Intra-regional economic interactions in East Asia were broadly compatible with the global liberal order from the late 1970s into the mid-2000s. Despite many national barriers to incoming trade and investment, more were coming down than going up. World Trade Organization (WTO) and International Monetary Fund (IMF) rules and norms generally prevailed. The World Bank and the Asian Development Bank (ADB) adhering to longstanding global standards were the key sources of infrastructure loans. An array of challenges to that congruence between global and regional trade and finance have arisen within East Asia, particularly since the global financial crisis (GFC) of 2008-09 and the current Covid-19 pandemic. New institutions of trade and investment threaten to compete with one another and with existing global institutions in ways that pose challenges to the existing global liberal order and threaten the competitive opportunities for non-Asian corporations from both Europe and the United States. Whether policy-makers there can respond effectively to offset these challenges is a central question for near-term action.
Access to global markets is increasingly conditional on meeting social and environmental standards in a number of strategic economic sectors relevant to Southeast Asia. Although linking trade to environmental and labour standards is not new, what has changed is the extent to which diverse, often competing public and private socio-environmental standards are reshaping, albeit unevenly, global supply chains in key commodities produced in these countries while cross-cutting demands to improve socio-environmental practices in these sectors enter supply chains from many sources and levels, often taking by surprise targeted economic actors and their governments. Such pressures have been in the making for over two decades but were uneven, diffuse, and mostly emanated from non-profit actors, and so governments missed, misinterpreted or dismissed these until about some years ago when their combined, interactive effects became visible and significant. In such complex situations, economic security requires industry resilience, which at the least, requires fundamental recognition that socio-environmental standards are here to stay, will likely escalate and will, therefore, require changes to local production processes even as states use various diplomatic tools to address more immediate barriers to market access.
Recently, the Chinese government released the White Paper on China’s International Development Cooperation, considered as a response to the international pushbacks resulting from the Chinese aggressive Belt and Road Initiative (BRI). The White Paper clearly aims to address international concerns such as transparency, project ownership, and financing efficiency. Based on the above, this paper aims to address the question: why did China modify its international development cooperation, and to what extent will this modification make a difference? The paper argues that, by reshaping the narratives of the BRI as a public good for development, China aspires to achieve two major goals: continuing international integration to serve both domestic and international markets and setting international standards. It further argues that China’s modifications in improving transparency, returning project ownership to local governments, and financing efficiency of its overseas financing show that the international pressure works. Nonetheless, this is not to suggest that extreme pressure would fundamentally change China’s behaviour. Modifications of China’s international development cooperation show China’s gradual recognition of international norms and standards, especially through the engagement with multilateral mechanisms. In a context where geopolitical rivalry prevails on state-to-state relations, perhaps, development cooperation and engagement through multilateral mechanisms is a good start to depoliticize the tension.
As the People’s Bank of China (PBoC) rolls out a digital yuan, officially designated as the Digital Currency Electronic Payment (DCEP), monetary relations in China could be revolutionized. Digital currencies differ from both physical cash and traditional electronic payments in that they are digital tokens that use distributed ledger technology (DLT), commonly known as “blockchain”. However, unlike private cryptocurrencies, these tokens are official state-backed tender, issued in a centralized and regulated manner by central banks. The PBoC’s objectives for the launch of the DCEP are manifold, ranging from a substantial improvement of financial efficiency to the enhancement of state authority and supervision of monetary operations. This article explores the implications of the DCEP for the creation of new monetary relations in China and yuan internationalization.
This essay details how the United States has applied coercive financial statecraft tools on China and Hong Kong in 2020-21 and assesses the impact of these punitive measures. The tools include financial sanctions on Hong Kong and Mainland Chinese officials, investment bans on Chinese companies with purported links to China’s military and pushing for Chinese corporate stock delisting from the New York Stock Exchange (NYSE). The analysis shows, however, that large inflows of money from China, Asia and Europe into Hong Kong and Mainland financial markets have acted as offsetting portfolio investment, which have buoyed Hong Kong’s capital markets, and allow the targeted Chinese companies more capital and clout. Even though US divestment in the targeted Chinese assets has occurred, the net effect is that the US coercive statecraft measures are not working, and they are not having the disciplining effect on Hong Kong and Chinese officials, or on the Chinese companies, as intended. The policy recommendation is these coercive financial statecraft measures are actually damaging the relative global position of the United States and undermining the international economic order that has provided peace, growth, and stability across the Asia-Pacific region for the last five decades. The current US presidential administration and US legislators should rethink their policies and adjust.
