This month, Xi Jinping will complete two years as China's President. Domestically, Xi has made his mark by an unprecedented and controversial crackdown on corruption and the creation of a personality cult not seen since the days of Mao. On the foreign policy front, one of priorities has been the revival of China's links to the rest of the Eurasian continent through the construction of so-called "silk roads". An increasingly common short-hand for his vision is "One Belt, One Road", referred to in the Chinese media simply as "OBOR". It alludes to overland "economic belts" and "maritime roads" that reach all the way to Europe.

Xi's OBOR initiative serves a dual purpose. Domestically, he hopes that better transport links will promote growth in underdeveloped central and western regions such as Xinjiang, Gansu Province, Ningxia, Guangxi and Yunnan Province. That would not only boost overall GDP, but also reduce regional economic inequality, and thus migration into the coastal areas, a trend that may contribute to social tension. An economic boom in Xinjiang is also seen as the best way to combat the rise of Islamic extremism in the region.

Xi's Pivot to Eurasia

From a foreign policy perspective, the most immediate goal of the OBOR initiative is to boost China's influence in Central Asia, a resource-rich region that no longer falls into Moscow's orbit. As a growing number of countries becomes dependent on Chinese transport and energy infrastructure, stronger economic ties will make it increasingly costly for Central Asian governments to oppose China.

Different from the ancient Silk Road, which mainly focused on trade, the "One Belt and One Road" could also include the flow of financial services, information, technology and people. China will involve its neighbors in a series of institutional setups - such as the Asian Infrastructure Investment Bank (AIIB), the CICA security architecture, and corridors through Pakistan and Myanmar to the Indian Ocean that may, in the medium term, contribute to the creation of a increasingly sinocentric Asia.

According to China's Foreign Minister Wang Yi, 2015 is crucial in promoting and carrying out the "Belt and Road" initiatives:

China's development of a new-type of international relations in 2015 will focus on interacting with neighboring countries, including China-Japan-South Korea trilateral cooperation, North Korea, India and members of the Association of Southeast Asian Nations, said Liu Jiangyong, vice director of the Modern International Relations Institute at Tsinghua University. "The 'Belt and Road' initiative will not only focus on infrastructure to physically connect [these countries], but also to explore free trade agreements.

Train connections from Chongqing to Duisburg (Germany) and Yiwu to Madrid are now a reality and have dramatically reduced transport times, but their economic impact will be limited to expensive goods. While trains now take a mere 2 weeks between China and Europe, they can only carry several hundred containers. A large ship, by contrast, can carry several thousand containers at a third of the cost. Bureaucratic hurdles at border crossings and different track standards further complicate train transports, even though China hopes to reduce such difficulties. In addition to the "economic belt", Xi Jinping therefore envisages a "maritime road" from China's Quanzhou in Fujian province to Europe, via the Malacca Strait, Kuala Lumpur, Sri Lanka, Nairobi and Djibouti.

Western analysts often point out that China is likely to encounter strong resistance to its plan to strengthen connectivity both on land and sea. Among others, resurgent Russia and a more ambitious India are supposedly eager to block Beijing's schemes. While such a possibility indeed exists, Chinese roads and ports are more likely to be welcomed with open arms by those who rightly see them as a chance to boost economic development. Considering that China is the world's second largest economy and no.1 trading partner of many countries around the world, anti-China sentiment is still remarkably limited. As long as China assures that others interpret OBOR as a win-win situation, China's pivot to Eurasia will cement, not undermine, China's regional leadership claims.

Read also:

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Washington’s short-sighted opposition to China’s new regional development bank

Why the Boao Forum matters

Since last year, a small but vocal number of Western commentators and politicians have been calling for banning Russia from the SWIFT payment system, a move that would impact Russia's economy far more than the economic sanctions adopted so far. Recently, Prime Minister David Cameron suggested keeping the option of excluding Russia from the Belgian-based payment system on the table. Considering that there is a broad interest in "raising the cost" for President Putin, and that military engagement is highly unlikely, the SWIFT option is indeed a possibility.

Policy makers in Beijing are likely to be secretly rooting for such a move, for it would benefit China in several ways.

First, asking SWIFT (the Society for Worldwide Interbank Financial Telecommunication) to stop working with Russian banks would affect the Russian economy far more than countries like Iran, because Russia's economy is much more globalized and interconnected, and thus more vulnerable to such restrictions. SWIFT sanctions would push Russia further into China's economic orbit and become less of a competitor in Central Asia. Just like the recent Sino-Russian gas deal, most new deals Moscow strikes with Beijing would be highly beneficial for China.

Secondly, and most importantly, the move would weaken SWIFT as a global standard. The cooperative organization plays a crucial role in the world financial system, and its perceived neutrality is its key strength. Pushing Russia out of the SWIFT banking payment system would send a powerful message to decision-makers in Beijing that the service has turned into a tool of Western foreign policy. If Moscow can be targeted, the thinking goes, China could be next at some point in the future. Efforts to strengthen new platforms such as China Union Pay, an alternative payment system set up in 2002, would thus likely to be accelerated in order to obtain greater autonomy. Russia, aware of the West's discussions about cutting Russia off SWIFT, has been working on an alternative system, yet Moscow would, in any case, also opt for embracing China Union Pay.

While other large economies that have not joined the West in condemning Russia -- such as India and Brazil -- would continue to using SWIFT, they would also begin to look out for alternative mechanisms to continue doing business with Russia, possibly further strengthening Union Pay's international footprint. The Chinese interbank credit-card association already accounts for 45% of all credit and debit cards in circulation and is now accepted in 135 countries. The exclusion of Russia from the SWIFT system would also strengthen those in China and Russia who seek to avoid the US-dollar when doing intra-BRICS trade.

For now, the Western financial system remains firmly in control. That is mainly due to the strength of the US dollar. 87% of international trade is still conducted in US dollars and 61% of global foreign-exchange reserves is denominated in the currency. Yet the more profound and lasting Russia's estrangement with the West becomes, the more likely the emergence of alternative systems -- most likely to be led by China -- will become.

Read:

OBOR: China’s Pivot to Eurasia

How the Chinese-financed Nicaragua Canal would change regional dynamics

Responsible Protection: Chinese norm entrepreneurship?

In a rare open disagreement between London and Washington, aligned on virtually any major foreign policy issue over the past decades, Britain has become the first major Western government to apply for membership in the Chinese-led Asian Infrastructure Investment Bank (AIIB), an initiative bitterly opposed by US foreign policy makers. By announcing Britain's intention to be part of the Chinese-led bank, David Cameron has made a bold move that is proof of a far more sophisticated understanding of global affairs than on the other side of the Atlantic. Other major economies such as Germany, France and Brazil should follow Britain's lead.

At the AIIB's signing ceremony last year, twenty-one countries signed the founding document, including all major actors in South-, Central- and South-East Asia, aside from Kuwait, Oman and Qatar. China plans to contribute $50 billion US-dollars, hinting that it may double the amount.

There is an undeniable demand for fresh capital to modernize Asia's infrastructure. In a much-cited study, the Asian Development Bank (ADB) said that the region needed $8 trillion US-dollars of investments in infrastructure in the current decade to put Asia on a sustainable growth trajectory. Yet particularly countries such as Myanmar lack the means to do so, and existing institutions such as the Asian Development Bank cannot satisfy existing demand. The ADB lends little more than US$10 billion a year for infrastructure development. Its president is traditionally named by Japan, even though China is by far the region's largest economy.

Over the past year, the United States and Japan have undertaken a regional diplomatic offensive to convince Indonesia, South Korea and Australia -- among others -- to reject China's invitation to join the AIIB, thus reducing the new institution's respectability and making it look more than a sinocentric institution - precisely what Beijing seeks to avoid to not be seen as a regional bully. US motivations are clear: A potent AIIB with broad regional support would reduce the influence of both the World Bank and the Asian Development Bank, dominated by Washington and Tokyo respectively. Indeed, despite the risks, the rise of a China-led development bank would increase both China's influence and its soft power in the region, a trend that could dramatically limit Washington's capacity to build alliances in Asia based on the common aversion to Beijing.

The arguments used by US-policy makers are largely unconvincing, and it was only after severe diplomatic pressure that Indonesia, Australia and South Korea have decided not to join the AIIB - for now. However, in all three countries, powerful voices are beginning to argue that rejecting China's invitation deprives them of influencing the way a key regional institution will be run. In the medium-term, Japan may become the only country not to become part of the new institution.

Yet Washington's opposition to the AIIB is not only likely to be futile, it also hurts US national interest: Citizens across Asia will recognize that the United States seeks to maintain influence in the region, while caring little for the well-being of Asia's poor, who are in dire need of better infrastructure. The argument that the AIIB does not recognize the environmental and governance standards the World Bank or the Asian Development Bank adhere to may have some truth to them, but rejecting the institution for that reason is inadequate.

A more coherent response would have been to embrace the new initiative and incentivize member countries (many of which are US allies) to push more rigorous standards. Paradoxically, by pressuring Seoul and Canberra to stay out of the new institution, Washington lost two actors through which it could have indirectly influenced the AIIB. Now, Britain, in a shrewd reading of the situation, has correctly decided that joining the bank is the best way to go forward. Rather than denying China's its rightful place as a major power (and hence, sponsor of major institutions), Britain has decided to engage in one of them and seek to exercise its influence from within.

US policy makers are right to recognize the AIIB as yet another step by Beijing to create a regional that can complement existing Western-led institutions. Other China-led institutions are the Shanghai Cooperation Organisation (SCO) and the Conference on Interaction and Confidence Building Measures in Asia (Cica). Whether China-led institutions will succeed does not depend on the United States, but on Beijing's capacity to convince its neighbors that China's rise is good (and not dangerous) for the entire region. While the outcome of China's bid to regional hegemony is far from clear, the United States active opposition to projects that could benefit the region are likely to play into China's hands.

Most problematically, Washington's opposition underlines how insincere US foreign policy makers' calls on rising powers to become "responsible stakeholders" is -- after all, there are few better examples of China "stepping up to the plate" than providing $50 billion for regional infrastructure development. While surprising to some in Washington, it is obvious that rising powers want to assume responsibility on their own terms rather than accepting the rules and norms established by US-led institutions.

The United States' unwillingness to accept anything but its own leadership or that of its allies points to a complex transition to actual multipolarity in which other powers, such as China, reduce US room for maneuvre in some parts of the world. This stance implies a deep sense of insecurity by US policy makers that is both exaggerated and unnecessary. Britain may play a crucial role in reducing the tensions during the transition into a more multipolar order.

The Economist correctly points out why Britain may be better-positioned to understand how to deal with a rising China: 

An anonymous American official quoted by the Financial Times says America is “wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.” Cynical Britons might point out the strategy worked well enough a century ago when Britain was the incumbent power and America on the rise. But that is not an analogy that will go down well in Washington.

Read also:

OBOR: China’s Pivot to Eurasia

Why the Boao Forum matters

China’s parallel global order

Banco de investimento chinês cria era de multipolaridade, diz especialista

Oliver Stuenkel, especialista da FGV em emergentes, diz que os EUA usam a ajuda militar como principal moeda de troca para impedir a adesão de países como o Japão e a Índia ao banco de investimento criado pela China, que já tem apoio dos países europeus.

