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Will Beijing Really Rename and Reroute the China-Pakistan Economic Corridors (CPEC) to Please India?

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The Chinese Ambassador to India suggested that his country could rename and even reroute the China-Pakistan Economic Corridor, popularly known as CPEC, in order to appease New Delhi.

His Excellency Mr. Luo Zhaohui proposed this controversial idea in a speech at the Centre for Chinese and South-East Asian Studies late last week, which is the second time that he spoke about it when considering that the first instance was half a year ago in May. It’s difficult to interpret why this is being brought up yet again, though there are two branches of understanding that can help with figuring out what might be going on. The first one of course is that the Ambassador isn’t serious about the proposal and is simply bringing it up for diplomatic reasons and in order to temporarily alleviate India’s hysterical jingoistic worries about CPEC. That’s indeed very possible, though the second school of thought on this topic is equally plausible as well, and it’s that Beijing might actually be somewhat serious about this suggestion.

To explain, China would ideally like for India to join its One Belt One Road (OBOR) global vision of New Silk Road connectivity, as the complementary synergy between these two Asian Great Powers could literally have world-changing consequences for International Relations, but New Delhi’s ultra-nationalist government has thus far refrained from this due to its maximalist approach to the Kashmir Conflict and fears of being inundated with Chinese goods. In an attempt to temper their unease, Ambassador Zhaohui proposed that China could “create an alternative corridor through Jammu and Kashmir, Nathu La pass or Nepal to deal with India’s concerns”, which would in essence connect over two billion people and create a powerhouse of geopolitical gravity if it was successful.

China-Pakistan Economic Corridor

The problem, however, is that this is more of a liberal fantasy than a functional plan when considering that all indicators point to India’s reluctance to ever agree to this proposal, especially since the South Asian state is in the process of formulating a 100-year-long strategy with the US, as revealed by Secretary of State Rex Tillerson earlier last month. Therefore, it’s fair to suppose that any members of China’s permanent military, intelligence, and especially diplomatic bureaucracies – or “deep state” – who believe in this are followers of the liberal school of thought, which might also suggest that some of them might even believe the unfounded fake news reports about Pakistan’s stability and security, ergo why they would publicly entertain renaming and potentially even rerouting CPEC.

The $250 billion worth of deals that Trump agreed to during his visit to the People’s Republic a few weeks ago might have also had an influence on Ambassador Zhaohui’s revival of his curious proposal, whether as a symbolic diplomatic gesture or a serious initiative. At the end of the day, however, it’s very unlikely that China would ever reroute CPEC because of the grand strategic purpose that the project fulfills in providing Beijing with reliable overland access to the Indian Ocean through which almost all of its Eastern Hemispheric trade traverses, and as for renaming this project, it can’t do so unilaterally without Pakistan’s approval and that won’t ever happen because CPEC has become inseparable from the country’s 21st-century international branding.

The post presented is the partial transcript of the CONTEXT COUNTDOWN radio program on Sputnik News, aired on Friday Nov 24, 2017:

 

 

Posted in China, India, Pakistan & Kashmir0 Comments

US Sanctions Against North Korea Target China

The US Treasury announced new sanctions on Tuesday that not only target North Korea, but a number of Chinese companies and individuals. The latest penalties underscore Washington’s determination to exploit the current confrontation with Pyongyang to undermine China economically and strategically.

The announcement followed Trump’s decision on Monday to redesignate North Korea as a state sponsor of terrorism—an utterly cynical move that further undercuts the possibility of negotiations to end the crisis. A North Korean spokesman yesterday denounced the step as “a serious provocation” and warned that Pyongyang would continue to strengthen its nuclear arsenal as long as the US continued its “hostile” policy toward his country.

The new US sanctions will hit six North Korean shipping companies and 20 vessels, along with the Korea South-South Cooperation Corporation, which allegedly organises the employment of North Korean guest workers in other countries, including Russia and China.

Treasury Secretary Steven Mnuchin declared that the US was “steadfast in our determination to maximise economic pressure to isolate it [North Korea] from outside sources of trade and revenue.” His comments demonstrate that Washington is seeking a complete blockade of North Korea, aimed at strangling it economically, not simply the enforcement of existing UN sanctions.

The impact of the latest US sanctions on the Pyongyang regime is limited. Successive UN Security Council resolutions already ban virtually all North Korean commodity exports, including coal, iron, other minerals and seafood, as well as limiting joint investment and the hiring of extra North Korean guest workers, and capping the sale of oil and related products to North Korea.

The US, however, is going well beyond the UN measures, which were pushed by Washington and reluctantly agreed by China and Russia in a bid to forestall war. In effect, the Trump administration has unilaterally declared that any trade or investment with North Korea is out of bounds and any individual or company that does so faces exclusion from the US financial system.

The US Treasury imposed secondary sanctions on three Chinese companies—Dandong Kehua Economy and Trade, Dandong Xianghe Trading and Dandong Hongda Trade—which it claimed had done more than $750 million in combined trade with North Korea over almost five years up to August 31. This included trade in coal, iron ore, lead, zinc and silver ore, lead metal and ferrous products, as well as notebook computers.

The Trump administration has not attempted to justify its move against these companies by referring to UN sanctions, international law or even previously declared US policy toward North Korea. Up until the latest UN resolution in August, the purchase of coal, iron ore, lead and ferrous products was not subject to a total ban. The US has arbitrarily singled out Chinese companies for retrospective penalties.

Chinese citizen Sun Sidong and his company Dandong Dongyuan Industrial were also sanctioned for allegedly exporting more than $28 million worth of goods, including items connected to nuclear reactors, to North Korea over several years.

Chinese foreign ministry spokesman Lu Kang on Wednesday condemned the US actions, saying:

“We consistently oppose any country adopting unilateral sanctions based on its own domestic laws and regulations and the wrong method of exercising long-arm jurisdiction.” Lu warned that “if other parties wish to have effective cooperation with China” they should share intelligence and cooperate with China “to appropriately handle the issue.”

The Trump White House, however, has no intention of winding back the confrontation with North Korea or China. During his visit to Beijing earlier this month, Trump demanded that China “act faster and more effectively” to force North Korea to capitulate to US demands for it to abandon its nuclear programs.

However, every step taken by China is only met with new US pressure. The decision to rename North Korea as a sponsor of terrorism was a deliberate slap in the face to Chinese efforts to bully Pyongyang to the negotiating table on US terms. Just last week, Chinese President Xi Jinping sent a special envoy to North Korea for the first high-level talks with its leaders in more than two years.

The US confrontation with North Korea is also aimed at weakening and ultimately subordinating China, which Washington regards as the chief threat to its continued dominance in Asia and the world. The sanctions against Chinese companies are just an element of Washington’s far broader plans for trade war measures against China. In Beijing, Trump demanded that China “immediately address the unfair trade practices” in order to reduce its trade surplus with the US.

