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1001. The Influence of RMB Internationalization on the Chinese Economy: Theory and Policy

Author:
Fan He and Qiyuan Xu
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
With a balance between radicalism and gradualism, renminbi (RMB) cross-border settlement covers all of the items in China's balance of payments (BoP), including financial accounts, although some of these accounts are still controlled by means of quotas and administrative approval. By the end of the first quarter in 2014, the amount of RMB trade settlement had reached ¥11 trillion since the pilot scheme was launched in July 2009. RMB cross-border settlement has become increasingly important for monetary authorities in terms of macroeconomic policy frameworks. This is especially the case with the more sophisticated conditions in global monetary markets, which result not only from the nontraditional monetary policies employed by the European Central Bank and the Bank of Japan, but also the ongoing quantitative easing (QE) tapering by the US Federal Reserve and the spillover effects on emerging economies. It is increasingly important to evaluate the potential influence of RMB internationalization on China's macroeconomy. A framework, which includes monetary supply and demand, was created to analyze the influences of RMB cross-border settlement on China's domestic interest rate, asset price and foreign exchange (forex) reserves. RMB settlement behaves in different ways with the various items in BoP, such as imports, exports, foreign direct investment (FDI), overseas direct investment (ODI), RMB Qualified Foreign Institutional Investor (RQFII), RMB Qualified Domestic Institutional Investor (RQDII) and cross-border loans. It was found that RMB settlement in different items leads to different effects on China's economy. For RMB export settlement, RMB overseas direct investment (RODI) and RQFII at the initial stage, RMB settlement does not affect China's interest rate and asset price. In addition, more favourable to the People's Bank of China (PBoC), foreign exchange reserves increase less with these reforms; therefore, they should be promoted with priority. However, it is necessary to stress that all settlements should be based on real transactions in order to prevent fake exports. For RMB import settlement, RODI and RQDII at the initial stage, these pilot schemes exert influences on China's economy through interest rate changes, causing an additional increase of forex reserves. Although other short-term items in the financial account could also impact the interest rate, the items in this group are either based on real business such as trade and investment or on financial transactions at the initial stage on a small scale. Therefore, this group has a relatively moderate influence on the interest rate. It is important to remember that this negative by-product is a result of the assumption that the PBoC targets exchange rate stability. If the PBoC sets the exchange rate system to be flexible enough, then such pilot schemes will not cause an increase of forex reserves. It is thus essential to advance exchange rate regime reforms to keep up with the steps of RMB internationalization. With the progress in RQDII and RQFII, the endorsement of issuing dim sum bonds for capital backflows and with the increase in lending from the offshore to the onshore market, these types of RMB cross-border settlements will not exert pressure on forex reserves; however, they do have an impact on the money market. If the amount of RMB flowing through these items is large enough, the interest rate and asset price will be significantly affected, and could be in conflict with the intended monetary policy. These types of transactions are the most risky to monetary authorities; therefore, they should be cautious regarding these items. In the short term, RMB settlements in these kinds of items should be regulated with quotas. In the medium to the longer term, these items should be opened in a gradual way.
Topic:
Foreign Exchange and Monetary Policy
Political Geography:
Japan, China, and Europe

1002. The North Korea Crisis and Regional Responses

Author:
Ching-Chang Chen, Denny Roy, and Utpal Vyas
Publication Date:
04-2015
Content Type:
Book
Institution:
East-West Center
Abstract:
The Kim Jong Un (KJU) regime, since its inception, has ratcheted up tension on the Korean Peninsula. His decision to dishonor what he had agreed to—a moratorium on nuclear tests and long-range missile launches as well as the return of IAEA (International Atomic Energy Agency) inspectors to Yongbyon—at several rounds of bilateral talks with the United States in February 2012 confirmed the belief that North Korea is a historically unpredictable and unreliable actor. Because the new North Korean leadership needed to fulfill its promise that North Korea would enter an “era of being a strong and prosperous nation ( gangseongdaeguk ),” pursuing economic recovery by easing tension through reconciliation with the international community, including the United States, was of significance. North Korea could have obtained nutritional assistance including corn, soy beans, vegetable oils, and ready-to-eat therapeutic food, but instead it initiated a string of provocations and hostile threats, which brought China's patience to the limits, strengthened UN sanctions, and consolidated the US position not to engage with North Korea before Pyongyang shows concrete steps for denuclearization. Hence, for the international observers, North Korea's gamble seemed to be a grave mistake.
Topic:
Economics
Political Geography:
China and North Korea

