Posts Tagged ‘China’

LSE Continental Breakfast 10: Brexit and multilateralism

Multilateral institutions – from the EU to NATO to the G-summits – are under strain. How does Brexit fit into this trend? Horatio Mortimer (LSE) reports on an expert discussion held at the LSE under Chatham House rules in June 2018.

Brexit, Germany and the multilateral system

Brexit is bad news for the EU, and perhaps especially for Germany, the EU’s largest and richest member. Many German industries are closely integrated into the UK economy, and supply chains will not cope with the border delays that are the inevitable consequence of leaving the Single Market. Nevertheless, German industry is resigned to Brexit, and as the representative of one major German car company was reported to say, Brexit is only ‘about number eleven’ on their list of headaches. The priority is to make sure that the rest of the Single Market stays intact. That is why firms that benefit from it are unmoved by appeals from the UK – such as Theresa May’s Lancaster House speech -that propose special deals in particular sectors such as automobiles and finance.

Perhaps a greater concern is that Germany will lose an important ally in moulding the Union towards a more open economy, with less bureaucracy and more fiscal discipline. Without the UK, Germany may no longer be able to muster a blocking minority of fiscally-conservative countries.

theresa may angela merkel

Theresa May and Angela Merkel at a bilateral in Berlin, July 2018. Photo: Number 10 via a CC-BY-NC-ND 2.0 licence

Another concern is that Germany will come to dominate the EU, just as it has the Eurozone, and that this may not be in its own long-term self-interest – it might even threaten peace and prosperity. The raison d’être for European integration, as originally laid out in the Schuman Plan, was to resolve and settle ‘the German question’ once and for all. Later, during the negotiation of the ‘two plus four’ treaty between the Second World War Allies and East and West Germany, which allowed the reunification of Germany in 1990, both Margaret Thatcher and Francois Mitterrand were worried about an over-mighty Germany.

Thatcher believed that ‘the German problem’ was inherent in German national character with its roots in the late formation of the German nation state, which caused it to veer ‘unpredictably between aggression and self-doubt’. A reunited Germany, she believed, would dominate western Europe, and its economic dynamism would lead it to look east as well as west, which would destabilise Europe. A close Franco-British alliance and a continuing American presence were together necessary to contain German power. According to Thatcher, European integration would only increase German dominance.

Mitterrand, on the other hand, (along with most of the British government), believed that European integration was the only way to bind Germany to the West and to European institutions. The German chancellor, Helmut Kohl, was cautious about the sequence of European integration, and wanted both economic convergence and political union to come before monetary union. Implementing EMU first was a compromise allowing a more rapid integration to keep pace with German unification.

More recently, the case for European unity has generally been framed as an answer to problems arising from globalisation. Yet many Europeans seem to be turning away from integration. What has gone wrong?

One factor may be Russia – an aggrieved former superpower that has been watching its smaller neighbours defect towards Europe. Recognising that acts of external aggression are likely to have the effect of increasing solidarity and strengthening the EU, the Kremlin has instead been working hard to foment nationalist sentiment inside the EU.

Ironically, globalisation is the very reason many Europeans have turned against Europe. They feel more at home and safer in their nation state. Nationalists have achieved electoral breakthroughs across Europe by arguing that globalisation can be rolled back, and that problems like mass migration, perceptions of an unjust financial system, and the effects of climate change could all best be handled at the national level.  Then came Emmanuel Macron, with his winning slogan ‘L’Europe qui protège’ – Europe that protects. This sparked similar movements in other countries, including Germany, with the ‘pulse of Europe’.

Macron has also made concrete proposals to reinforce European unity. Germany’s support was crucial – but it was not given, partly because some key members of Angela Merkel’s party saw calls for European solidarity as a grab for German money. Angela Merkel’s strategic hesitation, or what Ulrich Beck called ‘Merkiavelli’, also played a part.

