Australia concerned about China economy, monitoring ‘very closely’

 (Reuters) – Australian Treasurer Jim Chalmers said on Sunday the government was closely watching China amid “concerning” signs of economic weakness that could weigh on Australia’s economy.

“I share the pretty substantial concerns that people have voiced about the Chinese economy,” Chalmers told Sky News television.

“It is concerning to see the weakness, the softness, in the recent weeks and months in the Chinese economy because it has obvious implications for us here in Australia.”

Recovery in China, the world’s second-largest economy, has sputtered due to a worsening property slump, weak consumer spending and tumbling credit growth, prompting the authorities to slash interest and promise further support while analysts downgrade growth forecasts.

China is the top trading partner for raw-materials exporter Australia, with annual trade of A$285 billion, although Canberra has urged exporters to become less reliant on China amid diplomatic tensions.

“In China they’re dealing with slower growth, they’ve got deflation, there are concerns in their property sector and to some extent in their banking sector, their exports have slowed as well, Chalmers said. “Our concerns for China in particular is something that we’re monitoring very closely.”

Australia’s growth “will be substantially weaker” due to China’s slowdown and Australian interest rates rises, he said.

The Reserve Bank of Australia left rates unchanged in August for a second straight month after raising them by 4 percentage points over 16 months to rein in inflation.

“The overall direction of travel is pretty clear – our economy is weakening,” Chalmers said.

Australia’s economy grew 0.2% in the first quarter, its slowest in 1-1/2 years as high prices and rising.

Reporting by Sam McKeith in Sydney; Editing by William Mallard

US commerce secretary heads to China to bolster trade amid tensions

Raimondo has repeatedly said the United States does not want to “decouple” from China, but also noted she has aggressively placed Chinese companies on an export control list.

“There’s a lot of benefit to doing business (with China) where we can. Having said that, we have to protect what we must, and be eyes wide open about the threats and strategic competition,” Raimondo said in July.

Tensions are high as the United States works with allies to block China’s access to vital equipment needed to keep its chip industry competitive and Beijing restricts shipments from prominent U.S. firms like planemaker Boeing BA.N and chip company Micron Technology MU.O.

Ahead of Raimondo’s arrival in Beijing on Sunday, several recent announcements from the U.S. have likely pleased Chinese officials. On Tuesday, China welcomed the U.S. decision to lift export control restrictions on 27 Chinese entities, saying it is conducive to normal trade between Chinese and U.S. firms.

And on Wednesday the United States said it is seeking a six-month extension to a decades-old science and technology agreement with China, a deal Chinese officials have expressed a desire to extend.

The two biggest economies in the world used to be each other’s largest trade partners, but Washington is now trading more with neighboring Canada and Mexico, while Beijing is trading more with Southeast Asia.

The visit comes after a blitz of intense diplomacy over several months by U.S. President Joe Biden’s top aides aimed at easing tensions between Washington and Beijing.

Officials are hoping to see concrete signs of progress in the relationship, in potential areas ranging from trade to climate, in time for a potential face-to-face meeting between Biden and Chinese counterpart Xi Jinping before the end of the year.

The semiconductor chip industry is eager to protect its profits in China as the Biden administration considers another round of restrictions on chip exports to China. Last year, China accounted for $180 billion in semiconductor purchases, more than a third the worldwide total of $555.9 billion and the largest single market, according to Semiconductor Industry Association.

Raimondo in May said the United States “won’t tolerate” China’s effective ban on purchases of Micron memory chips and is working closely with allies to address such “economic coercion.”

Raimondo said in July the Biden administration is seeking to carefully target U.S. controls on exports to China, but rules will cost firms some revenue.

Restrictions should not be so broad “that you deny American companies revenue and China can get the product elsewhere, or China can get the product from other countries,” Raimondo said. Rules “will deny some revenue to American companies, but we think it’s worth it.”

One big open question is when will China resume deliveries of Boeing 737 MAX passenger jets. Raimondo, who has spoken to Boeing executives on numerous occasions, said in 2021 the Chinese government was preventing its domestic airlines from buying U.S.-manufactured Boeing airplanes.

“There’s tens of billions of dollars of planes that Chinese airlines want to buy, but the Chinese government is standing in the way,” she said.

Raimondo’s trip may be the last face-to-face interaction between top U.S. officials and their Chinese counterparts ahead of Vice President Kamala Harris’ Sept. 4-7 trip to the ASEAN meetings of Southeast Asian countries, Biden’s Sept. 7-10 trip to India for the Group of 20 meetings and the annual gathering of world leaders at the United Nations later in September.

On the sidelines of those meetings, Biden and Harris are expected to spend time wooing neighboring countries anxious about China’s assertive posture in the Indo-Pacific and declining economy.

(Source: Reuters)

Same criminals different mask: 54 years since the arson attack on Al-Aqsa

Dr Mohammad Makram Balawi

Since the Israeli Occupation of the West Bank in 1967, which is considered by many Zionists as the heartland of the Jewish world, the Israeli occupation authorities started concerted efforts to alter the character of Jerusalem, particularly its cherished Al-Aqsa Mosque. From the early days of the Occupation, the occupying army demolished the Moroccan neighbourhood and its surroundings to make room for what is nowadays known “the Wailing Wall”. Over the years, the Mosque has suffered extensive damage to its furniture, walls, ceiling, carpets, rare decorations as well as the loss of its Quran and other valuable possessions. The restoration process has taken years to complete.

When a fire broke out in the Al-Aqsa compound in 1969, it was the responsibility of the occupying forces to protect the Mosque and its surroundings. However, they cut off the water supply to the area and intentionally delayed the arrival of fire trucks from the occupying municipality in Jerusalem, thereby hindering efforts to extinguish the fire. Initially, it was claimed that the fire was caused by an electrical short circuit. However, Arab engineers later provided evidence indicating that an individual deliberately started the fire. This individual was identified as Dennis Michael Rohan, a young Australian. It was promised that he would be brought to trial for his actions. However, he was subsequently declared mentally unstable and released.

Years proved that the actions carried out by this criminal are part of a deliberate and systematic process aimed at Judaising the area, which has unfolded through various significant stages. One such stage was the storming of the Mosque by former Israeli Prime Minister, Ariel Sharon, an event that not only ignited the second Palestinian Intifada but also emboldened an increased influx of intruders. As time went on, these stormings became more audacious, with the intruders openly engaging in Jewish religious practices.

Despite the signing of the “Wadi Araba” treaty in 1994, a peace agreement between Jordan and Israel that recognised Jordan’s right to oversee religious affairs in Jerusalem under the Hashemite guardianship, Israel has steadily eroded this guardianship through several means, such as the installation of surveillance cameras and electronic gates, the establishment of police checkpoints outside and within the Al-Aqsa compound and the use of brute force during raids on the Mosque are just a few examples. We witnessed such brutality during the attack on hundreds of worshippers in an unprecedented and savage manner during the last Ramadan, as well as the subsequent arrests that violated international norms and conventions. These actions have understandably provoked Palestinians and led to various acts of resistance.

