Are the United States and China really vying for influence in Pakistan as the American business publication Wall Street Journal claims? What is the big prize at stake? Does Pakistan hold the key to who wins the competition to claim the top spot as a global superpower?
IMF bailout or Chinese bailout? Will CPEC development slow down or accelerate? Will China invest in export oriented industries in Pakistan and buy more Pakistani products? How will PTI government led by Prime Minister Imran Khan handling the situation? Will they play their cards well to get maximum benefits for Pakistan?
What is the impact of Begum Kulsoom Nawaz's passing on Nawaz Sharif family? Is it more than a family's tragedy? What does it mean for Pakistani politics and Nawaz Sharif's future?
Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Sabahat Ashraf (iFaqeer) and Riaz Haq (www.riazhaq.com)
South Asia Investor Review
Can Pakistan Avoid Recurring Balance of Payment Crisis?
Pakistan Economy Hobbled By Underinvestment
Pakistan's IT Exports Surging
China and US Battle For Influence in Pakistan
Pakistan-China-Russia Vs India-Japan-US
Chinese Yuan to Replace US $ as Reserve Currency?
Remittances From Overseas Pakistanis
Can Imran Khan Lead Pakistan to the Next Level?
China to Expand Manufacturing in Special Economic Zones
Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ
Saturday, September 15, 2018
US-China Competition in Pakistan; CPEC's Future; RIP Kulsoom Nawaz
Labels: China, CPEC, IMF, Imran Khan, Kulsoom Nawaz, Misbah Azam, Nawaz Sharif, Pakistan, PTI, Riaz Haq, Sabahat Ashraf, US
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#Pakistan's army chief Gen Bajwa visits #Beijing after 'Silk Road' tension. He is most senior figure to visit staunch ally #China since the new government of Prime Minister Imran Khan took office in August. #CPEC #BRI https://www.reuters.com/article/us-pakistan-china-military/pakistans-army-chief-visits-beijing-after-silk-road-tension-idUSKCN1LW0PR
Pakistan has deepened ties with China in recent years as relations with the United States have frayed.
Bajwa may be hoping in Beijing to smooth out any Chinese alarm at comments last week by Pakistan’s commerce minister, Abdul Razak Dawood, who suggested suspending for a year projects in the China-Pakistan Economic Corridor (CPEC), the Pakistan leg of China’s Belt and Road Initiative that includes recreating the old Silk Road trading route.
Bajwa, the Chief of Army Staff (COAS), regularly holds meetings with world leaders due to the Pakistan armed forces’ outsize influence in the nuclear-armed nation, where the military controls security and dictates major foreign policy decisions.
“During the visit COAS will interact with various Chinese leaders including his counterpart,” Major General Asif Ghafoor, the military spokesman, tweeted late on Sunday.
Beijing has pledged to invest about $60 billion in Pakistan for infrastructure for the Belt and Road project.
Dawood, in an interview with the Financial Times, also suggested the CPEC contracts had been unfairly negotiated by the previous government and were too favorable to the Chinese. Later he said the comments were taken out of context, but did not dispute their veracity.
The critical comments were published just after China’s top diplomat, State Councillor and Foreign Minister Wang Yi, visited Pakistan and the two sides reaffirmed the mutual benefits of the Beijing-funded projects.
On Thursday, Pakistan’s government said it wanted CPEC to include more projects with a focus on socio-economic development, something which would align more with the populist agenda of Khan’s new administration.
Overseas Pakistanis sent home nearly $4 billion home in July and August, the first two months of FY 19.
#ADB sees #Pakistan’s #economy slowing down in current fiscal year. #Manila-based lending agency forecasts #GDP growth rate to touch 4.8pc this year compared to 5.8pc in fiscal year ending in June 2018
Anticipating a one percentage point fall in the rate of growth and two percentage points rise in inflation during the current fiscal year, the Asian Development Bank has advised the newly elected government to address rising debt obligations, falling reserves and large twin deficits.
In its flagship Asian Development Outlook 2018 update, the Manila-based lending agency said the economy appeared slowing down and forecast GDP growth rate to touch 4.8 per cent this year, compared to 5.8pc in the fiscal year ending in June 2018.
It said Pakistan’s 5.8pc growth last fiscal was higher than the ADB forecast, but the outlook is clouded by a large budget deficit, a deteriorating current account deficit and falling foreign exchange reserves. “The growth forecast for Pakistan in 2019 is downgraded in light of a pressing need to deal with large budget and external imbalances,” it said.
Also, the ADB noted rate of inflation growing significantly to 6.5pc at the end of current fiscal against about 4.5pc last fiscal year.
The bank said Pakistan required mobilising substantial external financing to buy time for orderly reform to reduce the large external and domestic imbalances. Such resources can be acquired from bilateral and multilateral sources, the diaspora, or international capital markets. “The key challenges are to adopt the right reforms and achieve good outcomes to sustain public support,” the report noted.
The good thing is that Pakistan’s economy has time and again shown resilience and the capacity to bounce back, it said. Although formidable development challenges remain, the ADB expected the stability fostered by the smooth political transition and the new government’s strong commitment to focus on pockets of vulnerabilities and implement pro-job and socioeconomic development policies that will stimulate robust, sustainable growth in the years ahead, said ADB Country Director for Pakistan Xiaohong Yang.
The 4.8pc growth prospect is linked to success of the government in obtaining finance and on the strength of an improved security and energy supply, continued investment in the CPEC and other initiatives, and recognition of the need to rein in deficits. “Challenges to maintaining the growth momentum are tighter monetary and fiscal policies to contain domestic demand, currency depreciation, and tension in the global trade environment,” the ADB noted.