Trump’s trade representative Robert Lighthizer, who accompanied Trump to Beijing, is notorious for his advocacy of trade war measures against China. According to a Wall Street Journal article this week entitled, “US throws out playbook on China trade,” Lighthizer “shocked the Chinese hosts by declining their proffered trade concessions including a financial-opening package… His message: Half-measures won’t work for a White House seeking fundamental change.”

Beijing is reluctant to impose a complete economic blockade on North Korea, fearing it will provoke an economic and political crisis in Pyongyang that Washington will exploit. An implosion in North Korea would not only threaten chaos on China’s border but raise the possibility that the US could impose a pro-American regime in Pyongyang.

At the same time, China is acutely aware that the US has advanced military preparations and plans for an all-out war and, to use Trump’s words, the “total destruction” of North Korea, which is formally a Chinese ally.

A debate has opened up in Chinese ruling circles over how to respond to the US over North Korea. According to an article in the Diplomat this week, a rare public debate between academics over the contentious issue points to deep divisions in the Chinese state apparatus. While one wing blames the US for the crisis and continues to call for a negotiated end to the standoff, its opponents suggest that China should cut ties with North Korea and draw up “contingency plans” with the US in case of war, or regime collapse in Pyongyang.

The very fact that a public debate is taking place at all suggests real fears in Beijing that the US will wage a war of aggression against North Korea that could drag China and the world into a catastrophic conflict.

Posted in USA, China, North Korea0 Comments

China’s Belt and Road: Geopolitical Analysis of Regional Impediments

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China’s Belt and Road: Geopolitical Analysis of Regional Impediments. Afghanistan, Pakistan, Myanmar, India, Bangladesh

China’s colossal industrial overcapacity needs global markets and it drives the country to explore wide-scale and costly corridors for overland access to the east and west.

China’s vision to establish a brand new international currency in lieu of the US dollar under powerful bloc of BRICS nation;

China and Russia’s shared efforts to shatter petrodollars and of the highest concern, China’s mega “Belt and Road” project is cautioning the US about its future economic hegemony in the region. Remember, the entire global violence of any sort, anywhere has its ultimate roots in economic interests.

China is laboring on its Central Asia economic corridor without a bump, though this robust economy’s CPEC [China-Pakistan Economic Corridor] as well as Bangladesh-China-India- Myanmar road network could meet a number of obstructions. China has even fixed eyes on the US-occupied Afghanistan as a potential ground for another “Belt and Road” whose foreign policy is entirely at the discretion of the US.

Pakistan went through never-before-seen warnings of Washington under Trump, which were primarily instigated as a result of Pakistan-China’s joint economic scheme. The week following Trump’s critical comments against Pakistan in the UN Summit in September, the Secretary of Defense James Mattisflew to India in an apparently provocative official trip and spoke of India’s role in Afghanistan.

Earlier this month, Washington couldn’t hold back and unearthed that CPEC is passing through the disputed region [Kashmir]. The US Defense Secretary James Mattis told the Senate Armed Services Committee that the Chinese One Belt One Road project is controversial. India objects to CPEC because it may automatically bestow Kashmir to Pakistan once the project comes into practice. At this point, the US and India’s strategic interests coincide.

The US’s posture towards the project has turned upside down. In July last year, the US ambassador to Pakistan David Hale had welcomed the deal and stated:

“The United States welcomes the project and is supportive of any effort that brings about economic growth and development in Pakistan”.

China is working to craft an additional economic corridor that commences from China’s southwestern provinces and runs across Myanmar, Bangladesh and ends up in India’s Kolkata. Recently, China released a white paper vision for Maritime Cooperation under the Belt and Road Initiative to join CPEC with Bangladesh-India-Myanmar corridor. China has come to the sense that India’s disapproval may keep the project from progress, so the latest scheme seems to have surfaced to appease India.

It is believed that CPEC is a flagship project of China’s Belt and Road Initiative, while China calls the Bangladesh-China-India-Myanmar corridor also important. India is apathetic to the latest Belt and Road project. Beijing recently said it was willing to wait for New Delhi to join the project. India’s green light to the latest Belt and Road project may suggest that it has no issue with CPEC passing through disputed Kashmir claimed by India.

Even though India skipped China’s Belt and Road forum in May and made its opposition to CPEC clear, Beijing has continued building the controversial project, saying it has nothing to do with a bilateral dispute between India and Pakistan.

To the south of China’s Central Asia Belt and Road corridor, China seeks to build one through its narrow border with Afghanistan’s Wakhan corridor to connect to new markets along the route. Besides trading purposes, China’s Afghanistan Belt and Road project is intended to establish security in the region as well as undercut the US’s military agenda. On the other hand, Afghanistan’s conflict is on the upheaval with no imminent end which is barring China from moving ahead. To this end, China’s Afghanistan scheme would be blocked as long as US forces are stationed in Afghanistan.

It is not over; China’s Myanmar-Bangladesh-India economic corridor with limited progress in place is facing problems ed in Myanmar’s Rakhine state.

Has the Rohingya’s crisis been engineered to challenge China’s Belt and Road.

The fury that broke out last August in this state imperils China’s massive economic interests. As China expands its geo-political influence and opens up economic corridors to its southern neighbors, it needs peace and stability in Rakhine state. China has business interests accounting for billions of dollars in investment in Rakhine where violence hinders the implementation of ongoing Belt and Road project.

China’s impulse to back Myanmar is said to include cementing its foothold in Myanmar and proactive efforts to cut short the West’s intervention in the countries south of China’s borders. Rakhine’s violence is no less than Kashmir’s dispute to interrupt China’s Belt and Road constructions. On August 25, the insurgent group called ARSA conducted a spate of attacks on a number of Myanmar military’s outposts and killed enough to prompt military into a sweeping and brutal reaction.

Hired media outlets gave vent to Rakhine’s violence and scattering of people to draw global attention into Myanmar’s “crisis”. Yet, some of the world’s major countries including China, Russia and India have refused to specifically condemn the ongoing violence in Rohingya.

In a video message released recently, the front man, Ata Ullah, who is believed to have been born to a Rohingya family in the Pakistani city of Karachi and to have lived in Saudi Arabia, strongly rebuked Myanmar’s treatment of Rohingya. Myanmar’s authorities have asserted that ARSA has links to militants trained by Pakistani Taliban and declared it a “terrorist organization”.

To our surprise, analysts even opined that the climax of Rakhine’s violence is a favorable opportunity for infiltration by networks with a global terrorist agenda such as the Islamic State group (ISIS).

Is the UN acting and responding on behalf of Western interests against China? In February, the UN accused the Myanmar’s military of mass killings and rape of Muslims in Rakhine’s villages. The UN held a closed-door briefing on the crisis. Myanmar barred a UN fact-finding mission from visiting Rakhine state.

Last September, reports appeared that Myanmar was negotiating with Russia and China to protect Yangon from any UN Security Council actions. Noteworthy is that China refrained to step into Myanmar’s crisis, yet the unfolding chaos and the UN’s purposeful attack on Myanmar’s government compelled Beijing it to protect Mandalay. News emerged that China opposed UN involvement in Myanmar’s crisis.

