1. China’s Rise
1 Modifying the list of superlatives in China’s economic rise is a large gap in living standards within the country. By Asian Development Bank estimates, 5.7 per cent of Chinese still lived in poverty in 2015; see Asian Development Bank, Asia 2050: Realizing the Asian Century (Manila: ADB, 2011). The World Bank estimates that 4.1 per cent of the population lived below the international poverty line in 2014. A significant gap remains between current individual living standards in China – the World Bank ranks it in the “high middle-income” group – and those of high-income nations. Since 1978 closing that gap has been a priority, addressed by opening up and reforming the institutions and policies of China’s previously planned and closed economy.
2 See William H. Overholt, “The West is getting China wrong,” East Asia Forum, 11 August 2018.
3 “China inaugurates National Supervisory Commission,” Xinhua, 23 March 2018, available online at http://www.chinadaily.com.cn/a/201803/23/WS5ab4d311a3105cdcf6513ed0.html.
4 “Xi calls for solid efforts to win Three Battles,” Xinhua, 4 March 2018, available online at http://www.xinhuanet.com/english/2018-04/02/c_137083515.htm.
5 Kevin Rudd, “Xi Jinping’s Vision for Global Governance,” Project Syndicate, 11 July 2018, available online at https://www.project-syndicate.org/commentary/xi-jinping-has-a-coherent-global-vision-by-kevin-rudd-2018-07.
6 Xi Jinping, “Openness for Greater Prosperity, Innovation for a Better Future” (speech, 10 April 2018), available at http://www.chinadaily.com.cn/a/201804/10/WS5acc515ca3105cdcf6517425_1.html.
7 See Paul Heer, “Understanding the Challenge from China,” Asan Forum, 3 April 2018, available online at http://www.theasanforum.org/understanding-the-challenge-from-china/; and Michael D. Swaine, “The US Can’t Afford to Demonize China,” Foreign Policy, 29 June 2018, available online at https://foreignpolicy.com/2018/06/29/the-u-s-cant-afford-to-demonize-china/.
8 Asia Society, Task Force on US-China Policy, Course Correction: Toward an Effective and Sustainable China Policy, February 2019, available online at https://asiasociety.org/center-us-china-relations/course-correction-toward-effective-and-sustainable-china-policy.
9 Reported by Xinhua, available online at http://news.xinhuanet.com/enlish/photo/2015-11/04/c_134783513.htm, accessed 13 October 2016.
10 Lucy Hornby, “Communist Party asserts control over China Inc.,” Financial Times, 3 October 2017. Note, however, that the provisions in the foreign investment law summarized in the previous chapter and due to take effect in January 2020 prohibit “illegal government interference” in joint ventures.
11 Zhang Zhong Xiang, “Powering a low-carbon China,” East Asia Forum, 4 January 2017.
12 World Bank, Commission on Growth and Development, The Growth Report: Strategies for Sustained Growth and Inclusive Development (Washington, DC: World Bank, 2008), 19–21.
13 See, for example, Huang Yiping, “Can China Rise to High Income?” in Asia and the Middle-Income Trap, ed. Francis E. Hutchinson and Sanchita Basu (Abingdon, UK; New York: Routledge, 2016), 81–100.
14 See Bank for International Settlements, “Total Credit to the Non-financial Sector (Core Debt),” available online at https://stats.bis.org/statx/srs/table/f1.1.
15 Tom Mitchell, “China’s Xi orders debt crackdown for state-owned groups,” Financial Times, 16 July 2017.
16 “China’s new financial oversight body vows to fend of risks,” Reuters, 8 November 2017, available online at https://www.reuters.com/article/us-china-economy-committee/chinas-new-financial-oversight-body-vows-to-fend-off-risks-idUSKBN1D81OS.
17 International Monetary Fund, “IMF Executive Board Concludes 2018 Article IV Consultation with the People’s Republic of China,” Press Release 18/310, Washington, DC, 25 July 2018.
18 Ibid.
19 Gabriel Wildau, “China Internet finance crackdown targets fly-by-night operators,” Financial Times, 21 April 2016.
20 “China to better regulate Internet finance,” Xinhua, 14 October 2016.
21 Maggie Zhang, “PBOC sets up new committee to oversee China’s burgeoning fintech industry,” South China Morning Post, 15 May 2017.
22 Don Weinland, “China to end the year as worst performing stock market,” Financial Times, 31 December 2018.
23 Gabriel Wildau and Yizhen Jia, “Collapse of Chinese peer-to-peer lenders sparks investor flight,” Financial Times, 22 July 2018.
24 Nicholas Lardy, Markets over Mao: The Rise of Private Business in China (Washington, DC: Peterson Institute for International Economics, 2014), 72.