On the supply side, water shortages in some areas are likely to keep agricultural production below target in fiscal 2019. Growth in manufacturing and services will likely be affected by fiscal and monetary tightening. On top of dealing with macroeconomic imbalances, the new government faced long-delayed decisions on raising tariffs to contain rapidly rising and potentially disruptive inter-company arrears in the energy sector — so called “circular debt” that exceeds PRs1.4 trillion, or 5pc of GDP.
Average annual inflation is projected to reach 6.5pc in fiscal year 2019 because of currency depreciation and elevated international oil prices. Inflation accelerated sharply for both food and other purchases in the first two months current year to 5.8pc from 3.2pc a year earlier. The SBP increased the policy rate by 100 bps to reach to 7.5pc in July 2018 in an effort to contain the inflation pressure and is likely to continue further as part of its monetary tightening.
The new government needs to move swiftly to put in place its macroeconomic policies including fiscal, monetary, tax, and trade reform policies to promote financial stability and growth. Pakistan needs to institute mechanisms to increase competitiveness, attract private sector investments, and strengthen the ease of doing business as well as Pakistan’s position in the global value chain, the ADB said.
#Pakistan, #Russia ink deal for feasibility study on $10b offshore #gas pipeline.The China-Pakistan Economic Corridor (#CPEC) has now entered the industrialization phase and needs gas for duty and tax-free Special Economic Zones (#SEZs). https://tribune.com.pk/story/1812965/2-pakistan-russia-ink-deal-feasibility-study-10b-offshore-pipeline/
Pakistan and Russia signed a deal on Thursday for conducting feasibility study on a planned $10-billion offshore gas pipeline, an idea coined by Moscow to capture the energy market of Pakistan.
Ministry of Energy (Petroleum Division) Additional Secretary Sher Afgan and Deputy Energy Minister of Russia Anatoly Yanovsky signed a memorandum of understanding (MoU) for undertaking the study.
Inter State Gas Systems (ISGS) Managing Director Mobin Saulat was also present at the ceremony. On the occasion, the two sides expressed interest in enhancing bilateral relations in the energy sector.
ISGS – a state-owned Pakistani company established to handle gas import projects which is already working on schemes like the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline – has been designated by Pakistan for executing the pipeline project along with Russia’s energy giant Gazprom.
Gazprom will conduct the feasibility study and bear its expenses in order to assess economic viability and cost of the project.
The China-Pakistan Economic Corridor (CPEC) has now entered the industrialisation phase and needs gas for duty and tax-free Special Economic Zones (SEZs). The offshore gas pipeline will meet energy needs of the industries being set up in the SEZs along the CPEC route.
According to officials, the pipeline will connect Pakistan and Russia and act as an energy corridor between the two countries.
“Strategically, it is a very important project as the two countries will come closer to each other,” an official said. “At the same time, Pakistan will gain access to the Russian market in order to boost its overall exports which remained stagnant during five-year tenure of the PML-N government.”
Russia has nominated Public Joint Stock Company Gazprom for implementation of the project. Pakistan’s cabinet has permitted the company to conduct the feasibility study at its own cost and risk.
Separately, ISGS is working on the $10-billion Tapi gas pipeline which will connect South and Central Asia. Construction work on the scheme in Pakistan is planned to start in March 2019.
These projects are termed game changer for Pakistan as they will not only lead to regional connectivity, but will also meet growing energy needs of the country.
Owing to a long-running tussle with Europe and the US over the annexation of Ukrainian region of Crimea, Russia is looking for alternative markets and wants to capitalise on increasing energy demand in South Asia.
392 km #Sukkur-#Multan section of #Peshawar-#Karachi Motorway to open for traffic August 04, 2019. 69% of total work has been completed. #Pakistan #CPEC #China https://pakobserver.net/multan-sukkur-motorway-project-to-be-completed-before-time/ via @pakobserver
The 392-kilometer Sukkur-Multan section of Peshawar-Karachi Motorway is likely to be opened for traffic by May next year, two months ahead of the given schedule of August 04, 2019, General Manager of the project, Arbab Ali said. ‘At present 69 percent of total work has been completed, out of which 392 kilometer roadbed and culvert passage, and other structures are about to be competed (99%). Up to now, all the bridges are near completion, and asphalt pavement works are advancing at full speed, and the building construction and ancillary works also being implemented actively,’ he said while talking to a group of media in Multan.
He said this section was part of the mega China Pakistan Economic Corridor (CPEC) project. He informed that on May 26 this year, a 33 km section (Multan-Shujaabad) in the north end of the project was inaugurated by then Prime Minister Shahid Khaqan Abbasi, however it could not be opened to traffic due to incomplete work of the section. ‘This section will be opened to traffic by March next year’. Pakistan’s PKM project starts from Karachi via Hyderabad, Sukkur, Multan, Islamabad, Lahore and other cities ends in Peshawar with a total length of 1,152 kilometers.
Sukkur-Multan has a design speed of 120 km per hour, and it is a two-way six-lane road with a contractual value of USD 2.889 billion (excluding $180 million tax exemption). The Export-Import Bank of China provides loan support, and China State Construction Company Limited (CSCEC) is responsible for construction on Engineering Procurement Construction (EPC) basis. With a contract period of 36 months (including design period of four months), the project officially started on August 5, 2016.
Meanwhile CEO of CSEC Mr Zong informed that majority of the investment by China was based on soft loan (with a markup rate of only 2.2%) while the rest was based on commercial loans. He said that in this project, a total of 101 bridges, 1503 structures, 11 interchanges, six service areas, five rest areas, and 22 toll plazas will be constructed. ‘The whole project is divided into seven sections, each of which is about 54-59 kilometers long and all seven sections are constructed simultaneously,’.—APP
CPEC and Beyond: China and the US Fight For Influence In Pakistan
Beijing and Washington tussle to have their way with Islamabad’s foreign policy decisions.
