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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.

Landlocked in the heart of Central Asia, Kazakhstan is involved in regional partnerships and, pragmatic, claims to be a facilitator with balanced relations, even if the pressure to take a stand between Russia, China and the European Union is strong. This cocktail is the challenge of so-called middle power (or bridge) countries, developing multi-factor diplomacy, here constrained by geography and made possible by the country’s resources. Moreover, the development and identity of the five Central Asian countries are built around the imperative of cooperation, given the geographical position and the small number of citizens (75 million for the five countries).  The 2023 edition of the Astana Forum, formerly economic and renamed Astana International Forum, was structured around four themes: foreign policy and international security, international development and sustainability, energy and climate change and economy and finance. This forum supports the development of international action: dialogue of international themes, with the desire to propose answers, desires to become a reference on the world scene without forgetting a public relations dimension. This has resulted in Kazakhstan’s diplomacy being described as ‘niche diplomacy’ (for uranium exchanges) or multi-vector diplomacy[1]. Since February 2022, the Belt and Road Initiative, China’s connectivity project, no longer pass through Russia. Kazakhstan is at the centre of the EU-funded Asia-Europe Transport Road (or Trans International Transport Road). This is one example where the economy, originally considered by Joseph Nye as a resource of hard power, becomes a factor of attractiveness and image for a country. In terms of analysis, considering a continuum – not a strict dichotomy – between hard power and soft power allows for more flexibility between projects and resources. This multilateral institutional program connects the rail freight container transport networks of China and the EU. The multimodal transport structure connects the Caspian and Black Sea ferry terminals with the rail systems of Asian and European countries. The route starts from Southeast Asia and China, crosses Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and Turkey. The so-called middle corridor is present in the speeches and in the initiatives and funding of the European Union and China. This land logistics link between the China and EU trading zones goes beyond transport to digitation of data and complying with European Union and UN standards. Therefore, several models are facing together depending on the view of China or the Union. Beyond this situation, what are the challenges for this middle power and in the broader context of countries that voluntarily and reasoned choose an identical approach and positioning? A successful solution for a middle power means choosing specific negotiating topics in the international space, being agile and flexible, and knowing how to build coalitions to defend them. In the context of multilateralism, it is necessary to structure actions for a convergence between its interests and those of the partners rather than on an ideology. This is one of the conditions for becoming credible, for developing its discourse and, ultimately, to be perceived by the international community as a country with positive contributions. And beyond this community, by the public, which comes down to finding its place on the world map in the long term, when the country becomes known and better identified. Diplomacy becomes public, because it consists of informing, or even dialogue with public opinion. Thus, the Astana Forum presents a middle power capable of building a regional dialogue with experts, politicians, and international actors, which contributes to the construction of legitimacy and the ability to influence through contacts, cooperation and media coverage. Being a middle power also means being courted in alliance competitions whose number and formats become exponential, which generates as many acronyms as possible, here China + C5 and EU + C5. Two recent summits, beyond content and photos, tell the stakes. The China-five Central Asian summit took place in May 2023 in Xi’an, China with the signing of 54 multilateral agreements. The meeting of the European Union and the five Central Asian countries took place at the beginning of June in Cholpon Ata, Kyrgyzstan. These are the five countries being courted no doubt with strong pressure to choose one or the other alliance, hence the tensions and questions of cooperation already mentioned. Moreover, contradictions exist between the possibilities and wills of the middle powers and the driving force of international institutions, structures with more rigid rules, including, for example, the Security Council. A new paradigm is emerging: the role of coalitions. Finally, middle-power countries must balance their national interests, common international challenges such as climate change, and building alliances and coalitions. Claims of middle powers, alliances and coalitions and connectivity programs may be shaping the geopolitics of tomorrow.

