Why criticism of a third term for China’s Xi Jinping is rich coming from the US

•  Despite its clandestine interventions in China and elsewhere, America remains convinced of its exceptionalism and blind to how others perceive it
• In a similar vein, Western commentary on Xi’s reappointment can sound foolish, given that America set term limits for presidents not that long ago

Tom Plate

Maybe the lady intel officer who sought to recruit me for a CIA operation involving Chinese espionage on the US West Coast didn’t look the part – though, then again, perhaps she did. Modest in dress, controlled in comportment, she sat with me in the back of a large steak restaurant in Los Angeles without once raising her voice.

She told me she was proud to be “working for the President of the United States, that’s what we do”, and I believed her. She paid for everything (as she had for two prior dinners) with cash, not credit card, leaving no written record behind. But I left her visibly disappointed – mission unaccomplished: I just couldn’t go CIA-ing while remaining a proper American journalist and that was what I wound up telling her.

This rendezvous took place a half-dozen years ago but popped into mind while I was drinking in Agents of Subversion, an urgently needed book by Yonsei University professor John Delury.

Just as it unintentionally reminded me of how I could have added the Central Intelligence Agency to my resume, the book also added to my annoyance with those fellow Americans who hold that we don’t do dirty to China, as sometimes the Chinese (not to mention the Russians) do to us. DeLury will have none of that.

His book is about the CIA’s covert war in China. Did American undercover agents and forces try to influence the Chinese civil war? Yes. Did the US have assets working within Hong Kong after the 1997 handover that helped stir the anti-China hotpot? You bet. Even today? Please, let’s not be naive.

The security services of China are scarcely covert. Their assets and agents are all over the place. In fact, in the late 1990s, a report by the Select Committee on US National Security and Military/Commercial Concerns with the People’s Republic of China made extraordinary claims about Chinese espionage, especially systemic technology theft, that the American media replayed to Americans with abandon.

Lost in the anti-Communist frenzy and paranoia was the commonsensical notion that almost all nations execute deep dives into the dirty pool of espionage – and sometimes much worse. Contextualisation, rather than demonisation, is what even our enemies deserve if we are to understand them properly. Over time, demonisation leads to fragmentation of the possibility of a global community – of a better global order to cope with global challenges.

Delury offers another key dimension that echoes the spirit of Plato’s philosophical legacy of the unity of ethics: a city or – by extension any integrated entity – cannot be half virtuous. A contemporary example of this notion can be found in America’s Foreign Corrupt Practices Act of 1977, for example.

It holds that a US corporation operating overseas that’s bribing foreign officials must be brought to account by the headquarters in the States. It cannot look the other way, ignoring the illegality, just because it’s an ocean away. To its credit, the US Department of Justice has enforced the act against American companies abroad.

Delury takes this principle further and shows how a nation’s civic norms can be corroded domestically when it practises clandestine and illicit intervention in the internal affairs of others. “The pathologies of secrecy, like the violence of war, could not be contained overseas forever,” he concludes in the book.

In America, the blowback into the backyard of domestic politics can come with hurricane force. Clandestine anti-China crusades lead to poisonous politics such as McCarthyism. Hans Morgenthau, a legendary proponent of hard-nosed realism in foreign policy, famously characterised the infection of domestic norms with overseas malfeasance as a kind of “surreptitious totalitarianism”.

Despite the continuing cascade of clandestine interventions abroad, America remains convinced of its comparative ethical exceptionalism in international relations, especially compared to China. Such self-deception is a narcotic. It prevents one from feeling others’ pain and blinds us to how others see us; for the American public, it eases the pain of recognition.

Foolishly self-regarding Western commentary on Xi Jinping’s spectacular appointment to a third term as party general secretary makes the point. In America, term limits are relatively recent – and limited – efforts to bracket power. In 1945, Franklin D. Roosevelt entered his fourth four-year term (which led, of course, to the Twenty-second Amendment to limit presidents to two terms).