Florência Costa florencia.costa@brasileconomico.com.br e Gabriel Vasconcelos gabriel.vasconcelos@brasileconomico.com.br

http://brasileconomico.ig.com.br/mundo/2015-03-18/banco-de-investimento-chines-cria-era-de-multipolaridade-diz-especialista.html

As crescentes articulações de Pequim a fim de atrair parceiros para o Banco Asiático de Investimento em Infraestrutura (AIIB), sob seu comando, incomodam a diplomacia americana. De acordo com Oliver Stuenkel, professor de Relações Internacionais da FGV-São Paulo, especialista em países emergentes, a principal moeda de troca dos Estados Unidos será os acordos de proteção militar. Mas ele avisa: não será fácil impedir a “ascensão lenta e sutil” da influência global chinesa. Segundo Stuenkel, este é o início de uma nova era de multipolaridade em que a China se afirma como polo de poder pela primeira vez em duas décadas.

A decisão de potências europeias de aderir ao Banco Asiático de Investimento em Infraestrutura (AIIB) denota uma nova ordem geopolítica independente dos EUA?

A capacidade da China de criar uma instituição e convencer as principais potências europeias a participarem aponta para uma mudança importante na ordem global. Mas, neste momento, essa mudança é simbólica. Este banco ainda não vai substituir o Banco Mundial no curto prazo. Também já existem outras instituições como o Banco Asiático de Desenvolvimento. Vamos ver nos próximos anos uma convivência entre essas instituições. Mas temos observado uma campanha diplomática dos EUA para evitar que seus aliados integrem a iniciativa. É o início de uma nova era de multipolaridade, em que a China se afirma como polo de poder pela primeira vez em duas décadas. Ser líder de uma instituição que reunirá tantos outros países importantes, dá legitimidade à China, algo que só os EUA tinham até então.

Quanto tempo vai demorar para o novo banco se tornar uma opção real para países que buscam financiamento?

Será uma decisão da China. Mas não será uma coisa tão complexa. O lançamento desse banco não deverá demorar mais de um ou dois anos. Os primeiros projetos surgirão já em 2017. Nas próximas semanas vários países vão se juntar ao grupo. A Inglaterra tomou uma decisão muito inteligente porque se tornou o primeiro país europeu a aceitar o convite. Ela fez isso numa tentativa de tornar-se a porta de entrada para investimentos chineses na Europa. Há uma luta entre Londres e Frankfurt para ver qual vai ser o polo principal de investimentos da China. Há entre os europeus uma disputa pelo capital chinês. Mas além dos países europeus, outros entrarão. A grande questão é saber se nações como Japão, Austrália e Coreia do Sul serão membros fundadores ou entrarão mais tarde.

Qual será o impacto do banco chinês no Banco dos Brics?

A criação do banco do Brics já está mais avançada. A China está construindo o prédio em Xangai, o governo indiano está próximo de escolher o primeiro presidente, e a gente provavelmente vai ver o banco em atuação a partir do ano que vem. O banco do Brics faz parte de um novo tipo de instituição liderada por países emergentes. Também faz parte de um grupo no qual a China tem uma liderança importante. Eu não acho que este novo banco vá prejudicar o trabalho do banco dos Brics. Temos uma demanda de infraestrutura tão grande que nenhum banco consegue suprir sozinho. Esses dois bancos representam, do ponto de vista de Washington, uma ameaça que a médio e longo prazo vai enfraquecer as instituições baseadas nos EUA, como o Banco Mundial e o FMI.

Como os EUA tentarão evitar as adesões?

Continua lendo aqui.

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The decision by Europe's largest economies to become founding members of the AIIB, the new Chinese-led development bank is an unmistakable sign of the dawn of a more multipolar order. It is only a question of time before Japan, South Korea, Australia and eventually the United States will follow Great Britain's lead and join the Asian Infrastructure Investment Bank (AIIB), just like Germany and France have just announced. Policy makers in London, Berlin in Paris are right to support Beijing for a number of reasons.

First, being part of the new bank will allow European powers to participate in the decision-making process of what seems to become a key international financial institution over the coming decades. This will allow them to push for more rigorous enrironmental and human rights standards, but also strengthen their presence in a region that is in the process of reemerging as the world's economic center. London and Frankfurt are also competing for becoming the leading financial market place for Chinese capital. Even if the AIIB fails to take off (a possible scenario given how difficult it is to set up such a bank), the blame would be placed on China, not on the other member states.

In addition, a regionally well-integrated and accepted China is an important step towards assuring long-term stability in Asia. Irrespective of whether one believes that trade reduces the risk of war, joint regional infrastructure projects are widely seen as strengthening cooperation between governments in a region that still lacks a strong institutional framework.

While Washington tried to convince other countries not to join the AIIB (thus turning the issue into a diplomatic contest), the United States is unlikely to punish Britain and others for their move. The World Bank continues to enjoy ample support, and even a wildly successful Asian Infrastructure Investment Bank is unlikely to overshadow existing institutions anytime soon. Even World Bank Group President Jim Yong Kim welcomed the new multilateral infrastructure bank, saying there was a "massive need" for new investment in this area.

With a March 31 deadline looming for countries to gain “founding member” status, Brazil should be part of Beijing's initiative. While Brazil is already a member of the New Development Bank (often called BRICS Development Bank), there are signs that the AIIB will be larger and economically more powerful. While the NBD will invest in projects in the BRICS and other developing countries all over the world, the AIIB will focus on Asia alone -- a region that has long become far too important for Brazil to ignore. Today, China's "One Belt One Road" initiative (often simply called "OBOR") is known only to a small number of specialists in Brazil, yet Brazil's economic interests will increasingly be affected by it. China may already be Brazil's most important trading partner, but Brazilian diplomacy, academia, private sector and civil society must learn far more about China in order to understand the consequences of its rise.

Joining another developing bank in times of a domestic economic crisis may sound counterintuitive. The potential long-term benefits of being a founding member of the AIIB, however, could be considerable. Other countries that suffer from anemic growth, such as Italy, have expressed their desire to join. Even a small contribution would grant Brazil a seat at the table of the powerful. The next ten days offer Brazil a rare window of opportunity to become the AIIB's only founding member from the Western Hemisphere.

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Can Brazil learn to manipulate China?

Book review: “The Party: The Secret World of China’s Communist Rulers” by Richard McGregor

China vs. India: Will the “contest of the 21st century” lead to war?

In the wake of unprecedented Chinese institutional entrepreneurship, several analysts (myself included) have pointed to the creation of a potential Chinese-led "parallel order", which would, while not confrontational, greatly enhance Chinese autonomy and create, for the first time, a credible pole of power outside the United States' orbit. In this context, the Conference on Interaction and Confidence Building Measures in Asia (CICA) is often cited.

However, what is often forgotten is that CICA is not a new institution, and neither has it been invented by China. The idea was launched by Kazakhstan's President Nursultan Nazarbayev during the 1992 UN General Assembly, yet it would take almost a decade and the terrorist attacks of September 11, 2001, for CICA to convene a meeting for the first time. Since then, the grouping has met every two years. It was in 2014 when Xi Jinping used the summit in Shanghai as a platform to articulate his broader vision, entitled “United and Harmonious Asian Countries move together towards future”. The encounter was marked by the highest attendance of heads of state and government since the institution's creation. In a direct reference to the United States' presence in the region, the Chinese president called for the creation of a "new security architecture" and argued that "Asian problems should be solved by Asian people" -- an phrase that has been criticized by commentators given its reminiscence of Japanese attempts to rule the region in the 1930s. Xi's insistence that “No matter how strong China gets,it will never become a hegemon" is not yet fully convincing to all countries in the region.

It is thus not entirely wrong to cite CICA in the context of China's growing institutional activism, largely because Xi Jinping has revived CICA and given it a new significance as one of Asia's main platforms for regional security affairs -- a move that can be interpreted as a response to the United States' pivot to Asia.

Yet beyond limiting US influence in Asia, Beijing regards CICA as a useful mechanism to convince its neighbors that China's rise will benefit the region as a whole. In this sense, it complements other regional projects such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund, all of which are meant to boost regional support for Chinese leadership.

The key question will be whether smaller Asian countries would trust a security framework led by China (and, to a lesser degree, Russia) rather than the United States. CICA will hardly convince policy makers in Tokyo, Seoul and beyond to abandon decade-old security alliances with the United States anytime soon. Japan, Indonesia, Australia, the Philippines, Myanmar and Malaysia are not part of CICA to begin with, and it will require a long and arduous diplomatic effort by Beijing to convince them to join.

Beijing's goal is certainly not to push the United States out of the region immediately -- any overtly aggressive move towards that aim would achieve the opposite. Yet China will prepare the ground in a way that, should the United States one day no longer be able or willing to sustain its role in Asia, Beijing will be able to step in.

Several analysts have pointed out that CICA is mere symbolism, since issues such as terrorism are sufficiently covered by existing regional institutions such as the Shanghai Cooperation Organization (SCO). They overlook that Beijing's strategy is more subtle, creating a host of organizations that, in their entirety, strengthen regional socialization that may slowly reduce the resistance to Chinese activism among Asia's policy making elites. That partly explains why China has chosen to focus on topics such as anti-terrorism and infrastructure, issues all countries in the region can easily agree on.

A Post-American security architecture is still a long way off, and it is far from certain whether it will ever become a reality. And yet, it is undeniable that China's institutional activism will profoundly influence regional dynamics in the coming years.

Eluding the two facile and overly simplistic extremes of either confronting or joining existing order, the creation of several China-centric institutions will allow China to embrace its own type of competitive multilateralism, picking and choosing among flexible frameworks, in accordance with its national interests.

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China’s parallel global order

Book review: When China Rules the World. The Rise of the Middle Kingdom and the End of the Western World. by Martin Jacques. Penguin, 2012, 848 pages (U$ 15.14, paperback, www.amazon.com) 

Five years ago, Martin Jacques published When China Rules the World, followed by an extended paperback version in 2012. Perhaps only second to Fareed Zakaria’s The Post-American World, published a year earlier, Jacques’ book became a symbol of the global hype around the decline of the West and the “rise of the rest”, which was fuelled by the financial crisis in the United States. China, as a ‘civilization-state’, Jacques repeated in interviews across the world, would rise on its own terms. Its impact would be not only economic but also cultural and political, leading to a global future of ‘contested modernity’. Martin Jacques' TED talk, which summarizes the main arguments of his book, has been watched over 2 million times over the past years, becoming one of the most popular International Affairs-related presentations on the online platform. The book has been translated into eleven languages, and sold over a quarter of a million copies worldwide.

Why was When China Rules the World such a massive success? After all, the chapters that deal with the West's, Japan's and China's history (2, 3 and 4) hardly reveal anything new and can safely be skipped by those familiar with the subject, even though he rightly criticizes historians who regard the rise of Europe as an endogenous phenomenon. More importantly, however, his gentle treatment of Mao is somewhat disturbing, as is his explicit admiration for China's Communist Party. In addition, Jacques' thoughts on the future of global order and the recreation of the tributary system are both shallow and ill-conceived.

Rather, contrary to most other analysts who see China's rise mostly in economic terms, or International Relations scholars who engage in abstract debates about the implications for global order, Jacques' analysis is essentially sociological and cultural, arguing that even a rich, modern and globally integrated China will never be Western:

There has been an assumption by the Western mainstream that there is only one way of being modern, which involves the adoption of Western-style institutions, values, customs and beliefs, such as the rule of law, the free market and democratic norms.