Pivot to Asia - The Global South is on the march in their attempt to reshape the international system. How will this new order impact the old world? An increasing number of countries from the Global South, especially in Asia, are pushing to redefine the current global order. Three key trends to watch in this attempt to reshape the international system are the (potential) creation of a new economic order, the expansion of the BRICS grouping, and the transformation of China-Russia relationship after the invasion of Ukraine. In this changing international balance, Europe is losing its influence in the Global South, including in Asia. After centuries of global predominance, Europe’s strongest legacy is its role as a major normative power in global affairs. However, this reputation as a rule-setting power is set to change.   Why it matters 1. A (new) economic order. The debate over a “new Washington Consensus” has gained momentum after US national security advisor Jake Sullivan delivered a speech at the Brookings Institution on April 27th. The final communiqué by the G7 countries which met in Hirosahima on May 19-20 is the result of a similar strategic shift within the group, one that implies a move from economic interdependence to economic security. This shift is coupled with a major change in how the G7 intends to deal with emerging economies, such as their rival China and other partners in Asia that might soon become economic competitors in critical technologies. The G7’s sentiment has moved from promoting globalization and open markets to building industrial capacity in critical sectors, while securing existing and creating new strategic supply chains. Europe’s efforts in this context might not be enough: the investments envisaged so far are too little to reverse Europe’s dependency (often on China) in critical sectors. The EU must focus increasingly on diversifying its supply chains through securing access to rising economies in the Indo-Pacific. Here, joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could represent an opportunity.  2. BRICS+? The BRICS foreign ministers’ summit in June was yet another steppingstone toward enlargement. The countries that expressed a significant interest in joining the grouping are Iran, Saudi Arabia, the United Arab Emirates, Cuba, Democratic Republic of Congo, Comoros, Gabon, and Kazakhstan: all these countries sent their representatives to Cape Town. Egypt, Argentina, Bangladesh, Guinea-Bissau and Indonesia participated virtually. While the membership process might be a long one, the group’s upcoming expansion highlights the Global South’s political will to rise its voice, with a plethora of actors eager and able to leverage the new competition between powers which is shaping up after the Ukraine war. In this framework, Asian countries such as China and India are competing with one another to lead the BRICS.   3. China and the Stans. On May 19, Xi Jinping met in Xi’an with the (leaders of) the five Central Asian “Stan”-countries (Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan). Russia, the region’s traditional kingmaker, was noticeably absent. The meeting kickstarted – for the first time offline – a summit named C+5 and highlighted Beijing’s belief that it can now make deals within the region without Moscow’s supervision. China’s newfound independence in Central Asia and Moscow’s growing dependence on Beijing after the war in Ukraine provides new insights the on China-Russia relationship: although the two countries are united by their common desire to contest the US-led world order, the Sino-Russian relation seems increasingly tilted in China’s favor. This instable relationship could result in a stronger Chinese presence in Central Asia.  4. Loss of strategic centrality. Europe does not only risk becoming increasingly peripheral in world affairs, but also losing its bargaining power with the emerging Indo-Pacific economies. On the one hand, the EU needs to diversify its supply chains away from China and likely towards the ASEAN; on the other, the Global South – and by default its Asian members – is more aware of the current strategic window of opportunity to redesign the global balance of power.   Our take We are witnessing rapid changes in the international arena. In the coming months there will be increasing requests to review global norms. Therefore, the leading event will be the upcoming BRICS Summit in August: the meeting will probably certify the process to accept new members. Among the countries that are voicing their desire to reset the rules, some are considered by the West (mainly) as rivals, such as China, and as partners, like India. Therefore, Washington and Brussels cannot simply accept or dismiss their requests. Asia is claiming its century: the integration of this claim for a renewed global order into the current world order has just started. Its most important implications will be on the economic side, namely the redistribution of industrial capacity and trade relation in the context of de-risking from China.  Spotlight: G7  The G7 Hiroshima Summit has sent some clear messages to the rest of the world. The decision to invite President Zelensky to the gathering was a move meant to reinforce the unity of the members regarding the Ukraine invasion in the face of Russia — and China, too. The West has criticized China’s 12-point position paper on the Ukraine war, since it does not call for Russia to abandon occupied territories. The G7 countries have also announced a strengthening of the sanctions, seeking to curb products that could be used by the Russian military. The other important takeaway of the G7 is the joint statement directed at China, which includes a strong criticism of Beijing’s “economic coercion” and invites the PRC to play according to international rules. The G7 have also reiterated their position on divisive topics such as security in the Indo-Pacific and Taiwan, retreating their commitment to preserve peace and stability in the region. Despite the joint statement and the declarations by the leaders on the challenges posed by China, the G7’s stance on Beijing is still a balancing act. While concerned about being overly vulnerable with China, G7 economies and their industrial base remain strongly interconnected with the Asian country and despite calls for “de-risking”, such as cutting China out from some sectors like raw materials, it is impossible at the time.  