Provider of in-depth & balanced analysis on hot issues around the world

BOTTOM LINE • Taiwan’s presidential election is scheduled for January 13, 2024. • A down-to-the-wire effort by two of the three opposition candidates to unite against front-runner William Lai Ching-te failed dramatically, while the third candidate made a grand last-minute exit. • Disarray among the opposition will not necessarily guarantee Lai’s election, with the latest polls showing him barely ahead of his two remaining challengers. • Both challengers, though averring their preference for a strong relationship with the United States, favor warmer relations with Beijing in a manner that may portend some degree of willingness to accept unification with China that would adversely impact US and Japanese security interests • Chinese efforts to influence the vote have included military intimidation, veiled threats of invasion, and disinformation. On Saturday, January 13, 2024, Taiwan will go to the polls to choose itsa next president and 113 seats in the country’s unicameral Legislative Yuan (LY). Current president Tsai Ing-wen is term-limited and at first four, now three, contenders are seeking to succeed her, making this the most contested election since 2000. What’s at Stake for the United States The United States is significantly involved in one war in the Middle East, another in Eastern Europe, and is hence at pains to avoid confrontation in Asia. It has sent two aircraft carrier groups and ammunition to support Israel as well as large quantities of weapons to the Ukrainian government, leaving concerns in both America and Taiwan about how much assistance it could give the country should Xi Jinping decide to attack. Given China’s avowed desire to annex the island by force if Taiwan’s citizens do not agree to unification amicably, and Beijing’s strong reaction to anything that it construes as moves to further legitimize Taiwan’s de facto independence, the Biden administration prefers a Taiwanese president who will avoid both actions that could prompt an attack and measures that would bring the island under Beijing’s control. More than democracy and human rights are at issue: Since Taiwan sits astride sea lanes that are vital for international commerce and security, ceding the country to China would enhance Beijing’s control of both. An estimated 40 percent of world trade passes through the South China Sea, which China has increasingly asserted its control over. Japan, a US treaty ally, has what is arguably an even greater stake in stability in the Taiwan Strait since a Taiwan under Chinese control would bring its territorial waters perilously close to Japan as well as potentially adversely impact the shipping that is so vital to its economy. China also contests control of areas of the East China Sea with Japan. Since Okinawa hosts the only US bases within 500 miles (the unrefueled combat radius of US fighters) from Taiwan, China might well strike those bases at the outset of a conflict. Japanese leaders have explicitly said that a Taiwan emergency is a Japanese emergency and therefore an emergency for the Japan-US alliance. The Dramatis Personae Lai Ching-te (English name William Lai) is Taiwan’s incumbent vice-president and the nominee of the Democratic Progressive Party (DPP). Born in 1959 and the son of a coal miner, he is a medical doctor with expertise in spinal cord injuries, though he has dedicated his later career to politics. Regarded as a lackluster campaigner, he can however point to his extensive record in office as a legislator, then premier, and most recently as vice-president. Hou Yu-ih, born in 1957 and the son of pork sellers, represents the Kuomintang (KMT) or Chinese Nationalist Party. After graduating from the Central Police Agency and obtaining a doctoral degree in crime prevention and corrections, he had a long career in law enforcement before becoming deputy mayor and later mayor of New Taipei City. Hou says that his background in police work is excellent preparation for service as president. Ko Wen-je, born in 1959, is a medical doctor known for his expertise in organ transplants before going into politics. Ko successfully ran for mayor of Taipei as an independent, though with the endorsement of the DPP. In 2019, Ko founded the Taiwan People’s Party (TPP) as a challenge to the KMT and DPP. Terry Gou (Chinese name Guo Tai-ming) was born in 1950. A late entry into the race and formerly a KMT member who twice sought and was twice refused the party’s endorsement for nominee, he then announced he would run as an independent backed by the $7 billion fortune he made as founder of Hon Hai Precision Industries. Hon Hai, known abroad as Foxconn, is the world’s largest contract manufacturer of electronics. His parents, from Shanxi, fled to Taiwan in 1949, with his policeman father having fought for the KMT during the war. Gou believes that his extensive business experience makes him ideally suited for the presidency. Where They Stand All candidates face the dilemma of having to solicit the support of voters who overwhelmingly reject unification with China while not antagonizing China with its oft-repeated vow to achieve the “sacred task” of unification by whatever means. A poll released in late November showed almost no support for this: only 0.7 percent of respondents replied that they supported independence as soon as possible with 11.5 percent advocating maintaining the status quo while working toward unification. By contrast, 35.8 percent supported maintaining the status quo while working toward independence and 44.3 percent favored forever maintaining the status quo. On other issues, as do politicians worldwide, they must be wary of making promises they will find difficult to deliver on if elected. Lai, who has previously described himself as an advocate of Taiwanese independence, is careful to qualify the statement by adding that, since Taiwan is already an independent sovereign state known as the Republic of China, there is no need for a declaration of independence. He has rejected the so-called 1992 Consensus and pledged to continue Tsai Ing-wen’s non-confrontational policies. The 1992 Consensus refers to the outcome of a meeting in Singapore between the allegedly unofficial representatives of the Chinese Communist Party and the KMT, which then governed in the name of the Republic of China. Members of the opposition party objected. The Consensus, a term that did not exist until 2000, eight years later, holds that each side agreed that there is but one China and that Taiwan is part of China, but that each side has its own understanding of what China is: for the CCP, it is the People’s Republic of China; for the KMT, it is the Republic of China. KMT supporters continue to accept the latter definition, while the opposition DPP reject it, arguing that Taiwan is a sovereign state independent of the PRC. In 2010, newly elected president Tsai Ing-wen offered a concession in that she accepted the historical fact of the conference, but Beijing immediately rejected it as “an incomplete test paper.” The only one of the four candidates to support gay marriage, which has been legal in Taiwan since 2019, Lai wore a rainbow-colored scarf and spoke at a large parade in October to celebrate the law, declaring that equal marriage was not the end but the starting point for diversity. None of the other three presidential candidates attended, although the KMT’s youth wing did, with its members shouting that their party also supported equality as they passed by Lai. Hou Yu-ih accepts the 1992 Consensus, though adds that he objects to both a formal declaration of Taiwan’s independence and China’s offer to rule the country under Beijing’s interpretation of the one-country, two-systems formula. In a Foreign Affairs article that was obviously aimed at a US audience, Hou stressed the importance of urging both sides of the Taiwan Strait to jointly promote democracy, human rights, and mutual trust. He accepts, however, the need for deterrence against invasion and that Taiwan must deepen collaboration with the United States in areas such as intelligence sharing and regular joint training exercises. Hou has vowed to defend the Republic of China if it were attacked. It is significant that he did not use the word Taiwan, thereby implicitly endorsing his party’s position on the One China policy. On healthcare, Hou has promised to raise spending levels on national health insurance to 8 percent from its current 6.5 percent. Observers were puzzled at his choosing to emphasize this policy against two rivals who are medical doctors. Lai immediately countered that rather than announce a spending target, Hou should explain specifically what areas should be targeted for improvement and then suggested several that he, Lai, would pursue. Ko Wen-je emphasizes his pragmatism and rationality. On cross-strait relations, he advocates a middle-of-the-road approach that is neither anti-China nor overly pro-China. Ko has called for regular security talks among senior officials from Japan, Taiwan, and the United States regarding China’s intimidation of Taiwan. He argues that cutting off communication with China increases the risk of war and has expressed willingness to sign economic agreements with Beijing while also advocating that Taiwan follow the United States in de-risking. Agreements would be reviewed and referred to the Legislative Yuan for ratification—a backhanded reference to former president Ma Ying-jeou’s effort to push through a trade agreement with China that aroused a massive protest and closed down the Legislative Yuan for weeks. Ko has called on China to propose a new framework for engagement with Taiwan that explains what Beijing has to offer, telling inquisitive foreign reporters that “it’s their obligation [to do so] not mine” and adding that Beijing must also define exactly what it means by One China, whether it be political or economic. While economic cooperation with China is negotiable, he claims that politically there is “nothing we can do,” though he has said elsewhere that confrontation can be eased through dialogue and cultural, sports, and economic exchanges. Ko has also proposed turning the small offshore island of Jinmen, also known as Kinmen, into an experimental zone for peace between Taiwan and China. Critics immediately pointed out that, apart from being unconstitutional, Ko has not explained whether he would countenance