More than that, the author affirms, the economic side of the story has lulled the West into a false sense of security. “The mainstream Western attitude has held that, in its fundamentals, the world will be relatively little changed by China’s rise,” he writes. Yet China's political and cultural effects are "likely to be at least as far-reaching" and the West will lose its monopoly on defining modernity.

Jacques asserts that most analyses about the rise of China are blinded by Western-centrism, which leads us to vastly overestimate the importance of Western civilization as we look towards the future of international affairs. We have, Jacques writes, come to take Western hegemony for granted: "It is so deeply rooted, so ubiquitous, that we think of it as somehow natural." He argues that

We stand on the eve of a different kind of world, but comprehending it is difficult: we are so accustomed to dealing with the paradigms and parameters of the contemporary world that we inevitably take them for granted, believing that they are set in concrete rather than themselves being the subject of longer-run cycles of historical change.

The title of the book is both overly dramatic, misleading, and was probably merely chosen to boost sales. China is highly unlikely to dominate the world culturally, partly because the Zhonghuaxing – ‘Chineseness’ – is highly exclusive, as the author readily concedes, so the world's population will probably never be profoundly influenced by a Chinese type of Leitkultur. A title more faithful to the book's content would have been something like "The Rise of China and Contested Modernity", for Jacques -- correctly, I believe -- argues that

The rise of competing modernities heralds a quite new world in which no hemisphere or country will have the same kind of prestige, legitimacy or overwhelming force that the West has enjoyed over the last two centuries. Instead different countries and cultures will compete for legitimacy and influence.The new world, at least for the next century, will not be Chinese in the way that the previous one was Western. We are entering an era of competing modernity, albeit one in which China will increasingly be in the ascendant and eventually perhaps dominant.

Some of Jacques' predictions are conservative. He writes that

For perhaps the next half-century, it seems unlikely that China will be particularly aggressive. History will continue to weigh very heavily on how it handles its growing power, counselling caution and restraint.

Several more, however, strike the reader as fanciful (for example, that Mandarin will rival English as the world's lingua franca), and many of them are based on very optimistic growth forecasts developed during the first years of the 21st century. As such, When China Rules the World must be read as a provocation, rather than the only source of information for a public discussion on the future of China. The author himself acknowledges that political upheaval could reduce Chinese growth, and thus its capacity to influence others. Yet Jacques is notably silent on the many signs of discontent in Chinese daily life -- corruption, pollution and the growing number of protests -- that anyone who will spend more time in the country will witness first hand.

Still, five years after its publication, many of Jacques predictions still seem largely valid: “One of the consequences of China’s growing economic importance has been that the great majority of countries in the region have become more closely aligned with it.”, he writes. Beijing's recent diplomatic success, when even countries skeptical of China, such as South Korea, sought membership of the new Asian Infrastructure Investment Bank, seem to support that argument.

Most recently, David Shambaugh, a leading US-American China expert, made the bold prediction that the Communist Party is about to collapse, an event that could dramatically change China's long-term perspectives. One day, China may indeed become a democracy, like Taiwan. Such points of view need to be taken into consideration by policy makers around the world as they design their strategies vis-à-vis China. Yet it is as important that they consider Jacques' more bullish argument.

Read also:

CICA: Another step towards a Post-American security architecture in Asia?

Why Britain is right to join China’s new development bank

Why China would benefit from Western SWIFT sanctions against Russia

Book review: A Contest for Supremacy. China, America, and the Struggle for Mastery in Asia. By Aaron L. Friedberg. W.W. Norton & Company, 2011. 385 pages. R$ 32,46 (www.amazon.com.br, kindle)

Britain launched the Industrial Revolution and built a global empire with a comparatively small population, and the United States created the myth of the sole superpower with a population on the order of 100 million people (a century ago). What will the industrialization of China, with its 1.3 billion people, mean for the world? 
                                                                      Prof. Jin Canrong, China's People's University

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How can we explain the United States' diplomatic disaster in the context of the China-led Asian Infrastructure Investment Bank (AIIB)? How could policy makers in Washington so seriously misjudge their capacity to convince countries around the world -- ranging from Britain, Germany, Brazil, South Korea, Japan and Australia -- not to join the new institution? Perhaps more perplexing still, why did it frame the creation of the AIIB as a diplomatic contest in the first place? Had the United States early on sought membership of the bank, or merely decided not to comment on the issue, observers around the world would not pay as much attention to the institution today, or interpret it as a watershed moment in the transition from unipolarity to multipolarity.

Washington's strategy vis-à-vis the AIIB -- to frame it as a contest with China -- points to a group of intellectuals and policy makers who regard the rise of China mostly in the context of inevitable tension and possible conflict. One example of this school of thought is Aaron Friedberg, a Princeton professor with some policy experience, who wrote, a few years back, the book A Contest for Supremacy about US-China relations in Asia.

It only takes a few pages for the reader to grasp Friedberg's unequivocal opinion. An intense geopolitical rivalry between the United States and China is already underway in Asia, and unless the United States responds more vigorously than it has to date, the military balance in the Western Pacific is going to start to tilt sharply in China's favor: 

If the United States can stay in the game, it should have a good change to ultimately win. But if America and its allies permit their position to erode until it is too late to respond, they could yet lose the struggle for mastery in Asia.

Non-American readers will find the tone of A Contest for Supremacy oddly nationalistic and seemingly aligned with US government rhetoric. If, the author writes, "we permit China as presently constituted to dominate Asia, our prosperity, security and hopes of promoting the further spread of freedom will be seriously impaired." Indeed, it seems to be precisely this type of sweeping rhetoric that makes future confrontation difficult to avoid.

Many of Friedberg's assertions lack a proper explanation. He incessantly points out that the "ideological chasm" -- the fact that China is not a democracy -- significantly enhances tensions between Washington and Beijing. He does not consider that an authoritarian government in China may reduce nationalist sentiment that may actually help, not hinder, the bilateral relationship. The author often quotes Thucydides, yet seems to forget that the national interests of a rising power do not necessarily depend on its political regime. His argument that a democratic China would be less likely to launch a surprise attack on the United States seems unconvincing.

Friedberg recognizes that a strong economic relationship between the United States and China may contribute to avoiding conflict, yet in the end, he even turns trade into a potential cause for friction, arguing that "if disputes over trade imbalances, exchange rates, investment flows, access to and control over scarce commodities become increasingly vituperative (....), the entire relationship could unravel with surprising speed."

Though well-written, A Contest for Supremacy has a somewhat bland feel to it, and his historical analysis is a summary of well-known facts. Expressions like "if it is true that democracies really never fight each other" leave the reader uncertain of what the author actually believes -- after all, can two democracies start a war between each other or not? 

Those who have read Henry Kissinger's On China can safely skip the first several chapters -- still, in the chapter "Congagement", Friedman nicely describes the contradictory interests that shaped US policy towards China during the Clinton years. The author comes out as a supporter of a mix of engagement and containment: "there is no alternative approach that is clearly superior on its merits." He furthermore bemoans that "respectable opinion" in academic, politicial and policy-making circles is still solidly behind engagement and wary of balancing. What Friedberg overlooks is that perhaps engagement has more supporters simply because it is the more sensible choice -- and not because it is politically more correct. The author stubbornly writes that "China is too important to leave it to the China experts" -- yet it was precisely the China watchers that urged the United States to join the AIIB as soon as Xi Jinping announced its creation. Such a -- more collaborative -- move would have avoided the rare diplomatic humiliation Washington experienced during the global rush to join China's new bank. 

Friedberg rightly points out that, as China's economic strength and capacity to help promote development in its neighborhood increases (through initiatives like OBOR, the Silk Road Fund, the AIIB and CICA), the United States may find it ever more difficult to justify its continued military presence around China in the name of global public interest - such as preventing a nuclear arms race, fighting terrorism, or assuring maritime security. If Beijing manages to be seen as a boon, rather than a threat, for regional economic development and political stability, Washington's position will weaken -- even though, despite Japan's surprising decision to join the AIIB, such a scenario still seems unlikely in the medium term.

In the end, though, Friedberg's focus on regime change in China seems excessive and misplaced, largely because there is no evidence that democratization would help U.S. national interest. (Read also: Should the world root for democracy in China?) "The ultimate aim of the American strategy", he writes, "is to hasten a revolution, albeit a peaceful one, that will sweep away China's one-party authoritarian state and leave behind a liberal democracy in its place." His assertion that when far-reaching political change comes to China, "it will doubtless owe something to America's long-standing policy of engagement" seems delusional and vastly exaggerates US influence in Chinese domestic affairs. Friedberg never recognizes the obvious: Even a democratic China would seek regional hegemony and work towards limiting US influence in Asia.

Eluding the two facile and overly simplistic extremes of either confronting or joining existing order, the creation of several China-centric institutions will allow China to embrace its own type of competitive multilateralism, picking and choosing among flexible frameworks, in accordance with its national interests. That will make it extremely difficult for the United States to limit China's influence without being seen as a self-interested bully.

Still, Friedberg is certainly right that while the long-term odds are in Beijing's favor, Chinese hegemony is far from preordained. Demographic challenges, rising inequality, environmental disaster, political protests and regional conflict are all factors that could dramatically slow down China's rise. The greatest dilemma that policy makers in Washington face is that, from a purely economic point of view, the United States should do everything possible to help China continue its growth trajectory.

Read also:

Book review: “Why the Rise of the Rest Is Good for the West” by Charles Kenny

Why Britain is right to join China’s new development bank

China’s parallel global order

China vs. India: Will the “contest of the 21st century” lead to war?

Missing China: A world map depicting social connections on Facebook (https://www.facebook.com/note.php?note_id=469716398919)

Post-Western World's facebook page's roughly fifteen thousand followers ("fans") hail from 45 different countries around the world. While most are based in large countries like Brazil, followed by India, Pakistan, the United States and Russia, the list also includes less populous nations like Afghanistan, Belarus, Saudi Arabia and Morroco. That is, of course, a minuscule and insignificant fraction of facebook's almost 1.5 billion users, yet it is, along with millions of other facebook pages of comparable size, an example of how social media allows internet users to read, connect, comment and discuss any imaginable topic, ranging from pop music, religion, relationships and sports to computer games and politics with others, irrespective of national borders. For many users, particularly in large developing countries, social networks are the only way to engage with people in other countries. Language is no longer an insurmountable barrier, as translation tools are freely available. In the case of Post-Western World's facebook page, it is not uncommon to receive comments and messages from people who speak only very little English or Portuguese.

We have only a limited understanding of how exactly social media and blogs affects the way people relate to the world and think about events and people in other regions of the globe. Contacts and knowledge transmitted via social networks is often superficial, and international travelers are often surprised at how little globalization affects local cultures. Strongly diverging public opinions across different countries or even regions within countries on many issues show that one needs to be careful with easily embracing the idea of a "global conversation". Yet even those skeptical of the actual influence of facebook and twitter will recognize that social media does play a role in the proliferation of international people-to-people contacts, strengthening the diffusion of ideas, narratives and trends.