Experts’ viewsThe implications of China’s activism among the BRICS countries  The next BRICS Summit will take place at a critical juncture for the Global South. Russia is still at war, Brazil has a new administration eager to flex its muscles globally, and China has reached unprecedented influence across the developing world. Since they are all connected by the same desire of multipolarity away from US and Western hegemony, it is likely that the BRICS will try to offer a roadmap towards a new international order. This roadmap, however, is far from consensual: will Russia embrace the peace dialogues offered by Brazil or African nations – and what role will China play in brokering any such proposal? Will China and the other BRICS be able to cooperate economically to promote development worldwide? Are the BRICS ready for its first enlargement, and who is most likely to join in the coming years? This arrangement will require some mutual concessions and the outcome will help shape the future world order.  Guilherme Casarões, Fundação Getulio Vargas  The push to strengthen and even expand the BRICS, especially by China, should be viewed more broadly through the lens of a pragmatic Chinese foreign policy. It has not only sought to strengthen ties within BRICS but with other regions and countries who are instrumental for its trade and infrastructure connectivity imperatives.  This happens against the backdrop of a shift towards a multipolar world order with China as a rising power and rising geo-political tensions. Given that this bloc advocates for issues that are relevant to the Global South (global governance reform, support for a rules-based international order and multilateralism in times when countries retreat to unilateral measures), it is no surprise that other countries in the South wish to join. Regarding this summit, I see no major implications for the bloc, the core business of the BRICS will continue with South Africa advancing its five priority areas. However, we can anticipate a discussion on its formal expansion. Trading with local currency seems to have found new impetus following the sanctions placed on Russia. All this notwithstanding, it is important to note that the ‘de-dollarisation’ in trade debate is not a new concept for BRICS and its less about challenging the dollar but strengthening other currencies against external economic shocks. The real test is for the host country depending on whether President Putin attends the heads of state summit in August, given Pretoria’s obligations under the Rome Statute and domestic law.  Luanda Mpungose, South African Institute of International Affairs (SAIIA)  China’s push for a stronger BRICS on the global stage is advancing along a number of trajectories. Firstly, there is the BRICS expansion as well as the BRICS+ format that are likely to bring the majority of the Global South into BRICS-related platforms of economic cooperation. The implementation of the BRICS+ format may serve as a precursor for liberalizing trade across the Global South and exploiting the potential for boosting South-South trade and investment ties. The expansion in the membership of the Shanghai-based New Development Bank as well as the creation of its regional centers will increase the scope for connectivity projects across the developing world. There is also the greater use of national currencies (most notably the yuan) via de-dollarization as well as the R5 BRICS common currency project that if launched would mark a key transformation of the global financial system.  Yaroslav Lissovolik, BRICS+ Analytics   What and Where Thailand is ready to Move Forward   The May elections in Thailand resulted in a clear victory for the opposition parties. Led by Pita Limjaroenrat, Move Forward has won 152 seats, becoming the most voted party in the elections. This party is the heir to Future Forward, which was dissolved by the military government in February 2020, and was born out of the 2020-2021 protests against the army and the monarchy. The second party in the country is the historic Thai opposition party led by the Shinawatra family, the Pheu Thai. However, while the population has expressed its preference, there is no guarantee yet that Move Forward, and the opposition, will govern. Indeed, to be elected Prime Minister, and form a government, Pita will need to win the majority in the bicameral parliament made up of the elected 500 seats in House of Representatives and the 250 seats of the Senate – whose members are handpicked by the military. The Move Forward coalition with Pheu Thai and the other opposition parties so far can count on little more than 310 votes, a long shot from the majority needed to govern. The opposition must garner support among the senators – which generally have little interest in going against the military that put them in power – or among the parties that have yet to declare their allegiance.  