On Monday, the U.S. principal deputy assistant secretary of state for South and Central Asia, Alice Wells, in a statement said that a number of firms blacklisted by the World Bank had received contracts in the China-Pakistan Economic Corridor (CPEC).
In her renewed criticism, Wells, who is on a four-day visit to Pakistan, noted that the lack of transparency in the existing deals and the financial conditions imposed by China have increased Pakistan’s overall debt.
This not the first time that Wells has criticized the CPEC. In November last year, Wells warned that the Chinese loans are “going to hang over Pakistan’s economic development potential, hamstringing Prime Minister [Imran] Khan’s reform agenda.”
Broadly, CPEC has come under U.S. criticism due to its wider linkage to China’s global Belt and Road Initiative (BRI) Project. While Washington’s overt criticism of the project continues, it has also continued to insisted that Pakistan is a sovereign state that can make any trade deals that the country’s leadership finds suited to its interests. After Wells’ recent criticism of the project, U.S. Ambassador to Pakistan Paul W. Jones explained that Wells’ “remarks were meant to generate a debate.”
it’s unlikely that Washington’s criticism of CPEC will wear out in the coming months or years. Arguably, policymakers in Pakistan are wary of Islamabad’s growing financial reliance on China but at the same time they have been unable to win any significant financial support from Washington. Khan’s government demanded a major review to CPEC projects when it came to power in 2018. However, to Khan’s frustration, Beijing was only willing to review projects that had not started yet. Reportedly, the matters were settled after Pakistan’s top military leadership intervened and assured China of Islamabad’s commitment.
Arguably, CPEC has emerged as the next battleground for the United States and China’s economic rivalry. Both countries’ warnings and counterwarnings are coming at a time when Pakistan is looking for financial assistance from both countries. Pakistan may not like China’s financial terms, but there is no other major investor willing to assist Islamabad at a time when the country is stuck in a major financial crisis.
Moreover, while the United States has assured Pakistan that it is greatly enhancing trade with the country, it’s unlikely that Islamabad will win Washington’s economic support at a level even close to Beijing’s financial commitments. However, it remains to be seen if Washington can allow Beijing to completely wipe out its ability to influence Pakistan’s policymakers.
It’s unlikely that Islamabad is going to be able to balance its relationship between China and the United States in the coming months or perhaps years as both countries compete for influence in Pakistan.
What Would #US-#Pakistan War Look Like?
One word: Hell! #India could help with runways for US warplanes. US would assume some #Pakistani #nuclear weapons would survive sustained air campaign to destroy them & then used against #American forces or targets. https://nationalinterest.org/blog/buzz/what-would-hypothetical-us-pakistan-war-look-141072
In the U.S. television series Homeland, the United States and Pakistan are brought to the brink of war. In real life, the two countries are allies, albeit strained ones at that, and many Americans believe Islamabad often actively works against Washington’s interests. If the relationship turned poisonous, how would the United States prosecute a war against Pakistan?
A U.S. war with Pakistan would be extremely difficult to wage and fraught with difficulty. It would also be forced to proceed under the assumption that some Pakistani nuclear weapons would survive a sustained effort to destroy them, to be used against U.S. forces or targets in some way later in the campaign. This is the sort of uncertainty that can veto military action and makes a war between Washington and Islamabad an absolute conflict of last resort.
Of course, there is one regional power that can provide everything the U.S. needs, including local air bases and a large army, navy, and air force, already positioned in the theater with well-sketched battle plans: India. India could help with an air campaign, providing runways for U.S. fighter bombers to operate from, or even contribute its own airpower. Indian ground forces have a far shorter route to Islamabad and overmatch Pakistani forces on the ground.-----------
In order to proceed, let’s sketch out two war scenarios. In one, we’ll assume that the United States is pursuing an air-only campaign, in order to punish the country or strip it of some vital capability—nuclear weapons being a prime example. In the second scenario, the United States seeks to topple the country’s government entirely, including the occupation of the capital, Islamabad.
An air campaign against Pakistan would be slower and more fraught with difficulty than past campaigns. Pakistan’s Air Force has nearly four hundred fighters, including American F-16 Fighting Falcons, and would need to be quickly destroyed. U.S. Navy and Air Force aircraft could see their first significant air to air combat since the 1991 Persian Gulf War.
An all-out invasion of Pakistan would be much more difficult, bordering on impractical. An invasion would require securing the city of Karachi, a coastal city of 14 million, then a march upcountry of approximately 700 miles. Securing Karachi alone would be an immense effort dwarfing efforts to secure Baghdad in the late 2000s, one that required more than 100,000 U.S. troops and the cooperation of local militias.
Another power that could join such a conflict is China. China and Pakistan enjoy warm relations, and the rhetoric between the two countries suggests a relationship nearing that of a mutual defense pact. But it isn’t, and it’s not clear that China would risk direct conflict with the United States if Pakistan in some way overreached. China might, on the assumption that a U.S. puppet state in neighboring Pakistan would diminish China’s power and influence abroad. It’s worth remembering that the last time Chinese forces fought Americans was after the U.S.-led United Nations forces advanced into a state neighboring Beijing.
#Pakistan moves to save face as #coronavirus hits Belt and Road. "The world....will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital" #China #CPEC https://asia.nikkei.com/Spotlight/Belt-and-Road/Pakistan-moves-to-save-face-as-coronavirus-hits-Belt-and-Road2
The government of Pakistan has ordered the resumption of all infrastructure and energy projects that are part of China's Belt and Road Initiative, but experts believe the move is a matter of face-saving.
Work on the China-Pakistan Economic Corridor, a major piece of the Belt and Road, stopped when the novel coronavirus started to spread in Pakistan in February. According to Johns Hopkins University data, Pakistan has confirmed 9,216 cases as of Tuesday, including 192 deaths.
