“Global power is often seen as a zero-sum game, and policymakers in Washington fear that China’s growing influence is coming at the expense of the US. Yet they haven’t offered an alternative to the BRI, instead largely chastising China for its intentions behind it and discouraging countries from joining it.
But that changed at the Group of Seven (G7) Summit last month, when President Joe Biden announced the Partnership for Global Infrastructure and Investment (PGII). With the PGII, G7 governments and private funders aim to invest $600 billion in low- and middle-income countries over the next five years, with $200 billion specifically earmarked from the US.
The motivation isn’t hard to discern: Counter China’s BRI. “Imitation is the sincerest form of flattery,” said Jorge Heine, a professor at Boston University and Chile’s former ambassador to China. “It has finally dawned on Western countries that there is actually a need for infrastructure in countries in Africa, Asia, and Latin America.””
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“In his remarks announcing the PGII, Biden stated: “I’m proud to announce the United States will mobilize $200 billion in public and private capital over the next five years.” Despite that promise, however, the real money the US government has committed is far from $200 billion — adding up to about $170 million.
That discrepancy comes in part from how the US plans to finance this agenda. Kenny told me the US and the European Union have been keen to mostly rely on the concept of financial leverage. For example, a government may offer to finance $1 of an infrastructure project with the idea that this will then spur and be matched by $10 of investment from the private sector. “There’s this idea that you get from the millions and billions to these hundreds of billions by leveraging the private sector,” Kenny said. But, he added, “the fact is the record of that has been grim.” Rather than a one-to-10 public-private financing ratio, “we’re seeing a low one-to-one.”
The US is relying on leveraging to fund the PGII for two reasons. One, Congress is unlikely to authorize any more money for this kind of initiative, especially given its failure to pass increased funding for domestic programs (the rebranding of the initiative from “Build Back Better World” was no coincidence). So leveraging private companies “makes small amounts of US government money look bigger,” Kenny said, while enabling the administration to take credit for the whole promised sum.”
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“The other reason, according to Kenny, is a deeply embedded ideological belief, stemming back to the Washington Consensus of the late 20th century, that the private sector beats government when it comes to delivering on goods like infrastructure. Reliance on the private sector also has the added benefit of preferring US companies and workers for various development projects, but Kenny added that US policymakers genuinely appear to believe this method makes these projects more affordable to low- and middle-income countries.
This line of reasoning is shaky, though, as public-private partnerships like the ones the PGII proposes are often very complex.”
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“China and the BRI have had a different model, which has proven more successful. Kenny told me that China has been more willing to finance infrastructure that will be owned and operated by Global South governments. Fundamentally, this allows projects to be built faster and more cost-effectively as governments are already responsible for most infrastructure (approximately 83 percent of infrastructure investment worldwide is government-financed, per a 2017 study), and they don’t need to bargain and haggle with private companies.”
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“One key way for the US and G7 to support the Global South would be to better use existing multilateral institutions like the World Bank and regional development banks like the African Development Bank, especially because, as Kenny told me, the World Bank actually can do the concept of leverage pretty well. While the US is proposing the approach of a “bespoke retailer” that pursues public-private deals one project at a time (each maybe a $100 million investment), the World Bank is like a big “wholesaler” that leverages money from the whole market (in the range of hundreds of billions) to support a range of public sector projects.
“Governments put in a little bit of capital to the World Bank, which then goes out and borrows massive amounts on private markets, issuing bonds at a 10:1 ratio,” Kenny said, meaning that they can get a lot of money for construction and development projects for the Global South. The World Bank also used to be much more engaged in financing hard infrastructure like roads and railways, only for priorities in terms of what is funded to change in recent decades. A massive recapitalization of the World Bank, Kenny said, could be an important place to start.
Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research, also suggested the issuance of “special drawing rights” (SDRs) from the IMF to shore up the central banks of countries in the Global South. SDRs effectively act as “coupons” from the IMF — the closest thing to the world’s central bank — and they function like cash transfers to countries in times of crisis.
SDRs were most recently issued to support countries around the world facing a financial crunch during the Covid-19 pandemic, and were used by low- and middle-income countries to pay for vaccines and other health care needs. However, as the authors of a Brookings Institution analysis of SDRs during the pandemic found, high-income and upper-middle-income countries currently receive the majority of SDRs, so distribution would need to become more equitable.