suspending Jinmen’s elections, regulating its residents’ freedom of speech due to Beijing’s censorship and insistence on “internet sovereignty,” or imposing social controls on them to conform with Chinese practice. Terry Gou, whose Foxconn has over a million employees in its factories in China, has denounced the Taiwan independence movement while calling for de-escalating Sino-American tensions. He accepts the 1992 Consensus and advocates positioning Taiwan as equidistant from both the United States and China. As of now, it is “like prey on a tightrope”: If either America or China increases tensions even a little bit, Taiwan “will die a horrible death.” Critics believe that Foxconn’s heavy presence in China would make him vulnerable to pressures from Beijing; Gou responded that he has not managed the company’s operations since 2019 and in fact resigned from Foxconn’s board of directors in September 2023. Denying that he has ever been controlled by China, Gou vowed to reply “yes, do it!” if Beijing threatens Foxconn’s assets. As if to test his mettle, two months later, China announced an investigation into the tax and land use of Foxconn subsidiaries in several provinces, without supplying details. Foxconn management replied that it would “actively comply” with the investigators. Gou is an avowed opponent of gay marriage. Now no longer formally a candidate, he has vowed to keep advocating for these policy views. Taiwan does not possess indigenous fuels, so the energy issue is highly controversial. Opponents of nuclear energy argue that a Fukushima-type meltdown would devastate the much smaller and similarly earthquake-prone island. Proponents point out that without nuclear power, Taiwan would become still more vulnerable if it completely depended on imports to keep its heavily trade-dependent economy healthy. Due to a 2016 government decision to phase out nuclear power by 2025, usage has declined from over 20 percent to about 9 percent at present. Most citizens voted in 2021 to reject finishing a partially built plant whose completion has been suspended for three decades. Only Lai has vowed to make Taiwan a nuclear-free country by 2025, although he has not ruled out retaining some nuclear capability in case of emergencies like a Chinese invasion or blockade. All three other candidates claim that the nuclear-free homeland policy has failed, with Hou explicitly saying that he would revive nuclear power, including restarting two already decommissioned units, extending the operational period of a third, and evaluating whether to revive an abandoned fourth nuclear power plant. While warning of power shortages, no candidate has addressed the questions of safety or of finding a long-term solution for storing nuclear waste. Who’s Ahead? Taiwan, perhaps one of the most extensively polled countries in the world, has so many organizations collecting data that the Taiwan News regularly reports a poll of polls. Lai has been the consistent front-runner. Except for briefly exceeding 40 percent after a stopover trip to the United States en route to Paraguay, he until recently polled in the mid-thirties, with Ko and Hou in the mid-to-high twenties and Guo in the low teens. But Lai’s lead has been eroding. More concerning to the DPP, at the end of October Ko and KMT head Eric Chu reached an uneasy agreement—notably, Hou was not present— to share candidates in some constituencies in order to get a majority in the Legislative Yuan. If this succeeds and Lai is elected, the coalition could block Lai’s initiatives, leading to gridlock, as indeed happened during Chen Shui-bian’s presidency. It would also encourage Beijing to court them, as it has done during previous DPP administrations. Since the DPP has been in power for eight years, it has a track record that its opposition and non-committed voters can criticize. Rural citizens interviewed by a Canadian researcher believe that the party has forgotten about them while urbanites complain about inflation and lack of affordable housing and point out that wages have remained stagnant despite healthy growth rates. The youth vote, which had previously been a mainstay of DPP strength, has shown signs of shifting to the TPP. Many, including supporters of the party, believe that a social justice program is badly needed. They accuse the DPP of positioning itself as a progressive party but not behaving like one, urging it to enact policies that meaningfully tax the rich and invest the money in green technology, infrastructure, and innovation. The opposition has said that a DPP victory would mean war with China. Chinese Efforts to Influence the Election Beijing’s least favorite candidate is surely Lai. Rather than overtly interfere, a strategy that backfired badly in the 1996 election, it has tried a mixture of sticks and carrots. Sticks include Chinese fighter jets so regularly crossing the median line in the Taiwan Strait that a new normal now exists, ominous warnings from high military figures, and covert attempts such as disinformation. Carrots include hosting youth delegations to visit China, and a plan to make Fujian province a zone for integrated development with Taiwan, including encouraging Taiwanese firms to list on Chinese stock exchanges and supporting innovative ways of cross-strait capital cooperation. Entry and exit visas for “Taiwan compatriots” are being eased. While such initiatives are above board, some others are not. In late October, Taiwan’s Ministry of Justice Investigation Bureau seized $354.6 million in illegal remittances to candidates regarded as sympathetic to China. Among the conduits were businesspeople, contributions to temple charity events, dummy accounts through unregistered banks, and cryptocurrency. It is difficult to tell how successful these tactics are, with anecdotal evidence indicating that while some people are intimidated by China’s threats, others respond negatively. Taiwanese are well aware of the fate of Hong Kong, where the party-state ruthlessly quashed civil liberties in contravention of the promises it was treaty-bound to honor and often used as a cautionary tale to those few who view unification more favorably. Unexpected Last-Minute Developments At the meeting to discuss cooperation on fielding candidates for the Legislative Yuan, Ko and Hou also discussed having one of them agree to become vice-president while the other would be the presidential nominee. Assuming—a big if—that most of the supporters of one would agree to vote with supporters of the other, they would comfortably beat Lai. The possibility of an alliance at the top was always risky: In addition to each man having a healthy ego that would make subordinating himself to the other difficult, Ko was on record as saying that the things he hates most are “mosquitoes, cockroaches and the KMT.” He founded the TPP as a counterweight to both KMT and DPP, attracting many supporters, particularly among the young, who were disenchanted with the two. While some of the young voters might accept an alliance, others would likely feel betrayed. Whether Ko or Hou would get top billing, they pledged to abide by the opinion polls on who was the stronger. After much discussion, the two settled on accepting six of the nine major polls, but then disagreed on who was ahead based on differing interpretations of the margins of error. Former president Ma Ying-jeou then stepped in to mediate, summoning Ko and Hou to his office on November 24, the deadline for filing for the election. Only Hou appeared, waiting several hours fruitlessly. Ko later agreed to meet at a hotel and even then arrived late as a gaggle of media waited impatiently outside. The result was a dramatic failure with the candidates sniping at each other live on the country’s television networks: They will run separately. The event even upstaged Terry Gou’s also dramatic departure wherein the typically flamboyant Gou announced that although he “might be forgotten by the people,” he had chosen to sacrifice himself for the greater good, showing his “utmost dedication to his homeland.” With barely five weeks before the election, analysts have scrutinized the newly announced vice-presidential picks of the remaining three candidates. Lai has chosen Hsiao Bi-khim, the highly regarded woman who has served as Taiwan’s de facto ambassador to Washington for the past several years. But whether and by how much the choice will increase Lai’s popularity remains to be seen. Beijing has denounced Hsiao as a “diehard secessionist” and says the decision could “mean war for Taiwan,” which could scare some voters. Asked about this at a television interview soon after her selection, Hsiao responded carefully, saying that all Taiwanese reject war and that any candidate “must approach [relations with China] with utmost responsibility.” Hou’s choice for vice-president, the avowed pro-unificationist media executive Jaw Shaw-kong, also has negatives as well as positives. Presumably chosen to appeal to the KMT’s conservative base, Jaw is apt to alienate more moderate KMT members and voters who fear unification. His more assertive personality and markedly different view of unification raise the possibility of friction between him and Hou. Kou’s vice-presidential pick, Cynthia Wu, is likewise problematic. With very little political experience, she has been an executive of a family-founded major life insurance company that has been fined for speculation and questionable land deals. This undercuts the TPP’s claim to be the party that represents the interests of the young and underprivileged. Meanwhile, polls show Lai’s lead over Hou shrinking to about one point, with Ko less than four points behind Hou. At this point, the election is too close to call. Expect the Unexpected? Should it have to live with Lai, Beijing’s least bad scenario would be a divided Legislative Yuan, which would enable it to work with the opposition, as it also has done with previous DPP-led administrations. Assuming, as is likely, that Lai can be trusted to keep his promise to continue his predecessor’s nonconfrontational policies, he is certainly Washington’s preferred candidate. But, as evidenced by the events of the past few weeks, Taiwan’s politics are full of surprises: Neither the United States nor China can be sure that the election will go in its preferred direction. Dealing with democracies is inherently uncertain, for both autocracies and other democratic countries.