In reality, American politicians could be seen to make Xi look like a freshman. Obscured in the fog of the spotty term-limit law is the fact that US Congress itself has no term limits (and US Supreme Court justices get lifetime appointments).

Near-eternal incumbent US legislators include Vermont’s Patrick Leahy, first elected in 1974, more than 47 years ago; Iowa’s Chuck Grassley, since 1981; Kentucky’s Mitch McConnell, since 1985. Also note that in 1987, back in the heyday of China’s Deng Xiaoping, California’s Nancy Pelosi was first elected to the House. Today she is House Speaker, at 82.

By contrast, the comparatively sprightly Xi, at 69, faces a long march before matching the runs of McConnell and Pelosi. Perhaps America might offer the world a long overdue diminishment of pretensions.

Author and journalist Tom Plate, distinguished scholar of Asian and Pacific Studies at LMU, is vice-president of the Pacific Century Institute

Singapore’s George Yeo hopes China will stay out of ‘long, dark tunnel’ as Russia and the West wade into nuclear talk

• The ex-foreign minister is hopeful China will ‘have the wisdom and the statecraft to avoid entering’ the Ukraine war as it would put the world ‘in jeopardy’
• He characterised the Ukraine conflict as a ‘proxy war’ that typically occurs before world powers edge towards ‘Armageddon’

Bhavan Jaipragas

Russia and the West are walking into a “long, dark tunnel” with their rising rhetoric about a nuclear confrontation, and China should exercise wisdom and statecraft to avoid going down the same path, Singapore’s former foreign minister George Yeo has said.

Characterising the conflict in Ukraine – following Russia’s February invasion of its smaller neighbour – as a “proxy war”, Yeo said China’s entry into the fray would put the world in jeopardy.

“With the incorporation of the four [Ukrainian] oblasts to the Russian federation, the sabotage of the Nord Stream pipelines, I fear that Russia and the US and Europe are walking into a long, dark tunnel from which they cannot easily reverse,” Yeo said in an interview on Talking Post with the Post’s chief news editor Yonden Lhatoo.

Yeo comments came amid remarks by high-profile figures about the possibility of the use of nuclear weapons in Ukraine.

In the latest salvo, the European Union’s foreign policy chief Josep Borell last week said Russian forces would be “annihilated” if President Vladimir Putin used nuclear weapons in Ukraine.

Putin in September warned that he was not “bluffing” when he said he would use “all available means” to protect Russia if its territorial integrity was threatened.

“This lighthearted talk of nuclear exchange is madness,” said Yeo, who has remained one of Singapore’s most followed public intellectuals since his retirement from politics in 2011. “Once you begin that exchange, there’s no stopping point, because the side that feels itself losing will become even more desperate. And then little by little, it will ratchet upwards.”

Yeo, who has remained a prolific commentator on China affairs since his 2011 retirement from politics, said he hoped the Asian superpower would “have the wisdom and the statecraft to avoid entering that tunnel”.

He added: “Because if it does, then the whole world would be in jeopardy. But I think the Chinese will find a way to stay out of this.”

Yeo, a military general-turned-politician, said before world powers dangerously edged towards “Armageddon”, there would be proxy or hybrid wars, such as the conflict taking place in Ukraine.

In such scenarios, countries “jostle for advantage, using the threat of war as leverage but not really wanting it to be made use of ultimately”.

However, when “we act dynamically against one another, we may end up in a position which we did not intend t0 be when we first started”, Yeo said. “I think this is what has happened in Europe. All parties have ended up in a position they did not wish for originally.”

In his new three-part book series Musings, Yeo shared his views on great power rivalry and Singapore’s place in the more contested geopolitical landscape.

Asked during the interview if the ongoing US-China tensions would eventually lead to “doom”, Yeo said he was not as optimistic as Singapore’s late independence leader Lee Kuan Yew.

The elder statesman had said that both the US and China were ultimately “rational”, but Yeo said he was unsure whether this was still the case, noting that ex-US president Donald Trump was brought into power by “mass emotions”.