1003. Global Strategic Patenting and Innovation—Policy and Research Implications

Author:
Dieter Ernst
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
EastWest Institute
Abstract:
As an exclusionary property right, patents invite their use as a strategic weapon to shape markets and to reap monopoly rents through patent monetization. The increasing variety and global reach of strategic patenting strategies pose new and under-researched challenges for the international distribution of innovation gains. This think piece explores the proliferation of strategic patenting strategies, and highlights the growing complexity and uncertainty of the international patent system that result from the increasing use of patents as market deterrents and as a new asset class. Part One of the paper introduces four manifestations of strategic patenting that are well documented in the literature, i.e. the use of standard-essential patents (SEPs) as entry deterrents; aggressive patent infringement litigation that has galvanized the smart phone wars, with Apple as the pioneer; the proliferation of patent monetization services; and the use of cross-border patent licensing as a tool for corporate transfer pricing and tax planning. While existing research provides important insights into the drivers, we lack systematic theoretical and empirical research on how strategic patenting affects the international distribution of innovation gains. Part Two seeks to shed light on two recent forms of strategic patenting which need both theoretical and empirical case study research, i.e. the rise of Sovereign Patent Funds (SPFs), and first signs of patent-avoiding latecomer strategies, with China's Xiaomi as the most prominent example. The paper concludes with questions for policy and further research.
Topic:
Defense Policy
Political Geography:
China

1004. Regional Linkages and Global Policy Alignment: The Case of China–Southeast Asia Relations

Author:
Georg Strüver and Pascal Abb
Publication Date:
03-2015
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
This paper uses the case of Sino–Southeast Asian relations to gain insights on China's ability to muster support for its global agenda. The analysis focuses on the regional–global nexus of interstate relations and explores the extent to which the quality of two states' regional relations influences the likelihood of behavioral alignment in global politics. To this end, we consider a range of potentially influential aspects of Sino–Southeast Asian relations (the quality of bilateral relations based on recent event data, alliance policy, regime similarity, development level, and economic ties) and employ a statistical model to search for correlations with observed trends of voting coincidence in the United Nations General Assembly during the period 1979–2010. We find a strong correlation between the quality of regional bilateral relations and global policy alignment, which indicates that patterns of regional cooperation and conflict also impact the trajectory of China's rise in world affairs.
Topic:
Bilateral Relations
Political Geography:
China and Southeast Asia

1005. The Rise of China and Chinese International Relations

Author:
Emilian Kavalski
Publication Date:
05-2015
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
The discussion of China's growing prominence in international life has attracted the increasing attention of policy-makers, the public and scholars alike. Usually sidelined by the mainstream, such interest in China's role and position in global politics has grown exponentially in the context of the deepening concomitant economic, social and political crises across Europe and North America – which, until very recently, were considered the traditional locales of power and influence in world politics. Indicative of the emerging weight and significance of non-Western actors on the global stage, the trend set by China seems to challenge the conventional framework of the study and practice of International Relations (IR).
Topic:
International Relations and Economics
Political Geography:
China, Europe, and North America

1006. Authoritarianism Goes Global (II): The Leninist Roots of Civil Society Repression

Author:
Anne Applebaum
Publication Date:
10-2015
Content Type:
Journal Article
Journal:
Journal of Democracy
Institution:
National Endowment for Democracy
Abstract:
In the early part of the twentieth century, the small group of revolutionaries who became the Russian Bolsheviks developed an alternative theory of civil society. Burke, Tocqueville, and even Russian intellectuals believed that civil society was fundamental to democracy; Lenin believed that the destruction of civil society was crucial to totalitarian dictatorship. But by attempting to control every aspect of society, totalitarian regimes would eventually turn every aspect of society into a potential source of dissent, as in the cases of Czechoslovakia and Poland. Yet in many other societies heavily influenced by Soviet ideology—those in Belarus, Central Asia, China, Cuba, parts of Africa, and much of the Arab world—those in power remain attached to the old Bolshevik idea that independent civic institutions are a threat to the state.
Topic:
Civil Society, Authoritarianism, Media, Repression, and Dictatorship
Political Geography:
Africa, China, Europe, Central Asia, Middle East, Asia, Cuba, North America, and Belarus

