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151. The U.S.–China Trade Imbalance and the Theory of Free Trade: Debunking the Currency Manipulation Argument

Author:
Anwar Shaikh and Isabella Weber
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The U.S.–China trade imbalance is commonly attributed to a Chinese policy of currency manipulation. However, empirical studies failed to reach consensus on the RMB misalignment. We argue that this is not a consequence of poor measurement but of theory. At the most abstract level the conventional principle of comparative cost advantage suggests real exchange rates will adjust so as to balance trade. Therefore, the persistence of trade imbalances tends to be interpreted as arising from currency manipulation facilitated by foreign exchange interventions. By way of contrast, the absolute cost theory explains trade imbalances as the outcome of free trade among nations that have unequal real costs. We argue that a disparity in real costs is the root cause of the U.S.–China trade imbalance.
Topic:
Exchange Rate Policy, Free Trade, Trade, and Purchasing Power
Political Geography:
China, Asia, North America, and United States of America

152. An International Intellectual Property and Digital Trade Strategy for Canada

Author:
Jeremy de Beer
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
To remain competitive on a global scale, Canada needs to enhance its domestic intellectual property (IP) and digital trade strategies with an international approach that can respond to constantly changing global economic conditions. Although Canada launched its Intellectual Property Strategy in 2018 — focusing on IP awareness, strategic tools and legislation — its data initiative, known as the Digital Charter, remains a work in progress. Both policies would benefit from an outward-looking, interconnected, international strategic vision. As a member of various international trade agreements, Canada has framed its IP laws to align with these agreements and its trade partners. Canada should expand its trade relationships with Africa before other countries, such as China, take advantage of the continent’s rapidly growing economies and trade opportunities. Building strategic alliances with the right global partners, combined with the use of hard and soft laws to promote Canadian interests, will help Canada strengthen its international IP and digital trade strategy.
Topic:
International Cooperation, Intellectual Property/Copyright, Digital Economy, and Trade
Political Geography:
China, Canada, Asia, and North America

153. New Silk Road – An Opportunity for the Development of Rail Container Transport in Poland?

Author:
Aleksandra Bartosiewicz and Paulina Szterlik
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
Nowa Polityka Wschodnia
Institution:
Faculty of Political Science and International Studies, Nicolaus Copernicus University in Toruń
Abstract:
Poland, due to its location in the center of Europe, is a key element of the New Silk Road (NSR), an initiative that attempts to create the shortest land connection between China and Western Europe. This article analyzes various industry reports, national development strategies up to 2030, and EU and local projects to see is the further development of NSR an opportunity for container rail transport in Poland. As it turns out, the issue discussed in the article has hitherto been outside the circle of researchers’ interest, thus the analysis is an important supplement to the existing research gap. It indicates that the further participation of Poland in the Chinese One Belt One Road initiative is a great opportunity for the economic growth of the Republic of Poland (RP).
Topic:
Development, Bilateral Relations, Belt and Road Initiative (BRI), Trade, Transportation, and Railways
Political Geography:
China, Eastern Europe, Asia, and Poland

154. Economic Diplomacy in the 21st Century: Principles and Challenges

Author:
Linda Yueh
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
Economic diplomacy in the 21st century will face a different set of challenges stemming from the changed global economy, US-China tensions, as well as a backlash against globalisation, among others. Therefore, the conduct of economic diplomacy, i.e., how a country manages its foreign economic relations including trade and investment, must adapt. The framework for economic diplomacy should seek to balance commercial openness with strategic foreign policy aims, broadly defined. It should situate a country within the 21st century global economy with its new drivers, promote a rules-based system in order to mitigate Great Power tensions, and recognise that all foreign economic policy is ultimately also domestic. There is no one general approach but there are several principles, each with their own challenges, for governments to consider, which is set out in this Strategic Update.
Topic:
Foreign Policy, Investment, Trade, and Economic Diplomacy
Political Geography:
China, Asia, North America, and United States of America