Naghmana Hashmi, Pakistan's ambassador in Beijing, told Pakistani media on Sunday that a number of mechanisms have been established to complete all corridor projects within the prescribed time frame. But analysts say restarting the projects at the height of the pandemic is meant to spare Beijing and Islamabad embarrassment.
Amid the economic crisis, some have questioned the economic viability of Belt and Road projects. According to the Planning Commission of Pakistan, the country's top development planning body, Chinese skilled laborers are paid 1,300% more than Pakistani laborers for the Main Line 1 (ML-1) railway project, a discrepancy it says must be rationalized.
The commission has also asked Pakistan Railways to evaluate the impact of a huge Chinese loan of almost $9 billion for the ML-1, which is the single largest infrastructure project for the corridor in the country. Pakistan expects 90% of the funding for the ML-1 to come from the Chinese loan. The commission fears the terms may saddle the country with heavy debt if it is not looked into now.
On the other hand, there are bullish voices who say that resuming Belt and Road projects is worth the risk.
Hasaan Khawar, a public policy analyst based in Islamabad, believes the corridor's special economic zones can help Pakistan solve its economic woes. "The world is changing fast, and it will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital," Khawar said. He added that the corridor and the zones provide a ready framework for Pakistan to attract Chinese capital and should, therefore, be a priority for Pakistan.
Malik believes that the aftermath of the COVID-19 crisis will leave China better positioned as a global power and savior of a world in deep crisis. After this, the world will see a continuation and expansion of Belt and Road projects, he says.
Kugelman sees the corridor as the most concrete and active part of the Belt and Road and says its trajectory will be shaped to a great extent by how the corridor develops. He adds that if corridor projects are put on hold until the pandemic has ended, the Belt and Road as a whole could take a pause. If they move ahead, that portends more forward movement for the initiative in the near future, Kugelman says.
“Because technology is the key weapon in the fight for control of the industries of the future and in combating pandemics, the US private tech sector will become increasingly integrated into the national-security-industrial complex.”
#US urges #China to waive #Pakistan’s #debt. “At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan” #CPEC #PMLN #COVID https://tribune.com.pk/story/2225775/1-us-urges-china-waive-off-pakistans-debt-amid-covid-19-crisis/
The United States on Wednesday urged China either to wave off or renegotiate what it called “unsustainable and unfair” debt of Pakistan as it once again raised serious questions about the lack of transparency in the multibillion-dollar China-Pakistan Economic Corridor (CPEC).
“At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan,” said Alice Wells, the outgoing US Assistant Secretary of State for South and Central Asia.
“We hope China will join in either waving off debt or renegotiating these loans and creating a fair and transparent deal for Pakistani people,” Ambassador Wells said while addressing a farewell news briefing through a video link attended by journalists from South and Central Asia.
This was not the first time the US and Wells in particular publically questioned the viability of CPEC. Wells in the past also expressed similar views, declaring CPEC detrimental to Pakistan’s economy.
China always dismissed the US claims and instead challenged Washington to match its economic assistance to Pakistan.
Ambassador Wells, who is retiring this week, said the US supports CPEC and other development projects as long as they meet international standards, uphold environmental and labour standards.
“I enumerated my concerns and the United States government’s concerns over CPEC, over the lack of transparency involved in the project, over the unfair rates of profits that are guaranteed to Chinese state organisations to the distortions it caused in the Pakistani economy including by the massive imbalance in the trade Pakistan now has with China,” she argued.
Pakistan has been seeking debt relief from G20 countries to offset the negative fallout of coronavirus on its economy.
The top US diplomat also spoke about President Trump’s South Asia strategy, which according to Wells, brought fundamental change in approach towards Pakistan.
She said that Trump’s strategy had made it clear that Pakistan had to take decisive action against terrorist and militant groups that supported conflict in Afghanistan.
The suspension of security assistance by President Trump in January 2018 was a demonstration of that resolve to hold Pakistan accountable for the alleged presence of terrorist groups on its soil, she added.
According to Wells, since then Pakistan had taken “constructive steps” to advance Afghan peace process. She said Ambassador Zalmay Khalilzad had developed “solid cooperation” with Pakistan civil and military leadership.
The US senior diplomat also praised Pakistan’s steps to eradicate threat posed by terrorist groups to regional stability.
“Pakistan is also taking initial steps towards curtailing other terrorist groups that threatened the region such as arresting and prosecuting Laskhar-e-Tayaba leader Hafza Saeed and beginning to dismantle terrorist financing structures.
“And as Pakistan’s commitment to the regional peace grown, we see initial growth in our relationship with Pakistan as well particularly in trade,” she further said.
EU Foreign Policy Chief Josep Borrell: “Analysts have long talked about the end of an American-led system and the arrival of an Asian century....This is now happening in front of our eyes” #US #China #Europe #America #Asia #COVIDー19 #Coronavirus https://www.newsweek.com/pressure-choose-sides-us-china-eu-diplomat-josep-borrell-coronavirus-warning-1506325
Pressure to choose sides between the U.S. and China is growing amid the arrival of an "Asian century," a top European diplomat said today.
Europe is facing an "existential crisis" sparked by the COVID-19 crisis, which could be a catalyst in the demise of an American-led system, according to Josep Borrell, a vice president of the European Commission branch of the European Union (EU).
The diplomat, who also serves as the EU's High Representative for Foreign Affairs and Security Policy, told virtual participants of the German Ambassadors' Conference 2020 that the pandemic could be considered a "great accelerator of history."
Borrell claimed that in the world that emerges Asia will be increasingly important, while noting that China is fast becoming "more powerful and assertive."
