investment and construction around the world contracted in 2019, regardless of Beijing’s claims to the contrary. However, the decline is concentrated in large, headline-winning deals, and Chinese firms remain active on a smaller scale. A contraction in acquisitions in rich economies has boosted the relative importance of greenfield spending. The number of countries in the Belt and Road continues to expand, and power plant and transport construction continues to be preeminent. American policymakers were initially spurred to act by intense Chinese investment in 2016. This has dropped sharply, but there are challenges related to investment review that are more important, starting with strengthening export controls.
Topic:
Foreign Policy, Economy, Belt and Road Initiative (BRI), and Investment
Political Geography:
China and Asia