25 See “China Inc.: Reinstatement,” Economist, 22 July 2017, 55–7.
26 Huang Yiping’s advice was reported in “China central bank advisor calls for zombie company cleanup,” Financial Times, 12 July 2017,
27 See Barry Naughton, “The Chinese Economy ‘New Normal’: Structural and Systemic Change” (paper presented at the conference “China’s New Normal and Korea’s Growth Challenge,” Honolulu, November 2016).
28 “China Inc.: Reinstatement.”
29 Don Weinland, “Alibaba and Tencent among investors in China Unicom,” Financial Times, 16 August 2016.
30 Gabriel Wildau and Yizhen Jia, “China state groups gobble up struggling private companies,” Financial Times, 26 September 2018.
31 See International Monetary Fund, “China’s Emerging SOE Reform Strategy,” in The People’s Republic of China: Selected Issues, IMF Country Report 16/271 (Washington, DC: IMF, 2016), 38–43, available online at https://www.imf.org/en/Publications/CR/Issues/2016/12/31/The-People-s-Republic-of-China-Selected-Issues-44182.
32 Naughton, “Chinese Economy.”
33 Nicholas Lardy, The State Strikes Back: The End of Economic Reform in China? (Washington, DC: Peterson Institute for International Economics, 2019).
2. China as a Global Innovator?
1 5G refers to ‘‘fifth-generation” wireless technology, which underpins the industrial Internet and machine-to-machine communication and is much faster than its 4G predecessor.
2 See Bien Perez, “China’s chance to lead global innovation may lie with 5G mobile technology development,” South China Morning Post, 1 October 2017, available online at https://www.scmp.com/tech/enterprises/article/2113581/chinas-chance-lead-global-innovation-may-lie-5g-mobile-technology, accessed 20 May 2018.
3 Naughton, “Chinese Economy.”
4 Edward S. Steinfeld and Troels Beltoft, “Innovation Lessons from China,” MIT Sloan Management Review 55, no. 4 (2014): 49–55.
5 World Bank and Development Research Center of the State Council, People’s Republic of China, China 2030: Building a Modern, Creative, and Harmonious Society (Washington, DC: World Bank, 2013), 18, 25.
6 Paul Mozur and John Markoff, “Is China outsmarting America in AI?” New York Times, 27 May 2017, available online at https://www.nytimes.com/2017/05/27/technology/china-us-ai-artificial-intelligence.html.
7 China’s R&D spending is 2.07 per cent of GDP compared with the OECD average of 2.38 per cent; see OECD, “Gross Spending on R&D,” available online at https://data.oecd.org/rd/gross-domestic-spending-on-r-d.htm, accessed 8 December 2017.
8 McKinsey Global Institute, The China Effect on Global Innovation (n.p.: McKinsey and Company, October 2015), available online at https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Innovation/Gauging%20the%20strength%20of%20Chinese%20innovation/MGI%20China%20Effect_Full%20report_October_2015.ashx.
9 “China’s Audacious and Inventive New Generation of Entrepreneurs,” Economist, 23 September 2017.
10 Jonathan Woetzel, Jeongmin Seong, Kevin Wei Wang, James Manyika, Michael Chui, and Wendy Wong, “China’s Digital Economy: A Leading Global Force,” Discussion paper (n.p.: McKinsey & Company, August 2017), available online at https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/China/Chinas%20digital%20economy%20A%20leading%20global%20force/MGI-Chinas-digital-economy-A-leading-global-force.ashx.
11 McKinsey Global Institute, China Effect on Global Innovation, 6.
12 “China’s Audacious and Inventive New Generation of Entrepreneurs.”
13 “Chinese fintech’s global future is arriving now,” Financial Times, 21 May 2018.
14 Woetzel et al., “China’s Digital Economy,” 10.
15 Paul Mozur, “Beijing wants AI to be $150b industry by 2030,” New York Times, 20 July 2017, available online at https://www.nytimes.com/2017/07/20/business/china-artificial-intelligence.html.
16 See “Baidu Develops ‘Medical Brain’ for Computer-aided Diagnostics,” China Intellectual Property Blog, 30 November 2016, available online at https://en.blog.chinabrand.de/2016/11/30/baidu-develops-medical-brain-for-computer-aided-diagnostics/.
17 Woetzel et al., “China’s Digital Economy,” 12–13.
18 Thomas Gatley, “The Expanding Universe of Private Companies,” GavelkalDragonomics, 5 October 2017, available online at https://research.gavekal.com/search-result-list?search=&fr=&to=&au%5B0%5D=18816&selectItemau%5B0%5D=18816&sort=date&items_per_page=100.
19 See Martin Chorzempa, “Opinion: A Run on Peer-to-Peer Platforms Shouldn’t Be Possible. It’s Now Happening in China,” Caixinglobal, 24 August 2018, available online at https://www.caixinglobal.com/2018-08-24/opinion-a-run-on-peer-to-peer-platforms-shouldnt-be-possible-its-now-happening-in-china-101318522.html.