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"Analysts have long talked about the end of an American-led system and the arrival of an Asian century. This is now happening in front of our eyes," he said. "If the 21st century turns out to be an Asian century, as the 20th was an American one, the pandemic may well be remembered as the turning point of this process."
His comments were first reported by the Associated Press.
Tensions have spiked between the U.S. and China in recent years,, with tit-for-tat trade tariffs being slapped on goods by both countries. U.S. officials have also complained about national security concerns linked to Chinese tech firms, and 5G.
This month, president Donald Trump told Fox Business that he didn't want to speak with China's leader, Xi Jinping, and suggested the U.S. may cut ties.
"We could cut off the whole relationship," he told Fox host Maria Bartiromo. "Now if you did, what would happen? You would save 500 billion dollars."
In April, Trump said in a briefing that "serious investigations" were being conducted into China's handling of the ongoing COVID-19 pandemic, which ravaged America this year, causing more than 1.6 million infections and close to 98,000 deaths.
China has claimed its own virus infection and death rates have plunged, although official health statistics have been met with widespread scepticism.
"We are not happy with that whole situation because we believe it could have been stopped at the source, it could have been stopped quickly, and it wouldn't have spread all over the world. And we think that should have happened," Trump fumed.
Borrell said today that the need for multilateral cooperation has "never been greater" but raised concerns that leadership from the White House is lacking.
"This is the first major crisis in decades where the U.S. is not leading the international response," the EU diplomat said. "Maybe they don't care, but everywhere we look we see increasing rivalries, especially between the U.S. and China.
He added: "The pressure to choose sides is growing. As the EU, we should follow our own interests and values and avoid being instrumentalized by one or the other.
Borrell went on to say that U.S.-China rivalry is often having a "paralysing" effect on the multilateral system, fueling more arguments and vetoes than agreements.
According to the transcript, he said: "We need a more robust strategy for China, which also requires better relations with the rest of democratic Asia. That's why we must invest more in working with India, Japan, South Korea et cetera.
#US-#China #Tradewar sends Kearney #US Reshoring Index to record high. It compares US domestic manufacturing to imports with Manufacturing imports from 14 Asian nations including #Bangladesh, #India, #Pakistan. #Vietnam is biggest beneficiary. #COVID__19 https://apnews.com/PR%20Newswire/fc57a9d217e2fc9c38d311f322d13e64
US companies in 2019 sourced substantially fewer manufactured goods from 14 traditional Asian trading partners, apparently as a direct result of aggressive US government trade policies, according to the seventh annual Kearney US Reshoring Index.
The ongoing trade war sent the Reshoring Index to a record high in 2019.
The Reshoring Index compares US domestic manufacturing gross output to the level of manufacturing imports from 14 traditional Asian low-cost countries (LCCs): China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka, and Cambodia.
Kearney, the global management consulting firm that calculates the index, attributes much of the big 2019 shift to a 17 percent decline in US imports of manufactured goods from China, which has long been the leading choice for offshore production. Intriguingly, manufactured imports from Vietnam and Mexico both increased last year, evidence that US companies were starting to significantly adapt their sourcing strategies even before the COVID-19 crisis began disrupting global supply chains early in 2020.
Big Jump in Reshoring Index
In 2019, US manufacturing was steady while imports from the 14 Asian trading partners notably declined. Imports of manufactured goods from the 14 Asian LCCs shrunk to $757 billion from $816 billion in 2018—a 7.2 percent decrease—while US domestic manufacturing output was $6,271 billion in 2019, virtually unchanged from 2018.
Consequently, the US market imported just 12.1 cents worth of offshore production from the Asian LCCs for every $1 of domestic manufacturing gross output in 2019, nearly a full percentage point decrease in corresponding imports from the previous year.
The US Reshoring Index is expressed in basis points (1 percent change = 100 basis points). A positive index number indicates net reshoring. The precise 2019 Reshoring Index calculation is: 2018 import/domestic manufacturing ratio of 13.058 percent minus corresponding 2019 ratio of 12.077 percent = 0.98 change, or 98 bps. The resulting Reshoring Index of 98 is by far the highest yet registered. The previous index high was 11 bps in 2011. The index came in as low as -112 bps as recently as 2015.
US trade policies also appear to be changing trade dynamics among and between the various countries exporting manufactured goods to the US. While US manufacturing imports from China declined, imports from the other Asian LCC countries increased by $31 billion in 2019. Similarly, manufacturing imports from Mexico rose $13 billion.
“Much of China’s loss was Vietnam’s gain,” said Patrick Van den Bossche, Kearney partner and co-author of the study. “Of the $31 billion in US imports that shifted from China to other Asian LCCs, almost half (46 percent) was absorbed by Vietnam, which exported $14 billion more manufactured goods to the US in 2019 than it did in 2018.”
“The door for these insurgents was clearly opened by ongoing US–China trade disputes, as their gains were mainly in product categories impacted by tariffs,” observed Yuri Castano, Kearney manager and co-author of the study. “Apparently, the trade war jolted US companies to start rethinking and reshaping their supply networks.”
Costs, risk and resilience
“2020 dawned with a disruption of a new order of magnitude―COVID-19,” noted Brooks Levering, Kearney partner and co-author of the study. “We anticipate that the harsh lessons of this crisis will compel companies to go much further in rethinking their sourcing strategies― indeed, their entire supply chains.”
#China announces $178.2 billion #military budget. Premier Li dropped the use of the word “peaceful” when talking of reunification with #Taiwan. #US Def Sec Mark Esper reaffirmed that his country would stand by Taiwan #Asia #geopolitics #India #Pakistan https://www.defensenews.com/global/asia-pacific/2020/05/22/china-announces-1782-billion-military-budget/#.Xsx7vSEvR8A.twitter
China has announced a 6.6 percent growth in its defense budget for this year, its lowest rate of increase for almost three decades.