The US would also be wise to focus on its strong suits. As Kenny wrote in a recent article, the best way the US could help build the human capital of the world by way of providing scholarships and visas for access to its world-leading institutions of higher education, as well as increasing the number of work visas issued. And many of these migrants would end up sending capital back to their home countries in the form of remittances. A 2019 IMF study found that remittance flows total up to greater amounts of cash to low- and middle-income countries (China excluded) than overseas development aid.”
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“A final option for the US is to ditch the global competition frame and collaborate with China to invest in the Global South. Baker argued that the “competition basically makes zero sense” due to the global scale of issues like the climate crisis, pandemics, and global development more generally.”
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“Fundamentally, the Global South hasn’t necessarily bought into the geopolitical ideological competition of “democracy vs. autocracy” between the US and China. The Global South, as seen in its position toward the Russian war on Ukraine, is increasingly pursuing a strategy of what Heine termed “active nonalignment,” meaning rather than siding with either of the big powers in this supposed “new Cold War,” they’re more narrowly focused on their own economic growth and development.”
“Tariffs on seafood have hit Alaska in particular, Alaska’s fishing industry generates over $5 billion dollars in economic activity and creates nearly 70,000 jobs in the state, making it a vital lifeline for the state. Over 40 percent of U.S.-caught Alaskan salmon and one-third of all seafood from Alaska is exported to China each year. Much of it is processed in China and then re-imported to the United States for sale in grocery stores.
As the National Fisheries Institute points out, this split processing stream has contributed to rising seafood costs for U.S. consumers, as China’s retaliatory tariffs hit seafood when imported for processing and the original U.S. tariffs hit products upon their return to American shores.”
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“For consumers, meanwhile, these costs are discouraging consumption of fish, according to a February study published by data analytics firms IRI and 210 Analytics. That month alone, sales of frozen seafood products decreased by 9.4 percent, while fresh seafood sales decreased by 12 percent.”
“When the Trump administration implemented tariffs on Chinese chemical companies in 2018, administration officials said tariffs would make American chemical companies more competitive. But industry groups told regulators last week that it’s had the opposite effect.
At a Thursday hearing on the impact of the Trump administration’s tariffs against China, the American Chemistry Council (ACC), an industry group representing over 190 U.S. chemical companies, informed the International Trade Commission that imports of Chinese chemical products have instead grown continuously since the tariffs took effect in June 2018. Over $35 billion worth of chemicals were imported from China in 2021, and Chinese companies now make up a larger share of U.S. chemical imports than they did when former President Donald Trump took office in 2017.
Per the ACC, the Trump administration failed to account for American manufacturers’ reliance on intermediate products exclusively produced in China. “China is the primary source of many valuable inputs to U.S. chemical manufacturing processes, and for which few or no alternatives exist,” an ACC representative said. “It would take years, and billions of dollars, to build manufacturing capabilities for these inputs in the United States or other countries.”
Dyes stand out as some of the most notable examples of vital Chinese imports impacted by chemical tariffs. For U.S. manufacturers to produce Red 57, a red pigment commonly found in many cosmetic products, they must import 3-hydroxy-2-naphthoic acid, also known as BONA, from China. BONA is exclusively produced in China, forcing American manufacturers to bear the higher costs associated with importing these critical Chinese-made inputs for their final products.”
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“Despite the attention given to the industry by the federal government in recent years, chemical companies are warning that tariffs are hurting their ability to invest new capital in their supply chains and innovate on issues like climate change. They also worry that it will slow job growth and hinder the Biden administration’s broader efforts toward restoring resilience in the supply chain while only contributing to higher costs for consumers.
“[T]ariffs are clearly not working for the chemicals and plastics sector,” the ACC said in their testimony. “[They] are making the United States a less attractive place for jobs, innovation, and plant expansion.””
“China has recruited Federal Reserve economists for more than a decade to share sensitive and confidential information about U.S. economic policymaking in a bid to gain influence over the central bank, a Senate Republican charged in a report Tuesday.
The report from Sen. Rob Portman of Ohio, the top GOP lawmaker on the Homeland Security committee, detailed what Senate investigators called “long-running and brazen actions by Chinese officials and certain Federal Reserve employees” to replicate the playbook China has used to infiltrate the science and technology sectors. It involves recruiting industry experts to provide proprietary information or research in exchange for monetary benefits or other incentives, it said.