AnnotationThe article is devoted to the analysis of Japan’s policy amidst growing competition between the United States and China in the Indo-Pacific region. It assesses the Japan’s place in US strategy to contain China in the economic and political spheres. Particular attention is paid to the events that took place in 2021, the first year of the Biden administration in the US.  The Biden administration, which came to the White House on January 20, 2021, immediately announced a course of rivalry with China. In his very first foreign policy speech, the 46th President of the United States called the PRC the most serious rival of the United States, declared his desire to rebuff "the growing ambitions of authoritarian China, challenging American leadership". The U.S. Interim National Security Strategy Guide, published in March 2021, called China “the only competitor with the potential to combine its economic, diplomatic, military, and technological might to mount a sustained challenge to a stable and open international system”. The Biden administration's course of confronting Beijing also included countering Chinese illegal trade practices, cybercrime, and countering Beijing's so-called coercive economic measures that undermine the competitive advantage of the American economy. At the same time, Joe Biden, unlike his predecessor D. Trump, who pursued a policy in the spirit of “America first”, promised to rely on allies and partners in the implementation of his international policy. The Interim Strategic National Security Guide of the United States called the American allies “the most important strategic resource”, allowing them to act as a united front against global and regional rivals, including China. The United States promised to reaffirm and strengthen its commitment to alliances in Europe and the Indo-Pacific region, and to encourage allies to develop their military and political capabilities to counter common current and future threats. Japan, the most important military and political ally of the United States in the Indo-Pacific region (ITR), supported Joe Biden's course of rivalry with China on a wide range of issues. At the same time, the growing competition between Washington and Beijing is challenging Tokyo's national interests, forcing it to revise the key parameters of its economic and foreign policy strategy and adapt it to changing international political conditions.Military-political sphereIn 2021, Japan began coordinating its PRC strategy with the new American administration. On March 16, Tokyo hosted the first meeting of the new heads of the US Foreign and Defense Departments — A. Blinken and L. Austin — with their Japanese counterparts, which took place in the 2+2 format. Following the meeting, the parties stated that China's activities in the political, economic, military and technological spheres pose a challenge to the Japan-US alliance and the entire world community when they do not comply with the existing international order. The ministers announced their determination to resist Beijing's actions if they put pressure on regional players or destabilize the situation, which undermines the "rules-based" international system. During Biden's first Japan-US summit in Washington on April 16, 2021, the parties expressed concern about China's behavior that violates international order, including the use of economic and other forms of coercion. In addition, J. Biden and Y. Suga spoke out against China's territorial claims in the South China Sea, and also expressed concern about the human rights situation in Hong Kong and the Xinjiang Uygur Autonomous Region of China. For the first time in 52 years (since 1969), the leaders of Japan and the United States mentioned the "Taiwan issue" in a joint statement: they declared the importance of peace and stability in the Taiwan Strait and expressed concern about the current situation around Taiwan. A desire was declared to develop cooperation between Washington and Tokyo on the basis of universal values and common principles. The parties also stressed the need for deterrence to maintain peace and stability in the region. At the same time, J. Biden and Y. Suga noted that it is important to have a frank dialogue with Beijing, directly express their concerns and work with it on topics of interest. The United States remains Japan's most important military and political partner, guaranteeing the security of the Japanese state from outside attacks. According to official Japanese government documents, the most serious security threat to Japan is the lack of transparency in the increase in the combat capability of the Chinese military. In addition, China's attempts to change the status quo in the East China and South China Seas pose a threat to Japan. There is particular concern about China's activity around the Senkaku Islands in the East China Sea, which threatens Japan's sovereignty over the islands. In addition, the development of the DPRK's nuclear and missile programs is considered a security threat to Japan. Tokyo is concerned about the significant progress made by Pyongyang in the development of a new type of ballistic missile. On these most sensitive issues, Tokyo is seeking guarantees from Washington to ensure its security. The growing confrontation between the US and China in the international military-political sphere poses new challenges to the alliance between Japan and the US. In the 2010s - early 2020s. with the active assistance of the Japanese government, military cooperation between Tokyo and Washington has expanded markedly. The change in the interpretation of the Constitution by the government of S. Abe in 2013 allowed Japan to apply the right to collective self-defense in limited cases. The Japanese Self-Defense Forces gained the ability to come to the aid of their allies in joint operations outside the Japanese islands. As a result, the scope of the Japanese-American alliance has expanded virtually to the whole world. The creation in 2015 of the Coordinating Mechanism between the armed forces of the two countries is aimed at strengthening cooperation between Tokyo and Washington in the military sphere. It was used to monitor the situation on the Korean Peninsula during the escalation of tensions in 2017. In addition, Japan increased the volume of purchases of American weapons, including F-35 aircraft, SM3 ballistic missile interceptors, RQ-4 Global Hawk long-range unmanned reconnaissance aircraft, Osprey convertiplanes, E-2D Advanced Hawkeye AWACS aircraft, etc. Tokyo's more active involvement in the confrontation between Washington and Beijing is supported by some American political experts. In recent years, there has been an increase in the number of publications substantiating the important role of Japan in the US strategy in the Indo-Pacific region. It is noted that during the years of D. Trump's presidency, the United States refused to participate in a number of global and regional multilateral initiatives, undermining its credibility as the leader of the liberal international order. At the same time, it was Japan that assumed the role of a conductor and defender of liberal values in the IPR. As S. Smith, senior fellow at the American Council on Foreign Affairs, notes, along with maintaining an unshakable commitment to an alliance with the United States, Japan has acquired a more prominent role in international coalitions in the ITR in recent years. This is evidenced by its participation in naval exercises with the United States, Australia, India, and others. Further involvement of Japan in the US-Chinese confrontation on the side of the United States will require Tokyo to build up its military potential and increase its defense budget, strengthen coordination between its three types of armed forces, between the armed forces of the United States and Japan, as well as the unification of their commands. Such changes in Japan's military sphere will require further modifications of its defense legislation, including a revision of the restrictions imposed by the anti-war Article 9 of the Constitution. Although part of the political elite, including members of the ruling Liberal Democratic Party and former Prime Ministers S. Abe and Y. Suga, advocates the need to revise the Constitution and further expand Japan's military capabilities, about half of the public still does not support this course and adheres to pacifist views. In the short term, radical changes in Japan are unlikely, which will impose restrictions on Japanese-American cooperation in the military sphere. As for relations between Japan and China, during the period of D. Trump's administration in the United States, there was limited convergence on economic and political issues between Tokyo and Beijing in 2017-2019. The visit of Prime Minister S. Abe to Beijing in 2018 gave an impetus to the expansion of economic interaction between the two largest Asian economies. China and Japan signed 52 agreements totaling about $18 billion, announced plans to cooperate in third countries in the field of infrastructure construction, agreed to cooperate in the field of innovation development and intellectual property protection, renewed a $30.4 billion currency swap agreement, expressed the need to jointly develop free trade regimes in the region. Tokyo and Beijing have taken steps towards each other in the field of regulating tension in the East China Sea. The parties reaffirmed their long-standing intention to turn the East China Sea into a "sea of peace, cooperation and friendship" and agreed to prevent the emergence of dangerous situations at sea and in the air. On December 28, 2021, Japan and China again announced their intention to open a “hot line” between military departments to monitor the situation in the East China Sea around the Senkaku Islands, the sovereignty over which is disputed by Beijing. In the military-political sphere, serious contradictions remain between Japan and the PRC, including the territorial dispute, the problem of historical memory, as well as competition for influence in the IPR. At the same time, Tokyo maintains channels of communication with Beijing and its own agenda of bilateral relations. According to R. Sahashi, a Tokyo University researcher, Japan's task in its relations with China since establishing diplomatic relations in the 1970s has been to involve China in the international political order through the development of bilateral economic relations while maintaining its alliance with the United States. Japan's response to the current intensification of confrontation between the United States and China has been to increase cooperation with the United States in the military-political sphere and in the field of economic security, as well as the development of interaction with countries that share views with Tokyo on a preferred international order while maintaining diplomatic relations with China. Japan's long-term interest lies in the creation in the IPR of certain institutions in the field of economy, politics and security, which should lead to the formation of an order based on universal values.Trade and economic sphereIn 2021, the policy of the Joe Biden administration in the trade and economic sphere in the Indo-Pacific region was in the process of formation. Many of D. Trump's measures, primarily in relation to China, have retained their effect. A number of new initiatives were proposed to restore the US position in the IPR, lost during the years of the previous administration. With respect to the PRC, Washington upheld the tariffs imposed by Trump on imports of Chinese products worth about $370 billion (on 75% of exports of Chinese manufacturers to the United States). In addition, sanctions remain against high-tech Chinese companies ZTE and Huawei. In response to US restrictive measures, China imposed 25% tariffs on $110 billion of US imports in 2018. The trade dispute between the United States and China, the active phase of which fell on 2018-2019, led to the signing by the parties on January 16, 2020 of the so-called first phase of the trade agreement. It assumed an increase in Beijing's purchases of American products in 2020-2021. by $200 billion compared to 2017. It also committed China to make progress in enforcing intellectual property rights, remove non-tariff barriers to agricultural imports, and liberalize its financial services sector. The Biden administration continued to insist that China fulfill the terms of the first phase of the bilateral agreement. In October 2021, the new US Trade Representative K. Tai announced her intention to continue consultations with the Chinese side on trade and economic issues, as well as to raise issues such as subsidizing by the PRC government of certain sectors of the economy and special measures to support state-owned enterprises, which Washington is considering in as Beijing's "non-market trading practices". The trade dispute between the United States and China has led to a slowdown in the global economy and world trade, a decline in business confidence and increased uncertainty about future developments. Japan's trade volume in 2019 also decreased by 5% compared to 2018. Japanese exports to China fell by 7%, imports decreased by 3%. China remains Japan's largest trading partner: China's share in Japanese trade in 2018-2019 was 22%, and at the end of 2020 it increased to 24%, while the share of the