China boasts 600 million internet users -- more than any other country  -- yet due to Beijing's censorship, Chinese social media users do not have access to twitter and facebook, which has led to the creation of parallel and censored networks, such as Sina Weibo and Renren. In this sense, they are not part of the same global conversation. That may sound abstract, but has tangible consequences. For example, after completing a masters degree in public policy at the London School of Economics in 2014, a Brazilian student will find it far easier to stay in touch with his former Swedish or Pakistani fellow students than with the Chinese ones. That matters not only on a personal level, but even more so once this generation will occupy key positions in government. The same is true for academics who meet at an international conference, or even tourists who want to keep in touch after a having met during a vacation.

For academics around the world, seeking to engage with Chinese professors and policy analysts, internet censorship in China poses a series of practical difficulties. Sending each other links to articles, YouTube interviews or blog posts about the BRICS is possible with Indian, Brazilian, Russian and South African counterparts, but more difficult with Chinese partners, who may not be able to access them. Creating a Facebook group for young researchers from each of the BRICS countries is impossible since the Chinese government decided to block Facebook, Twitter and YouTube after the 2009 riots in the Western province of Xinjiang.

Considering how important understanding China, its public opinion, domestic debate and government positions will be for virtually every country in the world, a far greater effort is necessary to engage with China than with other, more transparent, societies. The practical obstacles to exchanging ideas and information require even more face-to-face meetings, workshops, conferences, student exchange programs and visiting fellowships with Chinese institutions than usual. A far greater effort should be made to translate Chinese books in the field of social science, and history and politics in particular.

Facebook is currently signalling that it is far more willing to accept the Chinese government's censorship rules than Google in order to access the world's biggest internet market. During a recent visit of China's Internet czar, Lu Wei Facebook's Silicon Valley offices, Mark Zuckerberg even placed a copy of a book by Xi Jinping on his desk, and mentioned he had asked his employees to read it. Zuckerberg's promoting of the book struck many as kow-towing to a highly repressive regime. Yet, as much as his actions are driven by increasing profit (as is the case with any other business), Facebook's entry into China -- even if highly censored for now -- would be a small but important step towards strengthening interaction between Chinese citizens and the rest of the world.

Read also:

China’s Wild Hearts

Book review: “The Party: The Secret World of China’s Communist Rulers” by Richard McGregor

A Contest for Supremacy in Asia?

- Entrevista com Oliver Stuenkel, autor do livro "BRICS e a ordem global"

- Para especialista, Brics mantém dinamismo político, apesar de desaceleração
   econômica

- Investimentos da China no Brasil vão de trem transatlântico à Petrobras

http://brasil.elpais.com/brasil/2015/05/19/politica/1432058698_908972.html

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Nem tudo que o premiê chinês, Li Keqiang, prometeu no Brasil e nos outros países da região que visita essa semana sairá do papel. Mas isso não é necessariamente um problema para o especialista em países emergentes Oliver Stuenkel. "Mesmo se só a metade acontecer, isso é muito grande", diz ele. "Só a presença dessas promessas de investimento é uma chance única de integrar o continente sul-americano. A América do Sul é muito mal integrada em termos de infraestrutura."

Autor do livro "BRICS e o Futuro da Ordem Global", Stuenkel diz, em entrevista ao EL PAÍS, que o bloco — Brasil, Rússia, Índia, China e África do Sul — vive atualmente um dos momentos de maior dinamismo político, apesar da desaceleração das economias da maioria dos países dos BRICS. Ele acredita que mesmo com um patamar de crescimento mais baixo, a China se manterá como o maior parceiro comercial do Brasil e continuará sendo o protagonista do grupo que, em breve, verá concretizada uma de suas maiores conquistas: o lançamento do banco dos BRICS.

Pergunta. O Brasil está preparado para esse novo modelo chinês de desaceleração?

Resposta. Certamente não está preparado. O patamar chinês realmente é menor do que aquele que a gente teve nas últimas três décadas e hoje estamos vivendo o que os chineses chamam de "novo normal", que é um crescimento menor, mas mais sustentável. A China está passando por vários processos típicos de países em desenvolvimento que atingem um patamar per capita que é menos dependente de exportação e mais dependente de consumo interno. E o grande erro do Brasil foi não ter se preparado para anos mais difíceis, sobretudo durante o Governo Lula. Obviamente, o ponto crucial do crescimentos dos últimos anos foi essa demanda chinesa e, mesmo sabendo que isso iria acabar em algum momento, o Brasil não fez nada.

P. Mas como vai ficar o comércio entre os dois países?

R. Apesar do crescimento mais baixo, a China vai se manter como o grande parceiro comercial do país. O comércio com a China vai crescer em números absolutos e relativos se compararmos o total do comércio brasileiro com o resto do mundo, porém não vai mudar qualitativamente. Em termos absolutos ainda está ótimo, mas qualitativamente não está. Seguimos sendo um fornecedor de commodities, com todo o risco que isso implica. A questão é que o Brasil não tem alta produtividade de valor agregado.

P. E como o senhor avalia os investimentos chineses no Brasil?

R. A presença chinesa é importante para todos os projetos. Agora, sabemos que muitos desses projetos e esse investimento, que se fala em 53 bilhões de dólares, não vai acontecer desse jeito. Quando estudamos grandes propostas e olhamos o que aconteceu depois, vemos que muitas ações acabam não acontecendo, nem tem o mesmo tamanho. Mas mesmo se só a metade acontecer, isso é muito grande. Só a presença dessas promessas de investimento é uma chance única de integrar o continente sul-americano de um jeito que vai transformar a relação que nós temos com os nossos vizinhos. A América do Sul é muito mal integrada em termos de infraestrutura, é fisicamente pouco integrado.

P. Qual a importância do encontro de Dilma Rousseff com a o primeiro-ministro chinês Li Keqiang ?

R. É um encontro focado em questões econômicas. Ele está aqui, ele é a segunda pessoa mais influente da China, mas está aqui claramente como um emissário do presidente. Não é ele é quem vai tomar muitas decisões, é uma visita mais simbólica de aproximação. Ele quer mostrar que o peso econômico maior da China é bom para o continente. Do ponto de vista chinês, a América do Sul é apenas uma peça do esquema mundial para assegurar fornecimento de matéria prima e também de mercado que consumem produtos chineses de valor agregado.

P. Quais as perspectivas do futuro dos BRICS?

R. Acho que o grupo está passando por um momento de maior dinamismo, não no aspecto econômico dos países, mas vamos ver em breve o lançamento do Banco de Desenvolvimento do grupo. Isso será a primeira manifestação institucional. É um passo importante, pois desenvolver esse banco com outros países não é trivial, isso conecta esses países e gera uma ligação institucional de longa duração. Esse banco ligará os ministérios de fazenda, os bancos centrais, vamos ter um aumento de atividades intra BRICS. O que mostra que o grupo não depende mais de questões de crescimento econômico, é um grupo com viés cada vez mais político. Uma de suas grandes manifestações aconteceu, no ano passado, quando o grupo resolveu se recusar a se alinhar com os EUA e Europa sobre a questão da Crimeia. Os BRICS salvaram a Rússia de um isolamento político total. Realmente eu discordo desta leitura de que o grupo está encarando problemas por causa de um crescimento econômico mais baixo. Está tendo uma ampliação inédita de atividades do grupo. O custo é zero e os benefícios que esses países têm são grandes.

P. E como o Brasil está aproveitando essa ampliação?

R. Para o Brasil é realmente muito bom. É por meio dos BRICS que a presidenta do Brasil consegue se encontrar a sós com o presidente da China duas vezes ao ano. Uma vez no G20 e outro na cúpula. Apesar dos diplomatas não admitirem, o Brasil não teria essa possibilidade se não fosse pelo grupo BRICS. É um acesso, um canal direto importante. E esses encontros não acontecem apenas no nível presidencial. Temos encontros ministeriais em muitas áreas como saúde e educação. Quando você fala da cooperação do Brasil com os países do grupo há 10 anos, era impensável que chegasse ao nível de hoje. No caso da Rússia, as exportações brasileiras aumentaram muito. Tem uma visibilidade grande e passa essa visibilidade ao Brasil.

P. O que podemos esperar de novidade no próximo encontro dos BRICS em julho na Rússia?

R. Provavelmente será divulgada a data de lançamento do banco do grupo e quem serão os representantes na instituição. No Brasil, o representante deve ser provavelmente o Paulo Nogueira Batista Jr, do FMI. Vamos ter mais detalhes de como funcionará o fundo de reserva, e a grande questão será se o banco financiará projetos de outros países além dos membros dos BRICS. Acho que também será anunciada uma série de medidas para desburocratizar o comércio entre os países.

P. Além do Banco do BRICS o Brasil será membro do novo banco asiático de desenvolvimento...

R. Isso tudo faz parte de uma ordem paralela, não para substituir ou confrontar a ordem vigente, mas para reduzir o controle que os países possuem sobre a ordem atual. Os BRICS continuarão apoiando as instituições vigentes, mas esses bancos criarão um fundamento para que os países não sejam apenas dependentes do FMI e o Banco Mundial. Para o Brasil, isso significa que estamos caminhando para uma ordem multipolar, mas tudo depende da trajetória da China nos próximos anos.

Leia também:

Entrevista com o jornal Brasil Econômico sobre o Banco Asiático de Investimento em Infraestrutura (AIIB)

O Brasil na Venezuela

Política Internacional em 2015: dez previsões

Book review: Will China dominate the 21st century? By Jonathan Fenby. Polity, 2014. 154 pages. R$ 17,80 (kindle, amazon.com.br)

Published by the Australian Institute of International Affairs: http://www.internationalaffairs.org.au/australian_outlook/will-china-dominate-the-21st-century/

Will China dominate the 21st century? Jonathan Fenby, prolific author and long-term China-watcher, responds with an emphatic ‘no’. In his new book, he provides an exhaustive list of the many challenges policy-makers in Beijing will face over the coming years. He believes that many foreigners and Chinese alike have bought into a flawed narrative according to which China’s return to the global centre is a natural and effortless process. Just like emperors with a mandate from heaven, Fenby writes, today’s Communist Party leaders are often ascribed with an almost supernatural capacity to steer their nation of 1.35 billion people towards prosperity.

Fenby is highly knowledgeable about China and this is his eighth book on the topic. While the author recognises that China has made astonishing progress over the past three decades, his analysis leaves no doubt that he regards long-term growth projections as hopelessly optimistic.

To most readers, used to more positive projections, the author may come across as overly critical of China. Page after page is filled with horrific statistics about pollution, food poisoning and corruption. While the numbers marshalled are indeed impressive, the author can be criticised for failing to put them in perspective: for example, how does environmental damage affect Chinese citizens’ lives in comparison to those in India or Indonesia? In the same way, the text is littered with anecdotes that are hardly solid evidence to identify a trend: for example, he cites a school girl who, in a television interview, says she dreams of becoming a corrupt official yet such cases can be found in any country in the world (except perhaps Singapore and Norway). A major train crash in 2011 is described as ‘a stark reminder that, while the PRC can buy or copy foreign technology, it also has to be able to operate it safely,’ yet train crashes are no more frequent in China than in other developing countries. The 2011 crash can be seen more as a symptom of the government’s pressure to fulfil unrealistic goals rather than its incapacity to adopt technology.