The growth in China’s defense budget would see spending rise from $167 billion last year to $178.2 billion, an increase of about $11 billion. The country has the second-largest defense budget in the world, behind only the United States.
Despite the growth of China’s defense budget being at its lowest, in percentage terms, since the early 1990s, the 6.6 percent figure only represents a slightly lower figure than the 7-7.5 percent growth many analysts estimated before the pandemic. In real dollar terms, the $11 billion increase in defense spending is the fifth-highest increase ever for the country.
It also shows that China is determined that the People’s Liberation Army, or PLA, will remain insulated as much as possible from the negative economic effects of the COVID-19 pandemic, which resulted in China’s economy shrinking by 6.8 percent in the first quarter of 2020 compared to the same time last year.
Chinese Premier Li Keqiang said as much during his speech Friday at the opening of the annual gathering of its largely rubber stamp parliament. He pledged that the PLA would not be worse off.
“We will deepen reforms in national defense and the military, increase our logistic and equipment support capacity, and promote innovative development of defense-related science and technology,” he told legislators at the opening of the National People’s Congress, which kicked off Friday at the Great Hall of the People in China’s capital, Beijing.
Li also touched on the issue of Taiwan during his speech, reiterating that China would “resolutely oppose and deter any separatist activities seeking Taiwan independence.” He also called on the Taiwanese people to “join the mainland in opposing Taiwanese independence and to promote reunification."
China views Taiwan as a breakaway province, with the self-governing island off its coast having formed its own government in 1949 when Nationalist forces fled there following defeat at the hands of Communists during China’s civil war.
Perhaps tellingly, Li dropped the use of the word “peaceful” when talking of reunification with Taiwan, a departure from decades of using it as the standard expression Chinese leaders used when addressing parliament and mentioning Taiwan. Although China has never renounced the possible use of force for reunification efforts.
Li’s call for reunification came as U.S. Defense Secretary Mark Esper reaffirmed that the country would stand by Taiwan. Speaking on Hugh Hewitt’s radio show, Esper said the U.S. would “certainly live up to our commitments to Taiwan,” noting that it is also bound by the Taiwan Relations Act enacted by Congress, which pledges to supply Taiwan with weapons it needs for its defense.
Accordingly, the U.S. State Department announced Thursday that it has approved the sale of an additional 18 heavyweight submarine torpedoes to Taiwan for $180 million. The Mk 46 Mod 6 Advanced Technology torpedoes will equip Taiwan’s submarine fleet, and the approval follows another for 48 similar weapons in 2017.
Taiwan has reported that Chinese military activity around the island continues unabated throughout the ongoing pandemic, with Chinese naval vessels and military aircraft regularly operating in international airspace and waters around Taiwan.
China calls the movements routine training exercises. However, the island’s government sees these moves as part of an intimidation campaign against Taiwan and regularly publicizes PLA ship and aircraft movements in its vicinity.
#Pakistan factor behind #India-#China stand-off in #Ladakh. “There appears to have been a strategic shift in Chinese thinking after India abrogated Sections of Article 370 last year... Pakistan has become exceptionally important to China.." #CPEC The Hindu https://www.thehindu.com/news/national/pakistan-factor-behind-india-china-stand-off-in-ladakh/article31676271.ece
China’s heightened concerns over Aksai Chin and the China-Pakistan Economic Corridor (CPEC), which is routed, in part, through Gilgit-Baltistan, may have set the backdrop for the ongoing stand-off between Indian and Chinese troops in Ladakh.
“There appears to have been a strategic shift in Chinese thinking after India abrogated Sections of Article 370 last year and created the Union Territories of Jammu and Kashmir and Ladakh. India has always claimed Aksai Chin, but the issue appears to have been re-interpreted in China after the special status of Jammu and Kashmir was revoked,” says P. Stobdan, former ambassador to Kyrgyzstan, who specialises in trans-Himalayan studies.
Mr. Stobdan added that the CPEC — China’s strategic pathway to the Indian Ocean — which passes through Gilgit-Baltistan — has emerged as an entirely new factor, reinforcing and clubbing the already strong security relationship between China and Pakistan. “Pakistan has become exceptionally important to China as CPEC — which gives access to Gwadar port and helps Beijing reduce its vulnerability on the Americans who dominate Malacca Strait — is the gateway governing China’s international trade. The CPEC has imparted game-changing strategic ballast to the Sino-Pak relationship.”
The CPEC is “too big to fail,” as China has already staked its prestige in the enterprise, which has been showcased as the flagship of the Beijing-led Belt and Road Initiative (BRI).
The CPEC plan was robustly challenged in the aftermath of the August 5 change in the status quo in Jammu and Kashmir, which covers Pakistan-occupied Kashmir (PoK), including Gilgit-Baltistan, on the corridor’s route. Speaking in the Lok Sabha on August 6 last year, Home Minister Amit Shah unambiguously nailed India’s claims over PoK and Aksai Chin.
“Kashmir is an integral part of India, there is no doubt over it. When I talk about Jammu and Kashmir, Pakistan-occupied Kashmir and Aksai Chin are included in it,” he said. For the record, Mr. Shah was echoing a February 1994 unanimous Parliament resolution that categorically stated that Jammu and Kashmir was an integral part of India, and that Pakistan must vacate parts of the State under its occupation. Besides, a Parliament resolution passed on November 14, 1962, commits India to recover Aksai Chin and other areas of J&K occupied/annexed by China.
Pakistan Drifting Away From US Towards China: Defence Analyst
Amid the drastic change in US-Pakistan's relationship, China is the only hope for Pakistan for economic assistance, especially in the aftermath of the pandemic, said Ayesha Siddiqa, a defence analyst and South Asian politics scholar.