USA was at the level of 15%. The trade dispute between Washington and Beijing had a negative impact on the economic performance of Japanese multinational corporations (TNCs) with Chinese subsidiaries. Since the US imposed tariffs on Chinese products in 2018, there has been a decline in sales from Chinese affiliates of Japanese TNCs trading with North American countries. Declines in the value of shares on the exchange (Nikkei 225 Index) were recorded for Japanese TNCs, whose operations are related to trade between the US and China. The share price of TNCs, whose Chinese subsidiaries had a higher share of imports from Japan, fell most noticeably. This is because, as sales to the US fell, the volume and value of imports from Japan also fell, resulting in a decline in the share price. To avoid an increase in the negative effect of the trade war, some Japanese corporations were forced to transfer production. So, Mitsubishi Electric in 2018-2019 moved part of the production of semiconductors and equipment for customers from the United States to Japan. Other companies have increased the capacity of their plants in North America and Southeast Asia. Electric motor maker Nidec Corporation moved production to Mexico in October 2018, Ricoh moved printer production to Thailand, and Sharp moved some laptop production from China to Vietnam. Washington’s course to confront Beijing in the economic and technological spheres in 2021 was supplemented by an initiative aimed at reducing the dependence of the US economy on high-tech products made in China and reformatting existing supply chains with the possible exclusion of China from them. In February 2021, Washington announced its intention to encourage the transfer of production of critical products from China to the United States and allied countries, including Japan, South Korea, Taiwan, Australia, and India. At the same time, special attention in the United States is paid to the production of semiconductors, an industry that is one of the key drivers of global economic growth. The semiconductor shortage in 2021 exposed the vulnerability of existing supply chains and undermined the global production of cars, computers and electronics. On June 8, 2021, the U.S. Senate passed the Innovation and Competition Act, which provides $250 billion for the development of the semiconductor, quantum computing, and artificial intelligence industries. 52 billion of them is planned to be directed to expanding the production of semiconductors in the United States. The purpose of this bill is to increase the competitiveness of the United States in the technological competition with China, where as part of the "Made in China 2025" strategy, the amount of state support for semiconductor-producing companies is stated to be 1.4 trillion dollars. The Japanese government is also taking steps to reduce dependence on China. According to Japanese expert A. Furuse, Tokyo realized the need to diversify its supply chains as early as 2010 after the escalation of tensions around the Senkaku Islands in the East China Sea caused interruptions in the supply of rare earth metals to Japan from China. Today, when the whole world is facing supply disruptions, the importance of cooperation between allies and partners in high-tech industries is increasing. Partner countries will be able to reduce the risks of dependence on China, share the financial burden on research and development, and take their industrial cooperation to a new level. On June 4, 2021, the Government of Japan released the "Semiconductor and Digital Industries Strategy" covering activities in three sectors: semiconductors, digital infrastructure, and digital industry. It states that ensuring the security of production and supply of semiconductors is an issue directly related to economic security in the face of technological competition between the United States and China. To this end, Japan will promote joint development with advanced foreign manufacturers. Another document released by Japan's Ministry of Economy, Trade and Industry on June 29, 2021 said that with the rivalry between the US and China intensifying, Japan should diversify its suppliers and cooperate with the US and other countries to protect supply chains. It also emphasizes the need to take measures to prevent the leakage of sensitive technologies from Japan. Another important issue is the prospects for the participation of the US and China in multilateral trade formats in the ITR. Now China's share of international trade in the region far exceeds that of the United States. On November 15, 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed and entered into force on January 1, 2022 for ten countries (Australia, Brunei, Cambodia, China, Japan, Laos, New Zealand, Singapore, Thailand and Vietnam). In the absence of India, which pulled out of negotiations in early 2020, China is taking the lead in this world's largest free trade zone, covering 30% of the world's population. After the United States withdrew from the Trans-Pacific Partnership (TPP) in 2017, the remaining 11 countries participating in the negotiations entered into a new agreement called the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP). Japan, after the withdrawal of the United States, took the place of the leader of the association and thereby guaranteed itself participation in the formation of rules and norms for conducting trade and economic activities in the region. In September 2021, China applied to join the CPTPP. Although many are skeptical about the prospects of China's participation in the CPTPP, China's share in the trade of all its members already exceeds that of the United States. The accession of the United States to the CPTPP in the near future is also unlikely, primarily for domestic political reasons. Nevertheless, in 2021, the Biden administration made an attempt to return to the discussion of trade and economic issues in the IPR on a multilateral basis. Speaking at the East Asia Summit (EAS) on October 27, 2021, which was held online, Biden announced the initiative to create the Indo-Pacific economic framework. According to him, its activities will be aimed at facilitating trade procedures, setting standards for the digital economy and technologies, strengthening the sustainability of supply chains, decarbonization and development of clean energy, infrastructure development, improving labor standards, and so on. But this initiative, unlike multilateral free trade agreements, will not be binding, it does not include trade and investment liberalization goals, and it does not guarantee preferences in the attractive US market. These circumstances will reduce the value of the American proposal for the IPR countries in comparison with the already existing multilateral formats. Washington's unwillingness to participate in free trade agreements in the IPR reduces the involvement and influence of the United States in the rules and norms of trade and economic activity being developed here. In turn, Beijing, the leading trading partner of most regional economies, during the 2010s put in significant efforts in creating its own international institutions designed to strengthen the influence of the PRC on international economic relations and at the same time increase independence from external rules and norms. Under these conditions, Japan sees its task as the formation of a multifaceted trade and economic system with unified rules and norms in the ITR, which will be able to not only balance China's growing influence but also create a liberal economic order that both China and the United States will be forced to reckon with. Thus, Japan hopes that its multilateral trade policy will be able to limit the unilateral actions of Beijing and Washington and reduce the potential negative effects of the trade war between China and the United States on the national and global economy.

Japanese Prime Minister Fumio Kishida and his Liberal Democratic Party (LDP) are facing one of the worst financial scandals in decades, resulting in growing public distrust of the party and threatening the stability of his government. The Kishida government, which took office in October 2021, was already facing headwinds as its cabinet’s popularity declined due to concerns about the economy, social security and the LDP’s links to the Unification Church. The assassination of former prime minister Shinzo Abe in 2022 during an election campaign further complicates matters. The assailant claimed that Abe supported the Unification Church, which he said caused his family’s bankruptcy and forced his mother into making donations. Many other LDP parliamentarians are known supporters of the Church. Kishida and the LDP are yet to be transparent about this issue. Despite falling popularity, the LDP’s approval ratings hovered in the 30s between October and November 2023. Analysts suggested that, despite his low popularity, Kishida would continue and that there were no imminent threats to his prime ministership. That scenario changed dramatically at the close of November 2023. One poll suggests that Kishida’s cabinet approval rate has plummeted to 17 per cent, marking the lowest prime ministerial approval rating since the LDP regained power in 2012. The drop in popularity occurred after it was revealed that LDP factions and the individual parliamentarians associated with them had failed to report all revenues from ticket sales at fundraising events. The slush fund, estimated to be millions of dollars, was used for political purposes, violating the Public Funds Control Law. The Public Prosecutors Office has launched investigations into the LDP’s largest and most influential faction, the Seiwakai, commonly referred to as the Abe faction. Reports suggest that four other major factions, including the one led by Kishida, might also be implicated. Kishida has replaced four key cabinet ministers from the Abe faction. The position of Chief Cabinet Secretary — which serves as the face of the government — has gone to Yoshimasa Hayashi. Kishida had removed Hayashi from his position as foreign minister and, facing difficulty in persuading other colleagues to assume the Chief Cabinet Secretary position, Kishida opted for Hayashi, a member of his own faction. The other three ministerial positions went to factions led by Taro Aso, Toshimitsu Motegi and Hiroshi Moriyama. The cabinet reshuffle does not address the core problem — money politics. Money politics remains endemic in Japan’s political system, despite past reforms. In the 1970s, former prime minister Kakuei Tanaka resigned due to a bribery scandal. Following Tanaka’s resignation, the LDP sought to regain public trust by turning to ‘Mr Clean’, former prime minister Takeo Miki. But it was not long before another large-scale financial scandal — the Recruit Scandal — emerged in the late 1980s. The scandal led to former prime minister Noboru Takeshita’s resignation, his secretary’s suicide and the resignation of many high-profile politicians. Takeshita’s successor, former prime minister Sosuke Uno, resigned within months following revelations of sexual misconduct. Amid the scandals, the LDP called in another Mr Clean, former prime minister Toshiki Kaifu. But the LDP’s troubles persisted. The 1993 Sagawa Kyubin financial scandal resulted in the arrest and subsequent imprisonment of LDP ‘strongman’ Shin Kanemaru on tax evasion charges. These scandals ultimately led to the LDP’s electoral defeat in 1993, marking what was supposed to be a new era in Japanese politics. But opposition parties have struggled to win government and sustain it. The LDP regained power within two years of its 1993 defeat. Similarly, the LDP returned to government within three years by defeating the Democratic Party of Japan in 2012. Even during the Abe administration, reports of financial scandals emerged. But Abe’s strong popularity allowed him to survive. The current fundraising scandal and its scale are still unfolding. More resignations are likely. Many details regarding the unlawful accumulation of political funds remain unknown. The Public Prosecutors Office may shed light on the scandal after its investigation. Regardless of the outcome of the investigation, Kishida’s position appears untenable. Though not directly implicated like Tanaka, Takeshita and Uno in the past, the public expects Kishida, as President of the LDP, to own up to the rot in the party and step down. Despite the reshuffle of his cabinet and his statement committing to spearhead reforms in the LDP, it will be a political miracle if he survives this scandal ahead of the LDP presidential election in September 2024. The LDP and its Prime Minister face a choice. They can follow the same path as their predecessors by temporarily presenting a ‘clean’ face and then reverting back to business as usual. Alternatively, the new generation of LDP politicians can challenge the established path and set a different course for the party, one that is policy-focused, transparent, less factional and not hereditary. But it remains uncertain whether the new generation of LDP politicians is inclined to take on this challenge. The opposition parties remain weak, fragmented and unable to replace the LDP. Yet they play a crucial role in keeping the LDP government accountable. Without the Japanese Communist Party’s scrutiny, the present fundraising scandal might never have come to light.