Current US President Joe Biden is “weak”, Yeo said, and American society at large is divided by such mass emotion. “So China may be a rational player, [but] on the US side if something happens in the South China Sea, and the ship is sunk, hundreds of sailors lose their lives, I think the domestic reaction in the US will be so great it would be difficult for the White House to contain it.”

Hong Kong ‘not safe’ in 2019

Yeo, who served as chairman of Hong Kong-based Kerry Logistics Network from 2012 to 2019, also touched on the city’s political situation during the wide-ranging interview.

On the Beijing-imposed national security law (NSL), imposed in 2020 in the aftermath of the political turmoil a year earlier, Yeo said he was “relieved” when it was introduced.

Recalling the 2019 protests, Yeo said he and his wife were splitting their time between Hong Kong and Singapore during that period, spending at least a few days a month in the city state.

“In 2019, we no longer felt safe [in Hong Kong] and we were relieved when we came back to Singapore to be able to talk freely and to be able to eat in a restaurant late into the night”, Yeo said, adding that “Hong Kong was becoming strange to us” during that period.

“I was frankly quite disgusted by the way the Western media were lionising the violence, which they will never give allowance for in their own societies,” he said.

Yeo acknowledged that many Hong Kong residents, including his friends, were “still sullen” about the imposition of the NSL and were waiting to see what the longer term situation would be like.

His assessment was that the law had removed “one important question mark” about Hong Kong’s retention of the “one country, two systems” model beyond 2047.

“Now that the National Security Law is in place, which is entirely reasonable, because all countries have that … this has now ensured that beyond 2047, there will still be one country, two systems [and it’s] likely to continue indefinitely because it’s in China’s interest.”

The American chip industry’s US$1.5t meltdown

Thank the boom-and-bust cycle – and America’s government

In licking County, Ohio, fleets of dump trucks and bulldozers are shifting earth on the future site of chip factories. Intel is building two “fabs” there at a cost of around US$20 billion. In March, President Joe Biden called this expanse of dirt a “field of dreams” in his State of the Union speech. It was “the ground on which America’s future will be built”, he intoned.

In the spring, it was easy to be dreamy about America’s chip industry. The pandemic-induced semiconductor crunch had proved just how crucial chips were to modern life. Demand was still rising for all sorts of chip-powered technology, which these days, is most of it. Investors were less gloomy on chips than on other tech, which were taking a stock market beating. The Chips Act was making its way through Congress, promising to plough subsidies worth US$52 billion into the domestic industry, in order to reduce America’s reliance on foreign fabs and support projects like Intel’s Ohio factory.

Half a year later, the dreams look nightmarish. Demand for silicon appears to be falling as quickly as it had risen during the pandemic. In late September, Micron, an Idaho-based maker of memory chips, reported a 20 per cent year-on-year fall in quarterly sales. A week later, AMD, a Californian chip designer, slashed its sales estimate for the third quarter by 16 per cent. Within days, Bloomberg reported that Intel plans to lay off thousands of staff, following a string of poor results that are likely to continue when it presents its latest quarterly report on Oct 27. Since July, a basket of America’s 30 or so biggest chip firms have cut revenue forecasts for the third quarter from US$99 billion to US$88 billion. So far this year, more than US$1.5 trillion has been wiped from the combined market value of American-listed semiconductor companies.

The chip industry is notoriously cyclical at the best of times: The new capacity built in response to rising demand takes several years to materialise, by which time the demand is no longer white-hot. In America, this cycle is now being turbocharged by the government. The Chips Act, which became law in August to cheers from chip bosses, is stimulating the supply side of the semiconductor business just as the Biden administration is stepping up efforts to stop American-made chips and chipmaking equipment from going to China, dampening demand for American products in the world’s biggest semiconductor market.

Whether or not it makes strategic sense for America to bring more chip production home and to hamstring its geopolitical rival with export bans, the combination of more supply and less demand is a recipe for trouble. And if the American policies speed up China’s efforts to “resolutely win the battle in key core technologies”, as President Xi Jinping affirmed in a speech to the Communist Party congress on Oct 16, they could give rise to powerful Chinese competitors. Field of dreams? It is enough to keep you awake in terror at night.