Germany has benefited, perhaps more than any other country, from the normative project we call ‘the West’ – the multilateral institutions built on the values of the Enlightenment, the French and American revolutions and the Wilsonian Principles.  Economically, Germany relies on the open markets provided by other countries through the EU, the WTO and other agreements that allow it to run huge trade surpluses, while in security terms, it relies on NATO. When Donald Trump complained that Germany was free-riding in NATO, he was only repeating in less polite terms what Obama had previously said. Trump, however, called into question the Article 5 guarantee of assistance. He later backtracked, but a security guarantee is something that only works when people really believe in it.

Since neither open markets nor NATO now seem to be American priorities, the EU is critical to upholding western values and institutions, and many are dismayed at Germany’s apparent failure to embrace Macron’s reforms.

Merkel’s recent interview with the Frankfurter Allgemeine Zeitung offered positive remarks on tackling the European refugee crisis and security, but a much more muted response to Eurozone reforms – calibrated to make them palatable to the Bundestag. The German parliament has a powerful aversion to any suggestion of a transfer union, which would redistribute some of the excess profits that Germany and others made thanks to the euro, to members for whom the currency has caused financial difficulties.  Many on both sides of the argument argue that the present arrangements for the recapitalisation of the European Central Bank are in fact already a transfer union by the back door.

Unfortunately, Merkel’s strategy of keeping options open can lead to situations where only bad options remain. Previous chancellors saw crises on the distant horizon, took bold decisions and then persuaded the German people to get behind them. Germany was not automatically a ‘Western’ country, but German leaders took tough decisions to make it one. Konrad Adenauer first drove Western integration; Willy Brandt drove through his policy of OstpolitikHelmut Schmidt persuaded his country to accept medium range missiles; Kohl led them to the common currency; and Gerhard Schroeder pushed through the 2010 Agenda, which implemented structural reforms to restore German economic dynamism after reunification.

While Brexit is likely to be disastrous for the UK, it might increase the chances of Macron’s reforms being agreed.

The value of multilateral institutions

The failure of Western politicians to protect the multilateral system may be because people take it for granted.  The euphemistic “WTO option” of a no-deal Brexit is an example of the assumption that the rules-based international trading regime is a constant bedrock, despite the fact that Trump often seems bent on dismantling it.

Multilateral institutions are crucial to maintaining relatively effective international relations, and they are an innovation with a short history. It took 70 years to build them up to their current – far from perfect – but relatively useful condition. Their predecessors were the League of Nations, which failed in the 1930s, and a brief moment following the defeat of Napoleon, with the Concert of Europe. With these exceptions, international relations have been bilateral. At the Peace of Westphalia, for example, the 109 delegations never met in plenary, but negotiated bilaterally with each other. To understand how inefficient, opaque and prone to breed mistrust bilateral relations are, one can look at the exchanges that took place before 1914, as documented by TG Otte.

There is an inevitable trade-off between efficiency and legitimacy, so multilateral organisations fall on a spectrum between coalitions of the willing – such as NATO or the ‘G’ summits – and the more universal organisations within the UN system. However, many of these seem to be in trouble, as the recent G7 meeting in Quebec showed.

The EU was always dependent on NATO. The Schuman Plan couldn’t have been put into effect without the underlying security guarantee. But the EU was also established as a security organisation, and the two institutions work together. The EU’s purpose was to create good political relations: Jean Monnet’s theory was that you become friends by doing things together, rather than you do things together because you are friends. The more things you do together, the better friends you become. Member states are in a continual process of negotiation, so that it becomes strategically important to quarrel as little as possible with your fellow members, because you never know when you will need their support.

The downside of this dynamic is that when you are not a member, it works against you. Outside the Union, if you have some contention with just one member state, which is clearly of little consequence to the others, they will all firmly oppose you, because they know they need that member’s support in some other negotiation, and they can’t afford to alienate them.