Under the current Israeli far-right government, these attempts to alter the status quo have taken on a new dimension. The Israeli “Magistrate Court” issued a decision granting settlers the right to engage in “silent prayers” within the courtyards of Al-Aqsa, while simultaneously revoking deportation orders against settlers who publicly performed religious rituals during their storming of the Mosque in September 2021. These developments have resulted in an increase in the number of incursions into Al-Aqsa, with even Knesset deputies participating in provocative prostration rituals at its gates and attempting to make offerings.

Projects aimed at altering the identity of Occupied Jerusalem and transforming Al-Aqsa Mosque into a Jewish temple are neither hidden nor undisclosed. Israel openly declares its plans and projects in this context. When settlers took control of the current government in the Occupying State, there were two schools of thought. One represented by the Minister of Israeli National Security, Itamar Ben-Gvir, who stormed Al-Aqsa Mosque and sought to expedite the imposition of the status quo, and the other represented by the more cautious Minister of Finance, Bezalel Smotrich, who intends to invade Al-Aqsa Mosque and change the identity of Jerusalem based on traditional religious standards, which involve ethnic cleansing through the ritual purification with the “Red Heifer”, which is considered the main way to achieve purity from impurity, a precondition set by the official religious authorities to expand the incursions into Al-Aqsa Mosque and transform it into a Jewish synagogue.

The “Temple Institute” established a program to breed a herd of red heifers and employed biotechnology to fulfil the Torah prophecy by using frozen embryo implantation. The goal is to find a heifer that meets specific criteria, including being two years old without any deviation in its colour, not being milked or used for ploughing or pulling a cart, not giving birth and being completely free from any physical defects. It would then be slaughtered and burned with cedar wood and some branches of the hyssop plant. The ashes of this mixture would be mixed with water from a nearby source and then sprinkled on those who are impure to purify them. This is the fifth announcement regarding the existence of heifers that potentially meet the criteria. Over the course of 36 years, there have been four previous announcements but, in the end, the criteria were not met in 1997, 2002, 2014 and 2018. The current fifth announcement may end in failure or success.

The “Temple” groups are dealing with this announcement with greater confidence, especially since the current Israeli leadership is taking the issue of the Red Heifer very seriously and has devoted all efforts and resources to achieve it.

The dispute between the self-proclaimed moderate Zionist and the extremist Zionist is not about principles and ideas, but rather about the speed of implementing their agendas and plans. This is the real difference between them. Some seek to expedite the elimination of the two-state solution directly and rapidly, including the annexation of the West Bank, while others prefer a gradual approach.

The current escalation by extremist Zionism has been encouraged by the lack of genuine reactions on the international, Arab and Islamic levels. Prioritising regional interests of Arab and Islamic countries over central issues, such as the Palestinian cause, along with the complicit international stance towards the Zionist project, has played a role in this. It is no secret that Western leaders, including US President Joe Biden, who openly declared during his visit to the Occupation State, “I am a Zionist, and one does not have to be Jewish to be a Zionist.”

Fundamentally, Zionism is a racist movement and a form of racial discrimination as defined by the United Nations. As long as its ideology and efforts persist in the region, peace will remain elusive and Al-Aqsa Mosque will continue to be targeted.

(Source: MEMO)

قمة بريكس: رئيس الصين يشيد بالعلاقات بين بلاده وجنوب إفريقيا ويقول إنها “نقطة انطلاق تاريخية جديدة”

قمة بريكس: رئيس الصين يشيد بالعلاقات بين بلاده وجنوب إفريقيا ويقول إنها “نقطة انطلاق تاريخية جديدة”

أعلن الرئيس شي جينبينغ الثلاثاء أنّ الصين وجنوب إفريقيا “تقفان عند نقطة انطلاق تاريخية جديدة”، وذلك لدى لقائه نظيره سيريل رامابوزا في بريتوريا خلال زيارة رسمية يشارك خلالها في قمّة بريكس.

وقال شي “اليوم وبينما نقف عند نقطة انطلاق تاريخية جديدة، فإنّ نقل الصداقة وتعميق التعاون وتعزيز التنسيق تشكّل التطلّعات المشتركة لبلدينا وكذلك أيضاً المهام الجليلة الملقاة على عاتقنا”.

(المصدر: Euronews)

البيت الأبيض: استقرار اقتصاد الصين من مصلحة العالم ولا نعمل على إبطائه

قال البيت الأبيض إن الرئيس الأميركي جو بايدن سيدعو إلى إصلاح صندوق النقد الدولي والبنك الدولي في قمة مجموعة العشرين.

وأضاف أن استقرار اقتصاد الصين من مصلحة العالم، ولا نعمل على إبطاء النمو الاقتصادي الصيني.

وذكر أن زيارة وزيرة التجارة الأميركية للصين هدفها تأكيد اهتمام الولايات المتحدة بمواصلة التعاون.

أعلنت بكين وواشنطن اليوم الثلاثاء أنّ وزيرة التجارة الأميركية جينا ريموندو ستزور الصين في الفترة من 27 إلى 30 أغسطس.

وقالت وزارة التجارة الأميركية في بيان إنّ “الوزيرة ريموندو تتطلّع إلى إجراء مناقشات بنّاءة بشأن القضايا المتعلّقة بالعلاقات التجارية بين الولايات المتحدة والصين والتحدّيات التي تواجهها الشركات الأميركية ومجالات التعاون الممكنة”.

وقالت واشنطن إنها ستزور كلًا من بكين وشنغهاي، في حين أكّدت بكين الزيارة قائلة إنّ ريموندو تلقت دعوة من نظيرها الصيني وانغ وينتاو، وفق ما نقلته وكالة “فرانس برس”.

(المصدر: العربية)

وزيرة التجارة الأميركية تزور بكين الأسبوع المقبل

أعلنت كل من بكين وواشنطن الثلاثاء أنّ الوزيرة جينا ريموندو ستزور الصين في الفترة من 27 إلى 30 آب/أغسطس.

وتقول واشنطن إنها تسعى إلى إدارة علاقاتها الفاترة مع الصين على نحو أفضل، في حين تختلف القوتان العالميتان حول كلّ شيء من التجارة إلى حقوق الإنسان وتايوان.

قالت وزارة التجارة الأميركية في بيان إنّ “الوزيرة ريموندو تتطلّع إلى إجراء مناقشات بنّاءة بشأن القضايا المتعلّقة بالعلاقات التجارية بين الولايات المتحدة والصين والتحدّيات التي تواجهها الشركات الأميركية ومجالات التعاون الممكنة”.

وقالت واشنطن إنها ستزور كلًا من بكين وشانغهاي، في حين أكّدت بكين الزيارة قائلة إنّ ريموندو تلقت دعوة من نظيرها الصيني وانغ وينتاو.

وقالت واشنطن إن زيارة الوزيرة الأميركية ستستند إلى اتفاق الرئيسين شي جينبينغ وجو بايدن في بالي العام الماضي على “تعميق التواصل بين الولايات المتحدة وجمهورية الصين الشعبية بشأن مجموعة من القضايا”.

وتراجعت العلاقات بين واشنطن وبكين إلى مستوى هو بين الأسوأ منذ عقود، وتصدرت القيود التجارية التي فرضتها واشنطن قائمة الخلافات.