155. The Illicit Wildlife Trade in China and the State Response Following the Coronavirus Outbreak

Author:
Leo Lin
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
Since the outbreak of the COVID-19 coronavirus (新型冠状病毒, xinxing guanzhuang bingdu) in the People’s Republic of China (PRC), wildlife trade and consumption have become a top issue in the country. The disease, which has caused 3,215 deaths in China and over 6,500 total deaths worldwide (per official figures, as of March 15), has been identified as a zoonotic virus (i.e., one originating in an animal species) with a possible point of origin in the Huanan Seafood Market in Wuhan, Hubei Province (China Brief, January 17; WHO, February 28; Johns-Hopkins University, ongoing). China, as well as many other countries, suffered from the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003. [1] SARS was also zoonotic in nature: its origin was traced to civet cats (CDC, January 13, 2004), which are considered a delicacy among some mainland Chinese citizens. Seventeen years have passed since the SARS epidemic, and it seems that history repeats itself. Experts in the field of infectious disease have warned that governments should take measures to regulate (or ban outright) the trade and consumption of many wildlife species. The Chinese government has taken several measures to reduce the spread of COVID-19, including a ban on the trade in wild animals—both those that are hunted or captured in wilderness areas, and those that are farmed by people. What lessons have the ruling Chinese Communist Party (CCP), and the Chinese public, learned about the potential consequences of the wildlife trade? This article examines the Chinese government’s policy response towards the wildlife trade in the wake of the COVID-19 epidemic, and what this might portend for the future.
Topic:
Trade, Illegal Trade, Pandemic, COVID-19, and Wildlife
Political Geography:
China and Asia

156. The domestic risk of Chinese partnerships: cross-conditionality and coalition building

Author:
Alejandro Angel
Publication Date:
09-2020
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
Chinese credits became a viable, and preferred, alternative during the pink tide in part because it lacked traditional conditionality clauses. However, these financial operations, as well as others, often imply the existence of cross-conditionality. In opposition to traditional variants of conditionality, cross-conditionality implies that operations in the realms of trade, finance, or aid for development can be jeopardized as a response to decisions taken by national authorities that change previously agreed conditions in parallel projects. The main objective of this study is to explore the possible consequences of cross-conditionality, particularly the political consequences, in the Brazilian government’s coalition building. The hypothesis is that cross-conditionality represents a similar risk than the one that traditional conditionality represented in terms of national autonomy insofar as national governments would still have their hands tied, although for different reasons. We find that cross-conditionality affects the coalition-building efforts of national governments since it can be used to affect key government partners. In Brazil, agribusiness, a key partner of Bolsonaro’s government, is the sector that could be potentially affected if the Chinese government decides to implement cross-conditionality as a retaliatory measure to hostile policies or declarations of the Brazilian government vis-à-vis Chinese interests.
Topic:
Development, Partnerships, Trade, Coalition, and Cross-conditionality
Political Geography:
China, Asia, Brazil, and South America

157. The Embrace Between a Russian Bear and the Panda Bear. An Emerging Sino-Russian Axis

Author:
Jens Bastian
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
During a three-day official visit to Moscow in June 2019 the Chinese President Xi Jinping described Russia’s Vladimir Putin as his “best friend”. While China-US relations are deteriorating over bitter trade disputes, the imposition of tit-for-tat tariffs and intellectual property rights, the Sino-Russian partnership is evolving and deepening in areas such as security and defense, bilateral energy cooperation as well as the Kremlin’s expanding participation in China’s Belt and Road Initiative (BRI). Both Beijing and Moscow are building an alliance shaped by shared grievances and based on mutual strategic convenience. Against this background the following report argues that the strategic realignment underway between the Kremlin and Beijing is not one of equal partners. Status matters between the leadership of both countries. Moscow cannot compete with China’s sweeping investment efforts and infrastructure projects in the context of the BRI. What is increasingly emerging in this relationship is a junior role for Moscow and senior status for Beijing. The trade balance is heavily tilted in China’s favor. Chinese banks are key lenders to Russia. The energy cooperation is defined by China being able to command prices from Russia below market rates. Most importantly, China’s BRI is a multi-decade vision, spacing continents and backed up by sheer unlimited financial resources which Russia cannot even contemplate to match. With Russia and China strengthening their cooperation across policy fields, individual countries and sub-regions in continental Europe are faced with new and challenging strategic choices. As Moscow consolidates its economic footprint in Serbia and Montenegro, Beijing expands its presence across Central and Eastern Europe in the context of the 17+1 network. Policy makers are thus faced with daunting options. Some see Beijing as the more promising alternative, while others are tempted to seeking accommodation with both Russia and China.
Topic:
Security, International Cooperation, Bilateral Relations, Belt and Road Initiative (BRI), Trade, and Strategic Interests
Political Geography:
Russia, China, and United States of America