Furthermore, by leaving the EU the UK, which is comparatively liberal in trade matters, may tip the balance of the EU towards protectionism. Consequently the UK may find that the EU it has left is more difficult to negotiate with than it was while it still belonged.

The rise of China

If western multilateralism is weakening, is China showing signs of building a new multilateral system? China is fast emerging as a great power with an elaborate and strategic master plan. China seems happy to use parts of the existing multilateral system – including parts that constrain it, such as WTO dispute settlement, and the peer review process in the Financial Action Task Force, which works against money laundering. But it also seems to reject exactly these sorts of mechanisms in other multilateral bodies, refusing to join the OECD Anti-Bribery Convention, or Export Credit Arrangements.

Meanwhile, China is creating new institutions such as the New Development Bank – an alternative to the World Bank – with the other BRICS countries. It has also established a new emergency credit facility that parallels the IMF, and its Belt and Road Initiative is a massive international effort to build economic cooperation – including initiatives to combat climate change, which some have compared to the Marshall Plan.

Meanwhile, the language of diplomacy has changed. Trump is the most obvious example, but certainly not the only one. Where has this come from, and why is it so much more evident in the West? One answer is the explosion of social media, and the weakening of the old hierarchies of top-down channels of communication.  It has become far more difficult for ‘the authorities’ to cut through. Attention is the basic currency of the internet, and standards of decorum and consideration are diminished, while the ability to gain attention by whatever means has become all-important. It is no longer sufficient to convince a few influencers at the top of the establishment of the merits of international cooperation. Social media in China, on the other hand, is still under hierarchical control.

The end of the Cold War is another factor in the apparent decline in Western liberal values. During the Cold War, it was much easier to justify forceful action to defend those values. China’s model of ‘meritocratic authoritarian capitalism’ seems less antagonistic than the Soviet Union did. Eventually, perhaps, China’s insistence on fealty to the Chinese Communist Party, which itself seems to be becoming less internally mobile, will seem less palatable if China’s growing influence brings it into more frequent conflict with other nations.

Brexit is both a result of the unravelling of the multilateral system and Western values, and contributes to it. The more the system unravels, the less confidence the world has in the ability of multilateral institutions to protect their interests. It is far from clear what can be done to reverse this vicious circle.

This post is an account of a discussion held at the LSE. It does not represent the views of the Brexit blog, nor the LSE. For a fuller account and a list of participants, see the complete write-up.

Horatio Mortimer is a business partnerships manager in the LSE’s Research Division and a public affairs consultant.

China looks to greater Arab ties

Chinese President Xi Jinping will be taking a large trade delegation with him when he visits the UAE, ahead of his visit to South Africa for the 10th BRICS Summit [Archive]

For the first time in 29 years, a Chinese head of state will be visiting the United Arab Emirates to discuss bilateral ties and look at ways to expand the One Belt One Road culture and trade initiative to the Arab countries of the Persian Gulf, an official in Beijing said.

President Xi Jinping is expected to visit the UAE on July 19, followed by state visits to Senegal and Rwanda through to the 24th before arriving in South Africa to attend the 10th BRICS Summit in Johannesburg from July 25 to 27.

Chinese Ambassador to Abu Dhabi Ni Jian said that Xi’s trip to the UAE highlights a relationship that is at its peak and enjoys “mutual respect, friendship and win-win cooperation”.

He said that the strategic relationship with the UAE has stood the test of time, according to Abu Dhabi-based Gulf News.

The two countries also enjoy a high volume of trade estimated to be above $50 billion last year.

UAE media has called the upcoming visit historic and a milestone. Concurrent with Xi’s visit, the UAE will host a week of exchange and celebration of the ties between the two countries.

Xi’s visit to the UAE comes just a few days after the conclusion of the 26th Arab Economic Forum held on July 12-13 and the 8th ministerial conference of the China-Arab States Cooperation Forum (CASCF), held July 10 in Beijing.