لكن واشنطن تقول إن قيودها ضرورية لحماية الأمن القومي، بينما ترى بكين أنها تعيق نموها الاقتصادي.

وخلال الشهر الحالي، أصدر بايدن أمرا تنفيذيا يهدف إلى تقييد بعض الاستثمارات الأميركية في مجالات التكنولوجيا الفائقة الحساسة في الصين. وهي خطوة انتقدتها بكين ووصفتها بأنها “مناهضة للعولمة”.

وتستهدف القيود الجديدة، المتوقع تنفيذها العام المقبل، قطاعات مثل أشباه الموصلات والذكاء الاصطناعي.

وتأتي الزيارة المرتقبة لريموندو في أعقاب زيارات رسمية لمسؤولين أميركيين رفيعي المستوى إلى الصين.

خلال زيارتها إلى الصين الشهر الماضي، سعت وزيرة الخزانة الأميركية جانيت يلين إلى طمأنة الصينيين بشأن القيود الجديدة وقالت إن واشنطن ستتبع نهجًا شفافًا في أي إجراءات تتخذها.

وأكدت يلين على الحاجة إلى منافسة اقتصادية صحية وإلى تحسين الاتصالات بين الجانبين. كما حضّت على التعاون بشأن التهديد الخطير الذي يشكله تغير المناخ.

لكنها قالت أيضا إنها تطرقت إلى المخاوف الجدية بشأن ما وصفتها بالممارسات الاقتصادية غير العادلة التي تتبعها بكين وكذلك القضايا المتعلقة بحماية الملكية الفكرية.

في حزيران/يونيو، سافر وزير الخارجية أنتوني بلينكن إلى بكين حيث التقى شي وقال إنه تم إحراز تقدم بشأن عدد من مصادر الخلاف الرئيسية.

لكن لم تؤدّ أيّ من الزيارتين إلى انفراج كبير في العلاقات بين القوتين، كما أدانت الصين البيان الصادر عن قمة كامب ديفيد الأخيرة بين الولايات المتحدة وكوريا الجنوبية واليابان والتي هدفت جزئياً إلى التصدي لنفوذ بكين.

وبعد تلك القمة، قال الرئيس بايدن إنه ما زال يتوقع لقاء الزعيم الصيني شي مرة أخرى هذا العام.

دعا بايدن نظيره الصيني في تشرين الثاني/نوفمبر لزيارة سان فرانسيسكو خلال انعقاد قمة منتدى التعاون الاقتصادي لآسيا والمحيط الهادئ، الذي يضم الصين.

ومن المحتمل أن يلتقي الزعيمان الشهر المقبل في نيودلهي على هامش قمة مجموعة العشرين لكبرى الاقتصادات العالمية.

(المصدر: فرانس 24)

170 Palestinian children still languishing in harsh conditions in Israeli prisons

The Israeli occupation is holding around 170 Palestinian children in inhumane conditions that violate the International Humanitarian Law and human rights conventions, according to the Palestinian Commission of Detainees and Ex-Detainees Affairs. 

In a report, the commission explained that Palestinian children in Israeli occupation jails are subjected to various forms of abuse and torture in a blatant breach of international human rights standards. 
The commission called on international human rights groups to provide protection for the Palestinian children in Israeli occupation prisons. 

Since 2000, the Israeli occupation has detained at least 17,000 Palestinian children aged between 12 and 18, with some under the age of 10.  

According to the report, about 75 per cent of Palestinian children held in Israeli jails have been subjected to at least one form of physical abuse, while all of them have been exposed to psychological torture at the time of their detention or during their imprisonment.
  
Most of the detained Palestinian minors are from occupied Jerusalem, where they are subjected to various forms of rights abuses, such as unlawful detention, house arrest, banishment from the holy city, and hefty fines.   

There are nearly 5,000 Palestinian detainees in Israeli occupation prisons, including 170 children, 31 female detainees, 18 journalists, and 700 sick detainees – 200 of whom are in dire need of proper health care. 

Of them, there are approximately 1,300 Palestinian detainees who are being held under so-called ‘administrative detention’ – a euphuism for holding detainees for renewable periods without charge or trial but based on “secret evidence”.

(Source: Hamas.ps)

India’s hesitation as China pushes for BRICS expansion

With the latest BRICS summit kicking off today, much has been said about Russia’s announcement that Vladimir Putin will attend virtually, given South Africa’s obligation as a party to the Rome Statute to execute the International Criminal Court arrest warrant against him. While Western commentary is busy celebrating a somewhat empty victory, the main issue on the BRICS agenda this year – the question of expansion – could have far more important geopolitical implications for the West (and indeed, for the world) than one man’s travel plans.

As many as 23 countries, including Saudi Arabia, Iran, United Arab Emirates, Argentina, Indonesia, Egypt and Bolivia, have formally applied to join the group, and many more are said to be interested. Reports that emerged after the BRICS Foreign Ministers meeting, indicated that a swift expansion is being pushed by China, with support from Russia, whereas India and Brazil have pushed back.

Equality between the members has been a fundamental characteristic of the bloc.

What started as a Goldman Sachs catchphrase coined to encourage investor interest on the fastest growing economies 20 years ago – Brazil, Russia, India and China – BRIC became a loose geo-economic grouping that held its first summit in 2009. South Africa was roped in the next year as a representative of Africa and since then the bloc has espoused a vision of alternative global governance (read: a world less dominated by “Western” financial institutions such as the International Monetary Fund and World Bank).

Further, BRICS sees itself as representing the interests of the Global South, and it is telling that none of the members have formally criticised Russia for the invasion of Ukraine.

However, the question of expansion has recently highlighted fault lines within the bloc.

Michele Spatari/Bloomberg via Getty Images
BRICS sees itself as representing the interests of the Global South (Michele Spatari/Bloomberg via Getty Images)

A large body of research and opinion within China believes that strategic alignment between China’s Belt and Road Initiative and BRICS could upend Western geo-economic hegemony. This line of argument is quick to point out that BRICS countries have surpassed the Group of Seven (G7) in terms of gross domestic product (GDP) when calculated on purchasing power parity (PPP). China’s GDP is close to double that of all the other member states combined, allowing it to wield significant influence within the bloc. Add to this, the presence of an isolated great-power, Russia, now heavily dependent on Beijing in the aftermath of the Ukraine war. Thus, if BRICS were to expand, it would allow China a platform larger than the G7 (dominated by the United States) to project its views and pursue its geopolitical agenda.

New Delhi suspects that if a “swift” expansion were to happen, Beijing would then move to give the bloc an “anti-Western” flavour.

This is precisely the kind of scenario that India fears. New Delhi suspects that if a “swift” expansion were to happen, Beijing would then move to give the bloc an “anti-Western” flavour. For India, BRICS has been an important forum to seek its vision of a “multipolar” world order. Equality between the members has been a fundamental characteristic of the bloc, and an expansion could threaten to disrupt this balance by pitting New Delhi against Beijing.

For now, New Delhi finds an ally in Brasilia, whose largest trading partner is China but largest foreign direct investor is the United States. Brazil is equally wary of losing its influence within the bloc, and has reportedly suggested that new members be added as partner countries instead, while pre-eminent roles stay reserved for the current countries. Thus, both India and Brazil have stressed the importance of reaching a consensus on admission guidelines, criteria and procedures before an expansion can take place.