158. US-China Trade Tensions: Impact on Mexico | Estados Unidos-China Tensiones Comerciales: Impacto en Mexico

Author:
COMEXI
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Mexican Council on Foreign Relations (COMEXI)
Abstract:
For the mid- or long-term, no country in the world—and much less Mexico—benefits from a strained environment in which there is no adherence to international trade rules. However, for the short-term, a strained trade environment produces adjustments to the supply chains, which could benefit competitors of those economies that are currently in conflict. Mexico, the second supplier of the United States only behind China, could reassert its position as a credible competitor of the Asian economy in the US. Likewise, in the context of trade friction, or even just the threat of a conflict, Mexico could strengthen its trade positioning in China by replacing part of the US offering. /// En el mediano o largo plazo, a ningún país del mundo, y menos a México, le conviene que exista un clima de tensiones donde no se respeten las reglas del comercio internacional. Ahora bien, en el corto plazo, el clima de tensiones comerciales genera ajustes en las cadenas de suministro, lo cual puede beneficiar a los competidores de las economías en conflicto. México, el segundo proveedor de Estados Unidos sólo después de China, puede reafirmar su posición como competidor creíble de la economía asiática en Estados Unidos, así como fortalecer su posición comercial en China, al sustituir parte de la oferta estadounidense, en un contexto de fricciones comerciales o su amenaza.
Topic:
Foreign Policy, Economy, Economic Growth, Trade Wars, Exports, and Trade
Political Geography:
China, Mexico, and United States of America

159. China- Pakistan Economic Corridor: Current Situation, challenges, Countermeasures and Suggestions

Author:
Lingfei Li
Publication Date:
04-2019
Content Type:
Special Report
Institution:
Pangoal Institution
Abstract:
China- Pakistan Economic Corridor (CPEC) is a series of big engineering project that China and Pakistan develops to enhance the connectivity and common development of the two countries. CPEC, with Kashghar (in Chinese Xin Jiang Province) and the port of Gwadar (in Pakistani Baluchistan Province) at its northern and southern ends respectively, is a hub of Silk Road Economic Belt and Maritime Silk Road. So it is extraordinarily significant for the strategic deployment and promotion of Belt and Road initiative. At the moment (May 2017), the construction of CPEC has made a number of important developments. The governments of China and Pakistan have also conducted rounds of consultations to set up “long-range planning of CPEC”. On this occasion, this article will conclude the current situation of the construction of CPEC, summarize and evaluate the challenges and risks that exist, and offer preliminary countermeasures and suggestions.
Topic:
International Cooperation, Partnerships, Economy, Belt and Road Initiative (BRI), Trade, and Industry
Political Geography:
Pakistan, China, South Asia, and Asia

160. China’s Export Success: Due to Unfair Practices or Fair Competition?

Author:
Rolf Langhammer
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Norwegian Institute of International Affairs
Abstract:
Compared with previous ratings, China’s trade policy today is more positively acknowledged. Yet, China can still be criticised in particular because of its non-transparent subsidy policy, the privileged role of state-owned enterprises, the heavy hand of the state in general, the sluggish enforcement of intellectual property rights, and the prevalence of non-tariff barriers. Yet, it cannot be ignored that Chinese entrepreneurship mentality is highly developed outside state interference in world markets. Especially, in the digital economy, high motivation and a large pool of human skills act as drivers of innovations, so far mainly process innovations. The trade war with the US hurts China and is responded by China with asymmetrical retaliation. The more Chinese exports to the US in total are affected, the more costs will have to be borne by US consumers as options to shift to alternative suppliers become weaker. What President Trump would see as a “good” deal for the US is unclear. It can be thus presumed that the trade war will continue into 2020 and that it is in fact a tech war. The EU is affected as EU companies produce in China for the US market and in the US for the Chinese market. While it might gain from trade diversion effects in the short run, the negative effects on investment due to uncertainty weigh more heavily. The EU is tempted to negotiate a free trade agreement with China but rightly refuses to start negotiations before China is prepared to conclude an agreement on investment. The EU should not see China and the US on equidistance. Workable relations with the US are much more important. To conclude, China’s trade policy has improved relative to Western standards but still warrants further steps towards much less state influence. Yet, its global competiveness especially in the state-of-the-art digital economy is high and is owed to a strong entrepreneurial mentality.
Topic:
Economics, European Union, Asia, Exports, Trade, and Strategic Competition
Political Geography:
China, Europe, Asia, and United States of America