In both, Arab countries hailed the strengthened trade ties and cultural exchanges with China.

During the CASCF, Arab and Chinese delegates approved the Beijing Declaration, a Declaration of Action on Sino-Arab Belt and Road Cooperation, and an action plan guiding the development of the Forum from 2018 to 2020.

The BRICS Post with inputs from Agencies

Markets shrug off trade fears but pound falls on Trump Brexit comments – business live

Traders await developments in US-China dispute, while Trump’s talk of no UK-US trade deal hits sterling

Here’s more apparent fallout from the trade tensions between the US and China, courtesy of Reuters:

A hotel in the southern Chinese city of Shenzhen on Friday denied a report that it would charge U.S. guests an extra 25 percent amid an escalating trade war between Washington and Beijing.

However, three staff members who declined to be identified told Reuters that a discriminatory rate policy had indeed been posted at the hotel as of Thursday but had since been removed.

The pound continues to slip against the dollar as investors weigh up Donald Trump’s inflammatory comments about Theresa May’s Brexit proposals meaning no UK-US trade deal. It is currently down 0.64% at $1.3119, after hitting a low for the week of $1.3117.

Fiona Cincotta, senior market analyst at City Index, said:

US President Trump has put his counterpart Teresa May in a difficult position this morning saying that a soft Brexit would mean no trade deal between the UK and US. This comes a day after May released a white paper on the UK-Europe relationship after Brexit, offering a softer stance ahead of next week’s vote on a Brexit trade bill.

The UK can’t afford to alienate either the US or the EU, its two largest foreign trade partners, and will not be able to choose an “either-or” solution. Trump’s comments come at a particularly bad time for May who is facing bigger problems as her government is in a precarious balance after the resignations of David Davis and Boris Johnson earlier this week. The pound dropped 0.6% against the dollar following Trump’s remarks.

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A Trade Deal with China is Unacceptable

A Trade Deal with China is Unacceptable

Our government has frequently expressed its desire for a free trade agreement with China. Indeed we already have some dubious arrangement with their involvement in Hinkley Point and the suggestion of another similar plant in the south-east. Here I will suggest why such arrangements are bad for us and the suggestion of a free trade deal with the Chinese even worse.

The Nature of the Chinese

The Chinese are insidious; they don’t openly cause problems as the Muslims do but quietly insert themselves into other countries where they may develop their businesses. Their only true god is money, little else matters. Many businesses in South East Asia, for example, are owned by the descendants of Chinese immigrants. More recently we have seen them curry favour in Africa to exploit its mineral wealth. Of course, such businesses turn to their country of origin when products or components are required. They might employ local people but normally only in the lower ranks. Nothing is spent on anything they can do without such as improved working conditions or better equipment. I have seen this; my wife currently works for such a business.

Chinese Product Quality

In my experience over many years, the quality, i.e. fitness for the intended purpose, of a wide range of Chinese products is simply unacceptable. Sometimes it is difficult or near impossible to source products of acceptable quality where the Chinese suppliers dominate the market. Their products might be cheap but simply don’t last. Some, such as electrical items, can be extremely dangerous but might have an undocumented “CE” mark moulded into them. One example I found was a socket adapter which came apart when pulled from the socket exposing live terminals.

I read some years ago that the largest container ship in the world is scheduled to visit the UK annually in the run-up to Christmas. Of course, it brings toys, Christmas decorations and suchlike. Do we really need to import and waste our money on such tat which will end up in the bin after a short time?

The quality of Chinese steel is a major concern; in many cases, it simply does not conform to our required standards which were developed over many years. I have had a good bit of hands-on steel fabrication experience over the years and know the difference. In particular, the Chinse steel is of inconsistent composition and one only needs to drill a hole in it confirm that. The British product drills smoothly but the bit continually snags on hard spots in the Chinese product. A friend who is a CNC machinist confirms the same issue in machining part completed Chinese steel components but the “bean counter” is allowed to override the Engineer; the cost is still lower even with a very high reject rate (around 50%). For that reason I used to source re-usable British / European steel but that no longer seems possible; it is all being exported as scrap to feed the Chinese furnaces.