China continues to provide diplomatic protection to Myanmar as some Western nations press the government and military on the Rakhine issue.  In March, China along with Russia blocked a brief UNSC statement when the 15-member body met to discuss the situation in Rakhine. It suggests that certain circles within the UN are working against the interests of China and Russia.

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China Gains Ground in Global Ranking of Research

Academic research papers from China garner the second most worldwide citations, after those from the United States but ahead of those from the United Kingdom, according to a new study.

The analysis was conducted by Amsterdam-based information and analytics company Elsevier and commissioned by the UK’s Department for Business, Energy and Industrial Strategy.

Citations are the way in which scholars give credit to other researchers and acknowledge their ideas. They indicate how seriously research is taken by other scientists.

Elsevier assessed the performance of the UK’s research base between 2010 and 2014 and compared it with seven other countries: China, Canada, France, Germany, Italy, Japan and the US.

The analysis found that in 2014, research papers originating in China accounted for 18.1 percent of all citations, a sharp increase from the 11 percent it had in 2010.

In comparison, the UK’s share in 2014 was 10.7 percent, which was slightly down from the 11 percent they garnered in 2010. The US saw its share slip from 39.4 percent in 2010 to 35 percent in 2014.

In 2014, China accounted for 19.6 percent of the world’s most heavily cited articles, while the UK produced 15.2 percent.

The report said:

“The global research landscape in recent years has become increasingly complex and fluid, and it can only become more so as emerging research nations grow their research bases.”

Authors said the UK and other research-intensive nations are seeing their global shares in key research indicators eroded by emerging countries, “especially by China”.

“As China and other rising research nations succeed in their desire to emulate and even surpass the research performance of countries like the US and the UK, their shares will naturally become larger while the erstwhile powerhouses see theirs shrink,” the report said.

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The Communist Party of China (CPC) at Its 19th National Congress. President Xi’s Battle against Corruption

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Foreign analysts and media look to the 19th National Congress of the Communist Party of China for clues about China’s future. It is no secret that President Xi Jinping, during his almost five years as China’s senior-most leader, has strengthened the Party’s role in governing China — and foreigners have questions. I’m asked these questions by foreign media and I think it useful to state and examine them.

What is it about the Party, the CPC, and its governing philosophy, that makes Xi so committed to enhancing the Party’s governing power? What are the Party’s positions and policies, organization and governance, vision and challenges? Why has China opted for perpetual CPC leadership? What innovations has Xi brought to the Party’s leadership role in the economy and society? Why has Xi elevated “strict discipline of the Party” to the highest level of national importance, the fourth of his “Four Comprehensives” for governing China? Why is his anti-corruption campaign so relentless?

Answers to these questions lead to a more basic question: How has the Party led China to its remarkable development and modernization? How has the Party adapted to changing conditions, kept up with the times? What can we learn from the Party’s history, its triumphs and tragedies? What is it about the Party’s recent past that it mustnow be rejuvenated?

But can a system with a perpetually ruling party discipline itself, itself establish credible checks-and-balances?

What challenges does the Party face? What does the Party consider its greatest dangers? And what are its enduring ideals, its visions for the future? Under Xi’s core leadership, how might the Party’s role in governing China develop over the next five or ten years?

China requires strong leadership to maintain stability given China’s unique, complex challenges: domestically (slower growth, industrial overcapacity, endemic pollution, imbalanced development, income disparity, social injustice, social service demands) and internationally (regional conflicts, sluggish economies, volatile markets, trade protectionism, ethnic clashes, terrorism, geopolitical rivalries, territorial disputes).

Xi’s unprecedented anti-corruption campaign has won strong public support. His determination to root-out corruption and cut the wasteful and detested perks of officialdom is altering how officials in government, and executives in state-owned enterprises, work and even think.

But some foreign analysts see Xi’s anti-corruption campaign as a weapon of political power, thus reflectingtheir superficial and one-dimensional understanding of China. Befitting the size and complexity of the country, for almost every decision of importance, China’s leaders have multiple motivations or reasons.

For the anti-corruption campaign, I can see ten motivations or reasons.

First, to state the obvious, officials who are manifestly corrupt are brought to justice. To manage China’shuge society, there must be respect for law and judicial impartiality.

Second, by combatting corruption the Party increases public trust, building confidence in the Party’s leadership.

Third, by combatting corruption the Party functions more effectively and efficiently, making decisions for the general good, not biased by personal benefits.

Fourth, corruption distorts markets, so that by reducing corruption, resources are allocated more efficiently.

Fifth, corrupt officials impede economic reform because change threatens their private interests. The removal of corrupt officials facilitates reform.

Sixth, corrupt officialsthwart rule of law for personal interests and prosecuting them strengthens rule of law for the national interest. Rule of law is exceedingly important, the third of Xi’s “Four Comprehensives.”

Seventh, some corrupt officials, in addition to enriching themselves, have non-standard political ambitions that could destabilize the system; their removal helps maintain national unity and political stability, which is essential for China.

Eighth, for China to become a world business center, China must have world-class business ethics and standards.

Ninth, combatting corruption benefits China’s entire society, elevating morality and restoring Chinese civilization as a paragon of ethics and integrity.

Tenth, for China to become a global role model, China must exemplify morality and rectitude.

The CPC is a work in process. For the world to understand the China, it must understand why the Party asserts that its continuing political leadership is optimum for China’s development. One key is the Party’s adaptability, stressing experimentation and testing of new policies.

The benefits of a system with a single leading party include implementing critical policies rapidly and assuring that strategies which require long-term commitment, have long-term commitment – for example, China’s “Belt and Road Initiative”.

The Party’s leadershipis deemed essential for China to continue its current development. Yetto continue to earn its leadership, the Party has a higher obligation to enhance rectitude of governance, standards of living and personal well-being — which includes rule of law, transparency in government, public oversight, institutionalized checks and balances, increasing democracy, various freedoms, and human rights.

Going forward in the ‘new era’, the Party faces challenges – furthering economic reform and transformation, and guiding social development and transition – while at the same time, improving transparency and building institutions that are self-regulating. The Party claims a historic mission. The Party will continue to be judged by the results.

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Making History: China and Russia Are Transforming “Enemies” into “Friends”

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In the previous articles, the military and economic means by which the United States initially aimed for global hegemony were addressed, detailing how the US became the (declining) superpower it is today. In both analyses I highlighted how the threat of US military power is no longer credible, and how sanctions and the strong-arming behavior of corporate giants and international bodies (IMF, World Bank, BIS, etc) have ceased their effectiveness.

This has made the United States increasingly irrelevant, leaving in the process a vacuum to be filled by emerging powers like China and Russia, which effectively ushers in a new world order based on multipolarity. In this third and final part of the series, I will dive into the specific events that show how the military, economic and diplomatic combination of Iran, Russia and China have forged, by known as well as less-known means, an alternative world order to the unipolar American one.