20 See Peter J. Williamson and Eden Yin, “Accelerated Innovation: The New Challenge from China,” MIT Sloan Management Review, 23 April 2014; and Wang Feng, Peter J. Williamson, and Eden Yin, “Antecedents and Implications of Disruptive Innovation: Evidence from China,” Technovation 39–40 (May–June 2015): 94–104.
21 McKinsey Global Institute, China Effect on Global Innovation, 8.
22 Scott Kennedy, “Made in China 2025,” Center for Strategic and International Studies, 1 June 2015, available online at https://www.csis.org/analysis/made-in-china-2025.
23 McKinsey Global Institute, China Effect on Global Innovation.
24 Kennedy, “Made in China 2025”; and Lee Xin En, “Made in China 2025: A New Era for Chinese Manufacturing,” CKGSB Knowledge, 2 September 2015, available online at knowledge.ckgsb.edu.cn/2015/09/02/technology/made-in-china-2025-a-new-era-for-chinese-manufacturing/.
25 See Adam Segal, “When China Rules the Web,” Foreign Affairs 97, no. 5 (2018): 10–18.
26 “China to establish national demonstration areas for ‘Made in China 2025’,” Xinhua, 20 July 2017.
27 Kennedy, “Made in China 2025.”
28 Jost Wübbeke, Mirjam Meissner, Max J. Zenglein, Jaqueline Ives, and Björn Conrad, Made in China 2025: The Making of a High-Tech Superpower and Consequences for Industrial Countries, MERICS Papers on China 2 (Berlin: Mercator Institute for China Studies, December 2016), available online at https://www.merics.org/sites/default/files/2017-09/MPOC_No.2_MadeinChina2025.pdf.
29 Naughton, “Chinese Economy,” 2.
30 Dan Wang, “Ideas: Why China Can Succeed in Tech,” GavekalDragonomics, 19 December 2018, available online at https://research.gavekal.com/search-result?search=&fr=&to=&au%5B%5D=29274&selectItemau%5B%5D=29274&items_per_page=.
31 Loren Brandt, Wang Luhang, and Zhang Yifan, “Productivity in Chinese Industry: 1998–2013” (manuscript, University of Toronto).
32 Nicholas Lardy, “Private Sector Development,” in China’s 40 Years of Reform and Development: 1978–2018, ed. Ross Garnaut, Ligang Song and Cai Fang (Canberra: ANU Press, 2018), 329–44.
33 Henry Paulson, Dealing with China: An Insider Unmasks the New Economic Superpower (New York: Hachette Book Group, 2015), 375.
34 Regina M. Abrami, William C. Kirby, and F. Warren McFarlan, “Why China Can’t Innovate,” Harvard Business Review 92, no. 3 (2014): 107–11.
35 Ibid., 108.
36 McKinsey Global Institute, China Effect on Global Innovation.
37 Ibid., 10.
38 Greg Levesque, “Here’s How China Is Achieving Global Semiconductor Dominance,” National Interest, 25 June 2018..
39 Ibid.; Abrami, Kirby, and McFarlan, “Why China Can’t Innovate.”
40 See “Number of University Graduates in China between 2007 and 2017,” Statista, available online at https://www.statista.com/statistics/227272/number-of-university-graduates-in-china/, accessed 9 August 2017.
41 An official development strategy was released in July 2017 with the goal of becoming the world’s AI leader by 2030; see “Code Red,” Economist, 27 July 2017.
42 See Wübbeke et al., Made in China 2025, 32, for a list of their smart factories.
43 Commission on the Theft of American Intellectual Property, “Update to the IP Commission Report: The Theft of American Intellectual Property: Reassessments of the Challenge and United States Policy” (Washington, DC: National Bureau of Asian Research, February 2017).
44 Susan Decker, “China becomes one of the top 5 US patent recipients for the first time,” Bloomberg, 9 January 2018, available online at https://www.bloomberg.com/news/articles/2018-01-09/china-enters-top-5-of-u-s-patent-recipients-for-the-first-time.
45 Nicholas Lardy, “China: Forced Technology Transfer and Theft?” Peterson Institute for International Economics, 20 April 2018.
46 Josef Stadler, “Why China’s business innovation can survive the trade war,” Financial Times, 9 November 2018.
3. Creating a Leading Financial System
1 It should be noted that such behaviour was not unique to China. In the wake of the global financial crisis, one of the major criticisms of the US regulatory system was that regulators’ knowledge and attention seriously lagged financial innovation.
2 See IMF, People’s Republic of China, IMF Country Report 17/247 (Washington, DC: IMF, 2017), 10, 19, available online at https://www.imf.org/~/media/Files/Publications/CR/2017/cr17247.ashx.