The worrying fact is that steel that does not comply with our accepted standards is being imported. Often it is not even necessary to test the steel as the non-conformance to our standard profiles is obvious by visual inspection. It is worth noting that some Japanese multinationals in the oil and gas industry simple refuse to accept products containing Chinese steel and some even exclude Indian steel. Are they going to be allowed to supply the rails for HS2?

Of course, there are industries in China which are well controlled but most of these have been set up by international companies which have enforced proper standards. The same might be said for some major engineering projects but there is a large pool of western expats to be drawn on for the required expertise.

The Chinese Business Model

We have seen the demise of many of our native steel manufacturers through their being unable to compete with Chinese imports. That is a direct consequence of how the Chinese operate:

Subsidise their exports > destroy the native industry > capture the market.

Sadly our own government is unbelievably naïve or is complicit. Maybe corruption plays its part but whatever the reasons, the failure of the government to protect those industries from unfair competition is unacceptable.

Another concern is the propensity of the Chinese to steal intellectual property. I’m sure that is one of the key reasons why they want to be involved in our nuclear industry.

Animal Welfare in China

Every year the dog eating festival is celebrated during the summer solstice in Yulin, Guangxi. Thousands of dogs are transported in atrocious conditions from far and wide to await their execution in full view of those next in line. It is reported that some are boiled or roasted alive as this is said to improve the flavour.

The Chinese seem to have a taste for anything; I have heard it said that any creature with forward facing eyes is eligible. I recall some years ago seeing a TV programme (probably not in the UK) showing snakes and other reptiles being skinned alive in a restaurant kitchen after being selected by the customer. However, possibly the worst case I have been told of (by an expat who had witnessed it) is their taste for monkey brains, one of those foods which they consider gives them special powers. In that case, the restaurant tables are equipped with a hole in the centre. The monkey is installed protruding through the hole sufficiently for the top of the head to be cut off. Once that is done the customers eagerly spoon out the brain; the monkey has to be alive at the start of this process for those special powers to develop in the consumer.

One of the other serious acts of cruelty is the extraction of bear bile from a live animal kept in a cage too small for it to move around. After many such extractions, the bear will die. Again they believe that the consumption of it has special health benefits. We get a few Australian TV programmes over here, one of which is concerned with their border control and the attempts at smuggling. One unusual item that caught the attention of the customs officer was the penis of a deer which a Chinese guy was trying to smuggle in. Apparently, that is another product which has to be removed from the live animal to secure its beneficial effects.

Of course, we are unlikely to import any of these products or methods but do we really want to deal with people who carry out such atrocities routinely in their lives?


There are many reasons why we might want to avoid trading with China, some of them practical, some simply abhorrent. Their involvement in Hinkley Point presents a serious safety concern and, of course, they are only there to steal the technology. As ever, our politicians take the opposite view and have welcomed the Chinese and their imports to the detriment of our own industries.  They have even suggested that a trade deal with China should be pursued as a matter of priority.

They need to be forced to think again, both on that and the involvement of the Chinese in key infrastructure projects.

[Ed: we’d like to remind our readers that the opinions expressed by authors in their articles are their own and not necessarily shared or endorsed by UKIP Daily. UKIP Daily, like our Party, stands for Free Speech. We don’t do ‘No Platforming’. Controversial arguments made in articles can and should be debated in the comments.]

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Chinese economy forecast 6.7% growth in H1

Premier Li Keqiang said that China is committed to market reforms and opening up to the global economy [PPIO]


A report released by the Bank of China on Sunday indicated that the Chinese economy is forecast to have grown by 6.7 per cent in the first half of 2018.

This is a slight dip from the 6.8 per cent growth in the first quarter of 2018. It grew at a similar pace in Q3 and Q4 of 2017.