Cambodia: Hun Sen is getting rid of the competition ahead of July elections  On the 14 of May, Cambodia’s opposition party – the Candlelight Party – has been disqualified from running in the upcoming July elections by the country’s election commission. The party has allegedly failed to submit the necessary documentation to participate in the electoral race. With the exclusion of the Candlelight Party from the coming elections, the only possible competitor to the ruling Cambodian People’s party (CPP) of PM Hun Sen – who has been in power for 38 years – has been eliminated. This is not the first time that the main opposition party has been cut out of the electoral race. For instance, in the 2017 the Cambodian court, which is heavily colluded with the CPP, dissolved the Cambodian National Rescue Party (CNRP) before the 2018 general elections – a party that was given new life when its members created the Candlelight Party. However, the members of the opposition continue to be persecuted by Hun Sen’s forces with many political exponents arrested on charges of treason, assaulted, or forced to leave the country. With the opposition forces largely depleted and the main party banned from running for elections, Hun Sen is likely guaranteed another term.   The United States seeks to expand influence in the Indo-Pacific  Washington took advantage of two key international events to strengthen its strategic position in the region. During the Quad Leaders’ Summit, which took place on the sidelines of the G7 in Hiroshima, President Biden, Australia’s PM Albanese, PM Kishida of Japan and PM Modi of India stressed their unity and stated their plans to invest in digital infrastructure in the region. Throughout the meeting they did not mention China directly in their statements, but their references to the country were clear. The Quad expressed concern over the militarization of the region and the use of both economic and military coercion to alter the status quo – a clear reference to Chinese activity in the South China Sea. Another important step for the US to consolidate its position in the region is the announcement of the Supply Chain Agreement under the framework of the Indo-Pacific Economic Framework for Prosperity (IPEF). The agreement includes the 14 IPEF partner countries, namely Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, the US, and Vietnam. A year following the launch of the IPEF, this agreement is the first practical measure undertaken by the group. The group did not announce any official trade commitments, there is expectation among partners for increased cooperation and monitoring of supply chains fragility. The concrete development is still unclear, but the agreement signals the need for Indo-Pacific countries to avoid supply chain disruption and to minimize their dependence on the region’s main economic player, China.  Semiconductors: China fires back   China has gone on the offensive in competition over the semiconductor sector. The Cyberspace Administration of China (CAC) has stated that products by Micron, the US largest memory chip maker, are a “security risk for the information infrastructure supply chain” barring infrastructure operators from buying them. While additional information has yet to be revealed, some negative impacts are expected for Micron even if China and Hong Kong accounted for only 16% of the revenue of the company in 2022. The measure is a retaliation to America’s effort to cut China out from the semiconductor sector and slow the development of its industrial base. Since October 2022, the Biden Administration has imposed strict controls over chips export, followed by the Netherlands and Japan, preventing China from accessing and producing more advanced semiconductors. China’s declaration comes also after the leaders of the G7 grouping released a statement criticizing the country’s economic coercion tactic. After the move from Beijing, Micron fears that their products will be replaced by South Korean competitors, Samsung and SK Hynix, on the Chinese market. In the rising technological row between the US and China, there is also fear that Beijing might choose to put some export controls over other sensitive technologies, such as solar panels – where China dominates the whole supply chain.    TREND: Despite rate hikes, Asian unemployment is faring well (but not for everyone)  In the current context of high inflation and high rates, unemployment has turned out to be one of the main socio-political issues of Asia. With skyrocketing prices hurting businesses and consumers, many central banks in the West have adopted more hawkish monetary policies during the last year. Yet, the soaring cost of money has forced many businesses into a tight spot with concerning consequences on the employment level. Some countries though – like Japan, China, and Indonesia – have made the unorthodox choice to not significantly raise rates during the last year, while others – like South Korea and India – have adopted similar policies to those of the FED and the ECB. However, the results vary. In Japan the unemployment rate has been quite steady at around 2.6% for some time now, but in China the range (5.2-5.7%) was wider, especially due to the uneven nature of the post-Covid economic recovery. Yet, as the economy is slowly returning to normal, Beijing’s unemployment rate is gradually decreasing. Meanwhile Korea has consolidated a positive trend, with the last available figure at 2.5%, but the reforms of the labor market proposed by President Yoon Suk-yeol may cause some issues. The critical indicator though will be youth unemployment. Employment in aging societies, like those of East Asia, will increasingly become a core issue to maintain the viability of existing social welfare programs. So far China has a staggering 20.8% unemployment rate in the 16-24 years old age group which is particularly concerning, as it is the 7.2% recorded in South Korea. Japan is faring quite well but unemployment in the 25-34 years old age bracket has risen since the beginning of the year from 3% to 4%.

