10/26/15 10/26/15

2015 at Dawn.com)

President Xi Jinping’s recent trip to the United States grabbed global headlines. By going to Britain, the Chinese leader has sent an equally important signal of his interests and determination in deepening and expanding China’s ties with Britain — but also with Europe.Beijing and Washington certainly need to talk to each other on a range of bilateral and international issues. And the Sino-American agreements reached on cybersecurity and climate change will help ease relations between the world’s two leading political and economic actors.But President Xi and Prime Minister Li Keqiang’s many visits to Brussels, Paris and Berlin this year — and now Xi’s high-profile trip to Britain — underline that China and Europe have also made a strategic choice to further develop and expand relations.China’s focus on Europe and on Britain is important for several reasons. Tackling challenges in a multipolar and multi-complex world requires more than cooperation between China and the US. It also demands working in tandem with the European Union and its 28 member states.Britain, given its global role and influence is, of course, especially important. President Xi’s visit, including his high-level meetings, underline to a watching world — and to the rest of Europe — that China still views Britain as a key international player.Significantly, Xi’s visit follows a trip to China by UK Chancellor George Osborne last month, during which he said Britain should be China’s “best partner in the West”.It’s not just Britain that wants closer ties with China, however. Germany remains a strong contender for the title of Beijing’s ‘best friend’ in Europe. And more generally while relations between China and individual EU states are important, ties with the EU are also improving, with the launch of the connectivity platform and the agreement to cooperate on developing 5G networks.Europe certainly has the markets China needs for its exports — and trade is still booming. European expertise and know-how is critically important to help meet China’s urbanisation, climate, innovation and other developmental challenges. Most recently, there is a focus on synergies between the ‘One Belt, One Road’ project and Europe’s own investment blueprint for transport, digital and technology networks. Britain and British companies have a key role to play in such cooperation, both on a bilateral level but also through the EU.True, the EU’s many recent crises have eroded much of its lustre. Last year has been especially difficult as EU leaders have grappled with continuing troubles in the Eurozone, struggled to tackle the influx of refugees fleeing war and conflict in Syria and Africa while also dealing with longer-term problems of low growth and high unemployment.For the next few months, the focus in London, Brussels and in other EU capitals will be on Britain and the country’s upcoming referendum on its membership of the EU.The EU is hoping that Britain will opt to stay in. And while no EU leader would say so in public, many are clearly hoping that President Xi gives a clear but subtle message to British citizens to vote in favour of EU membership. As such, it is especially significant that the Chinese president has met leaders of the opposition parties and parliamentary leaders.But that’s not the only reason that the EU kept a close watch on President Xi’s speeches and meetings in Britain. China-watchers in Brussels and elsewhere in the EU wanted to learn more about the state of the Chinese economy after the market volatility over the summer and what to expect as China’s development priorities in the upcoming 13th Five-Year Plan.Meanwhile, Xi’s speech in London provided further insight into China’s hopes for the internationalisation of the renminbi and also information on China’s priorities as it prepares to take over as chair of the G20.Certainly as in other EU capitals, the focus was on business, with Britain looking for Chinese investments in key projects such as a high speed rail line in the north of the country and a deal on Chinese investments in the Hinkley Point C nuclear plant. The UK is now China’s largest investment destination country in Europe.More investment opportunities for Chinese companies opened up in the railway, energy, aviation and telecommunications industries. Significantly, leading the way for other European countries, Britain joined the Chinese-led Asian Infrastructure Investment Bank (AIIB), despite opposition from Washington, earlier this year. Within the EU, Britain’s opinion is important as the EU and China negotiate their Bilateral Investment Treaty and will be even more important if and when the two sides start discussions on a Free Trade Agreement.There used to be a time not so long ago when China’s friendships with individual EU member states were viewed with suspicion by Brussels. This was especially the case as regards China’s ‘special relationship’ with Germany and the burgeoning ties between Beijing and the Central and Eastern European states. Fortunately, such unease is now mostly over, with many policymakers agreeing that stronger bilateral ties between China and the individual EU member states — including Britain — help to consolidate and deepen the wider EU-China relationship.

