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301. Economic Sanction Games among the US, the EU and Russia: Payoffs and Potential Effects

Author:
Dong Yan and Li Chunding
Publication Date:
07-2018
Content Type:
Working Paper
Abstract:
Economic sanction of the US and EU on Russia because of Ukraine crisis in 2014 lasts for a long time and is still a hot policy topic. This paper uses a 16-country or region numerical general equilibrium model with trade cost and exogenous trade imbalance to explore this three-country economic sanction game payoffs, and simulate the effects of sanctions on individual countries. Our analysis find that all sanction involved countries will be hurt, but comparatively Russia will be hurt more, and the US and EU will be hurt less. Sanction measures of EU have larger impacts to Russia than the US measures, and meanwhile Russian counter-sanction measures will generate larger impacts on the EU than on the US. From the economic perspective, the optimal choice for US and EU is to give up sanction measures to Russia, and retaliation is Russia’s optimal choice when faced with sanction measures. Countries out of the sanction game will gain because of trade diversion effects.
Topic:
Economics, Sanctions, European Union, and Economy
Political Geography:
Russia, Europe, and United States of America

302. Keeping China’s WTO Commitments Clear

Author:
Su Qingyi
Publication Date:
07-2018
Content Type:
Policy Brief
Abstract:
In terms of fulfillment of WTO (World Trade Organization) commitments, all members of the organization should be treated equally. First of all, China’s WTO accession commitments, which were made when the country was admitted to the organization in 2001, were recorded in three documents, Protocol on the Accession of the People’s Republic of China to the WTO and two reports from the working party on the accession of China to the WTO. The two reports specified China’s promises to open up its services market. And the protocol defined the country’s other promises outside the realm of the services market. Second, after years of China’s accession to the WTO, WTO members should be very clear of China’s compliance with its WTO commitments. For questions as to whether China has opened up in compliance with its commitments, whether it met targets on the time table and whether reforms have been carried out in some areas, the results should be clear. Third, since 2006, WTO has been performing a trade policy review on China every two years. Every WTO member can supervise China’s fulfillment of its WTO commitments within the WTO framework. If any have complaints about China, the two sides can solve the problem within the WTO review mechanism. In fact, the WTO’s dispute settlement mechanism can be employed to force China to make readjustments.
Topic:
Treaties and Agreements, World Trade Organization, Economy, and Multilateralism
Political Geography:
China and Asia

303. China will further open up but not due to US pressure

Author:
Dong Yan
Publication Date:
06-2018
Content Type:
Policy Brief
Abstract:
China will take measures to further open up to the outside world, Xi said in his highly-anticipated keynote address at the Boao Forum for Asia. But amid the escalating China-US trade conflict, some people have wrongly assumed Xi made the remarks with the Trump administration's accusations in mind. But a review of China's policies shows the country will deepen reform and opening-up because of its practical development needs, not because of any other country's demand or coercion. And more importantly, if the US insists on starting a trade war, China's further opening-up policies will not apply to any US enterprises. To people concerned about China's development, Xi's speech must have sounded inspiring, but not surprising, as opening-up has been a development theme for China for the past 40 years.
Topic:
Development, International Trade and Finance, Economy, and Trade Wars
Political Geography:
China, Asia, and United States of America

304. U.S.-China Trade Imbalance and the Results of Trade Conflict

Author:
Ma Tao
Publication Date:
04-2018
Content Type:
Working Paper
Abstract:
The very success of globalization has flourished since World War II. The benefits of economic globalization are not evenly distributed among countries, especially among different groups within a country. Before the financial crisis in 2008, as the major promotors of globalization, developed countries intensified their internal contradictions. So populism, protectionism and isolationism are rising in many developed countries, which are the main features of anti-globalization. Brexit happened against the polls in 2016, in large part, because of the migrant crisis tipping the British towards protection of its borders. In the beginning of his presidency, Donald Trump declared to withdraw from TPP, build Mexican border wall, renegotiate NAFTA and so on. Trump’s protectionism policies may be gradually implemented in 2017. Going on like these, the tide of anti-globalization may be further strengthened in the future.
Topic:
Globalization, Economy, Trade, and Protectionism
Political Geography:
China, Asia, United States of America, and North America

305. China should address downward pressure in 2018

Author:
Qiyuan Xu
Publication Date:
01-2018
Content Type:
Policy Brief
Abstract:
In 2017, the Chinese economy rebounded more significantly than expected. There is now general anticipation that growth in 2018 will fall slightly compared with that of 2017, but that it will remain stable at 6.5 percent or above. However, there are some factors that could lead to downward pressure on investment and consumption in 2018. First, investment growth has shown negative growth recently. Judging from the notional fixed-asset investment, the year-on-year growth in the first 11 months of 2017 was 7.2 percent, 1.1 percentage points lower than in the same period of 2016. Due to the significant increase in producer price index (PPI) growth in 2017, the drop in real investment growth in 2017 is quite worrying. The real investment growth rate in the first three quarters of 2017 dropped to 2.2 percent year-on-year, while in the same period of 2016, this figure was 9.5 percent year-on-year. On a quarterly basis, the real investment rate in the third quarter of 2017 fell by 1.1 percent year-on-year, the first time that negative growth has been recorded in more than a decade.
Topic:
Economy, Economic growth, and Investment
Political Geography:
China and Asia