In the last two years, China's leader, Xi Jinping, has announced three global initiatives: the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilization Initiative (GCI). What exactly are they, how do they differ from the Belt and Road Initiative (BRI), and what do they imply for the State of Israel?  In the last two years, Chinese leader Xi Jinping has announced three global initiatives: the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilization Initiative (GCI). These new initiatives are a means of bolstering the legitimacy of the Chinese Communist Party, with Xi at its head. More importantly, they reflect how China’s foreign policy has evolved and the lessons learned from its global engagement in the ten years since

The border standoff between China and India illustrates the growing rivalry between the two countries – and the part that other major powers play in it On 27 April, the defence minister of India, Rajnat Singh, met his Chinese counterpart, Li Shangfu, on the margins of the Shanghai Cooperation Organisation (SCO) Defence Ministers Meeting in Delhi. The meeting was yet another attempt to find a way out of the three-year-long standoff between thousands of soldiers along the disputed border, which began in May 2020 when Indian and Chinese forces clashed in the Galwan Valley, killing 20 Indian soldiers and an undisclosed number of Chinese ones. Since then, officials from both countries have met for 18 rounds of talks to try to agree on a disengagement of troops from the area with no success. India has blamed China for unilaterally trying to move the border by sending troops beyond the Line of Actual Control (LAC) between the countries. While it is in both China’s and India’s interest to settle the dispute, Beijing seems unwilling to engage in actual negotiations about the LAC, instead expressing hope that the two sides could move on from the issue and strengthen their mutual trust.   India’s and China’s dispute along the border is illustrative of the growing rivalry between the two countries, which is shaping the security landscape and strategic environment of South Asia. China is gaining power and influence in the Indo-Pacific – where India has long been the dominant power – and using it as yet another arena for its strategic rivalry with the United States. Given Europe’s trade with the region and the complex interplay of relations between China, the US, India, Russia, and the European Union, this dynamic will have severe consequences not just for the region, but for Europe as well. Beijing has tightened its grip over the entire Indian Ocean region in the past two decades. It has created a network of military and commercial facilities – the so-called string of pearls – and strengthened its economic relations with countries of the region. In 2022, Sri Lankan debt obligations to China rose to $7 billion, while the Maldives owes some 40 per cent of its GDP to China. These economic dependencies have eroded India’s influence in its immediate neighbourhood. New Delhi had built up strong diplomatic ties with other countries in the region through its “island diplomacy” and initiatives such as the Security and Growth for all in the Region maritime cooperation. China’s investment in the region has now pushed New Delhi into an economic competition which it may ultimately have difficulties sustaining. New Delhi still exerts a dominant role in South Asia and, specifically, the Indian Ocean, but as China consolidates its position in the region, its attitude towards India has become more assertive. India remains resolute about preventing Chinese hegemony in Asia, repeatedly stressing that a multipolar world starts with a multipolar Asia, and seeking partnerships with a variety of countries, including the US and the EU. Beijing is concerned about India’s growing military ties with the US and tends to consider India’s intentions through the lens of its own rivalry with the US. India’s inability to push back China at the border also further diminishes New Delhi’s influence over the smaller regional states, namely Bangladesh, Nepal, Bhutan, and even the Maldives, by absorbing the financial, military, and administrative resources that could be spent on expanding India’s footprint in the region. It also poses questions about India’s relative power and its ability to protect smaller neighbouring countries from Chinese coercion. This leaves New Delhi even more isolated in the region that includes its arch-rival Pakistan. Both India and China insist that they want to rebuild trust but they cannot agree on the process. Because it currently has the upper hand, China would like trust building to remain a strictly bilateral matter and does not want organisations such as the G20 and the SCO, the other three BRICS states – Brazil, Russia, and South Africa – or even the ASEAN-led institutions to play any role in the so far hypothetical normalisation process. In doing so, China challenges India’s multilateral aspirations and de facto reduces New Delhi’s capacity to manage collectively the consequences of China’s rise for itself and the region. The war in