The meeting of Russian President Vladimir Putin and Chinese leader Xi Jinping in Moscow helped both give the impression of a united front, but underlying tensions were also discernible. What did the summit achieve for each side?With the pomp of a state visit, Russian President Vladimir Putin and Chinese leader Xi Jinping shined a spotlight on their ­growing strategic alignment, which is aimed at upending the U.S.-led, rules-based international order in favor of a multipolar world. Long on symbolism, short on concrete substance, the summit nevertheless served both leaders’ purposes. Putin welcomed the demonstration that Russia was not, and could not be, isolated on the world stage, as it deepened relations with one of the world’s two superpowers. By showcasing burgeoning commercial ties and unveiling plans to expand them, Putin conveyed confidence that Russia can remain resilient in the face of harsh Western sanctions.      Meanwhile, Xi’s decision to make Moscow his first foreign visit of his third term as president underscored his strong commitment to Russia and to Putin personally. He used the summit to underscore China’s determination to pursue its national interests in defiance of mounting U.S. economic and diplomatic pressure—making the point that China will not abandon its strategic partner in pushing back against U.S. pretensions to global leadership. That was a crucial message for his increasingly nationalistic domestic audience, as well as for the Global South, where the U.S.-led liberal order is under stress. At the same time, Xi subtly let it be known that China is the dominant partner. Putin had little choice but to accept Xi’s proposal that Russia use the yuan, not the ruble, in trade with the Global South to diminish the role of the U.S. dollar in world trade. Xi also gratuitously endorsed Putin for reelection in 2024, even though the Russian president has not declared his intention to run. And at the joint press availability at the end of the summit, Xi was much more restrained in his description of bilateral relations than was Putin, who was eager to lay out all the areas in which the two countries would enhance cooperation in the years ahead. That left the clear impression that Russia needed China much more than China needed Russia.What does the summit mean for the war in Ukraine?Nothing at the summit suggested that the underlying dynamic in the war was about to change. As expected, Beijing continued to provide Moscow with strong diplomatic support, echoing the latter’s narrative blaming the North Atlantic Treaty Organization (NATO) for the conflict. Despite Washington’s fears, however, Xi gave no indication that China was ready to provide lethal military aid that might radically improve Russia’s chances on the battlefield. Putin noted that China’s recently released 12-point peace plan could serve as a basis for negotiations, but neither he nor Xi suggested any practical steps that might give substance to what is largely a list of bromides about respecting sovereignty, avoiding escalation, and seeking a diplomatic solution. The reality is that China benefits from the military stalemate. Russia’s aggression distracts U.S. attention and resources from the Indo-Pacific region, while Western sanctions compel Russia to turn to China as an economic lifeline. China exploits Russia’s predicament to gain access to critical natural resources, especially oil and gas, at discounted prices.  In line with this calculus, Xi provided Putin with sufficient moral and material support so that he could continue the fight, but much less than needed to give Russia the advantage. At the same time, the Chinese continued to drive hard commercial bargains. Notably, no deal was announced to build a second Power of Siberia gas pipeline, which Putin has described as “the deal of the century.” Rather, it was simply noted that further details needed to be negotiated, as China explores alternatives.What does it reveal about the underlying tensions between China and Russia?Except for a brief period after the Communist takeover of China in 1949, China and Russia have been rivals, not partners. Until the end of the Cold War, Russia was by far the superior power.   The dynamic changed dramatically after 1991. Then, the two countries’ economies were roughly the same size. Now, China’s economy is ten times larger, and the gap continues to widen.  Moreover, China now casts a much larger shadow on the global stage: it has overtaken Russia in the development of advanced technology and its conventional military is comparable to Russia’s, even as it is moving toward nuclear parity with both Russia and the United States. What once could have been seen as a roughly equal partnership has evolved to the point where Russia is decidedly the junior partner. Despite the rhetoric of comprehensive partnership and avowals from Putin and Xi that relations have never been better, this asymmetry in power and ambition is in itself a source of friction, in addition to the civilizational clashes, racial prejudices, territorial grievances, and geopolitical competition that have strained relations in the past. But these sources of tension are currently far outweighed by the shared challenge from the United States. Washington’s current policy of dual containment only reinforces their strategic alignment and pushes the tensions further into the background.

It aims to signal its diplomatic ascendance and challenge Washington as the big shaper of outcomes. Late last month, Chinese President Xi Jinping finally made that much hoped-for call to Ukraine’s President Volodymr Zelensky and informed the world that his nation “always stood on the side of peace.” This was the first outreach by Beijing to Ukraine since  the latter’s invasion by Russia last February, and Zelensky was keen on this engagement, especially after Xi’s visit to Moscow in March. Ukraine views China as an important interlocutor that can engage with Russia and seems to have been encouraged by the “long and meaningful” phone call between the two leaders that in its view would “give a powerful impetus to the development of our bilateral relations.” Last week, Ukraine’s finance minister also suggested that Kyiv should use its bilateral relationship with China as leverage to bring an end to Russia’s full-scale invasion, though he refused to consider China as a friend. The Chinese President has been reported as saying that China, “as a responsible majority country,” would “neither watch the fire from the other side, nor add fuel to the fire, let alone take advantage of the crisis to profit.” But there was no suggestion that Beijing would be doing anything meaningful going forward. The call and associated choreography had more to do with positioning China as a global power that is willing to engage in resolving problems, as opposed to the US that is creating more trouble by continuing to support Ukraine and prolonging the war. China has already laid out its cards on the table when it comes to the Ukraine crisis. It had released a 12-point position paper on the political settlement of the Ukraine crisis earlier this February. In an attempt to present itself as a neutral peace broker, Beijing has enunciated a few standard principles, including respect for the sovereignty of all countries, resumption of peace talks, keeping industrial and supply chains stable and opposition to unilateral sanctions  as well as the use of nuclear weapons. Taking this forward, China has decided to send special representatives to Ukraine and hold talks with all parties in an attempt at peace-making. But beyond these principles, China’s credentials are hardly supportive of a larger role as a peace-maker, as it has long refused to view its ties with Ukraine and Russia at the same level. Russia has shown no inclination to step back from its aggression and Ukraine is seemingly preparing to launch a large-scale counter-offensive against Russian forces in a bid to retake territory in the east and south for which it has been preparing for months now. While Moscow has given no indication of backing down, perhaps assuming that it has time on its side and waiting for the Western consensus on backing Ukraine to collapse, Ukrainian forces feel that the weaponry delivered by the West over the past few months is likely to give them the momentum needed to shape battlefield realities in their favour. China is also unlikely to be viewed as an honest broker, given its ties with Russia that are increasingly becoming tighter. And despite repeated statements that the “sovereignty, independence and territorial integrity of all  countries must be effectively upheld,” Beijing has not only refused to acknowledge Russia’s violation of Ukrainian sovereignty, but has continued to privilege its partnership with Moscow. Though Xi’s visit to Moscow in March did not result in any concrete help to Russia, it did signal to the West that  the China-Russia entente can shape the global balance of power in ways that can be deleterious to Western interests. More than anything else, Chinese posturing in the Ukraine conflict is aimed at the West. In its position paper, Beijing talks about the need to abandon a “Cold War mentality” and argues that “the legitimate security interests and concerns of all countries must be taken seriously and addressed properly,” making it clear that it largely agrees with Moscow’s perspective that it was the West that created the conditions for this war with the expansion of the North Atlantic Treaty Organization (Nato). China has also been critical of Western sanctions on Russia, arguing that “relevant countries should stop abusing unilateral sanctions and ‘long-arm jurisdiction’ against other countries, so as to do their share in de-escalating the Ukraine crisis.” Both of these issues are germane for the long-term trajectory of China’s role on the global stage amid deepening tensions with the US. For China, clearly, this crisis is more about itself than it is about Russia. As China comes out of its covid- induced isolation, it would like to have a stable international environment for a sustained economic recovery. But it is also using an opportunity to emerge as a key global interlocutor by venturing into diplomatic arenas it has been shy of in the past, taking advantage of the West’s recent inward orientation. This effort was exemplified by its attempt to bring Iran and Saudi Arabia together in the highly volatile Middle East. China’s attempt at emerging as a global peace-maker is about presenting a diplomatic challenge to the US on the global stage. Beijing may not have much of an impact on the eventual outcome of the Ukraine crisis, but it is signalling that it is no longer shy of showcasing its growing diplomatic heft.