If the bilateral relationship between India and China was not at its lowest point in decades, then perhaps they could have jointly worked together for regional integration and built inclusive financial institutions within the Global South, a welcome prospect for a slowing global economy. However, the trust deficit defined by a protracted military stand-off on an unresolved boundary ensures that they will pursue competing visions for BRICS. India, which is slowly but surely pivoting to the West, has no real desire to get caught in the geopolitical cross-fire between China and the United States. So it will work to ensure that China’s vision for BRICS does not succeed. The Shanghai Cooperation Organisation is awkward enough for New Delhi as it is.

That said, India is hardly in a position to be seen as non-inclusive, given its stated desire to be a “voice of the Global South”. Therefore, it is likely that New Delhi will push for the inclusion of countries such as Indonesia and other democracies, instead of countries such as Venezuela or Iran, which are likely to push the group in a direction Beijing wants.

Further, New Delhi will lobby within an expanded BRICS to focus on issues such as climate change, digital connectivity, and food security. In doing so, it would push for engagement with the West on global issues, and simultaneously seek reforms in international institutions, such as the United Nations Security Council. Such a strategy may be India’s best bet to gain influence within an expanded BRICS, as a majority of the countries in the Global South have no interest in picking sides between China and the United States.

Irrespective of India’s or Brazil’s concerns, it seems likely that BRICS will expand. However, which competing vision succeeds ­– India’s or China’s – will determine the direction that the bloc takes and could shape the coming geopolitical trends in the world for decades.

(Source: The Interpreter)

US commerce secretary to visit China next week for talks

David Shepardson

(Reuters) – U.S. Commerce Secretary Gina Raimondo will travel to China next week for meetings with senior Chinese government officials and U.S. business leaders, the latest in a recent series of high-level visits, the department said on Tuesday.

Last month, Raimondo vowed to go forward with the visit despite the reported Chinese hacking of her department’s emails.

U.S. National Security Advisor Jake Sullivan said Raimondo will carry a message that the U.S. is not seeking to decouple from China, but will protect its national security. He added she will reinforce the U.S. is focused on sustaining an economic relationship with China.

On Tuesday, China welcomed the department’s decision to lift export control restrictions on 27 Chinese entities, saying it is conducive to normal trade between Chinese and U.S. firms.

The U.S. Department of Commerce on Monday removed 27 Chinese companies from its “Unverified List.” Companies are added if the U.S. cannot complete on-site visits to determine if they can be trusted to receive sensitive U.S. technology exports. Companies on the list cannot use license exceptions for exports.

Commerce said the removal “demonstrates the concrete benefit companies receive when they or a host government cooperates” to complete checks.

Raimondo “looks forward to constructive discussions,” during the visit to Beijing and Shanghai from Aug. 27-30, the department said in a statement.

The talks would cover issues related to the U.S.- China commercial relationship, challenges faced by U.S. businesses, and areas for potential cooperation, it added.

Last week, China said it welcomed Raimondo’s expected visit.

Raimondo said recently that she wanted to raise with China “really serious concerns about the way they are targeting U.S. tech companies, about the way they don’t respect intellectual property but also try to find lanes of commerce.”

Her trip follows a four-day visit last month by Treasury Secretary Janet Yellen, who held more than 10 hours of meetings with senior officials in Beijing.

The U.S. and China agreed this month to approve twice the number of passenger flights now permitted by air carriers between the two countries, in a rare sign of co-operation between the world’s largest two economies.

Raimondo was among a group of senior U.S. officials whose emails were hacked this year by a group Microsoft (MSFT.O) said was based in China, according to a person briefed on the matter.

Earlier, China’s embassy in Washington said that identifying the source of cyber attacks was complex and warned against groundless speculations and accusations.

In July, Raimondo said the Biden administration was seeking to carefully target U.S. controls on exports to China.

Raimondo met Chinese Commerce Minister Wang Wentao in May, discussing trade, investment and export policies in what was until then the first U.S.-China cabinet-level exchange in months, after a string of trade and national security irritants derailed plans for re-engagement.

In April, Raimondo warned Chinese cloud companies could pose threats. Some Republican senators want her to add such companies to the entity list that imposes U.S. export controls on foreign companies.

How Malaysia Views U.S. and Chinese Narratives About the World Order

Ngeow Chow Bing

Washington aims to convince Southeast Asian countries that U.S. military power in the region is benign, while Beijing aims to convince the region that its rise offers economic opportunities. Malaysia assesses both powers as having constructive roles to play.

This publication is a product of Carnegie China. For more work by Carnegie China, click here.

Southeast Asia is an important geopolitical arena where U.S.-China strategic competition is playing out intensely. Malaysia is one of the most crucial regional countries, as a founding member of the Association of Southeast Asian Nations (ASEAN) and a credible and active diplomatic actor. Like many other countries in the region, Malaysia faces the contending grand narratives fashioned by the United States and China. But it strives not to see these two narratives as completely zero-sum; it assesses both major powers as having constructive roles to play in the region but also sees gaps between each side’s rhetoric and the reality of their actions.

THE DUELING U.S. AND CHINESE NARRATIVES

China is the number one trading partner of most countries in Southeast Asia. It is also a significant source of investment, tourism, and other economic opportunities. For China, the economic importance of Southeast Asia has risen significantly as well. In 2020, ASEAN became China’s largest trading partner for the first time. As economic tensions grow between China and the United States, the European Union, Japan, and Taiwan, Southeast Asia has emerged as a crucial intermediary.

The United States, on the other hand, is often counted as the primary security provider in the region, particularly in the maritime domain, and it has substantial and growing economic relations with Southeast Asian countries. (It is the second-largest trading partner of ASEAN and the largest investor.) The United States has two treaty allies in the region—the Philippines and Thailand—and robust security partnerships with Indonesia, Malaysia, Singapore, and Vietnam. China’s forceful moves to assert its claims in the South China Sea have resulted in a growing sense of insecurity, anxiety, and vulnerability for many maritime Southeast Asian countries, and the United States is valued by many of them as a balancing force to check any potential Chinese military aggression.

Both the United States and China have incentives to secure the support, if not the full allegiance, of Southeast Asian countries. In this context, it is crucial for each country to shape a narrative or worldview that is congenial to its role, status, and aspirations in the region and to have its narrative accepted by regional leaders and the elite.

Washington aims to convince Southeast Asian countries that the preponderance of U.S. military power in the region is benign; that the United States is the key architect of and the leading power behind a stable order that has benefited the region in terms of peace and prosperity; and that it, together with allies and partners, is defending this order from being undermined by China. For its part, Beijing aims to convince Southeast Asian countries that China’s rising power is benign, that it provides ample economic opportunities for the region, and that it is not a threat and not trying to upend the existing international order.

These dueling narratives are well captured by the speeches offered by the countries’ respective defense chiefs at the 2023 Shangri-La Dialogue in Singapore. In his speech, U.S. Secretary of Defense Lloyd Austin underscored the “vision” of a “free, and open, and secure Indo-Pacific within a world of rules and rights . . . anchored in some key principles [such as] respect for sovereignty; adherence to international law; transparency and openness; the free flow of commerce and ideas; human rights and human dignity; and equal rights for all states, large and small.” He emphasized that “this vision isn’t the vision of a single country” but “a common and compelling aspiration” for all. The United States’ aspirational role is clear: it wants to work with partners to uphold this vision and “to deter aggression and to deepen the rules and norms that promote prosperity and prevent conflict.”