While cautionary tales are indeed necessary when analysing China’s future, Fenby’s analysis is not always balanced, particularly towards the end of the book. Critical observations that focus on issues that say little about China or its society can sound like some sort of personal vendetta:

Even sources of China’s pride and joy have their hollow aspects. At the opening of the Beijing Olympics, the girl singer was dubbed since the real performer was regarded as insufficiently good-looking and all the 56 children who paraded as representatives of ethnic minorities were Han dressed in colourful disguise.

Fenby’s analysis also suffers from a lack of sources. He argues that Chinese commentators say their country deserves equality with the United States; I would argue that most policy-makers in China are, in fact, more modest about China’s global role and unwilling to accept a G2-scenario. The majority of those predicting a Chinese-dominated 21st Century are western; many Chinese officials regard this as a strategy to force China to assume more global responsibilities.

Fenby is certainly right to argue that it is far from assured whether China can keep up its current growth trajectory and circumvent the countless economic, environmental, political, social and demographic challenges it faces. Yet his book ends up being too one-sided to have a lasting impact on the debate.

Read also:

Why China would benefit from Western SWIFT sanctions against Russia

Why Britain is right to join China’s new development bank

Nye’s bet on continued US primacy

On June 29, representatives from 50 countries gathered in Beijing to participate in the signing ceremony of the articles of agreement of the Asian Infrastructure Investment Bank (AIIB). The significance of the event for both Asia and global order could hardly be overstated. It represents the definitive end of China's traditional strategy to 'Hide your strength, bide your time', articulated by Deng Xiaoping. China's claim for a global role is now fairly explicit, and for the first time, the country has opted for the creation of a new global institution to cement its leadership ambitions.

The creation of the AIIB is good news for three reasons. 

First, the membership of countries from around the world will force China to operate according to a clear set of rules and norms. If other countries started to sharply disagree with the way China leads the institution, they would leave, creating an embarrassment Chinese leaders will seek to avoid. For third countries, receiving loans from the AIIB will be far safer than dealing with China bilaterally. More broadly, China's decision to opt for multilateralism is to be welcomed, affirming the basic principles of today's global order. China will hold 26.06% of the votes, giving it an effective veto over major decisions, followed by India with 7.5% and Russia with 5.92%. Countries defined as "within the region" will hold a combined 75% stake in the bank's $100bn capital base. And yet, as Amitav Acharya rightly wrote in a recent op-ed, "the AIIB is good news for the international community. It poses no risk of Chinese hegemony, while putting China's leadership capacity to its most severe test to date."

Secondly, Asia badly needs greater investment in infrastructure, and none of the existing banks have been able to satisfy such a massive demand. Over the past years, Nicholas Stern, Joseph Stiglitz, Amar Bhattacharya, and Mattia Romani have campaigned globally for new structures. As the four economists point out in a 2013 op-ed,

The infrastructure requirements in emerging-market economies and low-income countries are huge — 1.4-billion people still have no reliable electricity, 900-million lack access to clean water and 2.6-billion do not have adequate sanitation. About 2-billion people will move to cities in the next 25 years. Policy makers must ensure the investments are environmentally sustainable. To meet these and the other challenges, infrastructure spending will have to rise from about $800bn to at least $2-trillion a year in the coming decades or it will be impossible to achieve long-term poverty reduction and inclusive growth.

Together with the World Bank, the New Development Bank, the Asian Development Bank and others, the AIIB is thus a boon for Asian economies, which -- in their entirety -- are set to turn into the center of the global economy during the 21st century. The AIIB therefore does not represent a threat to any other institutions, including the BRICS-led New Development Bank, set to begin operating next year. 

Thirdly, a new large organization like the AIIB -- which will greatly benefit from existing knowledge generated at the World Bank and elsewhere -- may itself produce new ideas and best practices that take the global debate about development further.

The articles, agreed to at a meeting of the bank’s 57 founding member countries last month, call for the Asian Infrastructure Investment Bank to be overseen by an unpaid, nonresident board of directors, unlike the World Bank, the African Development Bank and the Asian Development Bank. The AIIB, which will use English as its operating language, will open bidding for projects to all, unlike the ADB, which restricts contracts to member countries. Several differences with existing institutions will emerge, likely to create a healthy competition of ideas, which may strengthen the effectiveness of lending practices across the board.

As 50 nations signed the bank’s articles of incorporation at a ceremony in the  Great Hall of the People, seven nations which had previously announced their interest stayed away: Denmark, Kuwait, Malaysia, Poland, South Africa, the Philippines and Thailand. However, they have until the end of the year to sign the articles of agreement and would still be regarded as founding members. At least in the case of the Philippines, the reason is overtly political, and tensions between the two countries have recently mounted. The other countries alleged logistical reasons and are most likely to join by the end of the year.

Brazil's decision to become a founding member of the bank -- as the only country of the Western Hemisphere -- will allow the country to participate in and benefit from an institution central to a historic transformation of Asia. Brazil's economic ties to Asia are set to increase further in the coming years, so another institutionalized foothold in the region -- in addition to Brazil's BRICS membership -- matters greatly. It will also help make Brazil assume a gateway function for Latin America when it comes to AIIB-related matters, at least until other countries from the region will apply for membership. 

Read also:

Brazil should join China’s new development bank

Why the BRICS grouping matters more than ever

Entrevista com o jornal Brasil Econômico sobre o Banco Asiático de Investimento em Infraestrutura (AIIB)

Entrevista: “Dinheiro chinês é chance única de integrar fisicamente América Latina”

In January 2015, construction of the so-called Grand Interoceanic Canal (usually called Nicaragua Canal) has finally begun. If completed, the canal would be the largest civil-engineering and construction project in the history of mankind, spanning 276 kilometers across the Central American nation. The previously unknown businessman Wang Jing, with likely approval and support of the Chinese government, estimates the cost of the construction to reach U$ 40 billion dollars, even though experts believe the total cost will be closer to one U$ 100 billion dollars.

Compared to the Nicaragua Canal, the Trans-Pacific Railroad, set to cross South America and connect the Atlantic to the Pacific Ocean, is a bargain. The 5,300 kilometer rail connection, if ever built, is expected to cost U$10 billion dollars, even though the cost may increase once the feasibility studies have been completed. Environmental studies from the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) won’t be complete until May 2016.

In addition to comparable projects at home, China is experienced with large-scale infrastructure projects abroad. In the 1970s, it financed the Tanzam Railway, which links the port of Dar es Salaam in Tanzania with the town of Kapiri Mposhi in Zambia's Central Province. At a price of U$ 500 million dollars, the project was completed ahead of schedule, and remains one of the largest single foreign-aid project undertaken by China.

Yet contrary to China and Tanzania, Brazil and Peru are home to one of the world's most organized civil societies, and environmental NGOs have already started voicing their concern about the project's potential negative impact on the Amazon rainforest and indigenous tribes living in the region. The Trans-Amazonian highway, built in the 1970s, accelerated the destruction of the forest as it provided illegal loggers with easy access to previously isolated regions. After all, 95% of deforestation in the Amazon occurs within 5 kilometers of a road.

The second challenge is logistical: In addition to passing through dense forest, the route crosses swamps and steep mountains before reaching the Pacific coast. Finally, the border region between Peru, Bolivia and Brazil is notorious for drug trafficking and lawlessness.

The third obstacle is Brazil's bureaucracy, which makes the implementation of complex infrastructure projects more expensive, often prolonging time to completion. Chinese investors often end up canceling projects in Brazil after realizing that bureaucratic hurdles are greater than at home in China. This is particularly so whenever several governments in the region are involved.

Still, the project, much commented by Chinese premier Li Keqiang during his visit to Brazil and Peru in May, would dramatically reduce the transport cost of Brazilian soy and iron ore to China. While the demand for iron ore is slowing, China's demand for beef is set to increase in the coming years, and Beijing has recently lifted a ban on Brazilian beef. For Brazil's commodity-dependent and uncompetitive economy, it would come as a boon, giving Brazilian businesses a port on the Pacific, bypassing the Panama Canal. In addition, it would provide Brazil with easier access to Peru and other markets along the Pacific coast.

The China Development Bank is said to finance the project, with construction done by local firms, but led by the China International Water and Electric Corporation. For Beijing, using local firms is likely to help compensate for the crisis that affects many construction firms at home.

From a Chinese perspective, both the Nicaragua Canal and Trans-Pacific Railroad serve a similar purpose, which may suggest that China pursues both projects as part of a hedging strategy, aware of the risks both undertakings entail.

The bad news is that the Brazilian governments have traditionally cared little about the environment. Yet some analysts have argued that the approximate route can be built by following existing roads and passing through land that has largely been cultivated already. Provided that environmental groups can keep up the pressure, the Amazonian Railway is a tremendous opportunity to physically integrate the region and connect Brazil to the world's economic center of the 21st century. 

Read also:

China’s Silk Road Fund: Towards a Sinocentric Asia

The myth of inward-looking China

How the Chinese-financed Nicaragua Canal would change regional dynamics

Entrevista: “Dinheiro chinês é chance única de integrar fisicamente América Latina”

Shanghai's current stock market turmoil has left the many observers wondering about short-term implications for the global economy. Looking beyond immediate worries, two issues are worth noting. First of all, the current crisis is an unmistakable sign that the Post-Western World is already a reality: Two decades ago, a plummeting stock markets in the global economy's periphery would have hardly caused global tensions. Today, by contrast, the saying "When China sneezes, the world catches a cold" seems remarkably fitting. After all, a staggering 38% of global growth in 2014 came from China, and 120 countries trade more with China than with any other country.

Secondly, the current crisis adds an interesting twist to one of the Chinese government's most ambitious and fascinating strategies, which symbolizes the extent to which China is willing to alter global structures: To turn Shanghai, a regional also-ran behind other geographically close cities like Hong Kong, into a global financial center capable of challenging New York and London, the world's only truly global financial centers. According to China's State Council, this should be achieved by 2020. 

Financial centers concentrate enormous economic power, and being home to one is seen as crucial to complement Chinese efforts in the realm of trade expansion and military modernization. Put differently, a global power cannot due without a global financial center.

As Kawaii explains,

A regional center can grow to function as a global financial center if it offers deep and liquid financial markets for global players – in addition to national and regional players; becomes a hub for global financial information; has a reservoir of highly educated and well-trained professionals (for investment banking, law, accounting, and information and communication technology (ICT); provides a conducive, responsive regulatory environment; and ensures economic freedom supported by unambiguous legal certainty.

China’s challenge, thus, is a complex one that involves not only the set-up of a clear regularly framework, but also attracting global talent from around the world, which requires turning Shanghai itself into an attractive city. Considering how low Chinese cities tend to rank in the global quality of life indexes (as virtually all urban centers in developing countries), the Chinese government may have to undertake profound reforms to generate the momentum necessary to make young talents prefer Shanghai over New York, Zurich, Singapore, or other financial centers around the world.The government is considering lowering income tax for financial staff to become more attractive, particularly since income tax in Hong Kong is as low as 15%. Considerable investments in education, such as the Advanced Institute of Finance at Shanghai Jiao Tong University, are meant to help enhance the city’s still insufficient intellectual infrastructure – after all, banks still prefer Singapore and Hong Kong due to its larger talent pool -- another area in which rich countries almost always beat poorer ones. If the Chinese government were ever to experiment with greater free speech, they may start in Shanghai, as censorship is unlikely to help bring international talent to the city. Anecdotal evidence suggests that most executives in finance from around the world would ask for substantial pay rises to accept a posting in mainland China, even though Shanghai offers a far more comfortable life style than Beijing or Chongqing.