1007. China's Political-Economic Institutions and Development

Author:
Chenggang Xu
Publication Date:
10-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
After more than three decades of economic reform, China has transformed from being one of the poorest economies in the world to being the second-largest economy measured by nominal exchange rates, or the largest economy measured by purchasing power. As such, it is important to elucidate the determinants of China’s future development. This article will focus on China’s institutions. I argue that although the size of China’s economy is extremely important in terms of its impact on the global economy, it is misleading to ignore political and economic institutions. Indeed, forecasts based on extrapolating past trends could be erroneous (see Pritchett and Summers 2014). China was the largest economy in the world before the end of the 19th century but then lost ground to Western nations that established the rule of law and free trade. To understand China’s past and future development, one has to examine its institutions.
Topic:
Economics, Reform, and Global Political Economy
Political Geography:
China and Asia

1008. Beyond the Wall: Chinese Far Seas Operation

Author:
Peter A. Dutton and Ryan D. Martinson
Publication Date:
05-2015
Content Type:
Special Report
Institution:
China Maritime Studies Institute, U.S. Naval War College
Abstract:
This volume is the product of a groundbreaking dialogue on sea-lane security held between People's Liberation Army (PLA) Navy and U.S. Navy scholars at the Naval War College in August 2013, with additional material from a related conference,"China's Far Seas Operations," hosted by the China Maritime Studies Institute in May 2012. At that time the political climate in China was uncertain, in the shadow of the Bo Xilai crisis and of the impending transition of power between the Hu and Xi regimes; accordingly the PLA Navy, though invited to participate in the "Far Seas" conference, ultimately declined to do so. This was not entirely surprising. Attempts by various agencies of the U.S. Navy up to that time to engage in discussions to advance maritime cooperation between China and the United States had been met with lukewarm responses at best. But at a maritime security dialogue in Dalian in September 2012 Senior Capt. Zhang Junshe of the PLA Navy Research Institute, a key contributor to this volume and to the success of the academic cooperation between our two institutes, approached Peter Dutton to tell him that everything had changed.
Topic:
Military Strategy, Military Affairs, Geopolitics, Navy, Oceans and Seas, Seapower, Chinese Communist Party (CCP), and People's Republic of China (PRC)
Political Geography:
United States, China, and Asia

1009. Double Remedies in Double Courts

Author:
Sungjoon Cho and Thomas H. Lee
Publication Date:
04-2015
Content Type:
Journal Article
Abstract:
This article uses an ongoing trade controversy litigated in US courts and the World Trade Organization dispute resolution system as a vehicle for exploring different models to deal with parallel adjudications in different legal systems between the same or related parties on the same issue. In lieu of more traditional models of subordination or first-to-decide sequencing, the article proposes an engagement model as a solution to the double-courts, single-issue problem.
Topic:
International Law, International Trade and Finance, World Trade Organization, and Courts
Political Geography:
China, Europe, and United States of America

1010. Mark Toufayan, Emmanuelle Tourme-Jouannet, Hélène Ruiz Fabri (eds). Droit international et nouvelles approches sur le tiers-monde: entre répétition et renouveau [International Law and New Approaches to the Third World: Between Repetition and Renewal]

Author:
Makane Moïse Mbengue
Publication Date:
07-2015
Content Type:
Journal Article
Abstract:
The volume under review publishes the proceedings of a colloquium held at the University of Paris in July 2010. The aim of this colloquium was to fill a lacuna that characterizes the contemporary francophone international legal scholarship. Indeed, as noted by the editors in their foreword to the book, after a prolific period during the 1970s and 1980s, French and francophone scholars have gradually lost interest in Third World-related issues and ignored this topic in their research and teachings. This trend is regrettable and unfortunate because despite some progress and improvements, international relations are still marked by significant inequalities and disparities between rich and poor countries, while several regions of the world remain in a situation of extreme poverty. Therefore, there is an urgent need to renew and revive the reflection of French-speaking international lawyers on their discipline by inciting them to critically question the present existence and effects of the rules of international law relating to the Third World in the current globalized context. To achieve this goal, Mark Toufayan, Emmanuelle TourmeJouannet and Hélène Ruiz Fabri had the idea of bringing together, in Paris, francophone and anglophone scholars and prominent representatives of the critical Third World Approaches to International Law (TWAIL). TWAIL scholars were invited to expose their ideas and thoughts, and their French-speaking counterparts were asked to react and comment on these thoughts.
Topic:
Development, Human Rights, Imperialism, International Law, Post Colonialism, Third World, and History
Political Geography:
China, Europe, France, South Africa, and Chile