Speaking during an interview with The News International, Siddiqa said amid the fast-changing world dynamics wherein the coalition among the United States, India and Saudi Arabia gains strength, "Pakistan is drifting away from the US towards a potential alliance between China, Russia and perhaps Iran."
"The nature of US-Pakistan relations is changing drastically. Even though it has played a vital role in the US-Taliban negotiations, no one expects the continuation of American financial assistance to Pakistan. Islamabad joined the American alliance against the Taliban after 9/11," Siddiqa said.
"While the dominant narrative popularised by Islamabad was that it was forced into alignment, governments stuck to the narrow prism of extracting financial resources from the US, which also meant delivering reluctantly. The foreign policy debate in Pakistan is silent about our own responsibility in supporting the Taliban or keeping Osama bin Laden. Ultimately, the relationship collapsed at a point of overselling of our capabilities with limited capacity to deliver," she added.
The US-Pakistan relation has continued to be on a downhill as the latter has failed to take strong action against the terrorist groups emanating from its soil.
Due to the deteriorating ties, Siddiqa said, "China appears to be the only option. It may be Pakistan's only hope for economic assistance, especially in the aftermath of the pandemic... In the wake of the fast-changing world dynamics, as the coalition among the United States, India and Saudi Arabia gains strength, Pakistan is drifting away from the US towards a potential alliance between China, Russia and perhaps Iran."
She, however, noted that there are a lot of issues that still need to be worked out between these countries and Pakistan can benefit only "if it can do its homework and go beyond the idea of extracting limited benefits."
"There is an expectation that Pakistan and Iran will come close as a result of both being part of BRI, especially if Beijing and Tehran sign an agreement that is being talked about. Right now, we don't know if the agreement will get signed, but even if it does, I am not sure that we are domestically talking about the competition between Iran and Pakistan that will happen naturally. It was there even when both neighbours were once part of an American alignment," she said.
She further stated that Pakistan needs to improve its relations with its neighbours including India, Iran and Afghanistan.
While commenting on Pakistan's defence and foreign policy, Siddiqa said, "Pakistan's defence and foreign policy community lacks independent thinking and diversity of viewpoints. Over the years, alternative voices have been silenced. I was talking to a diplomat, who said that during her two postings to the country between 2016 and now, many people that she would talk to are no longer in the country. The security community that we have now comprising faculty at the known public sector universities and think tanks only preach to the choir by communicating dominant narratives of the establishment back to them through their reports. It is interesting to note that most of the think tanks are located on the Grand Trunk Road with little input from other parts of the country." (ANI)
In an interview with Pakistani journalist Israr Kasana that was published on YouTube on June 3, 2020, (Indian Defense Analyst) Pravin (Sawhney) asserted that "Pakistan has never lost (to India) in any war, be it 1965 or 1971 or any other." "If Pakistan had lost, there would be no line-of-control or ceasefire line on the ground," he added. Here's more from that interview:
"If Pakistan had lost we (India) would have erased the LOC...why do I say that? I have explained it in my book. Pakistan has been strong in the western sector. It's a myth that Pakistan is weak, a myth that Pakistan itself perpetrates...India says we (India) are strong when in fact it is not.....CPEC is extremely important...China will share a lot of military capability with Pakistan....China shares platforms and assures unlimited supply of spare parts which is crucial in war...China and Pakistan do frequent joint military exercises...to assure interoperability."
One hard truth that Indians have to contend with is that America has also had difficulty treating India with respect. In recent years, many Americans have proudly proclaimed that America and India have a friendship built on a strong foundation since both are fellow democracies. This argument cuts little ice among thoughtful Indians since most of them remember well that America stood shoulder to shoulder with communist China and dictatorial Pakistan for several decades during the Cold War and beyond. One of the critical weaknesses of Washington, DC, is that the administrations and their officials change regularly; they have poor memories. Many Americans, like many of their fellow Westerners, have a higher degree of respect for Chinese civilization than they do of Indian civilization. Many Americans will deny it because it is an uncomfortable truth. They will proclaim loudly that they respect India as much as they respect China. But you cannot feign respect: it is best demonstrated not through words but in deeds. Every country in the world demonstrates its respect for another country by the amount of time and attention it gives to that country, and America has devoted far more time and attention to China than it has to India. If America wants to develop a close long-term relationship with India over the long run, it needs to confront the deep roots of its relative lack of respect for India. Is it a result of a perception among Western scholars that Indian civilization is not as impressive as Chinese civilization? Is this a result of the fact that the American media has broadcast a steady stream of stories about poverty in India, so much so that just as Americans naturally associate Africa with poverty, they may also do the same with India? Or were America’s condescending cultural attacks a result of romantic fascination with British dramas set in British India, with Indian culture presented as inferior? Unless Americans reflect on the roots of their lack of respect for India, they will fail to develop a strong partnership of equals. The tragedy of this failure is that such a partnership would bring massive benefits to both countries. As the American century gradually fades away in the coming decades and an Asian century emerges in force, America will need to build bridges to engage the new self-confident Asian societies. Clearly, China cannot provide America a bridge to the new Asia as China will be perceived as the main challenger to America for the coming decades. However, India can, as there are several common links to build upon. The first is the exceptional success of the Indian community in America. America’s free enterprise system is, in many ways, the most competitive market in the world for human achievement as the best minds from nations all over the world migrate to America. The pool of migrants in America represents the highest achieving segments of societies around the world. When the best brains of the world compete on a level playing field, which ethnic community does the best? The data show it is the ethnic Indian community in America.
Mahbubani, Kishore. Has China Won? (pp. 239-241). PublicAffairs. Kindle Edition.