China’s objective too turn Shanghai into a global hub is intimately tied to internationalizing the yuan, creating the China International Payment System (CIPS) and the establishment, in 2013, of the Shanghai Pilot Free Trade Zone (FTZ), which is seen as the Chinese government’s most innovative experiment. Initially the first free trade zone on the Chinese mainland, it has already led to three additional free trade zones, in Fujian, Guangdong and Tianjin. It is in these zones – and primarily Shanghai – that the Chinese government is set to conduct liberal experiments, not only regarding trade, yuan convertibility and interest rate systems, but also regulatory issues concerning joint ventures in the financial sector. Indeed, full convertibility of the yuan would be a requirement for Shanghai to begin to rival the existing financial centers. Before that, any such talk seems far-fetched.

In addition, the Shanghai Gold Exchange (SGE) launched, in 2014, a global trading platform in the city's pilot free trade zone, a move meant to challenge the dominance of New York and London in gold trade and pricing – considered to be of great strategic importance. China has recently turned into the world’s leading importer of gold, and the SGE is the world's largest trading platform for physical gold. However, Shanghai does not yet rival London or New York in its capacity to influence gold pricing. It ranks fourth worldwide for global gold transactions, just ahead of Dubai which is in fifth place. Too increase Shanghai’s attraction, foreign investors who are not legally established in China can now trade gold in the country. For China, a one-kilogramme yuan-denominated gold index could be useful to favour its own consumers and protect them from other foreign-currency denominated indexes, which Beijing might argue are prone to manipulation, or favour "Western interests". Shanghai is also seeking to establish pricing benchmarks for a number of other commodities, most importantly oil.

Shanghai’s success in becoming a global financial center will ultimately depend on a large number of factors, not at least China’s overall economic trajectory. Provided that 5% growth can continue over the coming years, the State Council’s ambition do not seem completely unrealistic, even though they are still unlikely to be fulfilled in time. Shanghai’s advantage is, without a doubt, its role as the financial hub of what will be the world’s largest economy, even though a lot of financial power is still concentrated in Hong Kong and Beijing. That does not mean, of course, that Shanghai may rival the importance of London and New York in their entirety, of course. New York and London have been central to the process of globalization over the past two centuries, and even if Shanghai were to seriously rival their financial capacity, the former two will remain cultural fixtures on a global scale for decades to come, and a magnet for artists and leading thinkers that China will struggle immensely to emulate.

London’s continued dominance is a case in point: Despite the expansion of the US economy, adverse impacts of WWI and the gradual decline of the British empire and economic prowess, New York never fully succeeded or overtook London as a global financial center. This shows that a financial center can sustain its strength even though its economic hinterland – in this case, Great Britain – no longer plays a key role in the global economy. China’s economic growth alone will therefore not be enough for Shanghai to replace existing global financial centers.

The idea of turning Shanghai into an international financial center is far from revolutionary – rather, in the eyes of China, it is about reestablishing the city’s key role it held as early as the 1920s and 1930s, when it was known as “Paris of the East”. Yet today’s ambition is still more than merely copying the past, and policy makers in Beijing are interesting in more than merely hosting the world’s most important stock exchange. Rather, they want Shanghai to be the place where the leading minds of the financial world gather to develop the ideas that will shape global finance for decades to come. Simply put, Shanghai’s role as financial center would allow it, the Chinese government hopes, to become the world’s leading agenda-setter in global finance. Considering that China will most likely be the world’s largest economy by then (China today represents about 15% of the global economy), a decentralization of financial power and a more diverse, geographically evenly spread allocation of decision-makers in the area is to be welcomed. After all, London and New York are far too homogeneous and similar to be able to act on behalf of a far more diverse global financial landscape.

Yet following reforms in Shanghai is important for another reason: It is likely to serve as a blueprint for the rest of China once the government feels safe to slowly release its grip on the country’s financial system.

Read also:

BRICS: Time to create an OECD-type structure?

As the financial crisis in China unfolds, analysts are scrambling to grasp the implications for the global economy. As Martin Wolf wrote in his excellent analysis in the Financial Times,

One must distinguish between what is worth worrying about and what is not. The decline of the Chinese stock market is in the second category. What is worth worrying about is the scale of the task confronting the Chinese authorities against their apparent inability to deal well with the bursting of a mere stock market bubble.

Indeed, market corrections occur, and while China has been hardest-hit, they are already taking place elsewhere. While such events are unlikely to affect global China's standing much, the Chinese government is under growing pressure to show that it can handle current turmoil -- necessary to convince observers that Chinese policy makers are skilled enough to manage the transformation of China's economy from one dependent on investment to one fuelled by private and public consumption. After all, that is a challenge far more complex than this week's stock market crash.

The international credibility of the Chinese government will determine the speed with which the country can advance in the creation of sinocentric international institutions which, in their entirety, will create a "parallel order" to increase China's autonomy from the Western-led order. The success of these institutions will depend to no small degree on the trust other nations have in China's capacity to take the lead as a global institution builder.

The year 2015 already marks the most important in that sense since the end of the Cold War, with the creation of the Asian Infrastructure Investment Bank (AIIB) and the institutionalization of the BRICS grouping, the most visible element of which is the New Development Bank (NDB) and the Contingency Reserve Agreement (CRA).

An additional step, still this year, is generally thought to be China's much-hyped international payment system (CIPS) to process cross-border yuan transactions, thus greatly increasing global usage of the Chinese currency due to lower transaction costs. The existing networks make processing yuan payments relatively slow and bureaucratic, thus failing to put the Chinese currency on an equal footing with other global currencies. Cross-border yuan clearing requires an offshore yuan clearing bank in London, Hong Kong or Singapore, or with a bank in mainland China. Seven of the 20 banks selected to participate in the new system initially are foreign.

As Dominic Basulto argues in the Washington Post,

What the creation of such a system means in the short-term is that the Chinese currency (officially known as the renminbi) has the potential to become a truly international, convertible currency and a more attractive currency for conducting international trade and finance. What it means in the long-term is that America’s long reign of economic dominance is at risk.

Just like with other Chinese ambitions such as the plan to transform Shanghai into a global financial center, the desire to turn the yuan into a globally traded currency is natural for a country whose economy is about to become the world's largest. The yuan already accounts for nearly 9% of all trade finance deals worldwide, the second largest behind  the US-dollar. The Chinese currency is also the fifth most used payments currency in the world, behind the dollar, the euro, the pound sterling, and Japan's yen. Still, the yuan is nowhere close to threaten the dominance of the US-dollar. Less than 3% of global payments involve the yuan, compared to over 40% that involve the US-dollar.

It is unclear whether the Chinese government will go ahead with the implementation of the system in the current state of financial turmoil. Rumors are that rather than launching CIPS completely, a limited version of the payments system would now only be used for cross-border yuan trade deals and won’t have capital-related transactions, the sources said.

Still, those who believe that current financial instability will keep the Chinese government from seeking to adjust global structures to its new found economic power are likely to be mistaken. Even if China and the United States were to grow at similar speeds for the coming years, the need for reform would remain in place, and China's institutional representation is, considering its position as the world's second largest economy, still low in both the economic and security realm.

Read also:

Can Shanghai become a global financial center?

BRICS: Time to create an OECD-type structure?

TPP vs. RCEP: Trade and the tussle for regional influence in Asia

Last week, in an effort to help protect currencies in the Southeast Asian region against global headwinds, Indonesia proposed a broader use of the Chinese yuan in the ASEAN region in order to better synchronise with China as Asean's largest trading partner. The timing of the statement was noteworthy, as it occurred at the end of a week that, some argue, badly affected the Chinese government's international reputation of being the world's leading technocrats, firm in control of the second largest economy. Quite to the contrary, China's decision to de-peg the yuan from the dollar, only to hastily spend U$ 200 bn to prevent the currency from devaluating, make the Chinese leadership seem hesitant and divided about the speed of market liberalization. It is a cautionary tale for those who had predicted more profound reforms, a necessary step to start challenging the US-dollar's global dominance, the bedrock of US hegemony. 

China is seeking to establish, since 2009, a controlled internationalization of the yuan. The creation of the China International Payments System (CIPS) is a key element of this strategy, as is the plan to transform Shanghai into a global financial center.

As Hu Jintao explained in 2011,

The current international currency system is the product of the past. As a major reserve currency, the US dollar is used in considerable amount of global trade in commodities as well as in most of the investment and financial transactions…It takes a long time for a country's currency to be widely accepted in the world. China has made important contribution to the world economy in terms of total economic output and trade, and the renminbi has played a role in the world economic development. But making the renminbi an international currency will be a fairly long process.

The reasons for such a strategy are clear. The global dominance of the US-dollar provides the United States with a tremendous privilege. It costs less for US-Americans to borrow, allowing the government to fund deficits and firms to raise money that would otherwise not be possible. Put differently, the United States has to work less to retain the confidence of global investors, and the pressure to reduce government debt is lower than in economies whose currencies matters little in the international system.

In addition, it allows Washington to wield its political influence far more effectively. The United States can impose sanctions many countries are forced to follow. After all, most international bank needs access to the US-American banking system, for which it needs an US-American license. Therefore, banks worldwide have to accept whatever sanctions the United States impose – as seen in the cases or Iran and North Korea.

Even though the Chinese government’s goal is to limit the US-dollars dominance and create “currency multipolarity” in the medium or long-term, the he internationalization of the yuan will take place in small and experimental steps, as those are less likely to generate instability or anxiety in the domestic or international economy. Giving the yuan more freedom would weaken the currency, potentially spurring capital flight (as happened in the past weeks). Since Beijing started pursuing its yuan internationalization, the use of the currency to settle trade with China has increased strongly. Almost 30% of China's global trade is now settled in yuan. The Chinese currency is already accepted as a form of payment in Mongolia, Pakistan, Thailand, and Vietnam.

In addition to the creation of CIPS and the promotion of Shanghai, China is also seeking to have the yuan included in the basket of currencies in International Monetary Fund (IMF)’s Special Drawing Rights (SDRs). However, the IMF’s precondition is that that China should remove restrictions on foreign capital flows and shift to a flexible exchange rate system.

With any such momentous policy changes, decision-makers in Beijing are far from united regarding the internationalization of the yuan. State-owned enterprises and banks are generally reluctant to internationalize the Chinese currency, as the necessary liberalization would reduce their control over key decisions that affect China’s export-led development model. In the same way, the Ministry of Finance, the National Development and Reform Commission (NDRC), and the State Asset Supervision and Administration Commission (SASAC) are not among the move’s strongest supporters. On the other hand, liberal forces led by the People’s Bank of China (PBoC) are in favor of internationalization as this would help them to push through important domestic financial and monetary reforms. After the recent stock market crash, their internal standing is almost certain to have suffered. In addition, their strategy may be dangerous. As Mallaby and Wethington argue,

Only once the domestic financial system has been fortified in this manner is it safe to open the economy to foreign capital inflows, allow the exchange rate to float, and let the country’s money circulate offshore. Currency internationalization should be the endpoint of reform, not the starting point.