The cyclical slump has so far been felt most acutely in consumer goods. PCs and smartphones account for almost half the US$600 billion-worth of chips sold annually. Having splurged during the pandemic, inflation-weary shoppers are buying fewer gadgets. Gartner, a research firm, expects smartphone sales to drop by 6 per cent this year, and those of PCs by 10 per cent. Firms like Intel, which in February was telling investors it expected PC demand to grow steadily for the next five years, are revising their outlooks as it becomes clear that many Covid-era purchases were simply brought forward.

Many analysts think that other segments could be next. Panic buying amid last year’s global chip shortage has left many carmakers and manufacturers of business hardware with inventories overflowing with silicon. New Street Research, a firm of analysts, estimates that between April and June, industrial firms’ stocks of chips were about 40 per cent above the historic level relative to sales. Inventories for PC makers and car companies are similarly full. Intel and Micron blamed their recent weak results in part on high inventories.

The supply glut and sputtering demand is already hitting prices. The cost of memory chips is down by two-fifths in the past year, according to Future Horizons, a research firm. The price of logic chips, which process data and are less commoditised than memory chips, is down by 3 per cent in the same period.

Chip buyers will work through their inventories eventually. But after they do, they may buy less than in the past. In August, Hewlett Packard Enterprise and Dell, two big hardware makers, hinted that demand from business customers was beginning to soften. Sales of both PCs and smartphones had started to plateau before the pandemic, and this trend will probably resume in the coming years. Phonemakers cannot stuff ever more chips onto their devices forever. For companies such as Qualcomm, which derives half its sales from smartphone chips, and Intel, which gets a similar share from those for PCs, that is a headache.

The chipmakers’ response has been to bet on fast-growing new markets. AMD, Intel and Nvidia, another big chip designer, are battling over the cloud-computing data centres, where chip demand is still increasing. Qualcomm is diversifying into cars. In September, the firm’s bosses boasted it already had US$30 billion-worth of orders from carmakers. Intel, meanwhile, is expanding into semiconductors for networking gear and devices for the hyperconnected future of the Internet of Things. It is also getting into the contract manufacturing business, hoping to win market share from TSMC of Taiwan, the world’s biggest chipmaker and contract manufacturer of choice for fabless chip designers such as AMD and Nvidia.

These efforts, however, are now running into geopolitics. Like their counterparts in China and Europe, politicians in America want to lessen their countries’ dependence on foreign chipmakers, in particular TSMC, which manufactures 90 per cent of the world’s leading-edge chips. In response, America, China, the EU, Japan, South Korea and Taiwan together plan to subsidise domestic chipmaking to the tune of US$85 billion annually over the next three years, calculates Mark Lipacis of Jefferies, an investment bank. That would buy a fair bit of extra capacity globally.

At the same time, prospects for offloading the resulting chips are darkening, especially for American firms, as a result of America’s tightening controls on exports to China. Many American firms count the Asian giant, which imported US$400 billion-worth of semiconductors last year, as their biggest market. Intel’s Chinese sales made up US$21 billion of its overall revenues of US$79 billion last year. Nvidia said that an earlier round of restrictions, which limited sales of advanced data centre chips to Chinese customers and to Russia after its invasion of Ukraine, would cost it US$400 million in third-quarter sales, equivalent to 6 per cent of its total revenues.

The latest restrictions, which target Chinese supercomputing and artificial intelligence efforts, are a particular concern for the companies which manufacture chipmaking tools. Three of the world’s five biggest such firms – Applied Materials, KLA and Lam Research – are American. The share of the trio’s sales that go to China has risen fast in the past few years, to about a third. Toshiya Hari of Goldman Sachs said that the controls are likely to cost the world’s toolmakers US$6 billion in lost revenues this year, equivalent to 9 per cent of their projected sales. After the new American export controls were unveiled, Applied Materials lowered its expected fourth-quarter revenue by 4 per cent to US$6.4 billion. Its share price has fallen by 13 per cent in the past two weeks. Those of KLA and Lam Research have tumbled by a fifth.