Russia, China and Iran have in recent years drawn enormous benefit from the declining military and economic power of the United States, further propelled by a general mistrust of Washington’s diplomatic and political abilities, both with Obama and now with Trump. The two previous articles showed that Moscow, Beijing and Tehran, even as they addressed different situations, shared similar interests and came to coordinate their military, economic and diplomatic strategy.

The success of the Euro-Asian triptych is based on the essential principle of transforming enemies into neutral players, neutral players into allies, and further improving relations with allied nations. In order for this project to be realized, economic, military and diplomatic efforts are variously employed, depending on the country and the general regional context. The flexibility shown by Moscow and Beijing in negotiations has delivered historic deals, not only in the energy sector but also in the military sphere and also in education and poverty reduction, as seen in Africa.

Saudi Arabia, Turkey and Syria are three countries that, when analysed individually, reveal this precise strategy of Russia, China and Iran. Particular attention is focused on the Middle East for several reasons. It is the region where America’s declining military power, unable to achieve its geopolitical objectives in Syria, meets with the progressive loss of Washington’s economic influence, highlighted by the increasingly precarious position of the petrodollar that is about to be challenged by petroyuan deals between Saudi Arabia and China.

From Enemies to Neutrals

The military defeat of Syria’s enemies was mainly due to the Syrian Arab Army (SAA) together with Iran (plus Hezbollah) and Russia’s military cooperation, together with Beijing’s diplomatic and economic support. Thanks to the strategy adopted by Putin in Syria, Russia was able to stop the advanced project of the United States, Saudi Arabia, Turkey, Qatar, France, the United Kingdom, Jordan and Israel to dismantle Syria. The Russian Federation gradually entered into the Syrian conflict, and the military results immediately favored the axis of resistance, the US military unable to intervene directly to change the course of events.

The consequences of this choice have led historic allies in the region to doubt Washington’s real commitment to the region and America’s military ability to intervene in a conflict in the Middle East and North Africa (MENA) and change its course in favour of Riyadh, Doha, Ankara or Tel Aviv. The new Trump administration has showed itself not to live up to the expectations of Saudi regional hegemonic plans, even though the Kingdom agreed to buy up to $110 billion worth of US weapons and commit to further investments in the US.

Riyadh is in an even tighter position than one would ordinarily think. It has to individually support the weight of the petrodollar, which is increasingly shaky thanks to the Chinese desire to eliminate forms of payment in US dollars by switching to the petroyuan. Moreover, Riyadh sees little tangible benefits to the US militarily backing its aggressive anti-Iran policies, even though Trump has shown to different ideas than Obama on the Iran deal. Saudi Arabia shares a common interest with Israel in the region with regard to their shared anger concerning Washington’s diminishing effectiveness in the region.

From the Saudi point of view, everything went downhill within a relatively short period. The defeat in Syria that coincided with the agreement on the nuclear deal (Joint Comprehensive Plan of Action – JCPOA) between Iran and the 5+1 countries. In both these scenarios, Riyadh feels the profound betrayal of its old North American ally. The Chinese economic pressure on Riyadh to accept yuan payments for oil, coupled with the growing ability of Moscow to effectively intervene in the region, and the renewed diplomatic and political role of Iran thanks to the JCPOA agreement, has left Riyadh on a certain path to destruction. The only solution is a strategic change that could affect the region in a significant manner.

The visit of Saudi King Salman to Moscow to sign trade agreements (an investment fund of over 1 billion dollars has been created) was of symbolic importance. The King’s actions, conducted in person, reflected recognition of Russia’s new dominant role in the Middle East as a result of American intentions to withdraw influence in the region. The need for the Saudi king to appear in person in Moscow also directly concerns the succession to the throne, with Mohammed bin Salman to inherit the keys to the kingdom, in spite of the disasters in Yemen and the Gulf Cooperation Council (GCC) crisis caused by the clash with Qatar. In a situation of extreme weakness, especially with oil prices so low, the Saudi monarchy is left with few cards to play and has to initiate a dialogue with Moscow and possibly start some kind of cooperation in various fields related to energy and investment. Initially, the main excuse for the Moscow meeting between Putin and the Saudi king was to coordinate the production and sale of petroleum and gas, a necessity for both countries given falling oil prices over the last 24 months. The first goal achieved by Putin and the Saudi king appears to be a spike in oil prices to acceptable levels, following Washington and Riyadh’s failed strategy to bankrupt Moscow by plunging oil prices.

Secondly, the meeting focused on the acceptance of Riyadh’s defeat in Syria, recognizing Assad as the only legitimate leader of the Syrian Arab Republic.

A lot is developing behind the scenes, and this is evident with Riyadh now recognizing a political solution as the only way to end the conflict, something never mentioned by Saudi state representatives. It will be very difficult for Riyadh to give up the regime-change project, even if the political, diplomatic, military and economic pressure from China and Russia increases. A common faith accompanies Riyadh and Tel Aviv, as shown with both repeatedly trying to persuade Putin to abandon his friendship with Iran and Assad, but without success. The loyalty demonstrated by Moscow to Tehran and Damascus has also had a positive effect on the Saudis, who must recognize that while Putin may have different views on certain issues, he is a man of his word; unlike the United States, where new administrations may sometimes throw friends under the bus, Putin maintains his promises, even under extreme pressure. In this sense, Trump’s decision to decertify the Iran deal is a demonstration of good will to Israel and Saudi Arabia by the new administration.

Saudi Arabia finds itself with very low monetary reserves as a result of the lowered price of oil and involvement in several wars. To add to this is a military defeat in Syria and an even bigger debacle in Yemen. To cap it all off, the United States, its most valuable ally, is increasingly disinterested in the fate of the Saudi monarchy and the kingdom, thanks to increasing energy independence as a result of fracking. Adding to this, the Gulf Cooperation Council (GCC) has split as a result of the economic warfare against Qatar, representing another example of Washington not supporting Riyadh to the full extent the monarchy in Saudi Arabia would have been expecting. The reasoning for Riyadh is as simple as it gets. If Washington is not able to support Saudi Arabia militarily, but Riyadh has to bear the burden economically, then the Kingdom is in enormous trouble and needs alternatives like Russia and China. It is unthinkable for Saudi Arabia to continue supporting petrodollar hegemony while Iran becomes a regional leader in the Middle East.

The best way is by negotiating with the main players, and Russia looks like the perfect mediator, as recently announced. China is just waiting for all these disputes to settle down to bring to bear its  economic power to definitively relegate to the past the last forty years of chaos in the region stemming from Saudi-Iranian rivalry.

For Riyadh, even if the attempt to separate Russia and Iran were to fail, it would nevertheless bring about relations that send a clear signal to the West. The purchase of S-400s is a clear demonstration of expanding Russian influence in the Middle East, and Riyadh perhaps has an understandable fear of American retaliation in the event that it starts to change course regarding the sale of oil in currencies other than the dollar.