3 The other four include the US dollar, the yen, the euro, and the pound sterling.
4 Seigniorage refers to the profit accruing to government by issuing currency, the financial value of which is much higher than the cost of producing it.
5 Barry Eichengreen, “The Renminbi Goes Global: The Meaning of China’s Money,” Foreign Affairs 96, no. 2 (2017): 157–63; and Yu Yongding, “Backpedalling or a step forward in renminbi reform?” East Asia Forum, 18 July 2017.
6 Andrew Sheng and Ng Chow Soon, Shadow Banking in China: An Opportunity for Financial Reform (Chichester, UK: John Wiley & Sons, 2016), 16.
7 Tom Mitchell, “China tightens rules on asset management to rein in risky lending,” Financial Times, 17 November 2017.
8 See “China has made progress in tackling financial risks,” Financial Times, 16 June 2018.
9 Yizhen Tian and Gabriel Wildau, “Chinese banks launch standalone wealth management units,” Financial Times, 23 December 2018.
10 IMF, “IMF Executive Board Concludes 2018 Article IV Consultation.”
11 Morgan Stanley, “China’s eCommerce Revolution,” Morgan Stanley Blue Papers (New York: Morgan Stanley, 13 March 2015).
12 Arjun Kharpal, “Alibaba sets new Singles Day record with more than $30.8 billion in sales in 24 hours,” CNBC, 4 December 2018, available online at https://www.cnbc.com/2018/11/11/alibaba-singles-day-2018-record-sales-on-largest-shopping-event-day.html, accessed 20 February 2019.
13 Gabriel Wildau, “China bond party attracts few takers,” Financial Times, 20 April 2017.
14 “View: China’s real credit risk lurks in shadow finance,” Financial Times, 31 May 2017.
15 China Securities Regulatory Commission, China Capital Markets Development Report 2008 (Beijing, 2008), 289–90, available online at http://www.csrc.gov.cn/pub/csrc_en/Informations/publication/200911/P020091103520222505841.pdf.
16 Nicholas Borst, “China’s Bond Market: Larger, More Open and Riskier,” Blog Entries, Federal Reserve Bank of San Francisco, 20 May 2016, available online at http://www.frbsf.org/banking/asia-program/staff/nicholas-borst/.
17 Nicholas Lardy, “A Blueprint for Rebalancing the Chinese Economy,” Policy Brief PB13-02 (Washington, DC: Peterson Institute for International Economics, 2013), 15.
18 Andrew Sheng, “No Pain, No Gain,” University of Hong Kong, Asia Global Institute, 22 January 2016, available online at https://www.asiaglobalinstitute.hku.hk/news-post/no-pain--no-gain.
19 Jonathan Anderson, 2016. “Avoiding the Japan Trap: China’s Impending Minsky Moment,” China Economic Quarterly (March 2016): 9–16.
20 “China’s third party payments providers will sever direct ties to banks,” China Banking News, 6 April 2018, available online at http://www.chinabankingnews.com/2018/04/16/chinas-third-party-payments-providers-severe-direct-ties-bank/.
21 See “Governor Yi Gang announced measures and timetable for further financial sector opening-up at Boao Forum for Asia,” People’s Bank of China, 11 April 2018, available online at http://www.pbc.gov.cn/english/130721/3517991/index.html.
22 For details on these measures, see Kevin Rudd, “US-China Relations in 2019” (speech to the Asia Society, 5 December 2018), available online at https://asiasociety.org/blog/asia/kevin-rudd-us-china-relations-what-happens-next. See also China International Capital Corporation, “CICC: PRC Stresses Financial Support to Private Economy to Observe Subsequent Progress,” Aastocks, 12 November 2018, available online at http://www.aastocks.com/en/stocks/analysis/stock-aafn-content/00998/NOW.907318/all.
23 Lardy, State Strikes Back, e-book, loc 2534; and Elizabeth Economy, The Third Revolution: Xi Jinping and the New Chinese State (New York: Oxford University Press, 2018).
24 “The Chinese Economy: Package Deal,” Economist, 16 March 2019.
4. China Invests Abroad
1 All FDI data are from United Nations Conference on Trade and Development, World Investment Report 2018: Investment and New Industrial Policies ([Geneva]: UNCTAD, 2018), annex 2, figure. 4, available online at http://unctad.org/en/PublicationsLibrary/wir2018_en.pdf.
2 Karl P. Sauvant and Michael D Nolan, “China’s Outward Foreign Direct Investment and International Investment Law,” International Economic Law 18, no. 4 (2015): 893–934.