American chip bosses now fear that China could retaliate, further restricting their firms’ access to its vast market. It is already redoubling efforts to nurture domestic champions such as SMIC (in logic chips) and YMTC (in memory), as well as domestic toolmakers, that could one day challenge America’s historic silicon supremacy. The result could be a diminished American industry with less global clout and more capacity than it knows what to do with. That is a shaky foundation on which to build America’s future.

©2022 The Economist Newspaper Limited. All rights reserved

中国人劣根性的例子

以下几点为常见例子。

1.自己做不好、幹不来的事，也不希望别人做得来；幹得好，宁愿大家都不做，也不能让别人做得出色；幹得比自己好，你要是做了，他不是釜底抽薪，就是到处捣鼓你、设计你，让你不得安宁。 

2.幸灾乐祸，落井下石。看别人笑话，是不少人的劣根。看到别人有了灾难，不是伸手拉一把、助人于危难之中，而是在一旁偷笑；最糟糕的是，还有很多人喜欢投石下井。 

3.小人不能得志。小人一旦得志，不是专横就是跋扈，几乎到了连自己父母都不认识的地步，危害社会和平；专横的就像霸王般强势，一旦失势，立马就变成了懦弱无能之辈。 

4.损人利己，见利忘义，为了个人的一点利益，不惜伤害别人，颠倒是非黑白，把白的说成了黑，黑的说成了白，把没有的说的像真的一样，那管曾经与之患难与共的朋友。当然有时候就是损了人也不一定就有利自己，目的就是要搞垮人家，搞得别人不如他。 

5.大声嚷嚷，总害怕别人听不到自己吵杂的声音。这种行为常常使得他人心情烦躁、不得安宁，是造成社会动荡的根本原因之一。 

6.缺乏公共意识，到处吐痰，乱丢卫生巾和纸巾，把垃圾丢到别人家门口，纸尿片乱抛，不注意个人卫生，出国乱涂鸦，乱爬他国雕塑，不尊重历史文物等等。 

7.道德观念扭曲。女儿被人强奸，不为女儿出头，还反过来骂女儿，责骂女儿丢家里的脸、让大家都没脸见人。 

8.缺乏文化素养，不分青红皂白，胡乱责骂他人，从而导致他人心灵受创。自己犯错，只怪他人，不愿承认自身的错误，把一切责任都推到他人身上。凡事不为他人设想，只顾眼前利益。 

Why China’s people no longer look up to America

We Chinese once sought to learn from US successes; now we study its mistakes so that we can avoid them.

Wang Wen

My generation of Chinese looked up to the United States.

When I was a university student in northwestern China in the late 1990s, my friends and I tuned in to shortwave broadcasts of Voice of America, polishing our English while soaking up American and world news. We flocked to packed lecture halls whenever a visiting American professor was on campus. 

It was a thrilling time. China was emerging from isolationism and poverty, and as we looked to the future we studied democracy, market economics, equality and other ideals that made America great. We couldn’t realistically adopt them all because of China’s conditions, but our lives were transformed as we recalibrated our economy on a US blueprint.

Decades earlier, a reform-minded scholar said that even the moon in the United States was rounder than in China. My schoolmates and I wanted to believe it.

But after years of watching America’s wars overseas, reckless economic policies and destructive partisanship — culminating in last year’s disgraceful assault on the US Capitol ­­— many Chinese, including me, can barely make out that shining beacon anymore.

Yet as relations between our countries deteriorate, the United States blames us. Secretary of State Antony Blinken did so in May, saying that China was “undermining” the rules-based world order and could not be relied upon to “change its trajectory”.

I have misgivings about some of my country’s policies. And I recognise that some criticisms of my government’s policies are justified. But Americans must also recognise that US behaviour is hardly setting a good example.