The speed of internationalization thus does not only depend on China’s growth trajectory, but also on internal power dynamics. This is particularly so because there are sound economic arguments that transforming the yuan into a global reserve currency could have downsides for China’s economy, too: It would lead to foreigners buying and holding massive amount of yuan, which could lead to a permanent appreciation, thus hurting Chinese exports. In addition, if the US-dollar ever lost its role as uncontested reserve currency, depreciation would almost certainly ensue, negatively affecting the value of China’s dollar reserves.

The perhaps most important move to internationalize the yuan are the numerous swap agreements with central banks, RQFII programs to liberalize capital markets, etc. Since 2008 China has also agreed some $500 billion in currency swaps with nearly 30 countries, including Argentina, Canada and Pakistan.

Although CIPS is, at first glance, little more than a platform to facilitate transactions, its medium- to long term consequences could be significant. It will allow banks and companies to move money around the global on a financial superhighway delinked from the US-centered dollar structures. Being excluded from the US-American system will thus no longer as terrifying as it once was, reducing US leverage over perceived wrongdoers. However, it is too soon to say whether the yuan may ever be able to challenge the US-dollar as the world’s main reserve currency. The challenges China faces are formidable. Not only must the yuan be universally convertible, the country would also have to create a transparent and liquid bond market. Government intervention during market turmoil in July and August 2015 shows that China still is a long way off allowing the markets to self-regulate. In the same way, it is hard to imagine how the yuan could compete with the dollar without a more transparent legal system, which would enhance trust in the government. Injoo Sohn points to additional difficulties:

The absence of formal alliances also seems to constrain the scope of China’s political leverage to internationalize its currency. The dollar internationalization of the early postwar years was supported not only by the United States but also by key Western European allies – China does not enjoy such support as it pursues RMB internationalization. The Cold War period gave U.S. allies more political incentives to maintain economic and financial ties with the United States through the offshore dollar market. With political confidence and trust, London banks started to lend out Eurodollars to other corporate customers in Western Europe in the 1970s.

What we can say is that, compared to the transition from the British pound to the US-dollar in the mid twentieth century, risks were manageable largely because both the pound and the dollar were convertible into gold at fixed rates. In the same way, policy makers in Washington and London were largely aligned on many broader issues concerning global order. Washington and Beijing, by comparison, think of their bilateral relationship far more in the context of ambiguous mutual dependence and suspicion.

Read also:

Market turmoil and the future of Chinese institution building

Can Shanghai become a global financial center?

BRICS: Time to create an OECD-type structure?

Last month, India and Pakistan were accepted as full members of the Shanghai Cooperation Organisation (SCO), a platform to discuss politics, economics and security matters in Eurasia. While some observers doubt the organization's importance, the step is likely to have three main beneficiaries: China, Russia, and the region as a whole. 

Benefits for Beijing

India's and Pakistan's inclusion are good news for Beijing, as it turns the organization into an ideal negotiating platform for China’s regional investment plans. Once sanctions on Iran will be lifted, Tehran’s accession seems only a question of time. An expanded SCO allows China to promote the Silk Road Economic Belt, China-Pakistan Economic Corridor (CPEC), Bangladesh-China-India-Myanmar (BCIM) Corridor and Central Asia-China Gas Pipeline with policy makers in Delhi, who regard China’s growing presence in the region with suspicion. China's Silk Road Fund in particular may be seen as a threat by Russia and India, who will rightly interpret China's efforts as a challenge to their own attempts to assume regional leadership.

From a geopolitical point of view, the organization’s significance (though still largely symbolic) is often seen as a potential counterweight to the Western security institutions, primarily NATO. Yet contrary to some would expect, the SCO, which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, will not rival or balance NATO frontally. Rather, it provides an alternative platform that will seek to play an increasingly important role in the agenda-setting process of geopolitical issues that affect Asia – ranging from terrorism emanating from Afghanistan and instability in Central Asia to China’s attempts to finance the region’s physical integration. The question of whether China still prioritizes SCO in this context is secondary: Rather, it will provide Beijing with additional autonomy and yet another option for forum shopping.

Benefits for Moscow

For Moscow, the organization's benefits are more basic. The SCO's mere existence reduces the West’s capacity to diplomatically isolate countries that it believes do not play by the rules. Russia may not always get what it wants in the SCO – particularly now that India has joined the grouping – but its membership increases its legitimacy and reduces its dependence on Western partners (even though it cannot compensate for the economic losses generated by the sanctions). India's accession increases the SCO's standing: Not only does it now include the majority of people in Asia (and a sizeable portion of mankind), but, including the world's largest democracy, it can no longer be seen as a club of autocrats.

The organization has often been understood in the context of defending autocracy and limiting US influence in the region, and in 2005, the group called on Washington to set a timeline for the removal of its military bases in Central Asia. Russia’s Foreign Minister Lavrov has argued that the SCO is a key element of a new “polycentric world order.” At the Dushanbe summit in 2000, members agreed to "oppose intervention in other countries' internal affairs on the pretexts of 'humanitarianism' and 'protecting human rights;' and support the efforts of one another in safeguarding the five countries' national independence, sovereignty, territorial integrity, and social stability.”

During summits, discussions usually revolve around Central Asian security-related concerns, often describing the main threats it confronts as being terrorism, separatism and extremism, and policy responses are sought in the realm of military cooperation, intelligence sharing, and counterterrorism. Regular military exercises are being held since 2003. In 2014, China hosted the SCO’s largest-ever series of military drills, which included China and Russia conducting joint naval exercises in the Mediterranean. That may be little more than symbolism, but matters greatly to Russia, in need of demonstrations of support.

The Shanghai Cooperation Organization is in the midst of a broad transformation as it has started dealing with economic issues, including the potential creation of an SCO development bank. Other new issues concern infrastructure, transnational border and water disputes, and cultural exchange programs. Russia has also proposed linking the Eurasian Economic Union (EEU), which consists of Armenia, Kazakhstan, Belarus and Russia, with China’s Silk Road Economic Belt.

Benefits for the region

All these topics will play a decisive role in the geopolitical future of Eurasia, a region that seems to regain its importance as Russia turns its back on the West, and as China is articulating its strategy to strengthen its presence in Central Asia and beyond. Asia is a region with a relatively low institutional density, and increasing the number of high-level fora that bring leaders together must be welcomed, considering the many potential points of friction that exist between countries in the region. In this sense, the Ufa Summit already produced a very tangible benefit -- have India's Narendra Modi shake hands with Pakistan's Nawaz Sharif, during what was the first meeting between the two leaders since May 2014 and came after increased border hostilities in the past few months and India’s cancellation of secretary-level talks last year.

Read also:

OBOR: China’s Pivot to Eurasia

China’s Silk Road Fund: Towards a Sinocentric Asia

CICA: Another step towards a Post-American security architecture in Asia?

Liu Jieyi, Permanent Representative of the People’s Republic of China to the UN

Review: Garwood-Gowers, Andrew (2014) China’s "Responsible Protection" concept : re-interpreting the Responsibility to Protect (R2P) and military intervention for humanitarian purposes. Asian Journal of International Law.

The global discussion about the prevention of mass atrocities and the responsibility to protect (R2P) is often wrongly understood in the context of a West vs. Rest dynamic. The US and Europe, according to this view, tend to be quick to adopt resolutions criticizing governments of countries where atrocities occur, and often recommend military intervention, while the BRICS, led by Russia and China, are categorically opposed to both critical resolutions or intervention. The situation in Syria, according to this narrative, shows that we are witnessing a return to the days of Rwanda and Kosovo, in which there is a stark choice between inaction in the face of large-scale killings and action outlawed by the U.N. Charter.

Yet that view fails to take into account that the BRICS have officially endorsed R2P ten years ago, and since then emerging powers have played an important part in the process of turning R2P into a global norm. Both Russia and China, often seen as the most irresponsible stakeholders, have voted in favor of resolutions including R2P in the vast majority of cases. As tragic as Russia's and China's vetoing against Syria-related resolutions is (which, it must be noted, did not include the use of military force), it would be wrong to argue that the deadlock over Syria symbolizes the "new normal". Even after NATO's  controversial interpretation of resolution 1973 regarding Libya, Russia and China routinely support resolutions that mention the responsibility to protect of governments all over the world (even though mostly pillar I and II). It is also often forgotten that Beijing has supported several UNSC resolutions on Syria, including those mandating the UN Observer Mission, the destruction of Syria’s chemical weapons, and most recently a humanitarian aid access plan.

A recent semiofficial Chinese initiative - called Responsible Protection (RP) - powerfully shows that the discussion in China about the prevention of mass atrocities is far more sophisticated and advanced than is often thought. As an interesting journal article by Andrew Garwood-Gowers about RP explains, the concept originally appeared in a 2012 newspaper opinion piece by Ruan Zongze, the vice-president of the China Institute for International Studies (CIIS), which is the official think-tank of China’s Ministry of Foreign Affairs. An expanded account of the idea – explicitly framed as an example of China contributing “its public goods to the international community” - was published later that year. Since then, the author contends, RP has gained more prominence among Chinese decision-makers.

The similarities to Brazil's concept of the "responsibility while protecting" (RwP) are striking. Similarly to RwP, RP indicates that China does recognize, in principle, the need for non-consensual military intervention under R2P's third pillar, albeit under a more restrictive set of conditions than Western powers tend to follow. In that sense, both RwP and RP are contributions which advance and complement R2P’s third pillar, rather than attempting to replace the current version of R2P.

Garwood-Gowers writes that "RP continues RwP’s push towards “fleshing out” the normative content of what is currently a largely indeterminate third pillar." Indeed, in the September 2013 UNGA informal interactive dialogue on R2P, China indicated that it “supports discussions at the United Nations to discuss RwP by Brazil." The author's analysis includes a useful table in which he compares RwP to RP, looking at key principles such as just cause, right intention, last resort and monitoring mechanisms, among others.

Just like the RwP proposal developed by Antonio Patriota in 2011, which states that “[e]nhanced Security Council procedures are needed to monitor and assess the manner in which resolutions are interpreted and implemented to ensure responsibility while protecting”, the Chinese proposal calls for the establishment of "mechanisms of supervision, outcome evaluation and post factum accountability”. Even though China's proposal is less specific about how such a supervision should look like, its inclusion is remarkable considering that China is a member of the P-5, and capable of undertaking military interventions in the future.

Responsible Protection, albeit not yet launched officially by the Chinese government, shows that the concerns raised in Brazil's RwP concept are set to play an important role in the global discussion about the prevention of mass atrocities in the coming years. The issues China's concept raises are highly complex and unlikely to find much initial support among NATO countries. Yet given that both Brazil’s RwP and China’s RP have made guidelines a central part of their proposals for advancing the discussion about R2P’s third pillar, the issue of criteria must be taken seriously by Western powers. Garwood-Gowers is right to argue that a recent RP conference in Beijing was a positive first step in this direction which suggests that China is genuinely interested in engaging constructively in the debate over R2P’s third pillar.

Brazilian policy makers may ask why did not China support Brazil more openly when it went out on a limb by launching its RwP idea, thus seeking to advance the global debate. One possible answer is that the idea may not have matured enough in the internal Chinese discussion. As Brazil realized in 2011, officially endorsing a new concept carries the risk of initially being criticized from all sides. Unlike France, which currently spends considerable time and energy to promote the idea of the Responsibility not to Veto (RN2V) in case of mass atrocities, China may not regard norm entrepreneurship in this field as a foreign policy priority at this point.