In order to ‘walk, chew gum, and play chess’ at the same time, the US will have to both invest at home and sign more trade deals. A speech late last month by Jake Sullivan, President Biden’s national security adviser, on “Renewing American Economic Leadership” clarified that the administration wants to build resilience to “de-risk” from China. But dealing with Beijing will require more than investing at home. Washington also needs to re-engage in negotiations with China to manage difficulties in the bilateral relationship. And to better compete, the United States should get back into the business of signing trade deals. As Trade Representative Katherine Tai quipped during her 2021 confirmation hearing, the United States can “walk, chew gum, and play chess” at the same time. The Biden administration should not only invest in domestic resilience, but also participate in new trade agreements and negotiate directly with Beijing. Over the past two years, China joined the Regional Comprehensive Economic Partnership (RCEP), began acceding to the Digital Economy Partnership Agreement (DEPA), and applied to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). China’s integration into these new frameworks will create efficiencies in its own economy, while binding Beijing closer to the rest of Asia. Meanwhile, the United States does not expect to see the first “real outcomes” from the Indo-Pacific Economic Framework (IPEF) until the end of 2023, more than one year after its announcement. IPEF, moreover, lacks the market-access agreements characteristic of other, more substantive economic agreements. It is not surprising, then, that the 2023 Lowy Institute Asia Power Index ranks China 100 out of 100 on its “economic diplomacy” index, while the United States receives a ranking of only 34.6. The 2023 State of Southeast Asia survey similarly shows that only 21.9 percent of respondents view the United States as a leader in championing free trade, down from 30.1 percent in 2022. To be fair, Beijing has significant ground to cover before its markets become as free and as open as those in the United States. What many trade partners care about, however, is not where China and the United States have been, but where they are going. To many, it appears as if Washington is turning inward while Beijing continues to open its markets. This leads to the second error in Jake Sullivan’s “new consensus” on international economic policy. He expresses fatalism about China’s economic trajectory without giving credence to the possibility that China may change, or that the United States can play a role in influencing Beijing’s behavior. Sullivan explains, when “President Biden came into office, we had to contend with the reality that a large non-market economy had been integrated into the international economic order in a way that posed considerable challenges.” In response, Sullivan focuses on building domestic “resilience” and “capacity” to reduce America’s dependence on China. Washington appears to have given up on addressing the non-market practices contributing to U.S. dependence on China in the first place, including state subsidies and dumping. The administration also seems to have forgotten that access to low-priced imports is an important factor in the competitiveness of U.S. firms and the standard of living of American consumers. Fatalism about China’s trajectory tracks with the Biden administration’s overall Indo-Pacific Strategy, which does not seek to “change the PRC but to shape the strategic environment in which it operates.” Fortunately, Treasury Secretary Janet Yellen has bucked the trend by stating that she hopes to “engage” with Beijing “in an important and substantive dialogue on economic issues.” Not trying to influence Beijing, on the other hand, would give up an essential element of any effective China policy. Of course, prior negotiations were by no means unqualified successes. The Trump administration’s “phase one” trade deal largely failed to change Beijing’s behavior, in part, because the bilateral purchase agreements effectively, as Yukon Huang and Jeremy Smith of the Carnegie  Endowment for International Peace put it, “prescribed state-managed trade over market forces.” Other negotiations, however, have seen more success. Former Treasury Secretary Hank Paulson was able to persuade Beijing to revalue its currency by more than 20 percent in the late 2000s, helping to level the trade relationship. China’s WTO accession negotiations also moved the needle on the country’s economic policy. While Beijing failed to carry out many of its WTO commitments, China did reform key aspects of its economy and, notably, slashed its average tariff level from 15.3 percent in 2001 to 9.8 percent over the next decade. U.S. policymakers should learn the lessons of past negotiations rather than standing by as U.S.-China economic relations deteriorate further. One way to pressure Beijing to continue along the path of reform and opening up would be to carry out negotiations in concert with U.S. friends and allies. The Trump administration gave up significant leverage by dealing with Beijing bilaterally, outside the parameters of the international trade system. Plurilateral negotiations with U.S. partners — many of whom share U.S. grievances — may be more effective at convincing China to change course. The consequences of not having an effective economic dialogue with Beijing will become more apparent over time. Despite Washington’s wishes, China is simply not going away. Beijing will continue to join new trade agreements and integrate itself deeper into the global economy, even as the United States focuses on building resilience at home.

A week-long trip to Beijing by the Pacific’s most flamboyant statesman Manasseh Sogavare, was always going to cause concern in Canberra. The substance of the visit was as expected. The relationship between China and the Solomon Islands was upgraded to a “comprehensive strategic partnership” (on par with Papua New Guinea, the first Pacific nation to sign up to the Belt and Road Initiative). Nine agreements were also signed covering everything from civil aviation and infrastructure to fisheries and tourism. The Chinese premier, Li Qiang, who inked the deals with Sogavare, made a point of not mentioning the controversial policing cooperation agreement, the draft of which was leaked more than a year ago to New Zealand academic Anna Powles. Despite repeated calls from Australia and New Zealand to release the text of the policing agreement, there is no indication the Chinese or the Solomon Islands leadership will do so. There were also moments of theatre in Sogavare’s trip. The prime minister declared “I’m back home” when he arrived in Beijing in a clip posted by China Global Television Network. He then said in a longer interview on the same network that his nation had been “on the wrong side of history” for the 36 years it recognised Taiwan instead of the People’s Republic of China, and lauded President Xi Jinping as a “great man”. Sogavare saved his biggest serve for his return to the Solomon Islands, though. He accused Australia and New Zealand of withdrawing crucial budget support and hinted he would look to China to fulfil his ambitions to establish an armed forces, should Australia be unwilling to help.China’s slow start in the PacificSome key questions have been overlooked this week in the pantomime about what Australia should or shouldn’t do to shore up its relationship with an important Pacific partner. (We could start by accepting that Sogavare will never love us, and avoid getting into an arms race in the Solomon Islands with China.) What’s been somewhat lost, though, is how China has made inroads so quickly in a region that it still officially classifies as “peripheral”. China has certainly had to work harder to gain a foothold in the region. Relative to other regions, it has a lack of historical state ties with the Pacific. In Africa and Southeast Asia, China can draw on memories of shared anti-colonial struggles and aid projects like the Tanzam railway. In the Pacific, the Chinese Communist Party is a latecomer. Also holding it back is the remoteness and small population of the region. This has not made the Pacific a good fit for China’s Belt and Road Initiative, which has flourished in countries with rapid transport and communication links, substantial Chinese diasporas and leaders who are easily reached. Most of China’s own Pacific experts were baffled when the region was belatedly included in the project. Yet despite these obstacles, it’s clear the Chinese state’s approach in the Pacific has shifted, most remarkably in its diplomacy and the role state-linked companies are expected to play. Diplomats with serious intent China’s wolf warrior diplomacy has received plenty of attention, but the picture in the Pacific is less straightforward. The recently appointed special envoy to the Pacific, Qian Bo, undoubtedly styles himself as a wolf warrior. Under his tenure as Fijian ambassador, a Taiwanese representative was assaulted by Chinese diplomats for the crime of displaying a Taiwanese flag cake. Yet, other appointments suggest China is appointing higher-calibre diplomats to the region. These include Li Ming, the current ambassador to the Solomon Islands, and Xue Bing, the former ambassador to Papua New Guinea who now holds the challenging post of special envoy to the Horn of Africa. With experience in the region and good language skills, these diplomats have been more able to engage with Pacific communities than their predecessors, who largely focused on sending good news back to Beijing. More serious representatives suggest more serious intent.Chinese companies exerting influence, tooChina’s state-linked companies remain the driving force behind China’s engagement with the Pacific. Unlike the embassies, they are well-resourced and have skin in the game. Many company men (in construction, where Chinese companies dominate, they’re mostly men) are based in the region for decades, developing a deep understanding of how to win projects and influence political elites. Failed projects generate plenty of headlines, but many companies – such as COVEC PNG and China Railway First Group – are effective operators. They are building infrastructure cheaply in the Pacific and winning the favour of multilateral donors, particularly the Asian Development Bank. For larger state-linked companies, like China Harbor Engineering Company and the China Civil Engineering Construction Corporation (CCECC), the geopolitical game has shifted. In the past, they could rely on their standing within the Chinese political system (their parent companies often outrank the Ministry of Foreign Affairs) to resist pressure to act on behalf of state. Now, they are expected to carry geopolitical water for Beijing. Often this can benefit the companies. For instance, when CCECC lobbied the Solomon Islands leadership to switch their allegiance from Taiwan to the People’s Republic of China, it helped the company when it came to bidding for projects for the Pacific Games in Honiara. The leaders of these companies realise it can harm their image when they are seen as Beijing’s pawns. Yet, the companies, diplomats and Pacific leaders who choose Beijing’s embrace know times have changed. China is now a serious player in the region with a development philosophy to sell. It’s no longer enough to read Beijing’s talking points. You have to look like you mean it.