#IMF: #China is world's biggest #economy. IMF's "2020 World Outlook" shows that China’s #GDP($24.2 trillion) is one-sixth larger than #America’s($20.8 trillion). China has replaced #US as the largest trading partner of nearly every major nation. #COVID19 https://nationalinterest.org/feature/china-now-world%E2%80%99s-largest-economy-we-shouldn%E2%80%99t-be-shocked-170719
Explaining its decision to switch from MER to PPP in its annual assessment of national economies—which is available online in the CIA Factbook—the CIA noted that “GDP at the official exchange rate [MER GDP] substantially understates the actual level of China's output vis-a-vis the rest of the world.” Thus, in its view, PPP “provides the best available starting point for comparisons of economic strength and wellbeing between economies.” The IMF adds further that “market rates are more volatile and using them can produce quite large swings in aggregate measures of growth even when growth rates in individual countries are stable.”
So what? If this were simply a contest for bragging rights, picking a measuring rod that allows Americans to feel better about ourselves has a certain logic. But in the real world, a nation’s GDP is the substructure of its global power. Over the past generation, as China has created the largest economy in the world, it has displaced the U.S. as the largest trading partner of nearly every major nation (just last year adding Germany to that list). It has become the manufacturing workshop of the world, including for face masks and other protective equipment as we are now seeing in the coronavirus crisis. Thanks to double-digit growth in its defense budget, its military forces have steadily shifted the seesaw of power in potential regional conflicts, in particular over Taiwan. And this year, China will surpass the U.S. in R&D spending, leading the U.S. to a “tipping point in R&D” and future competitiveness.
For the U.S. to meet the China challenge, Americans must wake up to the ugly fact: China has already passed us in the race to be the No. 1 economy in the world. Moreover, in 2020, China will be the only major economy that records positive growth: the only economy that will be bigger at the end of the year than it was when the year began. The consequences for American security are not difficult to predict. Diverging economic growth will embolden an ever more assertive geopolitical player on the world stage.
Graham T. Allison is the Douglas Dillon Professor of Government at the Harvard Kennedy School. He is the former director of Harvard’s Belfer Center and the author of Destined for War: Can America and China Escape Thucydides’s
#China warns #US over #Russia’s ‘legitimate security concerns’. Speaking to Secretary of State Antony Blinken, #Chinese Foreign Minister Wang Yi said Russia’s security concerns over growing tensions in #Europe over #Ukraine should be “taken seriously”. https://aje.io/xft7p4
China has thrown its political weight behind Russia as fears of it potentially invading Ukraine grows, pointing to Moscow’s “legitimate security concerns” in a call to US officials.
Speaking to US Secretary of State Antony Blinken, Chinese Foreign Minister Wang Yi said Russia’s security concerns over growing tensions in Europe over Ukraine should be “taken seriously”.
“All parties should completely abandon the Cold War mentality and form a balanced, effective and sustainable European security mechanism through negotiation,” China’s top diplomat said on Thursday, according to a foreign ministry statement.
In a nod to Moscow’s concerns about the expansion of the NATO alliance in Europe, Wang added that “regional security cannot be guaranteed by strengthening or even expanding military blocs”.
He also said China opposes “external interference” in how other countries are run.
Tens of thousands of Russian troops have been stationed at the border with Ukraine in recent weeks.
In response, the US and other NATO member states have been conducting intense diplomacy with Russian President Vladimir Putin in recent days, as well as providing military reinforcement to Ukraine.
According to the State Department’s readout of the call, “Secretary Blinken underscored the global security and economic risks posed by further Russian aggression against Ukraine and conveyed that de-escalation and diplomacy are the responsible way forward”.
The US and its NATO allies have said they are ready for any eventuality.
Russia has fuelled a rebellion in the former Soviet republic’s east that has killed more than 13,000 people since 2014.
That year, it annexed Crimea following the overthrow of a government in Kyiv that had resisted efforts to move closer to Europe.
Moscow has denied planning to invade Ukraine but that it wants guarantees the country will not join NATO.
Wang also warned the US to “stop interfering” in the Winter Olympics, which Beijing hopes to turn into a soft-power triumph.
“The most urgent priority right now is that the US should stop interfering in the Beijing Winter Olympics,” the foreign minister said.
The lead-up to next week’s Games has been clouded by a US-led diplomatic boycott over China’s human rights record, particularly towards its Uighur Muslim minority in the Xinjiang region.
Wang added that Washington must also “stop playing with fire” on the issue of Taiwan, an island China claims as its own territory.
In the last six years, China has lent $185 billion in emergency loans to developing nations. That’s more than the IMF.
Multipolar world where poor countries are not the mercy of one system. 👋🏻👇🏽
Also an important fact is that the majority of the loans are happening in Yuan
“Lender of last resort” — Bloomberg
Is China finally living up to its responsibility as the world’s second-largest economy? Or is it setting up a rival system of global governance as the relationship between Beijing and Washington gets sourer by the day?
Those are the questions raised – once again, the cognoscenti might say – by a new paper that lays out the growing role of China as a lender of last resort to countries in economic peril, of which there is now a growing list.
Among the findings of a new paper that my colleague Tom Hancock and I report on here:
From 2000-21, the People’s Bank of China and state-owned banks sent $240 billion to governments in the developing world in what amounted to emergency loans.
The bulk of that came in 2016-21, when 22 countries got some $185 billion, according to what the researchers were able to document.
That total surpassed the $144 billion that IMF data shows its members having drawn from the Washington-based lender during that time.
The research — by Sebastian Horn of the World Bank, Brad Parks of the William & Mary AidData project, former World Bank chief economist Carmen Reinhart and Christoph Trebesch of Germany’s Kiel Institute for the World Economy — is part of a growing body of work looking at Chinese lending.
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