The Fed has failed to effectively combat the threat and doesn’t have sufficient expertise in counterintelligence or adequate policies to thwart China’s influence campaign, which includes efforts to obtain information about interest-rate decisions, the report concluded. It calls on Congress to enact bipartisan legislation that would enhance security around federally funded research, among other measures.”
“Did the coronavirus responsible for the COVID-19 pandemic originate from live animals for sale in the Huanan Seafood Market in Wuhan, China, or as a lab leak from the Wuhan Institute for Virology? In search of answer to this question, a new article in Science parses the early outbreak data along with environmental samples taken in Huanan Market supplied by Chinese researchers. It finds that the market was the “epicenter” for the contagion. A second article concludes that the outbreak began after two genetically distinct coronaviruses infected people beginning in November and December of 2019.
Do these findings rule out the possibility that the COVID-19 coronavirus originated from the institute? No. The first article acknowledges that “events upstream of the market, as well as exact circumstances at the market, remain obscure, highlighting the need for further studies to understand and lower the risk of future pandemics.” Those “events upstream” could include a scenario in which someone associated with the Virology Institute was unknowingly infected with the virus and carried it to the market while shopping.
“Have we disproven the lab leak theory? No, we have not,” one of the study’s authors told The Washington Post. “Will we ever be able to? No. But there are ‘possible’ scenarios and there are ‘plausible’ scenarios….’Possible’ does not mean equally likely.”
Skeptics of the natural origin of the virus will point to its novel furin cleavage site (FCS), which enhances its ability to latch onto and infect human cells. Broad Institute researcher Yujia Alina Chan and her colleagues noted in a January 2022 article for Molecular Biology and Evolution that the Wuhan Institute had earlier proposed to research FCS in coronaviruses found in bats. They further observed that the FCS has not been found so far in plausible evolutionary forebears of the COVID-19 coronavirus.
On the other hand, a May 2022 analysis of the genetics of bat coronaviruses in Communications Biology identifies “several possible ways for natural acquisition of the FCS” in bat coronaviruses. This, they argue, supports “a natural evolutionary origin from bats with or without the involvement of [other animal] intermediary hosts.”
In June, the World Health Organization urged the Chinese government and researchers to allay speculations about lab leaks by being more forthcoming about the work on coronavirus viruses undertaken at the Wuhan Institute for Virology. The world is still waiting to hear from them.”
“High-level bilateral military contacts have long been a vexed issue. Beijing repeatedly rebuffed Defense Secretary Lloyd Austin’s efforts to secure a call with his Chinese counterpart, Wei Fenghe. Austin finally succeeded in speaking to Wei in April after almost 18 months of efforts.
“We want more open communications particularly between our militaries at a time like this,” John Kirby, National Security Council spokesperson, said Friday. “Because when you have this much military hardware steaming and sailing and flying around, the chances of misperceptions and miscalculations only increase.”
But the relatively low-level nature of the canceled talks suggests that Beijing’s cancellation was more form than substance.
“These are all useful engagements but ones that are not at the very top level and …[bilateral] communications will remain open,” said Ret. Vice Adm. Robert B. Murrett, professor of practice at Syracuse University’s Maxwell School. “I would hope that as opposed to being canceled, these [meetings] are actually just being suspended and that cooler heads would prevail sometime into next year.”
The announcement of cancellations allows Beijing to publicly vent about the Pelosi visit while providing time to walk them back in the coming months. That performative aspect of the Chinese response reflects President Xi Jinping’s domestic political considerations and the need to burnish his image as an iron-willed defender of China’s territorial integrity. That effort is particularly urgent in the run-up to autumn’s 20th Communist Party Congress, where Xi is widely expected to emerge with an unprecedented third term as a paramount leader.”
“In July 2020, the feds indicted more Chinese government hackers for their part in “a hacking campaign lasting more than 10 years to the present, targeting companies in countries with high technology industries, including the United States, Australia, Belgium, Germany, Japan, Lithuania, the Netherlands, Spain, South Korea, Sweden, and the United Kingdom.” In September of the same year, the U.S. Cybersecurity and Infrastructure Security Agency announced that hackers with China’s Ministry of State Security used “commercially available information sources and open-source exploitation tools to target U.S. Government agency networks.”
In March of this year, Mandiant, a cybersecurity firm, revealed that hackers sponsored by the Chinese state were able to “successfully compromise at least six U.S. state government networks.”