12/2/14 12/2/14

View from Abroad: A new plan to revive 'Granny Europe' (Originally published 29/11/2014 at dawn.com)

Not much gets Europeans excited these days. When challenges emerge — at least on the foreign policy front — the reaction seems to be almost always the same. Problems with Russia? Let’s expand sanctions. Iran? Let’s keep sanctions. Islamic State? Let’s impose sanctions although just how and on whom is not clear.But suddenly, out of the blue, there is a bit of a buzz in the winter air. Europeans woke up on Nov 26 with a new “hero”: European Commission President Jean Claude Juncker who strode on to centre stage to promise peace — or at least jobs — in our time.It was a seminal moment. For Juncker and Europe.The former Luxembourg prime minister is facing allegations that hundreds of multi-national firms were reportedly attracted to Luxembourg in legal tax avoidance schemes. Juncker was prime minister at the time but denies wrongdoing. The new plan has the advantage of taking the almost-scandal off the media radar.For Europe, the plan could be the answer to its dreams of revival. The 28-nation bloc is still struggling to climb out of a long and painful Eurozone crisis. Growth rates are low, unemployment is tragically high, especially among young people. People are downbeat and dejected. Even the German economy is beginning to flag.To top it all, making pessimists even more downbeat, in a speech to the European Parliament last week, Pope Francis likened Europe to a grandmother, “no longer fertile and vibrant”. (I’m not sure he’s talking about the lively grannies I know though…)Anti-granny remarks aside, the pontiff’s remarks do resonate for many. Europe is getting a tad worn out, depressed and haggard. A shot of vitamins is badly needed.Enter Juncker with a magic bullet: a 315 billion euro plan to spend EU money on new infrastructure projects as part of an initiative to revive granny and help Europe grow and thrive again.Only, there is no magic involved. There will be hardly any new money — only €21bn in EU funds as a guarantee to raise private cash in the capital markets — with the rest of the money expected to come from private sources.EU policymakers say they will be looking for funds wherever they can. Chinese investments will be sought out avidly. Middle East investors will be welcome.“I often hear we need so-called fresh money. But we need a fresh start and fresh investment,” Juncker told the European Parliament this week. “We will not betray our children and grandchildren by writing cheques they ultimately will have to pay.”With one eye on developments across the Atlantic, the Commission chief moaned that “While investment is taking off in the US, Europe is lagging behind. Why? Because investors lack confidence, credibility and trust.”The Commission is making up for the lack of solid details on the plan by upping the hype. Juncker says the initiative represents a cornerstone of efforts to revive an ailing economy.Others have called it a historic moment, a make-or-break initiative, a European “New Deal” to get Europeans working again.Certainly, the timing is right. Many European economists have been saying for some time Europe needs to move from the current focus on austerity to programmes which bring back growth.And the best way to do so is to start investing again — especially in infrastructure.The Commission believes it could create up to 1.3 million jobs with investment in broadband, energy networks and transport infrastructure, as well as education and research.National governments could contribute to the fund if they wished and would be asked to come up with a list of projects with “high socio-economic returns” that could kick-off between 2015 and 2017.With a nod to Martin Luther King, Juncker added that he had a dream. He wanted to see schoolchildren walking into a brand new classroom equipped with computers in the Greek city of Thessaloniki, European hospitals saving lives with state of the art medical equipment and French commuters charging electric cars on motorways.The good news is that pro-austerity Germany — the bane of countries like France and Italy which want the EU to start spending itself out of economic stagnation — is in favour of the plan.But EU officials admit the initiative will not fill the gap in the amount of investments needed, especially in infrastructure across Europe. There is also concern that there will not be enough credible projects around for investors to put their money into.The European Investment Bank will be the “prime mover” in delivering seed money for those investments over the next three years. The plan will now be discussed by the 28 EU leaders at the Dec 18-19 summit.Juncker’s shift from austerity and cutting debt to investment is not going to be the botox shot needed to transform “Granny Europe” into a vibrant young woman. But it is a start.