The report says that the property market nationally has continued to improve and that the economy overall is resilient.

The findings of the report are echoed by leading economists and think tanks such as the National Academy of Economic Strategy (NAES). It also said that growth in the first half of 2018 would like register at 6.7 per cent.

However, it warned of a drop in investments in the second half of the year which led it to predict an overal 6.6 per cent 2018 annual growth.

Meanwhile, Chinese Premier Li Keqiang told experts at the China and Central and Eastern European Countries business forum in Sofia, Bulgaria that the Chinese economy has grown at an average rate of 7 per cent in the past five years.

He said his government is committed to expanding its market reforms initiatives and opening up to world markets.

China has over the past two years said it expects steady and moderate growth between 6.5 ad 6.9 per cent in the coming years. This is quite the change from just four years ago when first half growth in 2014 was at 7.4 per cent.

The BRICS Post with inputs from Agencies

Russia raises duties on US imports

Russian President Vladimir Putin is due to meet US President Donald Trump in Helsinki, Finland on July 16 but most of the talks will focus on the Syrian conflict [PPIO]


A week after resorting to the World Trade Organization in its complaint against US tariffs on Russian steel and aluminum, Moscow has raised its duties from 25 to 40 per cent on some US imports.

According to the Russian news agency TASS, Economic Development Minister Maksim Oreshkin said the rise was to compensate for more than $500 million loss in exports expected due to the US tariffs.

“Currently our higher duties cover only part of the damage – $87.6 million. This is the compensation Russia has the right to under WTO rules,” Oreshkin said in remarks carried by TASS.

The $87.6 million figure refers to the amount of tariffs Russia can resort to without having to turn to a WTO ruling.

The 40 per cent tariff will apply to road construction equipment, drilling equipment and other hi-tech machines.

Russia last week joined other BRICS members China and India in resorting to the WTO about the US tariffs.

China’s officials have warned that a trade war benefits no one and leaves no winners.

India is expected to slap tariffs on 29 US products beginning August 4. It had already resorted to the WTO in May and last week announced it would join Norway in requesting third party dispute consultation.

In its May complaint, India accused the US of violating WTO guidelines multiple times including the 1994 General Agreement on Tariffs and Trade (GATT) and the Agreement on Safeguards.

The BRICS Post with inputs from Agencies

China: US ‘shooting itself in the foot’

Chinese President Xi Jinping maintains a good relationship with Trump, but Chinese media has called the US a trade bully


US President Donald Trump has warned of imposing tariffs on as much as $500 billion in Chinese exports if Beijing retaliates against his administration’s $34 billion levies which went into effect July 6.

While this would be a massive escalation of what is clearly becoming a trade war, it didn’t appear to faze China. On Friday, Chinese Foreign Ministry spokesperson Lu Kang said that Chinese tariffs on $34 billion worth of US products have indeed gone into effect.

These include soybeans (half of all US soybean production is exported to China), crude oil and auto parts, among nearly 600 other items.

It said the US had started the biggest trade war in economic history.

During his talk with journalists on his way to a Montana rally, Trump explained that while tariffs on $34 billion in Chinese goods goes into effect today, another $16 billion will be applied in two weeks.

“As you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. OK? So we have 50 plus 200 plus almost 300,” he said, before adding that this only applied to China.

China, meanwhile, accuses the US of violating World Trade Organization guidelines, and while global trade and markets will suffer, it is also the American consumer and industry which will pay the price.

Chinese media have called the US a trade bully and said it is shooting itself in the foot.

Lu said that “the series of unilateral acts and trade and investment protectionism measures adopted by the US government have caused widespread concern around the world for some time”.

He predicted that the number of retaliatory measures even from US allies will grow in time.

Right now, the US is engaged in open trade conflict with Canada, Mexico, the European Union and Japan.

The BRICS Post with inputs from Agencies

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