Many reports about state-sponsored hacking note that this isn’t a one-sided affair. U.S. officials don’t advertise it, but there’s evidence they’re doing their part to steal sensitive data from Chinese companies and government agencies.”
“The Pentagon is working on a new plan to rise above competition from China and Russia: balloons.
The high-altitude inflatables, flying at between 60,000 and 90,000 feet, would be added to the Pentagon’s extensive surveillance network and could eventually be used to track hypersonic weapons.”
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““High or very high-altitude platforms have a lot of benefit for their endurance on station, maneuverability and also flexibility for multiple payloads,” said Tom Karako, senior fellow for the International Security Program and Missile Defense Project director at the Center for Strategic and International Studies.
The Pentagon continues to invest in these projects because the military could use the balloons for various missions.”
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“Wind currents allow the balloon to float along a desired flight path, and the company takes advantage of different wind speeds and directions to move the balloon to the target area.
But that’s not all. Raven Aerostar uses a proprietary machine-learning algorithm that predicts wind directions and fuses incoming sensor data in real time, Van Der Werff said. The company also employs a software program to pilot and monitor its balloon fleet and has a mission operations center manned with trained flight engineers 24 hours a day, seven days a week, he added.
The balloons can supplement work performed by traditional aircraft and satellites, and stratospheric balloons can be built and launched at a fraction of the cost and time. For example, the cost to launch and operate balloons for weeks or months is in the hundreds of thousands of dollars, versus millions — or tens of millions — needed to launch and operate aircraft or satellites.”
“Lee’s tenure — and Xi’s support for it — mark a low point for civil rights and political freedom in Hong Kong. They also show Xi’s disdain for global human rights norms and a growing geopolitical divide between East and West, Lai said. “Xi Jinping’s vision is not to bring China in line” with those norms, he told Vox, but to assert dominance in places like Hong Kong and Taiwan, which threaten to provide alternative visions of political and social life. “Hong Kong seems to be the lesson.””
“When Chairman Mao Zedong visited Soviet dictator Joseph Stalin in the winter of 1949, he was very much the junior supplicant. Stalin packed him off to wait for weeks in his snow-bound No. 2 dacha, 27 kilometers outside Moscow, where the humiliated and constipated Chinese leader grumbled about everything from the quality of the fish to his uncomfortable mattress.
When the two Communist leaders did get to business, Stalin bullied his way to a very favorable deal that put Mao on the hook to buy Russian arms and heavy machinery with a loan on which Beijing would have to pay interest.
Seven decades later, the power dynamics reveal a radical reset. Shortly before invading Ukraine, Russian President Vladimir Putin traveled to the Winter Olympics in Beijing to proclaim the “no limits” friendship with China’s Xi Jinping, but there’s no doubting who the real superpower is in that duo these days. China’s $18-trillion economy is now 10 times mightier than Russia’s. Beijing will hold nearly all the good cards in setting the terms of any financial lifelines from big brother.
As Russia faces a sharply contracting economy under sanctions and an impending oil embargo from Europe, China is the obvious potential benefactor for Putin to turn toward.
Xi shares Putin’s hostility to the West and NATO, but that doesn’t mean he will be offering unalloyed charity. Xi’s overriding strategic concern is China’s prosperity and security, not saving Russia. Beijing is likely to buy at least some oil diverted from Europe, but only at a hefty discount from global benchmarks. China will only help Russia to the extent that it doesn’t attract sanctions and imperil its own ability to sell goods to rich countries in North America and the EU.”
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“For years, Chinese officials have been quietly lobbying their Russian counterparts to cut arms sales to India, which has had a sometimes bloody border dispute with Beijing.
Between 2017 and 2022, India was the largest arms export market for Russia, followed by China, according to statistics from the Stockholm International Peace Research Institute. Fighting Indian soldiers armed with Russian equipment may not be fun for China, but it’s certainly a lucrative business for Russia.
Before the war, “Russia was very stubborn and [would] say, ‘Oh, you’re not in a position, China, to dictate us our choices to whom we sell weapons. But I think that China will be in this position probably five years down the road,” said Alexander Gabuev, an expert on Russia-China relations with the Carnegie Endowment for International Peace, a think tank.
India, for its part, is trying to keep an open relationship with Putin. New Delhi, like Beijing, is snapping up cheap oil, even though it’s also eager to maintain strong ties with the U.S.”