3 See JP Morgan, “China’s Increasing Outbound M&A: Key Drivers Behind the Trend,” 2017, available online at https://www.jpmorgan.com/global/insights/chinas-key-drivers; and PwC, “PwC M&A 2016 Review and 2017 Outlook,” January 2017, available online at https://www.pwccn.com/en/mergers-and-acquisitions/ma-press-briefing-jan2017.pdf.
4 As indicated in Table 4.1, these transactions are listed in chronological order, as reported in China Daily, 1 June 2017.
5 Don Weinland, “Chinese M&A boom faces regulatory checks,” Financial Times, 29 December 2016.
6 See “China’s Dalian Wanda 2015 revenue up 19 pct as diversification takes hold,” Reuters, 11 January 2016, available online at https://www.reuters.com/article/wanda-group-results-idUSL3N14V1DU20160111.
7 Zhang Shu and Matthew Miller, “China cracks down on Dalian Wanda’s overseas deals: Sources,” Reuters, 17 July 2017.
8 See Prudence Ho, “How HNA drama turned tragic as buying spree went sour,” Bloomberg, 5 July 2018, available online at https://www.bloomberg.com/news/articles/2018-07-05/hna-drama-turns-tragic-after-buying-spree-turns-sour-quicktake.
9 “Who owns HNA, China’s most aggressive dealmaker?” Financial Times, 2 June 2017.
10 Don Weinland, Arash Massoudi, and James Fontanella-Kahn, “HNA’s buying spree surpasses $40 billion with CWT deal,” Financial Times, 9 April 2017.
11 See “Lexmark announces completion of acquisition by Apex Technology and PAG Asia Capital,” News Release, 29 November, 2016, available online at http://newsroom.lexmark.com/2016-11-29-Lexmark-announces-completion-of-acquisition-by-Apex-Technology-and-PAG-Asia-Capital.
12 These platforms include QQ Instant Messenger, WeChat/Weixin, QQ.com, QQ Games, Qzone, and Tenpay.
13 Laura He, “Tencent is first Asian company to top US$500 billion in value, joining Apple and Facebook,” South China Morning Post, 21 November 2017.
14 Clair Jones, Javier Espinoza, and Tom Hancock, 2017. “Overseas Chinese acquisitions worth $75 billion cancelled last year,” Financial Times, 5 February 2017.
15 Missing from the lists is the largest-ever acquisition to date – of Syngenta, a Swiss agricultural firm, by the SOE ChemChina for $43 billion, which closed in 2017.
16 See Baker McKenzie, Rising Tension: Assessing China’s FDI drop in Europe and North America (New York: Rhodium Group, 2019).
17 See Thilo Hanemann, Adam Lysenko, and Cassie Gao, 2017. “Tectonic Shifts: Chinese Outbound M&A in 1H 2017,” Rhodium Group, 27 June 2917, available online at http://rhg.com/notes/tectonic-shifts-chinese-outbound-ma-in-1h-2017.
18 A major source for the ensuing discussion in this section is Thilo Hanemann, Daniel A. Rosen, and Cassie Gao, 2018. “Two-way Street: 2018 Update US-China Direct Investment Trends,” Rhodium Group, 10 April 2018, available online at http://rhg.com/notes/tectonic-shifts-chinese-outbound-ma-in-1h-2018.
19 Thilo Hanemann, Cassie Gao, and Adam Lysenko, “Net Negative: Chinese Investment in the United States in 2018,” Rhodium Group, 13 January 2019, available online at https://rhg.com/research/Chinese-investment-in-the-US-2018-recap.
20 Tom Hancock, “Chinese investment into US biotech startups soars,” Financial Times, 1 July 2018.
21 Ibid.
22 See Lardy, “China: Forced Technology Transfer and Theft?”
23 Sarah Kutulakos et al., Canada China Business Survey 2016 ([Toronto]: Canada China Business Council, 25 April 2017), 4.
24 United Nations Conference on Trade and Development, World Investment Report 2015: Reforming International Investment Governance ([Geneva]: UNCTAD, 2015), annex table 2.
25 See Wendy Dobson, “China’s State-owned Enterprises and Canada’s FDI Policy,” SPP Papers (University of Calgary, School of Public Policy) 7, no. 10 (March 2014).
5. The Belt and Road Initiative
1 World Bank, “Belt and Road Initiative,” Brief, 29 March 2018, available online at https://www.worldbank.org/enn/topic/regional-integration/brief/felt-and-road-initiative.
2 See, for example, John Hurley, Scott Morris, and Gailyn Portelance, 2018. “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective,” CGD Policy Paper 121 (Washington, DC: Center for Global Development, March 2018).
3 See Nadège Rolland, China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative (Seattle: National Bureau of Asian Research, 2017), 108.
4 “China encircles the world with One Belt, One Road strategy,” Financial Times, 3 May 2017.