Still, policy makers from around the world should recognize RP as an important and welcome contribution by China, and as an opportunity to engage with an actor that will inevitably play a key role in mass atrocity prevention in the coming decades. The deployment of the first Chinese infantry battalion to take part in a UN peacekeeping mission in South Sudan and China's offer to help the Iraqi government in its fight against the Islamic State underline a trend of China's more systematic international engagement.

The author's suggestion that Beijing could introduce RP at the 7th BRICS Summit in Russia is excellent, and its inclusion in the final declaration would mark an important step in advancing the discussion. In the process, Brazil's experience with initially promoting RwP could be of great usefulness to policymakers in Beijing.

Read also:

What does China think about R2P?

The BRICS and the Future of R2P: Was Syria or Libya the Exception?

Is R2P a Western idea?

BRICS and the ‘Responsibility while Protecting’ concept (The Hindu)

Photo credit: CCTV

A photograph portrait Cixi sent to US President Theodore Roosevelt in 1904, thanking him for his good wishes for her 70th birthday.

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Book review: Empress Dowager Cixi: The Concubine Who Launched Modern China by Jung Chang. London: Vintage Digital (2013), 528 pages. R$ 26,80 (ebook, www.amazon.com.br)

The Manchu Empress Dowager Cixi (1835–1908) is generally thought of as a conservative figure in Chinese history, incapable of defending China's interests in the second half of the 19th century, when China lost its position as the world's largest economy.

Against this broad consensus, Jung Chang has written a lively biography that depicts Cixi (pronounced "Tseshi") as quite the opposite. Chang argues that Cixi, the most important woman in Chinese history, "brought a medieval empire into the modern age." Under Cixi's rule, China built the first railroads (the Beijing-Canton railroad remains a key artery in today's economy), installed telegraphs, introduced electricity, steam boats, modern mining, newspapers, established the state bank and promoted  freedom of religion.

The constitutional system Cixi initiated, Chang writes, included modern laws—commercial, civil, criminal, and judicial, and the establishment of law schools. In the early 20th century, she allowed women to appear in public, abolished foot-binding, lifted the ban on Han-Manchu intermarriage, and decreed that girls should be educated. Indeed, Cixi is depicted as unusually wise for her time and age. The author writes that "instinctively she seems to have known that a government needs dissenting voices", turning her into a some sort of Chinese counterpart of India's sage Mughal Emperor Akbar, who promoted religious tolerance during his long reign in the 16th and 17th century.

Contrary to her predecessor, Cixi believed that trade with the West would strengthen China. In a courageous move, she employed a large number of foreigners in the civil service to modernize the administrative structures. She also tried to introduce science into China's school system, a move that required hiring Western teachers. She promoted Hsu Chi-she, the first scholar to argue that China was just one of many countries, and not the center of the world. Unprecedented in China, she urged her temporary successor, Emperor Guangxu, to learn English. All that against a conservative establishment that continuously plotted against her and sought to remove foreigners from Chinese territory.

The book cites the diaries of the first Chinese officials who traveled to the West in the 19th century, the majority of whom was deeply impressed by democracy and the technological progress they saw. "If we are able to do what they are doing, there is no question that we, too, can be rich and strong," one wrote. Cixi tried to use these accounts to convince China's elite that change was necessary. It was under her that Chinese diplomacy emerged. Interestingly enough, an early diplomatic challenge -- aside from the rise of Japan -- was to help improve the conditions of Chinese slaves in Cuba and Peru.

Throughout the book, Chang's admiration for Cixi strikes the reader as somewhat exaggerated. "Never small-minded, she would invariably focus on the bigger picture", the author writes. Yet at the same time, the book described in detail how, after not feeling sufficiently revered, the Empress issued a decree that all her advisors would have to kneel in her presence - not exactly a sign of open-mindedness (even though she ended the practice in the later part of her reign). When a palace eunuch made a remark that offended her, she had him strangled to death. When she discovered a plan to assassinate her, she not only had the plotters beheaded, but also two innocent people, to avoid that the case turned public. 

Chang may be right in her claim that Cixi was the first Chinese leader who embraced modernity and sought to learn from the West -- yet one may also argue that there was little else the Empress could do. After all, it was under her that Western modernity was forced upon the Chinese, and she promoted adaptation only when she realized that continued isolation would have led to China's disintegration. Japan, by comparison, embraced change much more whole-heartedly, and, as a consequence, was able to defeat China militarily later on, despite Japan's much smaller size.

Chang's strength - her remarkable capacity to turn a lot of historical information into a highly readable account, accessible to a wide readership - is also the book's weakness. At times, her analysis suffers somewhat from an at times overly simplified style somewhat reminiscent of Isabelle Allende's tales, which depicts most individuals as either good or evil, and where goodness is always eventually rewarded. For example, Kang, a complex character and Cixi's main rival, is depicted rather crudely as a power-hungry plotter, yet he had many ideas about how to reform China.

Another problem is that the author depicts the West in an at times overly romanticized way. Chang reports how "one piece of information that made an impression on (the Empress) was the individual Chinese lives mattered to the Westerners." That sits oddly with England's ruthless promotion of the opium trade for commercial gain, which led the premature death of thousands of Chinese, and, decades later, with the bloody suppression of the Boxer Rebellion, thus assuring China's continued inferior status in international society.

The Empress was, without a doubt, a remarkable woman, and this book makes an important contribution to correcting her image as a cold-hearted despot who wrecked China. Cixi's influence was all the more remarkable because she did not, as a woman, have formal power, and she was not allowed to leave the Forbidden City during the early years of her reign. She was never the official ruler of China, thus always battling those who questioned her legitimacy. Chang surely has a point when she argues that Chinese historians were reluctant to elevate a woman to the country's key reformers, thus highlighting the negative aspects of her time in power.

As China is about to turn into the world's largest economy, many commentators have recently pointed out that China had occupied the leading spot as late as 1870s. While that may be true -- largely due to the country's massive population -- Chang's book is a reminder of how poor and underdeveloped Chinese society was at the time, especially when compared to Western Europe or the United States. Even at the turn of the century, 99% of China's population was illiterate. Western military incursions met very little resistance, despite the fact that, contrary to India, China was a relatively centralized state. Even Cixi's military modernization program -- halted after incompetent Emperor Guangxu temporarily took over -- was insufficient for China to stand up to European powers which geared up to World War I.

Even though the book at times reads like a hagiography, Chang's book is a great contribution that makes Chinese history more accessible to the rest of the world, and one that corrects the way we think about Cixi's legacy. That is good news considering the flood of books currently being written about contemporary China, many of which provide no historical perspective. It may also be useful to those interested in the future of Chinese foreign policy. None of the other great powers of present and past, like the United States, France, Russia and the United Kingdom, were ever forced to accept such harsh treaties like the ones imposed on China during the "century of humiliation", leading to an inferiority complex the country was only able to shake off under Mao. This painful memory remains an important element of the way China relates to the rest of the world.

Read also:

Book review: “The Boxer Rebellion and the Great Game in China” by David J. Silbey

China’s parallel global order

Book review: “From the Ruins of Empire” by Pankaj Mishra

Book review: “China Goes Global: The Partial Power” by David Shambaugh

Book review: “Taming American Power” by Stephen Walt

Book review: Age of Ambition: Chasing Fortune, Truth and Faith in the New China. By Evan Osnos. Farrar, Straus & Giroux; 417 pages.  R$36,14 (ebook, www.amazon.com.br)

China, like any other non-democratic regime, poses a fundamental dilemma to scholars: How to be truthful without losing access to valuable sources in the Chinese government, academia and civil society? This is particularly important for those who have set their career on studying China. Mastering the Chinese language is a multiple-year effort, yet those who turn into personae non gratae will find it difficult to conduct field research, find positions as visiting faculty at Chinese universities, or interview Chinese policy makers. Most scholars are therefore cautious not to cross the "invisible line".

International correspondents who leave China after working there for years are, by contrast, in a privileged position: They no longer depend on the Chinese government's goodwill and are in a position to write an honest account about their time in the world's most populous nation. And indeed, Evan Osnos' Age of Ambition is remarkably candid about corruption, oppression and struggle in China. Indeed, his chapters about systemic corruption of absurd scale and waste of public resources are by far the most interesting part of the book.

The main narrative in Osnos's book is the transformation from collectivism to individualism in Chinese society. The swiftness of this change is dizzying and has made China, in many ways, far more individualistic and materialistic than many Western societies. Personal ambition is more explicit, and Osnos compares today's China to late 19th century America, when robber barons ruled an increasingly unequal and exploitative economy. The sense of urgency seems omnipresent. The author cites a Chinese tourist in Europe who marvels  at a car that stops at a crosswalk. "Drivers in China think 'I can't pause. Otherwise, I'll never get anywhere.'" The Chinese word for ambition, ye xin, literally it means “wild heart” and it has only recently shed its negative connotation. After all, open personal ambition, under the dark days of Mao, was considered undesirable.

Yet while the examples the provided are colorful, the overall impression they create is somewhat caricaturesque and makes the Chinese seem almost mindlessly active, and  almost nonhuman. For example, Osnos writes that sex was so taboo in the early 20th century that some couples struggled to have children "because they lacked a firm grasp of the mechanics." That is hardly plausible and makes the uninformed reader think of the Chinese as easily controllable robotic creatures. There is plenty of evidence of liberal mores both before and during Mao's rule. In the same way, the author seems to relish listing weird book titles that are popular in China -- yet a reciting the titles of cheap books sold at gas stations in rural parts of the United States or Europe would sound equally bizarre. In that way, and many others, China is more like the rest of us than Age of Ambitions seems to suggest.

The book's engaging style makes it an ideal introduction for those who have little previous knowledge of China. Those who know the country are likely to be somewhat disappointed, as Osnos spends much time dwelling on famous individuals, like Chen Guangcheng, whose trajectories are well-known to most China watchers. Also, regular readers of the New Yorker will recognize several sections, such as a chapter about Chinese tourists in Europe, or about a national outcry after a child was run over and nobody bothered to help.

Osnos emphasizes the tension between China's recent obsession with individualism and the desire to find a voice on the one hand, and government repression on the other. Children recite sentences like "I am unique" and "I am the greatest miracle of nature" in school, yet citizens can neither vote nor freely express themselves. One can tell how much the author enjoyed living in China -- he speaks Mandarin fluently and preferred living in a run-down apartment in a poorer part of Beijing rather than a quiet high-rise that provided little access to common citizens. Yet his overall judgement is unequivocal -- to his mind, the Chinese government is morally bankrupt. At the anniversary of the Tiananmen Square demonstrations, people had been discussing the topic, in code, calling it "the truth" -- zhenxiang. The censors picked up on it, and when people searched Weibo for anything on the topic, they received an emblematic warning: "In accordance with relevant laws, regulations and policies, search results for 'the truth' have not been displayed."

In addition to writing about torture, government censorship and hypocrisy (common citizens being publicly humiliated for adultery, while many party officials entertain mistresses and prostitutes), he details how the Communist Party no longer promotes the best and the brightest to top positions -- long seen as the seal of legitimacy. All this implicitly lends Age of Ambition a pre-revolutionary atmosphere. And yet, the Communist Party has so far held the upper hand, against all odds. As the Global Times, a party tabloid, asserts, "For 30 years Ai Weiweis have emerged and fallen... the real social trend is that they will be eliminated."

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