Contrasting with the United States’ normative “shared vision,” Chinese Defense Minister Li Shangfu highlighted the geographic nature of the “shared home” of Asia-Pacific countries. He decried the “resurging cold war mentality” that increases “security risks of block confrontation” and builds “exclusive military alliances against imagined threats.” He presented China as a defender of the status quo, saying that Beijing upholds “the international order underpinned by international law and basic norms governing international relations based on the purposes and principles of the UN Charter,” while arguing that some countries only have a “selective approach to rules and international laws.”

The general perception, especially within the West, is that the two sides’ dueling narratives are diametrically opposed to each other. But for countries such as Malaysia, these narratives do not inherently represent either-or choices. In fact, both narratives have appealing elements that resonate with Malaysia’s interests, values, and ideals. At the same time, Malaysia has no illusion that both narratives promote idealized images of the United States and China as benign actors and gloss over inconsistencies and self-serving interests.

MALAYSIA’S POSITION ON THE U.S. NARRATIVE OF THE LIBERAL INTERNATIONAL ORDER

Broadly speaking, the “shared vision” described by Austin is associated with a grander and more fundamental narrative, often known as the liberal international order. Although Malaysian leaders seldom use that term, they are cognizant of the fact that, since independence, Malaysia initially survived and then thrived within the order that was formed, shaped, maintained, and underpinned by Western liberal powers, particularly the United States. The order has commonly accepted rules, norms, and arrangements governing interstate behaviors that Malaysia broadly agrees with and subscribes to, such as economic openness and free trade, the UN system, respect for sovereignty and territorial integrity, and respect for international law. Malaysia also acknowledges that the United States has played perhaps the most vital role in sustaining the order, primarily through fostering economic openness and maintaining its network of regional alliances. Hence, by and large, Malaysia sees itself as a beneficiary of the liberal international order. On the other hand, Malaysia’s acceptance of such an order does not mean its views are completely aligned with the United States’ narrative.

First, Malaysia does not hold a static or even mystified understanding of the rules and norms that underpin the liberal international order. There are numerous cases where Malaysia and Western powers have different understandings of the supposedly commonly agreed rules and norms, especially those concerning trade, the environment, and human rights. In the maritime sphere, beyond the broad acceptance of the principle of the freedom of navigation, Malaysia disagrees with the United States about the extent of the application of this principle to military activities, as it considers unauthorized military activities in its exclusive economic zone as unlawful. Moreover, Malaysia believes that rules and norms are not static but should evolve as realities change; the interests of countries in the Global South should be taken into stronger consideration. The liberal international order narrative projects a dichotomy whereby countries that adhere to the rules and norms stand together against countries that are revisionist rule-breakers. But for Malaysia, the narrative tends to paper over countries’ differences concerning the rules and norms and exaggerate the challenges to these rules in practice.        

Second, even for broadly accepted principles, Malaysia does not find that the West, or the United States, has been consistent in applying them. As Malaysian scholar Kuik Cheng-Chwee notes, “Malaysia, like many others in the Global South, does not think the West has a monopoly—let alone moral high ground—on these ideals. . . . When implementing supposedly universal rules or norms, the ‘liberal’ powers have been firm against other states but flexible when it comes to themselves.”

Third, Malaysia is very careful when it comes to the values assumption within the liberal international order narrative, particularly concerning democracy, freedom, and human rights. The liberal international order is not limited to the countries with liberal characteristics, but its proponents assume that countries within such order will more or less converge toward the liberal value preferences it represents. To be fair, the United States is sensitive to Southeast Asia’s political realities and refrains from emphasizing these values too much. Malaysia generally also supports the values of the liberal international order, but it understands them in a more abstract sense. It refuses to clearly define which countries or regimes are “liberal” enough to be considered acceptable members of this order. Countries are judged first and foremost by what they do externally toward other countries and within international organizations, and less so by the political systems they adopt internally. This does not mean that Malaysia is not supportive of democracy or is not concerned about blatant violations of human rights in other countries, but rather that Malaysia is sensitive to the potentially exclusionary and divisive implications of the explicit dichotomy of “democracy versus autocracy” within the liberal international order narrative.

Fourth, while it is a fact that the liberal international order has for decades been underpinned by the United States’ leadership and power, Malaysia does not necessarily conflate the two. For Malaysia, there is no definite correlation or causation between a particular power configuration and the acceptable rules and norms of the order. In Malaysia’s view, a transition from one leading power to another does not necessarily suggest the order is going to be undermined, nor is a different power configuration, such as a multipolarity, necessarily incompatible with the order. In fact, a multipolar world order combined with the liberal international order might be preferable to Kuala Lumpur. In this sense, while appreciative of the importance of the United States in sustaining liberal international order, Malaysia is not as invested in either the idea or the reality of permanent U.S. primacy.

MALAYSIA’S POSITION ON THE CHINESE NARRATIVE OF A COMMUNITY WITH A SHARED FUTURE

China’s narrative offers a different set of trade-offs for Malaysia. At one level, Malaysia seems to be more forthcoming in lending rhetorical support to the Chinese narrative. According to the Chinese readouts of Malaysian Prime Minister Anwar Ibrahim’s meetings with Chinese President Xi Jinping and Premier Li Qiang during his April 2023 visit to China, the prime minister endorsed the grand narrative of the Chinese leadership—“a community with a shared future.” The readouts also noted Anwar’s support for other major Chinese diplomatic lexicons, such as the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative. The Malaysian readout was a bit reserved but also stated that “Prime Minister Anwar expressed support for the principles and values of President Xi Jinping’s global initiatives and his vision of a Community for a Shared future for Mankind, including the proposal for a Malaysia–China Community for a Shared Future.” In addition, Anwar recommitted Malaysia’s support for China’s Belt and Road Initiative and seemed to agree with some standard Chinese formulations: the Chinese readout from the Xi meeting stated that “Malaysia rejects bloc confrontation and opposes being forced to pick sides.” 

Both Xi and Li also set the importance of China-Malaysia relations within the context of China’s view of Asian countries’ “shared home” (the same analogy used by Defense Minister Li in Singapore), underscoring an important element of the Chinese narrative. China seeks to prioritize and elevate the interests of countries within its region over those of “external powers,” a term China often uses to refer to the United States, implying that these external powers have a tendency to cause troubles and sow divisions. The narrative also stresses that countries within the neighborhood are obliged to preserve harmony, which is fundamentally about the mutual respect of each other’s core interests. To China, rules and norms are also important in buttressing neighborhood harmony, but they are secondary to the principle of mutual accommodation, which requires states to emphasize cooperation while managing any differences with prudence and dialogue. This conception of the mutual obligations within the neighborhood is consistent with China’s larger narrative of a community with a shared future, where the intertwined interests and destinies of all countries oblige each not to seek confrontation and to forge win-win solutions for all.