5 Eswar Prasad, “Path to Influence,” Finance & Development 54, no. 3 (2017): 22–5, available online at https://www.imf.org/external/pubs/ft/fandd/2017/09/prasad.htm.
6 Hugh White, “China’s Belt and Road Initiative to challenge US-led order,” East Asia Forum, 8 May 2017.
7 See “How to respond to China’s Belt and Road Initiative,” East Asia Forum Weekly, 15 May 2017.
8 See European Bank for Reconstruction and Development, “Belt and Road Initiative” (London, n.d.), available online at https://www.ebrd.com/what-we-do/belt-and-road/overview.html.
9 See “FT View: China needs to act as a responsible creditor,” Financial Times, 29 April 2018.
10 “China encircles the world with One Belt, One Road strategy,” Financial Times, 3 May 2017.
11 For details, see Asian Infrastructure Investment Bank, “Approved Projects” (Beijing: AIIB, 2019), available online at https://www.aiib.org/en/projects/approved/.
12 See “China economy: Belt and Road Initiative Quarterly: Q2 2018,” Economist Intelligence Unit, 21 May 2018, available online at http://country.eiu.com/article.aspx?articleid=626742246&Country=China&topic=Economy.
13 See “China signs more trade deals with Belt and Road countries,” Xinhuanet, 31 May 2018.
14 See Gabriel Wildau and Ma Nan, “China new ‘Silk Road’ investment falls in 2016,” Financial Times, 10 May 2017.
15 Tom Miller, “The Belt and Road to Leadership,” China Economic Quarterly, June 2017, 9–16.
16 Miles Johnson, “Why would Italy endorse China’s Belt and Road Initiative?” Financial Times, 21 March 2019.
17 See James A. Millward, “Is China a colonial power?” New York Times, 4 May 2018.
18 Ibid.
19 Miller 2017.
20 Nadia Naviwala, “Pakistan’s $100B deal with China: What does it amount to?” Devex, 24 August 2017, available online at https://www.devex.com/new/pakistan-s-100b-deal-with-china-what-does-it-amount-to-90872.
21 Kamran Haider and Faseeh Mangi, “IMF bailout looms for Pakistan as debt surge raises alarm,” Bloomberg, 30 May 2018, available online at https://www.bloomberg.com/news/articles/2018-05-30/imf-bailout-looms-for-pakistan-as-debt-surge-raises-alarm .
22 For this update, see Adnan Aamir, “China’s Belt and Road plans dismay Pakistan’s poorest province,” Financial Times, 14 June 2018.
23 “Where Will China’s ‘One Belt, One Road’ Initiative Lead?” Knowledge@Wharton, 22 March 2017, available online at https://knowledge.wharton.upenn.edu/article/can-chinas-one-belt-one-road-initiative-match-the-hype/.
24 Ibid.
25 Neelam Deo and Amit Bhandari, “The intensifying backlash against BRI,” Gateway House, 31 May 2018, available online at https://www.gatewayhouse.in/bri-debt-backlash/.
26 James Crabtree and Blake Berger, “Malaysia GE (general election) a wake-up call on China projects,” Straits Times, 14 May 2018; see also Ben Bland, “Malaysian backlash tests China’s Belt and Road ambitions,” Financial Times, 24 June 2018; and Stefania Palma, “Malaysia resets China ties over ‘lopsided’ deals,” Financial Times, 10 July 2018.
27 Millward, “Is China a colonial power?”
28 “China’s Belt and Road Initiative is falling short,” Financial Times, 29 July 2018.
29 Hurley, Morris, and Portelance, “Examining the Debt Implications.”
30 “China needs to act as a responsible creditor,” Financial Times, 29 April 2018.
31 Linda Lim, “The BRI needs fewer Chinese characteristics,” East Asia Forum, 9 May 2018.
32 See, for example, Andrew M. Warner, “Public Investment as an Engine of Growth,” IMF Working Paper WP14/148 (Washington, DC: International Monetary Fund, 2014), available online at https://www.imf.org/external/pubs/ft/wp/2014/wp14148.pdf.
33 James Kynge, Lucy Hornby, and Don Weinland, “China development banks expand links with foreign lenders,” Financial Times, 15 July 2018.
34 David Lubin, “China’s Belt and Road at 5: One-to-many or many-to-many?” Financial Times, 19 October 2018.
35 The Paris Club is an informal group of official creditors whose role is to find and coordinate sustainable solutions to payments difficulties of debtor countries. See http://www.clubdeparis.org.
36 See Agatha Kratz, “China in the Asia-Pacific: High-speed Rail Blues,” China Economic Quarterly, June 2017.
37 See, for example, Lim, “BRI needs fewer Chinese characteristics”; and Alvin A. Camba and Kuek Jia Yao, “China’s Belt and Road Initiative paved with risk and red herrings,” East Asia Forum, 26 June 2018.