11/18/14 11/18/14

View from Abroad: EU must engage urgently with China (Originally published 15/11/2014 at dawn.com)

China's President, Xi Jinping, is a busy man. And if the European Union’s new leaders waste time in engaging with him, the EU could find itself gently, but firmly, shut out as Beijing steps up its game, both in the region and on global stage.The Chinese president has had quite a week. Having hosted the Asia Pacific Economic Cooperation (Apec) summit, signed an unexpected agreement with President Barack Obama on cutting greenhouse gas emissions and eased tensions with Japanese Premier Shinzo Abe, Xi attended the East Asia Summit in Myanmar and will then be at the G20 gathering in Brisbane, Australia.Chinese Premier Li Keqiang did attend the Asia Europe Meeting in Milan last month — but the EU was represented at the meeting by the outgoing EU leaders, European Council President Herman Van Rompuy and his colleague at the European Commission Jose Manuel Barroso. Beijing is waiting for the new Commission chief Jean Claude Juncker, Donald Tusk who will head the European Council as of Dec 1, and the new EU foreign policy chief Federica Mogherini to get in touch and answer whether the new men and women in Brussels will want a continuation or a change in in EU-China relationsCertainly, urgent matters at home and in Europe’s troubled neighbourhood command immediate attention. Juncker has also had to field embarrassing questions about allegations that Luxembourg was helping companies to dodge taxes while he was prime minister.But still, reinforcing ties with the world’s second largest — and still fastest growing — economy must be also be an EU priority.The good news is that after a few troubled years, Europe-China ties are encouragingly sound. Although trade frictions are unlikely to completely disappear, major trade quarrels have been settled. Differences over human rights notwithstanding, the EU and China have developed a good working relationship. As such, the new EU team inherits a relatively solid EU-China agenda. It must use this to further shape relations to fit a complex environment, both at home and in China.But as the array of recent events, overtures and agreements illustrate it is busy with consolidating relations with the US and is focused on its immediate neighbourhood. Unless Europe acts quickly, it could lose China’s attention at a time when the two sides need each other.It is worth repeating: Europe and China need each other, not least for economic reasons. Its growth rates may be slowing down, but China’s appetite for European goods and investments continues to be crucial in determining the pace and success of Europe’s economic recovery. China’s economic transformation demands that it has access to European know-how, experience and technology. China’s reform agenda also gives European companies myriad opportunities for enhanced trade and investments.Second, a deeper EU-China relationship is important in order to polish Europe’s foreign policy credentials — in Washington, Moscow and in many Asian capitals. Asian countries, which are locked in territorial quarrels with Beijing in the East and South China Seas, believe Europeans can temper Beijing’s assertiveness on the issue and use its experience in managing cross-border challenges to ensure stability in the region.Third, while Europe’s one-time dream of ensuring that China would one day become a “responsible” international stakeholder now appears hopelessly out-of-date and patronising in view of Beijing’s increasing global outreach and self-confidence in world affairs, there is no doubt that the EU needs to engage with China on a range of urgent foreign and security policy issues, including relations with Russia, Iran’s nuclear plans, policy towards the IS, fighting Ebola and combating climate change.Significant headway has been made in recent years, especially in EU-China economic ties. Trade relations remain buoyant, with bilateral trade in goods valued at about 420 billion euros in 2013. Trade in services, currently estimated at about 50 billion euros annually, is expected to grow as China opens up its services sector and as new reform efforts begin to bear fruit. More is being done to increase bilateral investment flows.There is still much more to discuss and discover. China is in the midst of massive change as the focus shifts to boosting consumer demand and away from an excessive reliance on investments and exports. The emphasis is also on fighting pollution, ensuring sustainable urbanisation and implementing other aspects of last year’s massive national reform agenda agreed at the Third Plenum. More recently, China’s Fourth Plenum shifted the focus to the rule of law, governance and legal reform. President Xi, widely regarded as China’s most powerful leader in recent decades, is stepping up his anti-corruption campaign.Beijing has been true to its word in making 2014 “the year for Europe”, with both President Xi and Premier Li travelling to key European capitals. The EU’s new leaders must reciprocate through visits, convening of an EU-China summit early next year and rapid organisation of the high-level political, economic and people-to-people dialogues.As China and the EU prepare to celebrate the 40th anniversary of their partnership next year, the relationship must be made more resilient, robust — and mutually respectful.