Moscow has achieved a diplomatic miracle with Saudi Arabia, thanks to the military efforts in Syria, Chinese economic pressure through the issuing of petroyuan, and Iranian diplomatic success, stemming especially from the nuclear energy agreement, which has served to rehabilitate Tehran on the international political scene.

The purchase of advanced Russian weapons systems sends a clear signal and indicates that the Saudi kingdom is ready to assume a more neutral position and has started to knock on the door of the multipolar world, an acknowledgement of Chinese economic power and the military-technological predominance of the Russian Federation.

From Neutral to Friends

In transforming itself into a more neutral country, Riyadh may be attempting to balance American economic and military influence with Russian and Chinese support. The importance for Russia and China in having a neutral country with great spending capacity in the region should also be noted. In the case of Turkey, Russian intervention in Syria, coupled with Turkish aspirations to become a Euro-Asian energy centre, progressively pushed Moscow and Ankara together. As a result of effective diplomatic work following Turkey’s downing of a Russian jet, relations have gradually improved, occurring in parallel to the operational success achieved by the Syrian army and Russian Air Force against Turkish-backed terrorists. The military defeat of Turkey was already clear twelve months ago. In the last three to four months, Erdogan seems to have changed priorities, focusing on the Kurdish issue and on growing relations with Qatar (the political movement of the Muslim Brotherhood is key in both countries and essential to their relationship). In the meantime, Turkey is distancing herself from her NATO allies, gravitating more and more towards the orbit of the “axis of resistance” that consists of Iran, Iraq and Syria.

The Syria peace talks held in Astana laid the foundation for diplomatic efforts by Tehran and Moscow to persuade Ankara to abandon the military option (even though this was already clear once Russia decided to intervene). Instead, Ankara would be encouraged to open up important energy deals between Ankara and Moscow. It seems that Ankara has now decided to become an energy hub, carrying Turkish Stream gas from Russia to Europe as well as gas from Qatar and Iran. It even seems that China has every intention of connecting with the Turkish facilities for the supply of gas and oil, thus increasing Ankara’s role as a central energy-transit hub for the region.

The other aspect that has firmly convinced Erdogan to yield on Syria concerns the Kurdish issue. The Syrian Democratic Forces (SDF), consisting mainly of Kurdish fighters, operate in Syria under the command and on behalf of the US-led international coalition. Ankara has nominated the Kurds of the SDF as an armed extension of the Kurdistan Workers’ Party (PKK), considered a terrorist group in Turkey. This divergence between Washington and Ankara has continued to grow, even during the Trump administration, contrary to forecasts during the US election period.

With the progressive use of the SDF in Syria by the international coalition headed by the US, Trump and Erdogan’s strategies have ended up clashing. Trump needs to give his domestic audience the impression that the US is devoted to fighting ISIS, even if this means relying on Kurdish soldiers that entails severing relations with Turkey. Erdogan sees this as a matter of national security. The situation has escalated to a point where a few days ago, a diplomatic dispute led to the suspension of the issuing of visas from the respective embassies in Ankara and Washington. Erdogan considers American aid to the Kurds as a betrayal of the worst kind from a NATO ally. A natural reaction to these actions by the US, therefore, was the the agreement between Iraq, Iran, Syria and Turkey to preserve territorial integrity vis-a-vis the Kurdish issue.

The blessing of the Chinese and Russians is evident in this situation. In order to pacify the region, rebuild it and incorporate it into the One Belt One Road project, the Maritime Silk Road, and the North-South Transport Corridor, wars have to stop and diplomacy must prevail. For Ankara, it is a unique opportunity to exit the war in Syria without appearing as one of the defeated factions (hence the Turkish participation in the Astana talks with Russia and Iran). At the same time, Turkey emphasizes the importance of its geographical position as a centre for energy distribution on the Eurasian supercontinent. This is all at the expense of the US, with Turkey breaking free from Washington’s pressure.

Moscow has already removed all sanctions against Turkey, and vice versa, greatly increasing trade with considerable prospects for growth in the coming years. As for weapons sales to Saudi Arabia, Russian influence is expanding, thanks to the S-400 systems in the process of being sold to Ankara over the vehement protests of many NATO countries. The S-400 system is a further effort to deter US aggression, but is also the first indication of Ankara’s will to diversify, this time militarily, constituting a pillar of the new multipolar world order.

Ankara, after numerous diplomatic and military failures, has rebuilt its role in the region alongside Iran and Qatar, in a context where its partnership with Moscow and Beijing will guarantee Erdogan a margin of maneuver to progressively disengage from the NATO system that has brought so many problems to the country. A future entry into the Shanghai Cooperation Organization (SCO) could seal Ankara’s passage into the multipolar world, becoming in the process a fully fledged ally of Moscow and Beijing. In the meantime, it is already possible to say that Moscow and its allies have succeeded in the unlikely task of turning a nation that was on the brink of a direct involvement in Syria in the effort to remove Assad into one of the most important guarantors of Syria’s territorial integrity. Erdogan has agreed to Assad staying in power into the near future, and has even agreed to help fight terrorists in Syria, as evidenced with the recent Turkish military operations in Idlib.

How deep these new friendships between Moscow, Riyadh and Ankara are yet to be tested. Erdogan and the Saudi monarchs have been known not to keep their word. At it stands, this appears to be an economic, political and military masterpiece of the Iranian, Russian and Chinese triad. The war in Syria has almost been won; the terrorist groups supported by the Saudis and Turks have been neutralized; and the conditions for a full Eurasian economic and military integration of Riyadh and Ankara have been set.

Supporting Friends in need.

Ultimately, it is worth pointing out the contribution of Russia, China and Iran to the Syrian government and people. Over the six years of aggression against the Syrian Arab Republic, Iran has never failed to contribute in terms of manpower, equipment and logistical support in the battle against terrorism. Moscow, in the early stages of the conflict, even before intervening directly, took steps to settle the Syrian foreign debt to Russia, and in fact lent money by providing armaments, energy and logistics as a way of actively contributing to the defeat of terrorists in Syria.

The People’s Republic of China has already paved the way for the future of Syria in economic terms, declaring the country an important transit route and a final destination of a part of the Belt and Road Initiative (BRI). Chinese economic power will allow Damascus to rebuild a nation devastated by six years of terrorism and foreign aggression. With Russian military capabilities, Damascus will have all the necessary means to end the conflict and stabilize the country, laying the foundation to prevent any future Western aggression. From a political and diplomatic point of view, the joint actions of Tehran, Beijing and Moscow, together with Damascus, are an integral part of the axis that stretches from Iran to Iraq and Syria and arrives at the Mediterranean, or could even go to Turkey. With the combination of economic, military and political elements, Syria has survived almost unprecedented aggression, emerging as the winner, thus ensuring its ability to determine its future autonomously without external impositions.