Ukraine makes this even easier as Russia, traditionally on India’s side in multilateral regional arrangements, seems distracted and neutralised by its new, albeit uneasy, proximity to China. The escalating tensions and aggression since 2013 are therefore no coincidence. Beijing’s coercion on the border and naval build-up in the Indian Ocean force India into a costly arms race and warn it against what Beijing considers excessive proximity to the US. In the ongoing great power competition between China and the US, every issue becomes a zero-sum game. This makes it harder for India to solve its border conflict with China and at the same time manage China’s rise and growing assertiveness in the Indo-Pacific region in a peaceful manner. Strengthening India’s position in South Asia and the Indian Ocean region is in line with Europe’s own interests in free trade and supply chain resilience, as well as sustaining a multipolar world order – one in which countries’ political decision-making is not restricted by their economic dependency on China. In this regard, India should play a crucial role in the EU’s diversification and de-risking strategy. The Indo-Pacific region accounts for 40 per cent of the bloc’s extra-EU imports and 27 per cent of its total exports, most of which are sea-borne. As such, the Indian Ocean is Europe’s primary gateway to the Indo-Pacific region. China and India may be slowly but effectively moving towards a new phase of antagonistic rivalry. While the prospect of open confrontation remains only a distant possibility, further polarisation of India-China relations in the Indian Ocean is a problem not only for India, but also for Europe. The EU declared India a priority partner in its 2021 Indo-Pacific strategy, but its relationship with New Delhi has long been characterised as not living up to its full potential. Europe’s growing disillusionment with China over the past two years has shown the need and prepared the ground to further strengthen relations with India. The EU should prioritise the establishment and implementation of  the EU strategy for cooperation in the Indo-Pacific, the EU-India free trade agreement, the Trade and Technology Council, and the Connectivity Partnership to demonstrate its commitment and effectively move beyond symbolic cooperation with India.

The escalating geopolitical competition has placed the US and China at odds. Both sides need to stabilise their relationship given the role they play in world affairs. US National Security Advisor, Jake Sullivan, met for over eight hours over two days last week with Chinese Communist Party Politburo Member and Director of the Office of the Foreign Affairs Commission, Wang Yi, in Vienna. The meeting, which had not been publicised by either side before the talks, has been seen as a part of an effort by both countries to stabilise their relationship which is perhaps at its lowest level in recent decades. Both sides have been locked in a steadily escalating geopolitical competition, even as they have close and intense economic linkages and a joint interest in dealing with several global and regional affairs. They are locked in opposing sides on issues like Ukraine and Taiwan, and a slow-motion decoupling as US companies diversify away from China and earnings of US companies in China are falling. Both sides used identical language to describe the outcome of the meeting. A White House readout noted that the talks featured “candid, substantive and constructive discussions on key issues of US-China bilateral relationship, global security matters, Ukraine and Taiwan. A Chinese readout used the same terms “candid, in-depth, substantive and constructive discussions” on ways to “remove obstacles in the US-China relationship and stabilise the relationship from deterioration.” Wang laid out the Chinese position on Taiwan, Ukraine and other regional issues. Speaking on background, a US official said that both sides saw the balloon incident as being “unfortunate” and were now looking to “re-establish standard, normal channels of communications.” Two days before the Sullivan-Wang meeting, US Ambassador Nicholas Burns met China’s Foreign Minister Qin Gang in Beijing. According to Qin, a series of “erroneous words and deeds” by the US had put the relationship between the two powers on “ ice” but stabilising ties was the top priority for both countries. Burns said that he and Qin had discussed “challenges in the US-China relationship” and the necessity of “stabilising ties.” The US is in a delicate balancing act with regard to its China policy. In recent years, American policy has shifted from engagement to competition and even containment. In the wake of the US-China trade war, and the first wave of US technology restrictions on Chinese firms like Huawei, there was talk of a “decoupling” of the two economies. The Chinese crackdown in Hong Kong and the post-Pelosi visit tensions over Taiwan have deepened the divide between the world’s two foremost powers. In 2021, Biden had told Xi of the need “to establish some common-sense guardrails” to ensure that the two do not get into an