306. Global Growth Projections for The Conference Board Global Economic Outlook 2019

Author:
Abdul Erumban and Klaas de Vries
Publication Date:
12-2018
Content Type:
Special Report
Institution:
The Conference Board
Abstract:
This paper presents the methodology for The Conference Board Global Economic Outlook 2019, which includes growth projections for 11 major regions and individual estimates for 33 mature and 36 emerging market economies for 2019-2023 and 2024-2028. The projections are based on a supply-side growth accounting model that estimates the contributions of the use of factor inputs—labor and capital—and total factor productivity growth to the growth of real gross domestic product (GDP). While labor input growth rates are estimated using data on demographic changes and participation rates—including an estimation to adjust for the change in the composition (or quality) of the workforce—capital input and total factor productivity growth are econometrically estimated using a wide range of related variables during past periods. The obtained trend growth rates for the period 2019-2023 are adjusted for possible deviations between actual and potential output in the short run.
Topic:
Labor Issues, Economy, and Capital Flows
Political Geography:
Global Focus

307. The African Continental Free Trade Agreement (AfCFTA)

Author:
Michael Asiedu
Publication Date:
05-2018
Content Type:
Policy Brief
Institution:
Global Political Trends Center
Abstract:
On 21 March, 2018, 44 African heads of state and government dignitaries signed a historic African Continental Free Trade Agreement (AfCFTA) at the 10th Ordinary Session of African Union (AU) Heads of State Summit held in Kigali, Rwanda. The AfCFTA is the largest free trade area since the World Trade Organization (WTO) was established in 1995. The Session was under the theme: “Creating One African Market,” and falls under AU’s Agenda 2063 Initiative. The AfCFTA is also one of the biggest free-trade areas with regards to the number of countries, thus, encompassing 1.2 billion people with over $4 trillion in combined consumer and business spending should the remaining 11 AU member countries join the Agreement (Signe, 2018). The AfCFTA would additionally become effective 30 days subsequent to ratification by the legislative houses of at least 22 African countries; countries that signed the Agreement have 120 days for its ratification. This paper seeks to outline the significance of the Agreement, its aims, challenges and the continuous work needed to sustain it going forward with potential impact it may have on third country agreements with AU member countries.
Topic:
Treaties and Agreements, Economy, Tariffs, Free Trade, and African Union
Political Geography:
Africa

308. Conflicts in Indonesian Islam

Author:
Paul Marshall
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
ay 20, 1998 (Patrick AVENTURIER/Gamma-Rapho via Getty Images) Conflicts in Indonesian Islam Paul Marshall In the three years following the 1998 economic crisis and the fall of President Soeharto, Indonesia endured economic dislocation, political turmoil, and religious violence that claimed thousands of lives. However, since this period of upheaval the country has been on a broadly upward path both politically and economically. Religious violence has tended to be sporadic and local, aside from the Bali bombings of 2002. Indonesia now has the largest economy in Southeast Asia and among the countries of the Organization of Islamic Cooperation. At 260 million people, the country, which has now had nearly two decades of largely free elections, is the third-largest democracy in the world. Some 88 percent of its population are Muslims, making it the largest Muslim-majority country in the world. Despite these positive political and economic trends, in recent years, Islamist movements have flourished in Indonesia. Indeed, their pressure was a major factor leading to the imprisonment of the Christian governor of Jakarta on charges of blasphemy in 2017. The moderate forms of Islam that have historically been hegemonic in Indonesia may now be under threat.
Topic:
Islam, Religion, Economy, and Islamism
Political Geography:
South Asia and Indonesia

309. Israel and China Take a Leap Forward—but to Where?

Author:
Arthur Herman
Publication Date:
11-2018
Content Type:
Commentary and Analysis
Institution:
Hudson Institute
Abstract:
There is certainly no denying that, in terms of trade and investment alone, the burgeoning economic partnership between Israel and China has at least the potential of transforming not only Israel itself but also Israel’s position vis-à-vis the rest of the Middle East—and most notably vis-à-vis Iran, which happens to be Beijing’s other key partner in the region. Inevitably, it could also have an impact on Israel’s relations with the United States. But is this a marriage made in heaven? Or is it something else? Weighing the answer to that question involves probing beneath the two countries’ currently successful dynamic of trade and commercial transactions to their respective geopolitical agendas. When it comes to Israel, the acknowledged junior partner, it also requires examining whether and how the relationship with China could become a dependency. Such a change might please Beijing, but it would impose on Israeli national security a new kind of vulnerability, one very different from the challenges it has faced successfully in the past.
Topic:
Diplomacy, National Security, Bilateral Relations, Partnerships, Geopolitics, and Economy
Political Geography:
China, Middle East, Israel, and Asia

310. Reversing Zambia’s high risk of debt distress

Author:
Florence Banda-Muleya and Shebo Nalishebo
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
A load of unsustainable debt hangs heavy over Zambia. Zambia is part of a list of 25 low income countries considered at high risk of debt distress in 2018. Government’s efforts to reduce the country’s infrastructure gap as well as bring down poverty and inequality have resulted into large spending overruns, a growing subsidy bill and a substantial public sector wage bill over the last five years. Alas, domestic revenues remained low and stagnant. So Government resorted to massive external borrowing to finance arguably unsustainable expenditure. This approach to spending pushed borrowings to about 59% of GDP as at end of 2017, which is in the territory of unsustainable debt levels. In October 2017, the IMF issued a red flag that Zambia was at high risk of debt distress, implying that the country was likely to breach the thresholds for debt and debt service indicators and, should it continue on the same trajectory, it would likely default on its debt service obligations.
Topic:
Debt, Poverty, Economy, and Public Debt
Political Geography:
Africa and Zambia