The shift in Chinese attitudes wasn’t a given. But when US-led NATO forces mistakenly bombed the Chinese Embassy in Belgrade, Serbia, in 1999 during the Kosovo war, our idolising of America began to wane. Three people were killed in that attack, and 20 were wounded. Two years later, a US spy plane and a Chinese fighter jet collided in the South China Sea, leaving a Chinese pilot dead. These incidents may have seemed relatively minor to Americans, but they shocked us. We had largely avoided foreign wars and were not used to our citizens dying in conflicts involving other countries. The shift in perception gained pace as the 2000s unfolded and more Chinese had televisions. We watched as the carnage of America’s disastrous involvement in Iraq, launched in 2003 on false pretences, was beamed into our homes.

In 2008, China had to defend itself against the consequences of American greed when the US subprime lending fiasco touched off the global financial crisis. China was forced to create a huge stimulus package, but our economy still suffered great damage. Millions of Chinese lost their jobs.

Following his predecessors, President Barack Obama announced a string of weapon sales to Taiwan and embarked on his so-called pivot to Asia, which we regarded as an attempt to rally our Asian neighbours against us. President Donald Trump declared a destructive trade war against us, and Chinese citizens were as shocked as anyone when a pro-Trump mob stormed the citadel of American democracy on Jan 6, 2021. The visit to Taiwan last week by House Speaker Nancy Pelosi has only further disappointed many Chinese, who saw it as a violation of US commitments on Taiwan.

China’s critics in the United States need to realise that American actions such as these are causing outcomes in China that even the United States doesn’t want.

It’s no accident that China’s military spending — a source of concern in Washington for years — began rising in the early 2000s after the Belgrade bombing and the plane collision. It quickly took off after the war in Iraq showcased how far ahead the US military was compared with ours. China’s past weakness had been calamitous: Western powers attacked and forced China to surrender territory in the 1800s, and Japan’s brutal invasion in the 20th century killed millions.

US officials no doubt want China to follow the American path of liberalism. But in contrast to my university days, the tone of Chinese academic research on the United States has shifted markedly. Chinese government officials used to consult me on the benefits of American capital markets and other economic concepts. Now I am called upon to discuss US cautionary tales, such as the factors that led to the financial crisis. We once sought to learn from US successes; now we study its mistakes so that we can avoid them.

The sense of America as a dangerous force in the world has filtered into Chinese public attitudes as well. In 2020 I remarked on a Chinese television programme that we still have much to learn from the United States — and was attacked on Chinese social media. I stick to my view but am now more careful in talking positively about the United States. When I do, I preface it with a criticism.

Chinese students still want to study at US universities but are acutely fearful of American gun violence, anti-Asian attacks or being labelled a spy. They are sent off with ominous advice: Don’t stray from campus, watch what you say, back away from conflict.

And despite Chinese weariness with our country’s tough zero-Covid policy, America’s dismal record on the pandemic has only strengthened Chinese public support for our government.

To be clear: China needs to change, too. It needs to be more open to dialogue with the United States, refrain from using US problems as an excuse to go slow on reform and respond more calmly and constructively to American criticism on things like trade policy and human rights.

But although we don’t enjoy the same rights as Americans, many in China like where we are right now.

In the late 1970s, China was exhausted and traumatised from the destruction and hardship caused by the Cultural Revolution, which nearly destroyed us. Deng Xiaoping initiated reforms that brought stability and helped lift 800 million people out of poverty. We have achieved spectacular increases in income and life expectancy and stayed out of foreign wars. Tough firearm regulations allow us to walk down any street in the country at night with virtually no fear of harm. When we look at America’s enormous pandemic toll, gun violence, political divisions and the attack on the US Capitol, it only reminds Chinese people of our own chaotic past that we have left behind.

None of this is meant to gloat over America’s troubles; a strong, stable and responsible United States is good for the world. China still has much to learn from America, and we have a lot in common. We drive Chinese-built Fords and Teslas, wash our hair with Procter & Gamble shampoos and sip coffee at Starbucks. Solving some of the planet’s biggest problems requires that we work together.