10/21/14 10/21/14

View from Abroad: Western nightmares are just bad dreams (Originally published 19/10/2014 at dawn.com)

It's the stuff of Western nightmares: imagine if, one day, a strong China and a weak but assertive Russia “gang up” against the United States and Europe, winning more friends and allies and imposing their writ on the rest of the world?The recent high profile meetings between Chinese Premier Li Keqiang and Russian President Vladimir Putin have been watched carefully — and fretfully — in all Western capitals with uneasy policymakers seeking to understand if this is just a passing show of affection or if the two countries are planning to build a more solid partnership.Beijing has made clear that it has no intention of being part of any geopolitical power play being hatched by Moscow. China’s interests are global. Indeed before he met Putin, Li was in Germany striking two billion euro worth of business deals. He then headed to Italy for more headline-grabbing commercial overtures.Beijing’s standard line is that it has no allies, only friends. That’s not how Russia views the world. Russia in contrast is under Western sanctions. The EU is struggling to reduce its dependence on Russian oil and gas while the Nato military alliance talks menacingly about Russian actions in Ukraine and its annexation of Crimea.Some warn it is the beginning of a second Cold War. Clearly, it isn’t. The multipolar world today is a very different place from what it was in the Cold War years.Still, some thing is afoot. The Russians are working overtime to woo the Chinese. Beijing is clearly interested in accessing more Russian oil and gas, providing Moscow with new markets as Europe diversifies away from Russian energy. Some 50 agreements and memorandums of understanding are reported to be signed during Li’s visit to Moscow, including in areas related to high-speed transit and finance. China is also eager to supply Russia with fruit and vegetables, products that Moscow is no longer importing from Europe.Western attention is focused on Russian-Chinese cooperation within the Shanghai Cooperation Organisation which some in the West view as a potential competitor for Nato. And the recent decision to launch the BRICS bank is seen as a joint challenge by Russia and China to the post-war liberal order and the supremacy of the Bretton Woods institutions.Both China and Russia are often on the same side on tackling global flashpoints, eschewing military intervention unless sanctioned by the United Nations Security Council.There’s no doubt, however, that while it may want to stay friends and do business with Moscow, China has no interest in being seen as Russia’s best friend. As friendships go, in fact, the focus in many envious Western capitals is on the ‘special relationship’ between China and Germany.While in Berlin, Li and German Chancellor Angela Merkel signed deals worth approximately US$18.1 billion, covering cooperation in areas including agriculture, automotive, telecom, healthcare and education.Li requested that Germany help to relax the EU’s high-tech export restrictions to China and continue expanding bilateral trade and investment. He further stated that the two countries should continue working together on feasibility studies concerning the proposed China-EU Free Trade Agreement. The two sides also signed guidelines covering 110 cooperative agreements over the next five to 10 years.At the Hamburg Summit organised by Germany’s top industrialists that was attended by Premier Li the message was clear: China is not only the the biggest market for German companies, it is also a growing one. China’s huge national reform programme agenda, opens up exciting new export and investment opportunities for German — and other European — companies. Discussions focused on China’s massive urbanisation needs which can be met by European companies.Chinese investments into Germany and the EU are soaring. Significantly, unlike many other countries, China has shown a strong interest in the future course of Asem, the Asia Europe Meeting forum which is often criticised for being a mere talk shop.At the Asem summit in Milan last week, Li waxed lyrical about Asem’s role in improving connectivity between Asia and Europe, underlining his vision of building a Silk Road between Asia.Li knows he is on a winning streak. As the Financial Times newspaper reported recently, Chinese investors are surging into the EU.In 2010, the total stock of Chinese direct investment in the EU was just over 6.1bn euro — less than what was held by India, Iceland or Nigeria. By the end of 2012, Chinese investment stock had quadrupled, to nearly 27bn euro, according to figures compiled by Deutsche Bank.Not surprisingly, the EU and China are in the process of negotiating a bilateral investment treaty aimed at protecting each others’ investments but also ensuring better marker access.China is clearly not about to ditch Russia. But Beijing’s focus is on the growing markets of Europe. Western policymakers can sleep easy. For many nights.