With US-China rivalry and concerns over the long-term viability of the BRI growing, the third Belt and Road Forum will have much to manoeuvre should it take place this year  In July this year, total investments under China’s Belt and Road Initiative (BRI) crossed a significant landmark of US$1 trillion. The release of BRI data for the first half of 2023 was accompanied by reports that the third BRI forum is being planned to be held in China at the end of 2023. With the stature of being the highest-level gathering of participating countries, the forum is meant to showcase a collaborative approach towards implementation of the BRI, in addition to highlighting progress made and changes planned in its overall direction. The next forum will be the first in the post-pandemic period, after a gap of nearly four-and-a-half years. The road travelled The BRI rapidly gained momentum after its launch in 2013 (initially launched under the title One Belt One Road, which was changed to BRI in 2015 to stress collaboration and inclusivity). There was a sharp increase in the number of projects announced, total investments committed and executed, and the number of countries joining as partners (with the current number at over 150). The geographical scope of BRI also expanded significantly, transforming it from a regional to a near-global initiative, in both of its components—the continental Silk Road Economic Belt, and the maritime Silk Road. China stressed that BRI was a new model for partnership, trade and integration that was free from hegemonic pressures and conditions. In the second half of its decade-old existence, China started to highlight that the principles of multilateralism, environment and sustainability were embedded in the BRI. The importance of BRI for China has been such that it was included in the Chinese Communist Party’s (CCP) constitution in 2017 and in China’s 14th Five-Year Plan issued in 2021. Before the world was struck by the COVID-19 pandemic, the BRI appeared to be moving at a rapid pace, although numerous problems associated with it had already become evident. Headwinds for BRI  The BRI faced criticism for its underlying objectives of gaining strategic influence through developmental footprint, leveraging assistance for basing and access rights, aggressively linking different regions with Sino-centric value chains, inadequate attention to local needs, lack of transparency, disregard for sovereignty, adverse environmental impact, corruption, and lack of sound financial oversight. In some cases, like the port project in Sri Lanka and the rail project in Kenya, the utilisation and revenues turned out to be well below the initial estimates. The term ‘debt diplomacy’ became popular in reference to the BRI after cases of high debt risk in some partner countries, including Pakistan, Laos, Sri Lanka, Zambia, and Mongolia, became increasingly evident. In some cases, China provided additional lending, while in others, it offered currency swap lines for debt restructuring. Notwithstanding, negative perceptions about the BRI expanded slowly, with some partner countries becoming less enthusiastic about these projects, resulting in a changed stance. New connectivity and infrastructure projects launched by the United States (US), the European Union (EU), the G7, Japan, Australia, India, and others took time to gain cohesion and substance, and have started to take concrete shape post-pandemic. Partnership for Global Infrastructure and Investment (G7), the Global Gateway (EU), the Quality Infrastructure Investment Programme (Japan), and other such initiatives now offer alternatives to the BRI with different structures and processes. These and many linked initiatives have added to the challenges for the BRI, though their ability to rival the BRI in scale is yet to be established. The recent slowing down of the Chinese economy presents another key challenge to the BRI. In the face of high unemployment, a sticky consumer demand, lower trade and growth data, and concerns about the financial health of some big companies, China is being forced to look inwards.  This is also important from the point of view of the stated Chinese strategy of ‘dual circulation’, which links the domestic economy with external trade and investment. In the initial phase, China funded overseas projects under BRI through its policy banks, the China Development Bank, the Export-Import Bank of China, and specialised investment funds having the participation of public and private financing institutions. It adopted a new model of leveraging its foreign exchange reserves (currently at about US$3.2 trillion) to capitalise its state banks and sovereign funds. It subsequently diversified into other financing channels that include equity investment funds, sovereign development funds, private equity (PE) funds, and joint (with local investors) investment funds. As of October 2020, more than 70 percent of commitments undertaken by the Silk Road Fund were in the form of equity, with a medium- to long-term investment horizon akin to a PE firm. The capacity of many of these channels is linked with sustained economic growth and the overall health of the financial and banking sector. With very high levels of debt—some estimates suggest that the overall debt of China has crossed 300 percent of GDP—and new reports of bad loans, the BRI investments are likely to see increased scrutiny and lower risk appetite.  The BRI Forum The Belt and Road Forum for International Cooperation (BRF) was started by China as a platform for collaboration and networking that would periodically review the broad direction of the BRI, finalise its action agenda, and announce new frameworks and agreements. The first BRF was held in May 2017, and was attended by 29 heads of state, delegates from 30 countries, and representatives from 70 international organisations. The focus was to showcase cooperation and consultation. The Chinese President announced that China would allocate more resources and financial support, and several new agreements and projects were unveiled. The UN Secretary-General, addressing the first forum, praised the BRI as “rooted in a shared vision for global development” and linked it with the UN Sustainable Development Goals 2030. By all accounts, the first BRF was highly successful. The second BRF was held in April 2019 and attended by 37 heads of state, a higher number than the first BRF. However, the geopolitical environment had changed significantly, with the US having labelled China as a “revisionist power” and the EU having labelled it as a “systemic rival”. The trade and tariff friction between the US and China had started to evolve, and criticism of BRI projects—including on aspects related to financial terms, debt, local participation, and adverse environmental impacts—had started to grow. Accordingly, the second BRF emphasised consultative mechanisms, high quality and environmental standards, clean and green projects, and improved financial management. A debt sustainability framework, zero tolerance for corruption, and several documents outlining some key principles and deliverables were released. In addition to keeping up the momentum, the focus was also on image makeovers in response to various criticisms. China conveyed that the BRI was adaptive, and the broader assessments in different countries concluded that the BRI was here to stay for a long time. The Third BRI Forum amid a critical phase  The geopolitical and geo-economic shifts between the first two BRFs pale in comparison to those between the second and the anticipated third BRF. With the downward spiral in US-China ties and the unfolding strategic competition, the deterioration in the security environment, the precarious global trade and economic situation, the emergence of new partnerships and alliances, the focus on resilience related to technology and supply chains, and the new emphasis on ‘trust’, the third BRF faces a formidable challenge to reposition the BRI. The BRI itself has been facing some major headwinds, which have been exacerbated by China’s domestic economic problems. As 60 percent of China’s loans are in countries facing debt distress, there may be increased demands for waivers or restructuring at the forum. Given the new environment and re-evaluation by some partner countries, the participation—both in level and numbers—in the third BRF will be keenly watched. This will be a key input for China to schedule and conduct the event and to emphasise that the BRI continues to retain its appeal and enjoys widespread support, despite numerous challenges. For China, the BRI is too important to be allowed to move lower in its national priority. Some trimming of the number of projects and amount of investment is likely, and China may take up smaller projects overseas with enhanced scrutiny and oversight. China must, however, showcase the BRI as a success story whose continuation is in the interest of the entire global community. The third BRF will thus go ahead only if China is confident of a successful event and is able to put forward a plan and narrative that displays its resolve and ability to deal with some major headwinds at a very crucial juncture.

