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21. 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

22. India-Canada energy cooperation

Author:
Amit Bhandari
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Gateway House: Indian Council on Global Relations
Abstract:
Canada has been one of the biggest success stories in oil over the past few years. India should consider financial investments in Canadian energy assets as a means to secure its energy supplies. This paper studies the feasibility and prospects for Indian investment in Canada's petroleum sector.
Topic:
Energy Policy, International Cooperation, Oil, and Investment
Political Geography:
South Asia, Canada, India, and North America

23. The Aftermath: American Power after COVID-19

Author:
Emma Ashford
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
America has been hit hard by the 2020 coronavirus pandemic. A combination of poor public health response, differing state guidelines, and lack of political leadership are leading the country into a third, deadly wave of the virus. Yet while the immediate prognosis is pretty dire, the long-term implications of COVID for America’s power potential – and its role in the world – are less clear, and likely less severe than initial assessments suggested. There have been no significant impacts to American military readiness, and while the economic impacts of COVID-19 could potentially undermine the long-term health of the American economy, this is far from a foregone conclusion. However, it is clear that the COVID crisis has largely served to highlight existing trends with the potential to undermine American power, notably political polarisation and domestic underinvestment.
Topic:
Investment, Public Health, Pandemic, COVID-19, and Polarization
Political Geography:
North America and United States of America

24. 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

25. 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

26. 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

27. The United States and Fiji Reaffirm Security Assistance Cooperation

Author:
Steven McGann
Publication Date:
09-2020
Content Type:
Special Report
Institution:
East-West Center
Abstract:
The United States and Fiji continue to strengthen security cooperation in the Indo-Pacific region. Ties between the regional partners endured throughout Fiji’s 2006 military takeover and resultant domestic political challenges. During this period Washington’s engagement with Suva included humanitarian assistance/disaster response, maritime security, law enforcement cooperation, counter-narcotics, and anti-trafficking of vulnerable populations. The United States also supported Fiji’s participation in existing United Nations Peacekeeping Operations. In turn Fiji continued to support U.S. initiatives regarding United Nations General Assembly resolutions and kept doors open for development aid and private sector investment opportunities. The recent defense security cooperation assistance agreement with Fiji supports substantial funding for training and equipment for the Royal Fijian Military forces (RFMF) for future peacekeeping opportunities as well as an immediate boost for its navy including patrol boats to support fisheries protection as well as search and rescue efforts.
Topic:
Security, Humanitarian Aid, International Cooperation, Investment, and Private Sector
Political Geography:
North America, United States of America, and Fiji

28. India-Canada Energy Cooperation

Author:
Amit Bhandari
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
The energy sectors of India and Canada complement each other: India is a large and growing oil importer, while Canada is a large and growing exporter of oil and gas. However, as they invested in oil fields across the world, Indian oil companies have missed out on the Canada story. Investing in Canada’s oil sector can help India guard against the risk of spikes in oil prices and provide Canada with long-term demand security. In this paper, first presented as a backgrounder at Track 1.5 meetings in Mumbai, India, in November 2019, Gateway House outlines its findings on the feasibility of Indian investment in Canada’s petroleum sector, suggesting a path forward and best prospects for investment.
Topic:
Energy Policy, International Trade and Finance, Oil, Gas, and Investment
Political Geography:
Canada, India, Asia, and North America

29. 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

30. Can a Chinese-Iranian Deal be Averted?

Author:
Eran Lerman
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Jerusalem Institute for Strategy and Security (JISS)
Abstract:
Chinese investment in Iran would help Tehran withstand US economic pressures, and exacerbate the Western crisis with Iran
Topic:
International Cooperation, Investment, Economic Diplomacy, and Foreign Interference
Political Geography:
China, Iran, Middle East, Israel, Asia, North America, and United States of America