But that doesn’t mean following America over the cliff.

NYTIMES

Wang Wen (@WangwenR) is the executive dean of the Chongyang Institute for Financial Studies, a think tank at Renmin University of China. He is the author of “A Great Power’s Long March”, an analysis of China’s re-emergence as a global power. He is a Communist Party member and a former chief opinion editor of The Global Times, an arm of the official Communist Party newspaper, The People’s Daily.

Japan then, China now: the US is resorting to economic rival-bashing tactics again

• The Plaza Accord, signed in New York in 1985, did its job of hobbling Japanese competitiveness and forcing a ‘hollowing out’ of the country’s economy
• While the US has been unable to use a Plaza-like weapon against China, it now seeks to protect ‘economic security’ by intervening in supply chains

Anthony Rowley

On September 22, 1985, finance ministers of the then G5 nations – France, West Germany, Japan, Britain and the United States – signed the Plaza Accord in New York, devaluing the dollar dramatically against the yen and major European currencies. It was a rival-bashing tactic that has since become an American habit.

Thirty-seven years later, almost to the day, Japan is only now getting close to shaking off the massive deflationary impact of the Plaza Accord, and while China has managed to shield itself against such currency attacks, it has come under siege from different economic weapons.

All the noise we are hearing now about the yen plunging to its lowest level in decades, along with calls for currency market interventions, ignores the fact that pre-Plaza the yen/dollar exchange rate was around 260 and that within a couple of years or so the yen almost doubled in value.

Some might argue that the rate of 260 yen to the dollar was just as arbitrary as that of 360 set by occupying powers after World War II. But the fact is that Japanese price structures had adjusted to these levels by the time of the Plaza Accord, and the deflationary shock was thus profound.

No economy can withstand a trauma of Plaza magnitude without having the stuffing knocked out of it. Japan adjusted, but only at the expense of manufacturing sector employment and domestic economic growth. It now faces the need to adjust yet again to keep pace with fresh external shocks.

As a consequence of the 1985 accord, signed in New York’s Plaza Hotel, Japan suffered several “lost decades” of growth thereafter. In fact, what is mistakenly described as yen “weakness” now marks something closer to a return to an equilibrium exchange rate for the yen.

Bank of Japan governor Haruhiko Kuroda is well aware of this fact. He and former vice finance minister Eisuke Sakakibara helped steer Japan through rough waters after the Plaza Accord and the trauma of deflation. He is unlikely to be in a hurry to return to a strong yen now.

Why has the US not cried foul at Kuroda’s stealth tactic of letting the yen begin a steady decline – if not to anything like pre-Plaza levels then at least to well below the 100 to the dollar or even the levels it touched at times in post-Plaza decades?

The answer is partly that the Plaza Accord did its job of hobbling Japanese competitiveness and forcing a “hollowing out” of the Japanese economy after manufacturers reacted by shifting manufacturing production offshore. And it is partly the fact that the US has bigger fish to fry nowadays.

Washington has been unable to use a Plaza-like weapon against China, which has wisely preserved exchange controls, but US administrations have found other weapons of choice to use against those who, like China, dare to challenge American supremacy.

Under the guise of protecting “economic security” – which is in reality old-fashioned protectionism by another name – the US and some of its allies have begun talking about and acting upon the idea of bringing US production back onshore where it is supposedly safe from competitors.

This is disastrously backward-looking. It implies that for the sake of political expediency, many of the evolutions that Asian and other economies have been forced to go through in order to adapt to overseas-initiated currency and trade wars will need to be reworked.

Trade links and manufacturing supply chains that have evolved in line with the requirements of efficient international production and distribution have survived arbitrary currency interventions and tariff impositions. But they are unlikely to survive security-minded interventions.

Inflation will inevitably become a more entrenched and long-lasting phenomenon as a result because from now on supply chain interruptions will reflect changes in underlying trade and economic structures rather than temporary hiccups caused by the Covid-19 pandemic.