38 For this kind of argument, see Millward, “Is China a colonial power?”; and “Briefing: China’s Belt and Road Initiative,” Economist, 28 July 2018, 13–16.
39 Brenda Goh and Michael Martina, “China to recalibrate Belt and Road, defend scheme against criticism,” Reuters, 23 April 2019, available online at https://www.reuters.com/article/us-china-silkroad-forum/china-to-recalibrate-belt-and-road-defend-scheme-against-criticism-idUSKCN1S00AZ.
40 Xi Jinping, keynote speech at the Belt and Road Forum for International Cooperation 2019, Beijing, 28 April 2019, available online at http://www.cpecinfo.com/news/the-complete-text-of-president-xi-jinping-speech-at-the-belt-and-road-forum-for-international-cooperation-2019/NzAwMQ.
6. Living with China
1 The other signatories must be informed in advance about the intent to enter into such negotiations and to share any draft agreement with them before signing. If other signatories object to the proposed agreement, they may terminate the USMCA with six months’ notice – possibly replacing it with a bilateral agreement between the two remaining signatories. Initially this was seen as an infringement of Canada’s sovereignty, but it was pointed out that such information would normally be shared by trading partners as a courtesy, and in this case the United States has also bound itself.
2 These insightful perspectives are captured by Harvard professor Graham Allison in Destined for War: Can America and China Escape Thucydides’s Trap? (Boston: Houghton Mifflin Harcourt, 2017), chap. 7.
3 See Xi Jinping, “Openness for Greater Prosperity, Innovation for a Better Future” (address to 2018 Boao Forum for Asia, Hainan, 10 April 2018), available online at https://www.uscnpm.org/blog/2018/04/11/transcript-president-xi-addresses-2018-boao-forum-asia-hainan/.
4 Joshua P. Meltzer, “A Reformed China Is a Stronger China, and Such Is the US Dilemma,” East Asia Forum, 10 January 2019.
5 Available at https://www.hudson.org/events/1610-vice-president-mike-pence-s-remarks-on-the-administration-s-policy-towards-china102018.
6 See United States, National Security Strategy of the United States of America (Washington, DC: White House, 2017), available online at https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf.
7 See Paul Heer, “Understanding the Challenge from China,” Open Forum, 3 April 2018; and Michael D. Swaine, “The US Can’t Afford to Demonize China,” Foreign Policy, 29 June 2018.
8 Allison, Destined for War, 221–30.
9 The Society for Worldwide Interbank Financial Telecommunication code (SWIFT) and the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organization responsible for ensuring secure networks and stable operation.
10 David Mulroney, “Canada must see China for what it truly is,” Globe and Mail, 29 December 2018.
11 Paul Evans and Xiaojun Li, “February 2019 Survey of Canadian Attitudes on China and Canada-China Relations” (Vancouver, University of British Columbia, School of Public Policy and Global Affairs, 7 March 2019).
12 The discussion in this and the ensuing section draws upon Wendy Dobson and Paul Evans, “The Future of Canada’s Relationship with China,” IRPP Policy Horizons Essay (Montreal: Institute for Research on Public Policy, November 2015), available online at https://irpp.org/wp-content/uploads/2015/11/policy-horizons-2015-11-17.pdf.
13 See Canada, “Public Consultations on a Possible Canada-China FTA” (Ottawa: Government of Canada, 8 November 2017), available online at https://international.gc.ca/trade-commerce/consultations/china-chine/report-rapport.aspx?lang=eng.
14 Study Group on Global Education, Global Education for Canadians: Equipping Young Canadians to Succeed at Home and Abroad (Ottawa: University of Ottawa, Centre for International Policy Studies; Toronto: University of Toronto, Munk School of Global Affairs, November 2017), available online at http://goglobalcanada.ca/.
15 See Robert Fife and Steven Chase, “Ottawa launches probe of cyber security,” Globe and Mail, 19 September 2018.
16 Janyce McGregor, “Banning Huawei from Canada’s 5G networks could be costly for taxpayers,” CBC News, 17 February 2019, available online at https://www.cbc.ca/news/politics/huawei-canada-china-fipa-1.5021033.
17 Ivy Li, “Huawei, a Risk that Canadians Cannot Afford,” Inside Policy (Macdonald-Laurier Institute), March 2019, 25–6.
18 Robert Fife and Steven Chase, “No need to ban Huawei, Ottawa says,” Globe and Mail, 24 September 2018.
19 Kishore Mahbubani, “The US strategy is not the best way to deal with Huawei,” Financial Times, 6 March 2019 and Geoff Mulgan, “Build a global body to oversee telecom infrastructure,” Financial Times, 5 May 2019.