Putting all these elements together, Malaysia so far does not see the Chinese narrative purely on ominous terms or believe that it has a lot of incompatibilities with Kuala Lumpur’s own interests and values. For instance, Beijing’s rhetoric of safeguarding the harmony of the shared home has some resonance in Malaysia, which in its own diplomatic history has had a penchant to emphasize regional visions and solutions (as seen in its various strategic or economic proposals including the Zone of Peace, Freedom and Neutrality (ZOPFAN) in the 1970s and the East Asian Economic Caucus (EAEC) in the 1990s). Even Malaysia’s recent discomfort with the security arrangement known as AUKUS between Australia, the United Kingdom, and the United States is partly reflective of its preference for a regional solution to regional security issues.

Likewise, while China’s Global Development Initiative and Belt and Road Initiative do not necessarily conform to international rules and norms for investment, financing, and aid, especially when measured by the so-called high standards practiced by Western countries, Malaysia believes it is an exaggeration to suggest that China’s initiatives will upend the established rules-based order. Moreover, these initiatives will likely evolve, and they can be harnessed and improved by both China and the participating countries to address countries’ developmental problems and weaknesses. The ideas of the Global Security Initiative, such as the vision of “common, comprehensive, cooperative and developmental security” are ideas that Malaysia broadly does not disagree with; in fact, many of them reflect Malaysia’s own thoughts about security. To quote Kuik,

Malaysian elites believe that power competition breeds action/reaction, and heightening power action/reaction will precipitate a systemic security dilemma: a big power’s pursuit on a global scale of its own ‘absolute security’ creates absolute insecurity for other states, because when another power is targeted, contained or pushed into a corner, the latter’s countermeasures will add to vicious cycles of deepening distrust and tensions, accelerating crisis and pushing all parties closer to an unwanted conflict.

This is quite similar to what China calls for: its narrative prioritizes “taking the legitimate security concerns of all countries seriously” and notes that the “security of one country should not come at the expense of that of others.”

While not opposed to the Chinese narrative, Malaysia also has reservations with particular aspects or will have concerns if China pushes certain initiatives to their fullest extent. While Malaysia shares with China the emphasis on regional solutions, Kuala Lumpur does not always agree with the way Beijing portrays so-called external powers and accords these powers more legitimacy to have a presence in Southeast Asia. Malaysia is equally wary of the emphasis of a shared-home narrative leading to an exclusive, China-dominated sphere of influence.

Second, despite its apparent acceptance of the Global Security Initiative, Malaysia understands the role of the U.S.-led alliance system somewhat differently than China does. Although the Global Security Initiative’s concept paper does not explicitly say so, and the document does not mention anything about the U.S.-led alliance system, the implications of China’s security vision are clear. China presents the U.S.-led alliance system as rather anachronistic, serving the purpose of maintaining and justifying U.S. hegemony and creating imagined threats and enemies. Malaysia will not be comfortable if the Global Security Initiative is meant to fully delegitimize the U.S.-led alliance system. Although it is not a member of the alliance system and at times has its own misgivings about the system, Malaysia appreciates that the system has provided a stable foundation for maintaining regional geopolitical stability for decades. 

Finally, perhaps Malaysia’s most crucial disagreement with China is not about the narrative itself but about the gap between rhetoric and reality. China is as capable of exercising double standards as Western powers. In the South China Sea, for instance, China has failed to understand that its actions are causing security concerns among many littoral states in Southeast Asia, driving the states toward stronger defense and security cooperation with the United States and other so-called external powers. China often ignores that neighborhood harmony can be undermined and disturbed from within as much as from without.

CONCLUSION

Malaysia, like other countries in Southeast Asia, is carefully walking the tightrope between the United States and China and finds itself on the receiving end of the two powers’ dueling narratives. The United States projects itself as the defender of values, rules, and norms (encapsulated in the narrative of the liberal international order) against revisionist challengers. Malaysia has survived and thrived as a part of this order since its independence, and it no doubt wishes to preserve the order. But it also has some divergent views. Malaysia believes that the liberal international order is not perfect and that there are areas where improvements can and should take place. China’s narrative, on the other hand, emphasizes common interests, neighborhood harmony, and shared destiny. Overall, Malaysia does not see this narrative as negative or menacing like the West does, and it does not see the narrative as incompatible with the existing order. In Malaysia’s view, both narratives are actually (or potentially) complementary in certain aspects. However, Kuala Lumpur will not agree with Beijing if the end result is China’s hegemony in the Asia-Pacific.

For both the United States and China, a more consistent approach in applying the lofty principles propagated by their narratives, and the reduction of the gap between rhetoric and reality, is very much needed. The United States should appreciate that not all countries understand the rules and norms the way the United States does. It should therefore create more space for countries with divergent views and interests to shape the existing order. China should understand that countries within the shared home of the Asia-Pacific agree with the objective of maintaining regional peace and security. However, many countries have a different diagnosis from China of why regional peace and security is being undermined, and it is not necessarily due to the interference of so-called outside powers. Many countries, in fact, prefer and value a robust presence for the United States and other so-called external powers in the neighborhood.

Narratives shape perception and play a role in guiding the formulation of state policy and strategy. Malaysia’s refusal to accept both grand narratives at face value, in either-or terms, affords its leaders the space to formulate policies aimed at maintaining cordial ties with both the United States and China and helps ensure its nonaligned stance. Malaysia does not want to be caught in a grand narrative trap, where its foreign policy actions have to be guided by a grandiose frame at the expense of flexibility, pragmatism, and even its national interests. Given the intensifying rivalry between the United States and China, this balancing act will likely continue to be Malaysia’s preferred position.

(Source: Carnegie Endowment for International Peace)

India Can’t Cut the Cord From China

Sushant Singh

In the wake of Russia’s invasion of Ukraine and despite Western sanctions, India became one of the main buyers of Russian crude oil. Indian refiners have bought more than half of the oil exported by Russia in the current fiscal year. Europe and the United States have largely chosen to look away, but in May, the European Union objected to a direct shipment from Russia’s Rosneft Oil Company destined for India’s biggest state-owned refiner. As a result, the Reserve Bank of India refused to allow payment to Moscow in either euros or U.S. dollars. The state-owned refiner went to another bank, and ended up paying for the Russian crude in Chinese yuan. This gave a boost to Beijing’s efforts to internationalize its currency.

India’s stridently nationalist government was likely left embarrassed by the incident. In the summer of 2020, 20 Indian soldiers and four Chinese soldiers were killed in a skirmish on the disputed border in Ladakh after the Chinese People’s Liberation Army moved into areas controlled by India. Since the faceoff, the Indian government, headed by Prime Minister Narendra Modi, has repeatedly said that New Delhi cannot maintain normal ties with Beijing because the border situation is not normal. It has further tried to assuage anti-China sentiment by hyping its ban of TikTok, Shein, and hundreds of other Chinese-owned apps. Meanwhile, though, Indian companies continue to use yuan to pay for 10 percent of the country’s Russian oil supplies—and New Delhi remains silent on the issue.