Series Conclusions

The path traced by Moscow, Beijing and Tehran is expected to stabilize the Middle East, thanks to the resolution of the Syrian conflict. Some key elements of this global change we are witnessing are: Chinese economic pressure on the Saudis to accept payment for oil in yuan; the eradication of terrorism in Iraq and neighbouring countries, thereby circumventing sanctions imposed on Iran by the US and its allies; and transforming Turkey into a regional energy-distribution centre.

The RPC intervenes economically in a number of regions, particularly in the Middle East, to support Russian military power through money, diplomacy, economic investment (OBOR) and by providing liquidity to allies, as seen with Moscow when it was hit with Western sanctions. For Beijing, the decline in terrorism is a key factor in fostering China’s development of the Silk Road 2.0 infrastructure, allowing Beijing to enter into areas destroyed in the Middle East to offer easy reconstruction plans. At the moment, Syria, Egypt, Libya and Pakistan seem to hold great importance for China’s future strategies.

Russia and China lead organizations such as the BRICS, the UEE, the SCO, and the AIIB. The grand strategy is to support the creation of an alternative to the US dollar-based neoliberal world order and to contain the effects of declining US empire. Nations will increasingly have to choose between two systems: whether the multipolar world order, based on friendship and win-win cooperation, or the unipolar one, based on the America’s declining military and economic power.

Strong Chinese economic support, together with Russian military might as well as Iran’s importance in the Middle Eastern region, are successfully shielding countries like Syria from American military interventions, driving a wedge between old US allies and paving the way for Washington’s planned economic and military isolation in the region. Thus, countries similarly facing US pressure, such as South Korea, Mexico and Venezuela, will increasingly gravitate toward the multipolar world led by Russia and China, accelerating the decline and influence of the United States beyond the Middle East.

The multipolar world order is here to stay. The US is no longer the lone superpower but rather one among two other nuclear-armed powers. The sooner the US realizes this, the better it will be for humanity and for peace around the world.

Posted in China, RussiaComments Off on Making History: China and Russia Are Transforming “Enemies” into “Friends”

China’s Pivot to World Markets, Washington’s Pivot to World Wars

NOVANEWS

And the Debacle of the Latin American Left

First published by GR in August 2016

China and the United States are moving in polar opposite directions: Beijing is rapidly becoming the center of overseas investments in high tech industries, including robotics, nuclear energy and advanced machinery with collaboration from centers of technological excellence, like Germany.

In contrast, Washington is pursuing a predatory military pivot to the least productive regions with collaboration from its most barbaric allies, like Saudi Arabia.

China is advancing to global economic superiority by borrowing and innovating the most advance methods of production, while the US degrades and debases its past immense productive achievements to promote wars of destruction.

China’s growing prominence is the result of a cumulative process that advanced in a systematic way, combining step-by-step growth of productivity and innovation with sudden jumps up the ladder of cutting edge technology.

China’s Stages of Growth and Success

China has moved from a country, highly dependent on foreign investment in consumer industries for exports, to an economy, based on joint public-private investments in higher value exports.

China’s early growth was based on cheap labor, low taxes and few regulations on multi-national capital.  Foreign capital and local billionaires stimulated growth, based on high rates of profit.  As the economy grew, China’s economy shifted toward increasing its indigenous technological expertise and demanding greater ‘local content’ for manufactured goods.

By the beginning of the new millennium China was developing high-end industries, based on local patents and engineering skills, channeling a high percentage of investments into civilian infrastructure, transportation and education.

Massive apprenticeship programs created a skilled labor force that raised productive capacity.  Massive enrollment in science, math, computer science and engineering universities provided a large influx of high-end innovators, many of whom had gained expertise in the advanced technology of overseas competitors.

China’s strategy has been based on the practice of borrowing, learning, upgrading and competing with the most advanced economics of Europe and the US.

By the end of the last decade of the 20th century, China was in a position to move overseas. The accumulation process provided China with the financial resources to capture dynamic overseas enterprises.

China was no longer confined to investing in overseas minerals and agriculture in Third World countries.  China is looking to conquer high-end technological sectors in advanced economics.

By the second decade of the 21st century Chinese investors moved into Germany, Europe’s most advanced industrial giant.  During the first 6 months of 2016 Chinese investors acquired 37 German companies, compared with 39 in all of 2015.  China’s total investments in Germany for 2016 may double to over $22 billion dollars.

In 2016, China successfully bought out KOKA, Germany’s most innovative engineering company.  China’s strategy is to gain superiority in the digital future of industry.

China is rapidly moving to automate its industries, with plans to double the robot density of the US by the year 2020.

Chinese and Austrian scientists successfully launched the first quantum-enabled satellite communication system which is reportedly ‘hack proof’, ensuring China’s communications security.

While China’s global investments proceed to dominate world markets, the US, England and Australia have been trying to impose investment barriers. By relying on phony ‘security threats’, Britain’s Prime Minister Theresa May blocked a multi-billion dollar Chinese investment-heavy nuclear plant (Hinckley Point C). The pretext was the spurious claim that China would use its stake to “engage in energy blackmail, threatening to turn off the power in the event of international crises”.

The US Committee on Foreign Investment has blocked several multi-billion dollar Chinese investments in high tech industries.

In August 2016 Australia blocked an $8 billion-dollar purchase of a controlling stake in its biggest electricity distribution network on specious claims of ‘national security’.

The Anglo-American and German empires are on the defensive.  They increasingly cannot compete economically with China, even in defending their own innovative industries.

In large part this is the result of their failed policies.  Western economic elite have increasingly relied on short-term speculation in finance, real estate and insurance, while neglecting their industrial base.

Led by the US, their reliance on military conquests (militaristic empire-building) absorb public resources, while China has directed its domestic resources toward innovative and advanced technology.

To counter China’s economic advance, the Obama regime has implemented a policy of building economic walls at home, trade restrictions abroad and military confrontation in the South China Seas – China’s strategic trade routes.

US officials have ratcheted up their restrictions on Chinese investments in high tech US enterprises including a $3.8 billion investment in Western Digital and Philips attempt to sell its lighting business.  The US blocked ‘Chen China’s planned $44 billion takeover of Swiss chemical group ‘Syngenta’.

US officials are doing everything possible to stop innovative billion dollar deals that include China as a strategic partner.

Accompanying its domestic wall, the US has been mobilizing an overseas blockade of China via its Trans-Pacific-Partnership, which proposes to exclude Beijing from participating in the ‘free trade zone’ with a dozen North America, Latin American and Asian members.  Nevertheless, not a single member-nation of the TPP has cut back its trade with China.  On the contrary, they are increasing ties with China – an eloquent comment on Obama’s skill at ‘pivoting’.

While the ‘domestic economic wall’ has had some negative impacts on particular Chinese investors, Washington has failed to dent China’s exports to US markets.  Washington’s failure to block China’s trade has been even more damaging to Washington’s effort to encircle China in Asia and Latin America, Oceana and Asia.

Australia, New Zealand, Peru, Chile, Taiwan, Cambodia and South Korea depend on Chinese markets far more than on the US to survive and grow.