inadvertent conflict. Last November following their summit meeting in Bali, Biden said that “I am not looking for conflict, I’m looking to manage this competition responsibly” At the meeting, Xi called Taiwan “the first red line” that must not be crossed in China-US relations. This was to be followed by a visit of US Secretary of State Antony Blinken to Beijing, but that was called off last minute because of the balloon episode. Blinken met Wang at the Munich Security Conference later in February, but there was little forward movement. It may be recalled that last October, the US government put in place extensive new restrictions on China’s access to advanced semiconductors and the equipment used to make them. These restrictions were layered upon earlier decisions to restrict semiconductors to entities like Huawei and ZTE. Earlier this year, the US further tightened restrictions on the export of semiconductor manufacturing equipment to China. It coordinated with the governments of the Netherlands and Japan to tighten the guidelines. More recently, it has made it clear that it will restrict the actions of chipmakers who get funds under the CHIPs and Science Act. These restrictions are part of Washington’s effort to secure the supply of components that are needed for AI and supercomputers, as well as everyday electronics. In March came harsh signals from China. Speaking in March, President Xi Jinping for the first time named the US and said that it was in a policy of “comprehensive containment, encirclement and suppression against us.” The next day, the new Foreign Minister Qin Gang was more explicit. He slammed the US for equating the Ukraine issue with Taiwan and said that the “so-called ‘competition’ by the US is all-round containment and suppression a zero-sum game of life and death.” He warned that if the US “does not hit the brakes and continues to speed down the wrong path, no amount of guardrails can prevent derailing, and there will surely be conflict and confrontation.” In April, senior American officials have been trying to calm the turbulent waters. Last month, speaking at Johns Hopkins University, US Treasury Secretary Janet Yellen said that decoupling would be “disastrous” and that US goals relating to national security were not aimed at stifling China. She called for a plan of “constructive engagement” with three elements—national security of the US and its allies; an economic relationship based on “fair” competition; and cooperation on urgent global challenges. The Yellen speech was a comprehensive take on US approaches to China and struck what The New York Times said was a “notably positive tone” after months of tensions between the two countries. A week later, the tenor of her remarks was underscored by the National Security Advisor, Jake Sullivan at a speech at the Brookings Institution. Sullivan used the term “de-risking”, a term used earlier by EU Commission President Ursula von der Leyen: “We are for de-risking and diversifying, not decoupling,” he noted. Sullivan had earlier described the US policy of technology restrictions on China as creating a “small yard, with a high fence.” Now officials like Blinken, Yellen, Commerce Secretary Gina Raimondo and Secretary of Defence Lloyd Austin are trying to schedule meetings with their counterparts, but the going has been tough. According to Financial Times, the Chinese are reluctant to have Blinken visit because they were worried that the FBI may release the report based on the salvaged debris of the balloon. As for Austin, the problem is that his newly appointed counterpart General Li Shangfu is under US sanctions since 2018 in relation to Chinese imports of Russian arms when he was serving as a general. The US says that a meeting in third countries would not be affected by the sanctions, but it is unlikely that the Chinese will agree. General Li was appointed defence minister in March. With the tightening of the Western alliance in the wake of the Ukraine war, the US has sought to incorporate the European Union into its China project. Shortly after his three-day visit to China, French President Emmanuel Macron said in reference to Taiwan that Europe should not get caught up in crises “that are not ours”. Europe should try to be the “third pole” in the world order and that the need for Europe’s “strategic autonomy” was now accepted. But Washington points to a 30 March-speech by European Commission President Ursula von der Leyen where she said that it was neither viable nor in Europe’s interest to decouple from China, adding “We need to focus on de-risking—not decoupling.” She added in blunt language “The Chinese Communist Party’s clear goal is a systemic change of the international order with China at its center.” She added that it was there was a need for European companies to ensure that their “capital, expertise and knowledge are not used to enhance the military and intelligence capabilities of those who are also systemic rivals.” Just how much of the messaging from the US about the China relations is sincere, and how much of it is aimed at reassuring nervous allies who feel that