The yuan payments show how India’s dependence on China has only grown in the past three years, despite the fraught situation on the border. Bilateral trade has increased, and the trade balance has tipped further in China’s favor. Breaking previous vows, Indian ministers solicit Chinese investments. New Delhi is conceding to demands from electronics manufacturers to make it easier for Chinese engineers to get visas. India is the biggest recipient of financing from China-based multilateral banks, and Modi and his ministers are enthusiastic participants in both the BRICS group (Brazil, Russia, India, China, and South Africa) and the Shanghai Cooperation Organization (SCO), two groupings dominated by China.

There has been substantive diplomatic engagement between the two sides through these multilateral forums, but when it comes to the border dispute, Beijing has refused to make concessions. China has put additional diplomatic pressure on India, including by failing to post an ambassador to New Delhi since last October. Last week, positive language in a joint statement that followed border talks raised expectations that Modi and Chinese President Xi Jinping are likely to meet bilaterally in Johannesburg, South Africa, at this week’s BRICS summit. It would be their first structured meeting since 2019. But whatever the outcome of those talks, the task for India is to build its strength—democratic, economic, and military—so that it is prepared to confront the Chinese challenge going forward.


India, in recent months, seems to be reversing some of the steps it initiated against China at the time of the Ladakh border crisis in 2020. Around then, New Delhi amended its policy on foreign investments from countries it shares a land border with, requiring additional government approval for proposals; it was a thinly veiled policy to stall and block Chinese activity. Indian ministers have at least verbally changed their tune this summer, suggesting that completely cutting off China is not a sustainable strategy. In July, a reporter asked Rajeev Chandrasekhar, the minister of state for electronics and information technology, if India is open to doing business with Chinese companies. “Of course we are,” Chandrasekhar said.

That softening is in part because India needs Chinese investments in electronics, batteries, and electric vehicles. In January, New Delhi asked Apple to identify Chinese suppliers of parts who would be prepared to set up a joint venture with an Indian partner. The Indian government gave 12 Chinese companies clearance to apply to start such businesses, but many of them initially seemed unenthusiastic, since New Delhi had unleashed harsh measures against Chinese mobile phone producers for violations of tax and foreign exchange laws in 2020. However, a slowdown in tech funding in India in the past year means that the Modi government can no longer afford to be so strict about Chinese investment: Shutting the taps entirely had put India in a tough spot, with an economy that remained stagnant despite Modi’s much-hyped “Make in India” plan.

Such is India’s dependence on Chinese electronics manufacturing know-how that in July it agreed to open faster visa processing for Chinese experts in installation, expansion, and repair work, especially for those workers employed by companies approved under New Delhi’s so-called production-linked incentive scheme, a flagship program to boost Indian manufacturing. The Indian government has pushed Chinese cell phone manufacturers to rope in Indian partners for local production, but that has not delivered results. As a result, the Indian government’s long-running unofficial policy of denying visas for Chinese citizens and making things difficult for Chinese companies in India is falling at the altar of its plans to increase manufacturing.

India’s heavy reliance on Chinese imports, including smartphones, semiconductors, solar cells, and pharmaceuticals, is another challenge. Of the $117 billion worth of goods traded between the two countries last year, 87 percent were Chinese exports. India’s $50 billion pharmaceutical industry is dependent on bulk drugs and intermediate goods from China—essential raw materials to manufacture finished products for domestic consumption and export. Despite its efforts in the past three years, India has not found alternative sources to China for these materials. So critical are these links that Modi has no way of reducing New Delhi’s reliance on Beijing—and thus runs a risk of serious economic disruption in a crisis.


India is also a major beneficiary of support from multilateral development banks based in China. New Delhi is the largest borrower from the Beijing-based Asian Infrastructure Investment Bank, with $9.8 billion committed to projects since 2016, spanning energy, transport, and public health. India is also a founding member of New Development Bank, the erstwhile BRICS bank that is based in China. With 20 approved projects and seven proposals under review, at $7.5 billion, New Delhi is the second-largest recipient of the New Development Bank’s financial support after Beijing.

India’s association with these development banks stems from its membership in two groups dominated by China: BRICS and the SCO. New Delhi’s involvement with these groups predates its involvement with the Quadrilateral Security Dialogue (known as the Quad) alongside Australia, Japan, and the United States. While New Delhi sees its membership in BRICS and the SCO as part of its policy of multi-alignment, its active participation in the Quad was driven in part by India’s desire to externally balance China after the Ladakh border crisis. Senior Indian officials enthusiastically take part in BRICS and SCO meetings, and Modi has always been present at the summits—as he will in Johannesburg this week.

India’s involvement with BRICS and the SCO has ensured that a floor exists for its relationship with Beijing. Officials from both countries often hold bilateral discussions on the sidelines of meetings. Since 2020, most of these conversations have focused on the border crisis. The stalemate on this issue seems to be in China’s favor, with previous border management agreements now redundant. The differences between the two sides have only increased in recent months, with separate official statements after border talks. That trend was only broken this month after a 19th round of discussions between senior military commanders.

India was surprised by the Chinese on the border three summers ago, and it is now caught on the back foot in negotiations. China recently responded to India’s offer to create a buffer zone at the sensitive area of Depsang in Ladakh by instead proposing buffer zones 15 to 20 kilometers inside Indian territory, further cementing its ingress into the region. (India did not accept the Chinese proposal.) In five other areas where Chinese and Indian soldiers have stepped back from their positions by a few miles, Beijing has rejected any plans to move these soldiers back to their bases and has set about building significant military infrastructure in the meantime. New Delhi never publicly acknowledged the violations.

Differences in messaging between the two countries have caused some embarrassment for India. When Indian National Security Advisor Ajit Doval met top Chinese diplomat Wang Yi in South Africa in July, the Chinese readout referred to an “important consensus” reached between Modi and Xi at last year’s G-20 summit in Bali, Indonesia; India never mentioned such a consensus. Three days after Beijing’s July statement, New Delhi had to admit that Modi approached Xi in Bali not only to exchange pleasantries but also to discuss the need to stabilize bilateral relations. (The two leaders did not have a formal bilateral meeting in Bali.) This admission likely didn’t play well with Modi’s domestic audience because it drove home the starkness of India’s empty quiver when it comes to targeting China.

Militarily, India finds itself in a predicament of its own making: a poorly prepared force suffering from critical shortages in weapons, platforms, and spare parts, as well as a shortfall in soldiers. Russia has stopped providing many supplies due to large pending payments, of over $3 billion, further impairing India’s military. (Around 70 percent of India’s army arsenal, including tanks and aircraft, are of Russian origin.) Moscow doesn’t want to be paid in Indian currency, while New Delhi is unable to find ways to pay in a currency that doesn’t violate G-7 sanctions against Russia. As a result, Indian Foreign Minister S. Jaishankar has ruled out even a limited offensive option against China, essentially tying the military down with defensive deployment on the border to prevent further loss of territory.

Jaishankar’s ministry has never summoned a Chinese diplomat to issue a demarche on any of the issues, not even after the deaths of 20 Indian soldiers. This has further signaled New Delhi’s weakness. China does not initiate talks on the border situation and often takes weeks to grant Indian requests for such discussions. The lack of a Chinese ambassador to India for the last 10 months has not helped matters. After attending a think tank event in Beijing last month, former Indian Foreign Secretary Shyam Saran—a longtime China hand—reported that he found no willingness on China’s part to return to the border’s prevailing status quo from before the 2020 Ladakh clashes.