20 Dobson and Evans, “Future of Canada’s Relationship with China.”
21 Trade with EU members collectively is larger.
22 See Canada, Global Affairs Canada, Canada-China Economic Complementarities Study (Ottawa: Global Affairs Canada, 2012), available online at https://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/china-chine/study-comp-etude.aspx?lang=eng.
23 Ensuing discussion of this list draws from Dobson and Evans, “Future of Canada’s Relationship with China.”
24 See Dobson, “China’s State-owned Enterprises and Canada’s FDI Policy”; and Dobson and Evans, “Future of Canada’s Relationship with China.”
25 For the text of the Joint Statement, see https://pm.gc.ca/eng/news/2016/09/23/joint-statement-between-canada-and-peoples-republic-china.
26 Kerry Sun, “China-Australia Free Trade Agreement: Implications for Canada,” University of Alberta, China Institute Occasional Paper Series 2, no. 1 (2015), available online at https://cloudfront.ualberta.ca/-/media/china/media-gallery/research/occasional-papers/chaftakerrysun201503.pdf.
27 Ibid.
28 Laura Dawson and Dan Ciuriak, “Chasing China: Why an Economic Agreement with China Is Necessary for Canada’s Continued Prosperity” (n.p.: Dawson Strategic and Ciuriak Consulting, 2016).
29 More sophisticated than the China-Australia agreement, this option would draw on features of both the TPP and CETA in the comprehensive negotiations. See Patrick Leblond, “Toward a Free Trade Agreement with China: Opportunities, Challenges and Building Blocks” (Waterloo, ON: Centre for International Governance Innovation, 2017), available online at https://www.cigionline.org/person/patrick-leblond.
30 The seven sectors identified in the 2012 study are agriculture and agri-food; clean tech and environmental goods; machinery and equipment in agriculture and mining; natural resources and related products, including pulp and paper; services; textiles and related products; and transportation.
31 See Public Policy Forum, Diversification not Dependence: A Made-in-Canada China Strategy (Ottawa, 2018), available online at https://www.ppforum.ca/publications/diversification-not-dependence-a-made-in-canada-china-strategy/.
32 The sectoral arguments presented here are based in part on the 2012 Complementarities Study and on an unpublished analytical background paper that I contributed to the Public Policy Forum as a participant in the process leading to the final report, written by Edward Greenspon and Kevin Lynch.
33 Many of these suggestions are made by the Asia Pacific Foundation of Canada in “Toward a Canada-China FTA” (Vancouver: Asia Pacific Foundation of Canada, 2017), available online at https://www.asiapacific.ca/sites/default/files/filefield/canada-china_fta_report_final_1.pdf.
34 Canada China Business Council, “Canada-China Business Survey 2018/2019: Summary,” May 2019.
35 Nathaniel Vanderklippe, “Chinese visitor visa applications to Canada increase despite Huawei dispute,” Globe and Mail, 23 February 2019.
36 Marie-Danielle Smith, “Canadian companies start to benefit from membership in China-based infrastructure bank,” National Post, 25 March 2019.
37 Evan A. Feigenbaum, “Reluctant Stakeholder: Why China’s Highly Strategic Brand of Revisionism is More Challenging than Washington Thinks,” Carnegie Endowment for International Peace, 27 April 2018, available online at https://carnegieendowment.org/2018/04/27/reluctant-stakeholder-why-china-s-highly-strategic-brand-of-revisionism-is-more-challenging-than-washington-thinks-pub-76213.
38 The United Front of the Chinese Communist Party is part of the Party structure that works to reach out to, represent, and guide key individuals and groups in China and abroad; see, for example, Kuo, Mercy M. Kuo, “China’s United Front Work: Propaganda as Policy,” Diplomat, 14 February 2018, available online at https://thediplomat.com/2018/02/chinas-united-front-work-propaganda-as-policy.
39 For an account of CPC influence on public discourse in Canada, see Jonathan Manthorpe, Claws of the Panda: Beijing’s Campaign of Influence and Intimidation in Canada (Toronto: Cormorant Books, 2019).
40 Damian Cave and Jacqueline Williams, “Australian law targets foreign interference. China is not pleased,” New York Times, 28 June 2018, available online at https://www.nytimes.com/2018/06/28/world/australia/australia-security-laws-foreign-interference.html.
40 See “Australia’s decision to ban billionaire seen as pushback against Chinese foreign influence,” CNA International Edition, 7 February 2019, available online at https://www.channelnewsasia.com/news/world/australia-ban-billionaire-pushback-chinese-influence-politics-11209068.
42 For a summary, see, for example, “China and the West; at the Sharp End,” Economist, 16 December 2017, 20–2.
43 David Mulroney, “With another life at stake, Ottawa’s misguided vision of Beijing demands a reboot,” Globe and Mail, 1 May 2019.