While Germany, faced with China’s dynamic growth, has chosen to ‘partner’ and share, up-scale productive investments, Washington has opted to form military alliances to confront China.

The US bellicose military alliance with Japan has not intimidated China.  Rather it has downgraded their domestic economies and economic influence in Asia.

Moreover, Washington’s “military pivot” has deepened and expanded China’s strategic links to Russia’s energy sources and military technology.

While the US spends hundreds of billions in military alliances with the backward Baltic client-regimes and the parasitical Middle Eastern states, (Saudi Arabia, Israel), China accumulates strategic expertise from its economic ties with Germany, resources from Russia and market shares among Washington’s ‘partners’ in Asia and Latin America.

There is no question that China, following the technological and productive path of Germany, will win out over the US’s economic isolationist and global militarist strategy.

If the US has failed to learn from the successful economic strategy of China, the same failure can explain the demise of the progressive regimes in Latin America.

China’s Success and the Latin American Retreat

After more than a decade of growth and stability, Latin America’s progressive regimes have retreated and declined.  Why has China continued on the path of stability and growth while their Latin American partners retreated and suffered defeats?

Brazil, Argentina, Venezuela, Uruguay, Paraguay, Bolivia and Ecuador, for over a decade, served as Latin America’s center-left success story.  Their economies grew, social spending increased, poverty and unemployment were reduced and worker incomes expanded.

Subsequently their economies went into crisis, social discontent grew and the center-left regimes fell.

In contrast to China, the Latin American center-left regimes did not diversify their economies:  they remained heavily dependent on the commodity boom for growth and stability.

The Latin American elites borrowed and depended on foreign investment, and financial capital, while China engaged in public investments in industry, infrastructure, technology and education.

Latin American progressives joined with foreign capitalist and local speculators in non-productive real estate speculation and consumption, while China invested in innovative industries at home and abroad.  While China consolidated political rulership, the Latin American progressives “allied” with strategic domestic and overseas multi-national adversaries to ‘share power’, which were, in fact, eagerly prepared to oust their “left” allies.

When the Latin commodity based economy collapsed, so did the political links with their elite partners.  In contrast, China’s industries benefited from the lower global commodity prices, while Latin America’s left suffered.  Faced with widespread corruption, China launched a major campaign purging over 200,000 officials.  In Latin America, the Left ignored corrupt officials, allowing the opposition to exploit the scandals to oust center-left officials.

While Latin America imported machinery and parts from the West; China bought the entire Western companies producing the machines and their technology – and then implemented Chinese technological improvements.

China successfully outgrew the crisis, defeated its adversaries and proceeded to expand local consumption and stabilized rulership.

Latin America’s center-left suffered political defeats in Brazil, Argentina and Paraguay, lost elections in Venezuela and Bolivia and retreated in Uruguay.

Conclusion

China’s political economic model has outperformed the imperialist West and leftist Latin America.   While the US has spent billions in the Middle East for wars on behalf of Israel, China has invested similar amounts in Germany for advanced technology, robotics and digital innovations.

While President Obama and Secretary of State Hillary Clinton’s “pivot to Asia” has been largely a wasteful military strategy to encircle and intimidate China, Beijing’s “pivot to markets” has successfully enhanced its economic competitiveness.  As a result, over the past decade, China’s growth rate is three times that of the US; and in the next decade China will double the US in ‘robotizing’ its productive economy.

The US ‘pivot to Asia’, with its heavy dependence on military threats and intimidation has cost billions of dollars in lost markets and investments.  China’s ‘pivot to advanced technology’ demonstrates that the future lies in Asia not the West. China’s experience offers lessons for future Latin American leftist governments.

First and foremost, China emphasizes the necessity of balanced economic growth, over and above short-term benefits resulting from commodity booms and consumerist strategies.

Secondly, China demonstrates the importance of professional and worker technical education for technological innovation, over and above  business school and non-productive ‘speculative’ education so heavily emphasized in the US.

Thirdly, China balances its social spending with investment in core productive activity; competitiveness and social services are combined.

China’s enhanced growth and social stability, its commitment to learning and surpassing advanced economies has important limitations, especially in the areas of social equality and popular power.  Here China can learn from the experience of Latin America’s Left.  The social gains under Venezuela’s President Chavez are worthy of study and emulation; the popular movements in Bolivia, Ecuador and Argentina, which ousted neo-liberals from power, could enhance efforts in China to overcome the business- state nexus of pillage and capital flight.

China, despite its socio-political and economic limitations, has successfully resisted US military pressures and even ‘turned the tables’ by advancing on the West.

In the final analysis, China’s model of growth and stability certainly offers an approach that is far superior to the recent debacle of the Latin American Left and the political chaos resulting from Washington’s quest for global military supremacy.

Posted in USA, ChinaComments Off on China’s Pivot to World Markets, Washington’s Pivot to World Wars

Dollar Blow: China Launches New ‘Yuan-Ruble’ Payment Mechanism

NOVANEWS

The US received a major blow to its global hegemony, and one which is sure to trigger more fighting talk from hawks in Washington.

This week it was announced that China has established a ‘payment versus payment‘ (PVP) system to clear Chinese yuan and Russian ruble transactions. The aim, we’re told, is to to “reduce risks and improve the efficiency” of its foreign exchange system.

The new mechanism, which could rival the long-held monopoly of the US SWIFT inter-bank payment system (allowing for simultaneous settlement of transactions in two different currencies) was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.

However, financial oligarchs in Wall Street will view this move as an act of aggression in challenging the preeminence of the US dollar as the planet’s global reserve currency – which is inextricably tied and nearly completely dependent on the US ‘Petrodollar’ to prop-up the value of the US fiat currency. Georgetown University scholars note here:

Since petrodollars and petrodollar surpluses are by definition denominated in U.S. dollars, then purchasing power is dependent on the U.S. rate of inflation and the rate at which the U.S. dollar is exchanged (whenever there is need for convertibility) by other currencies in international money markets. It follows that whenever economic or other factors affect the U.S. dollar, petrodollars will be affected to the same magnitude. The link, therefore, between the U.S. dollar and petrodollar surpluses, in particular, has significant economic, political, and other implications.

First, the placement of petrodollar surpluses of the Arab oil exporting nations in the United States may be regarded politically as hostage capital. In the event of a major political conflict between the United States and an Arab oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use.

China to Buy Saudi Oil in Yuan

This breaking development coincides with other recent moves, including news that China will “compel” Saudi Arabia to trade oil in yuan. If this happens, the rest of the global oil market could follow suit, which would spell catastrophe for the U.S. dollar as the world’s reserve currency.

Yuan pricing of oil is coming, economist says from CNBC.

These two stories are absolutely linked. This is full-frontal challenge to the Anglo-American World Order.

Russia and China are also working behind the scenes to shore-up their precious metal/gold trading standards, possibly in preparation of a new ‘gold-backed’ currency valuation initiative.

Zero Hedge adds:

CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi [Yuan] internationalization. Russia, however, is a top priority: the world’s biggest oil producer recently became the largest source of oil for China, the world’s top energy consumer.