With no prospect of disengagement on the border, all eyes are now on the BRICS summit, where many analysts expect a meeting between Modi and Xi that could provide a breakthrough. Amid this speculation, India refrained from participating in a military drill hosted by Australia from July 22 to Aug. 4. Earlier this month, India’s usually brusque foreign minister said there had been “good progress” and that “talks are going on” with China. If Xi and Modi don’t have a formal meeting in Johannesburg, the G-20 leaders’ summit in New Delhi in September presents another opportunity. But Modi has no aces up his sleeve in these negotiations, while Xi could threaten to not turn up for the G-20 leaders’ summit—as has been suggested by some Chinese analysts—and ruin Modi’s party. (The Indian leader is banking on a successful summit as much for his own personal branding ahead of his reelection campaign next year as for diplomatic purposes.)

Modi, Jaishankar, and their advisors cannot avoid the reality that India is losing ground to China. But China has often erred in seeing India through the prism of its ties with global superpowers; it may be repeating this mistake by reacting with aggression in part in response to India’s deepening relationship with the United States—seeing India as part of the U.S. design to contain Beijing. New Delhi’s partnership with Washington can help to deal with an assertive Beijing to an extent. Still, India must develop its own strengths on its own terms—both as a vibrant, liberal democracy and as a military and economic power. Indians need to do the heavy lifting themselves; nothing else will serve the country’s purpose.

(Source: Foreign Policy)

China’s economy is in trouble. Here’s what’s gone wrong

Laura He, CNN

China has long been the engine of global growth.

But in recent weeks, its economic slowdown has alarmed international leaders and investors who are no longer counting on it to be a bulwark against weakness elsewhere. In fact, for the first time in decades, the world’s second economy is itself the problem.

Hong Kong’s Hang Seng (HSI) Index slid into a bear market on Friday, having fallen more than 20% from its recent peak in January. Last week, the Chinese yuan fell to its lowest level in 16 years, prompting the central bank to make its biggest defense of the currency on record by setting a much higher rate to the dollar than the estimated market value.

The issue is that, after a rapid spurt of activity earlier this year following the lifting of Covid lockdowns, growth is stalling. Consumer prices are falling, a real estate crisis is deepening and exports are in a slump. Unemployment among youth has gotten so bad the government has stopped publishing the data.

To make things worse, a major homebuilder and a prominent investment company have missed payments to their investors in recent weeks, rekindling fears that the ongoing deterioration of the housing market could lead to heightened risks to financial stability.

A lack of resolute measures to stimulate domestic demand and fears of contagion have triggered a new round of growth downgrades, with several major investment banks cutting their forecasts of China’s economic growth to below 5%.

“We downgrade China’s real GDP growth forecast … as the property downturn has deepened, external demand has weakened further, and policy support has been less than expected,” UBS analysts wrote in a Monday research note.

Researchers at Nomura, Morgan Stanley and Barclays had previously trimmed their forecasts.

That means China might significantly miss its official growth target of “around 5.5%,” which would be an embarrassment for the Chinese leadership under President Xi Jinping.

It’s a far cry from global financial meltdown of 2008, when China launched the largest stimulus package in the world and was the first major economy to emerge from the crisis. It’s also a reversal from the early days of the pandemic, when China was the only major developed economy to dodge a recession. So what’s gone wrong?

Property woes

China’s economy has been in doldrums since April, when momentum from a strong start to the year faded. But concerns have intensified this month following defaults by Country Garden, once the country’s largest developer by property sales, and Zhongrong Trust, a top trust company.

Reports that Country Garden had missing interest payments on two US dollar bonds spooked investors and rekindled memories of Evergrande, whose debt defaults in 2021 signaled the start of the real estate crisis.

While Evergrande is still undergoing a debt restructuring, troubles at Country Garden raised fresh concerns about the Chinese economy.

Beijing has rolled out a raft of supportive measures to revive the real estate market. But even the stronger players are now teetering on the brink of default, underscoring the challenges Beijing faces to contain the crisis.

In the meantime, debt defaults at property developers appear to have spread to the country’s $2.9 trillion investment trust industry.

Zhongrong Trust, which managed $87 billion worth of funds for corporate clients and wealthy individuals, has failed to repay a series of investment products to at least four companies, worth about $19 million, according to company statements from earlier this month.

Angry demonstrators even protested recently outside of the office of the trust company, demanding payouts on high-yield products, according to videos posted on Chinese social media seen by CNN.

“Further losses in the property sector risk spilling over into wider financial instability,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

“With domestic funds increasingly fleeing to the safety of government bonds and bank deposits, more non-bank financial institutions could face liquidity problems,” he added.

Local government debt

Another major concern is local government debt, which has soared largely due to a sharp drop in land sale revenues because of the property slump, as well as the lingering impact of the cost of imposing pandemic lockdowns.

The severe fiscal stress seen at local levels not only poses great risks to Chinese banks, but also squeezes the government’s ability to spur growth and expand public services.

Beijing has so far unveiled a steady incremental drip of measures to boost the economy, including interest rate cuts and other moves to help the property market and consumer businesses.

But it has refrained from making any major moves. Economists and analysts have told CNN that is because China has become too indebted to pump up the economy like it did 15 years ago, during the global financial crisis.

Back then, Chinese leaders rolled out a four trillion yuan ($586 billion) fiscal package to minimize the impact of the global financial crisis. But the measures, which were focused on government-led infrastructure projects, also led to an unprecedented credit expansion and massive increase in local government debt, from which the economy is still struggling to recover.

“While there is also a cyclical element to the current downturn that justifies greater stimulus, policymakers appear concerned that their traditional policy playbook would lead to a further rise in debt levels that would come back to the bite them in future,” said Evans-Pritchard.

On Sunday, Beijing policymakers reaffirmed that one of their top priorities was to contain systemic debt risks at local governments.

The People’s Bank of China, the financial regulator and the securities regulator jointly pledged to work together on tackle this challenge, according to a statement by the central bank.

Demographic decline

What’s more, China faces some long term challenges, such as a population crisis, and strained relations with key trading partners such as the United States and Europe.

The country’s total fertility rate, the average number of babies a woman will have over her lifetime, dropped to a record low of 1.09 last year from 1.30 just two years before, according to a recent report by state-owned Jiemian.com, citing a study by a unit of the National Health Commission.

That means China’s fertility rate is now even lower than Japan’s, a country long known for its aging society.

Earlier this year, China released data that showed its population started shrinking last year for the first in six decades.

“China’s aging demographics present significant challenges to its economic growth potential,” said analysts from Moody’s Investors Service in a research report last week.

The decline in labor supply and increased healthcare and social spending could lead to a wider fiscal deficit and higher debt burden. A smaller workforce could also erode domestic savings, resulting in higher interest rates and declining investment.

“Housing demand will fall in the long term,” they added.

Demographics, along with slowing migration from the countryside to urban areas and geopolitical fracturing, are “structural in nature” and largely outside of policymakers’ control, Evans-Pritchard said.

“The big picture is that trend growth has fallen substantially since the start of the pandemic and looks set to decline further over the medium-term,” he said.