Vladimir Putin met with Vice Premier of the State Council of the People's Republic of China Zhang Guoqing. President of Russia Vladimir Putin: Mr Zhang Guoqing, friends, I am very pleased to see you and to welcome you to Russia, to Vladivostok. China has traditionally participated in this forum for many years now. I had the pleasure of welcoming the President of the People's Republic of China to it. He participated in person, spoke here, and then took part in the forum in the videoconference format. I would like to take this opportunity to ask you to convey my best wishes to the President of the People's Republic of China, with whom I have friendly work-related and personal relations. This certainly helps promote bilateral relations and ties between our countries. We know you well as a very business-like person. You headed a major company and now engage in matter of industry. As far as I know, you have already had the chance to meet with your counterparts, deputy prime ministers [Yury] Trutnev and [Denis] Manturov. The latter is in charge of the industrial block in the Government. I would like to note that thanks primarily to the efforts of our governments and business circles, Russia-China relations in this area – the area of economic cooperation – have reached a very high level. Of course, this is a derivative of what has been achieved in the political sphere, but nevertheless the results are more than good, they are excellent, and every year our trade grows by almost one third. This year, too, over the first seven months of it, the trade is up by about the same amount, I think, 24 percent – to as much as 120 billion. The goal President Xi Jinping and I have set – to reach the US$200 billion mark in trade – can be achieved very soon, already this year. I am confident that our relations will keep the current pace. We are glad to welcome you, and I would like to thank you for your decision to come and take part in the Eastern Economic Forum. Welcome. Vice Premier of the State Council of the People's Republic of China Zhang Guoqing (retranslated): Thank you, Mr President, for the opportunity to meet with you. First of all, I would like to pass on to you sincere regards and best wishes from President Xi Jinping. We also wish to offer heartfelt congratulations on the successful organisation of the 8th Eastern Economic Forum. Under the strategic direction of President Xi Jinping and President Vladimir Putin, China and Russia have deepened their overarching partnership and strategic cooperation in this new era. Our relations have maintained a consistently high dynamic. As you rightly noted, our countries have provided resolute mutual support in matters concerning our key interests. We are deepening political cooperation and trust and multiplying our mutual interests, bringing our nations closer. Our multi-dimensional practical cooperation is moving forward progressively, and the range of our bilateral cooperation is constantly expanding. Mr President, you noted the volume of our trade for the first seven months of this year, but in the first eight months of this year, the bilateral turnover reached US$155.1 billion, which is 32 percent higher year-on-year. We have every reason to believe that the goal set at the highest level, to reach US$200 billion in bilateral trade, will be achieved earlier than the end of the year. Last March, President Xi Jinping made a successful state visit to Russia, during which a new large-scale plan for developing China-Russia relations was outlined and new guidelines were set. Currently, the Chinese nation, under the true leadership of the Central Committee of the Chinese Communist Party, centred around comrade Xi Jinping, is promoting the comprehensive Chinese modernisation focused on high-quality development. We are ready to share development opportunities and deepen mutually beneficial cooperation with our Russian colleagues. Vladimir Putin: We highly value and appreciate the fact that, as you mentioned, the President of China made his first foreign visit after his re-election to Russia. This indicates that the relations between Russia and China have reached an unprecedented and historic level in the past few years. As you said, we will continue working together.

This week I travel to China for the first time as Danish foreign minister. I was there at the end of 2017. At that time, I was prime minister and Xi Jinping had been president for four years. It was clear that there were major political changes underway in China - but also that there was still a desire for engagement and cooperation with the outside world. Here, six years later, the picture is different. China continues to pursue its interests in the world. But now with greater assertiveness and more muscle, and China is trying more directly to change the world order as we know it to China's own advantage. And they go to great lengths to protect their political system from outside influence. We in the West are therefore forced to relate to China in a different way.   And that is exactly why I look forward to setting foot on Chinese soil again. Because even if we disagree politically on a number of things, not least in terms of values, China cannot be avoided. Neither economically nor politically. China is the world's largest economy when adjusted for purchasing power. China's GDP is on par with Europe's combined. China is now and in the coming years indispensable for the value chains of our business life. We also need China to solve the climate crisis. The country accounts for 30% of global emissions of greenhouse gases. Without China, we simply cannot achieve our climate ambitions. Just like China, it is a producer of many – indeed too many – of the technologies and raw materials that form a central part of our own green transition.  Over the past many years, we in the West have become too dependent on China in several critical areas. There is no doubt about that. We have been somewhat naive for a long time. But we cannot react by decoupling ourselves from China now. It is simply not possible. We must be pragmatic idealists, as I call it, and pursue a committed, clear-sighted, and realistic China policy.  This means, first of all, that we must free ourselves from critical dependencies. We must minimize our risk and become more resilient. In plain Danish, we in Denmark and Europe must be able to stand on our own two feet to a greater extent. The time when we perceived the whole world as one big factory is over. We must look after our supply chains at the seams. This applies to energy, critical raw materials, and technology. And then Denmark and the EU must pursue a more robust and strategic trade and industrial policy.  Denmark, the EU, and our allies have significantly tightened their approach to China in recent years. It is wise and necessary. We must continue to address the challenges with China when it comes to interests, values and security with our partners and allies. The latter is important because Denmark cannot cope with Chinese power on its own. No European country can do that alone; for that, the size ratio is too unequal. Therefore, it is alpha and omega that we stand together in the EU on our approach to China in close dialogue with the USA and our allies in NATO.  At the same time, pragmatic idealism means that we must not overrule. Driving from one ditch to another doesn't help. Europe must not become generally protectionist and we must cooperate with China on our common interests.  My trip to Beijing and Shanghai has three purposes. Firstly, to agree a new Danish-Chinese work programme. Secondly, to open doors for Danish business so that they can deliver the green solutions the Chinese demand. And thirdly, to have an honest conversation with the Chinese government about our bilateral relations, about developments in the world and the things we see differently.  There are many issues to discuss with China. Over the past 10 years, China has increased political control over its own population and suppression of fundamental freedoms. In Hong Kong, democracy and freedom of assembly and speech no longer exist. Uighurs are oppressed in Xinjiang. And in Tibet, a slow erosion of ethnic Tibetan culture and identity has long been underway.  There is also the conflict over Taiwan. Half of all the world's containers are sailed through the Taiwan Strait, so the relationship across the strait has consequences for the whole world. Also, for the EU and Denmark. We emphasize that the conflict is resolved peacefully without violence, threats, or coercion. Like the USA and most other countries, Denmark pursues a one-China policy. This does not change the fact that we have strong economic and cultural ties to Taiwan. And many Danes have – like me – sympathy for the democratic governance reform that has been chosen in Taiwan.  In light of Russia's aggression against Ukraine, it is also clear that China's close partnership with Russia is worrying. China has neither condemned the invasion nor demanded that Ukraine's full territorial integrity be restored, just as China is helping to spread Russian disinformation. In return, China has emphasized that it will not support Russia's aggression militarily. It is an important commitment and signal, and we must take them at their word. As a permanent member of the UN Security Council, China has a special responsibility to engage actively in the peace dialogue to end the war in Ukraine.  We look at many things differently. When it comes to human rights, we must continue to hold China to international obligations. At the same time, the trade and climate conditions are such that we have to cooperate in those areas.  Our current work program with China expired in 2020, so it is long overdue for renewal. Several have argued that Denmark should end the cooperation. I don't think that would be in Denmark's interest. At the same time, it would be a significant and wrong political signal not to renew it at all. But we have known for a long time that the program should look different. It used to be quite broad – even too broad, in retrospect. The new program must be more focused. We will cooperate with China on climate, green energy, environment, sustainable food production, green shipping, and health. For example, we can help China reduce its greenhouse gas emissions. It is good for both the climate and for Danish exports.  It is important for us to focus the cooperation on the green areas in particular. If we only want to cooperate and talk with those we completely agree with, then I wouldn't have many places to go as Secretary of State. And that would not be good for either the economy or the climate. And not good for the overall political situation either.  China is constantly seeking cooperation with countries around the world. They have global ambitions. They are not only asserting their influence in Asia, but also in Africa and Latin America. They offer themselves as partners in very specific ways without demands for democracy and human rights. Construction of highways and railways. Expansions of airports. Mining. China has invested billions of dollars in major construction projects across the African continent and created a huge debt burden. That kind of counts. Also, when it comes to votes in the UN.  We in the West have to deal with that. Considered and strategic. We must strengthen existing partnerships and build new alliances based on equality and respect. We need to think more about building relationships. Education. Research. Exchange. We must also be present out there – in Africa, Asia, and Latin America – with offers for concrete collaborations. And get off the moral high horse a little.  China's changed face could perhaps be glimpsed in 2017, when I was in China last. Now the challenge is clear to everyone. We must be critical of a number of China's global ambitions and their political system at the same time as we cooperate on trade and climate. This requires a committed, clear-sighted, and realistic China policy.