Washington’s policies could have a negative impact on them is not clear. But Washington’s agenda remains clear. Speaking last week in Japan, where she is attending the meeting of G7 finance ministers, Yellen called for “coordinated action” by G7 nations against Chinese use of “economic coercion” against other countries. She also said that Washington has been considering the imposition of additional “narrowly targeted restrictions on outbound investment to China,” and that these have been discussed with other G7 partners. She said these would be targeted at technologies “where there are clear national security implications.” But as of now, it does appear as though the two sides are trying to create what David Ignatius called “a framework for constructive engagement.” There is some optimism arising from the detailed discussions that Sullivan and Wang held in Vienna which, as we note were described by both as “candid” and “constructive”. Both sides perceive the need to stabilise their relationship given the role the two countries play in world affairs. With the US going into election mode, it is not clear how long this period where the two sides are trying to work out a new modus vivendi will last. Engagement with China could become a political liability in the US where, if there is consensus on one issue, it is that of a hardline on China. World and New World Journal does not take positions on policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of World and New World Journal. 

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.

With China increasingly assertive in pursuing its economic and geopolitical interests abroad, US–China tensions are rising, leading many traditional American allies to consider following Washington’s lead in pursuing economic ‘decoupling’ from China. Their strategy aims to reduce economic reliance on China through extensive export controls and re-ordered supply chains. Yet in Western Europe, France and Germany are showing an unwillingness to join their allies in decoupling from China. French President Emmanuel Macron’s recent comments that Europe should not get ‘caught up in crises that are not ours’ demonstrate this. If anything, their relationship with Chinese capital is thriving. China is one of France and Germany’s major trading partners outside of the European Union and a significant export market for goods such as luxury goods and pharmaceuticals. Exports to China made up 7.4% of Germany’s total exports and 4.21% of France’s in 2019, with these numbers growing over the last three years to record levels. Given China’s growing middle class, the country presents an enormous potential consumer market in years to come. According to recent reports, France’s bilateral trade in goods with China exceeded US$100 billion for the first time in 2022, an increase of 14.6% on 2021­. The recent signing of 18 cooperation agreements by 46 French and Chinese companies across numerous sectors further emphasises the gathering pace of these trade relationships. As for Germany, its total trade with China saw an increase of 21% from 2021. While exports increased by a modest 3.1%, Germany’s imports from China accounted for much of the growth, soaring by more than a third. Specifically, Germany imports from China about two thirds of its rare earth elements, many of which are indispensable in batteries, semiconductors, and magnets in electric cars. This shows that Germany and France will rely more on China as time passes for the critical raw materials needed to fuel their economic growth and energy transitions. Furthermore, various French and German companies would prefer to grow their established production facilities and extensive sales networks in China. With the trade relationship expanding so rapidly and estimates suggesting that more than 2 million German jobs depend on exports to China, the countries’ economies are set to become even more intertwined. German companies Volkswagen and chemical processor BASF, for instance, are significantly expanding their investments in China. Volkswagen, which already has more than 40 plants in China, recently announced that it will invest billions in new local partnerships and production sites. BASF, which has 30, says it will invest US$10.9 billion in a new chemical production complex there. Given all this new activity, making a show of decoupling from China could cause significant repercussions for France and Germany. Ultimately, the costs of decoupling outweigh the benefits for the two governments. While their allies might come to bemoan their inaction, they just won’t forgo such significant opportunities for French and German companies in China. Additionally, decoupling could trigger retaliation, as it did with Australia, with China halting exports to the two countries, increasing tariffs, or reducing market access to French and German goods. All in all, France and Germany are unlikely to shift from their stance. They’d prefer to let their markets flourish and work out the rest later.

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.

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.