To be sure, the monetary convergence between Beijing and Moscow is hardly new. The most notable recent development took place in April, when the Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. As the South China Morning Post reported at the time, the new office was part of agreements made between the two neighbours “to seek stronger economic ties” since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.

At the time, Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon, to which we said that If Russia – the world’s fourth largest gold producer after China, Japan and the US – is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.

***

Expect that the West not to take this major financial challenge by China and Russia lying down. Washington may use its North Korea, Myanmar or Philippines cards – as a means to increase its leverage in Asia, in an effort to extract Chinese concessions, and head-off China’s new financial ascendancy.

Posted in ChinaComments Off on Dollar Blow: China Launches New ‘Yuan-Ruble’ Payment Mechanism

Expanding Horizons Key to BRICS’ Second Golden Decade

NOVANEWS

Unseen in the West, the BRICS summit in Xianmen marks a new step in the development of this international institution. Zhao Minghao reports the three main objectives of the summit and the concept of “BRICS Plus”.

The first BRICS foreign ministers’ meeting was convened in September 2006, which marked the foundation of the BRICS mechanism. In the 10 years since then, BRICS has become an important international economic bloc representing some of the world’s key emerging economies and developing countries.

In that time, BRICS member states have increased their share in the global economy from 12 percent to 23 percent, their trade has grown from 11 percent to 16 percent, and investment has increased from 7 percent to 12 percent. Most importantly, the contribution made by BRICS economies to global economic growth now stands at more than 50 percent.

With the Trump administration’s “America First” policy in play, the global economy now faces the major risk of declining multilateralism. If both developed and emerging economies continue to turn more inward-looking and back away from coordinating their macro-economic policies, the flickering flame of global economic recovery could be snuffed out.

In recent months, many economists including Managing Director of the International Monetary Fund (IMF) Christine Lagarde have stated that the global economy is finally showing positive momentum 10 years after the financial crisis. The US, Europe and Japan have witnessed steady growth and Russia, Brazil and South Africa have reportedly improved economic figures as well. China and India, meanwhile, have maintained medium to high economic growth rates.

The BRICS Xiamen Summit aims to usher in the second golden decade of the mechanism.

First, BRICS nations aim to set down new measures to boost trade in services, investment and e-commerce. In 2015, export of BRICS members’ trade in services reached about $540 billion, a mere 11.3 percent of the world’s total. With the middle classes expanding in BRICS countries, there is plenty of opportunity for cooperation in healthcare, tourism, education and other sectors.

In addition to this, BRICS countries have been committed to implementing schemes to facilitate investment, including measures to improve efficiency in the administrative approval process and the openness of industries. The BRICS E-commerce Working Group was established in August to help develop small- and medium-sized e-commerce enterprises into the new driving force behind the bloc’s future economic and trade cooperation.

Second, BRICS nations are looking to proactively promote the improvement of global governance. Apart from reform of existing international mechanisms such as the UN Security Council and the IMF, BRICS countries have already established cooperation mechanisms in anti-terrorism, space, cyber security, and energy security. As major energy exporters and consumers, BRICS countries will also deepen cooperation in increasing strategic energy reserves, developing renewable energy and enhancing energy efficiency.

Third, BRICS member nations are looking to enhance cooperation on national and regional security hotspots. During the seventh Meeting of High Representatives for Security Issues in July, it was agreed that deeper political and security cooperation would be the key to strengthening the BRICS mechanism. The political situation in the Middle East and North Africa was the main focus of attention, while issues relating to Afghanistan were made on several occasions in the joint declaration [1].

Most importantly, the Xiamen Summit put forward the concept of “BRICS Plus.” This places the focus on BRICS member countries to deepen relations with other developing countries to support and safeguard their interests, with the ultimate goal of expanding its international influence. Talks between BRICS and African state leaders were arranged during the 2013 BRICS Summit in Durban, South Africa, while India invited leaders of countries that border the Bay of Bengal to the Goa Summit last year. This year, leaders of countries such as Mexico, Egypt and Tajikistan are attending the Xiamen Summit as part of the BRICS Plus initiative.

There is no doubt that BRICS cooperation is not without its challenges. China, Russia and India need to better manage the negative impact of geopolitical factors between their countries, and help build a stronger collective identity for the economic bloc. BRICS also needs to focus on turning cooperation documents into real actions instead of dwelling on empty talk.

It is estimated that by 2021, the BRICS New Development Bank will have made $32 billion in loans. The bank’s African office also started operations in South Africa in August.

It is clear that such international mechanisms under the BRICS framework need to play a more complimentary role in global governance to a much greater extent in the future than they do now.

This article was originally published by Global Times (China).

Note

[1] BRICS Leaders Xiamen DeclarationVoltaire Network, 4 September 2017.

Posted in China, RussiaComments Off on Expanding Horizons Key to BRICS’ Second Golden Decade

US Sanctions Continue to Backfire: China Opens $10 Billion Credit Line for Iran

NOVANEWS

Assisting Tehran with sidestepping an ongoing Washington sanctions regime against the country, China has opened a $10 billion line of credit intended to finance energy, transportation, water and other key Iranian infrastructure projects.

Following the ground-breaking 2015 Joint Comprehensive Plan of Action (JCPOA) between Iran and Russia, the US, China, France, the UK, as well as Germany and the EU, to end its nascent nuclear weapons program, Tehran — in honoring the terms of the unprecedented treaty — has nonetheless seen Washington implement a host of new sanctions against the Middle Eastern country, including asset freezes and limits on global financial transfers.

According to Iranian Central Bank President Valiollah Seif, Chinese state-owned CITIC investment company has opened a $10 billion credit line to several banks in Iran to be used to fund wide-ranging infrastructure projects in the country, according to a report by the Times of Israel.

The significant credit line will primarily use euros and yuan to bypass the US sanctions.

Seif indicated that the $10 billion, alongside an additional previous $15 billion of Chinese investment into other unnamed projects in the country, show “a strong will for continuation of cooperation between the two countries,” according to Pakistan’s geo.tv media outlet.

China is seen to be opening trade to the region as part of a trillion-dollar “One Belt, One Road” strategy to increase ties to Africa and Europe. China is the biggest recipient of Iranian oil, and accounts for almost a third of Tehran’s overall trade.

In pledges to significantly increase trade with Iran, Beijing previously opened two credit lines equalling $4.2 billion, to build high-speed railway lines between Tehran and the cities of Mashhad and Isfahan, according to the Iran Daily, hot on the heels of an €8 billion credit agreement between Tehran and Seoul’s Exim bank signed in August.

While western banks remain cautious, particularly as Washington has imposed what many consider to be unnecessary financial blocks on Tehran, negotiations are progressing between banks in Austria, Denmark and Germany to provide a $22 billion credit line to Iran.

Posted in USA, ChinaComments Off on US Sanctions Continue to Backfire: China Opens $10 Billion Credit Line for Iran

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