All this exposes the fallacy that currency manipulation, tariffs and other trade barriers, plus specious arguments now about the need to preserve national economic security, can substitute for international cooperation on how the global economy and production should be structured.

It also highlights the fact that, in an age of globalisation, the idea that one major currency (the dollar) whose value is controlled by a single power (the US) can successfully facilitate trade and investment among multiple players without regard to their individual economic circumstances is wrong.

It is tragic that there is a refusal in Washington and other Western capitals to accept the fact that the world economic order has changed even if the political order is reluctant to adapt. There are bigger battles, such as climate change, to be fought than currency, trade and economic security wars.

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs

Has the Pentagon been caught using Twitter for pro-West disinformation?

• Facebook and Twitter have shut down dozens of fake accounts, suspecting they were created by the US military
• The Pentagon refuses to confirm or deny the US military was behind the accounts, but launches ‘review’

Agence France-Presse

The US Department of Defence has launched a review of its psychological warfare operations after the discovery of fake accounts on social media promoting pro-West disinformation, an official confirmed.

Pentagon spokesman Pat Ryder confirmed the review after a Washington Post report said social media giants Facebook and Twitter had shut down a number of fake accounts suspecting they were created by the US military.

Ryder did not say confirm or deny that the military was behind fake accounts, and said the information still needed to be reviewed.

He cautioned against assuming that the Defence Department was behind the accounts, leaving it possible that another government agency was involved.

He said the review is “an opportunity for us to assess the current work that’s being done in this arena”.

The Washington Post noted a report last month by Graphika and the Stanford Internet Observatory on pro-Western covert influence operations.

The report said Twitter and Facebook parent Meta had removed nearly 150 US and Britain-origin accounts in July and August engaging in “inauthentic behaviour”.

The Graphika-Stanford investigation said that, after analysing the accounts they discovered an interconnected web of accounts on eight social media platforms that had been using “deceptive tactics” to promote pro-Western narratives in the Middle East and in Central Asia.

The accounts came from a series of campaigns over five years rather than one single effort, the report said.

The accounts “consistently advanced narratives promoting the interests of the United States and its allies while opposing countries including Russia, China and Iran,” it said.

Citing unnamed government sources, The Washington Post tied at least some of the activity to the Pentagon, and said that officials of the US Central Command, which oversees operations in the Middle East, were “facing scrutiny”.

Ryder said the military’s psychological operations, or “military information support operations”, are structured and legal, and are to support activities in the field.

“These are not public affairs operations,” he said.

“It’s an aspect of warfare as old as warfare itself, and we conduct those operations in support of national security priorities,” he told reporters.

He noted that military deception operations were crucial in World War II, and are an integral part of the warfighting toolkit.

“There are opportunities in conducting operations against adversaries where you may want to use information in a way that is going to help them think a certain way - not truthful information,” he said.

“What I would highlight is that they must be undertaken in compliance with US law and Defence Department policy and we have safeguards in place and are committed to observing those safeguards,” he said.

Vladimir Putin’s war on Ukraine must not be allowed to undo decades of Sino-German economic cooperation

• China is not Russia. Its economic ties with Germany run far deeper, and Berlin needs good relations with Beijing to retain its leading position in Europe
• Without key raw materials from China, including metals, Europe and in particular Germany will not be in a position to advance ecological change

Thomas O. Falk

Relations between China and Germany go back a long way and have intensified since diplomatic relations were established in 1972 under German chancellor Willy Brandt. Since then, both sides have benefited greatly in areas such as science, technology and education – as well as trade, key to the flourishing cooperation.

A rising China needs Germany and the rest of Europe as markets for its products to ensure economic growth. Germany needs China for its manufacturing, particularly in electronics and chemicals, and for raw materials.

Previous German chancellors Helmut Kohl, Gerhard Schröder and Angela Merkel understood that amicable and beneficial relations with China were in Germany’s best interests.

Today, China is by far Germany’s largest trading partner, with bilateral trade worth more than €245 billion (US$250 billion) last year. Germany remains Europe’s primary investor in China, with direct investment increasing from US$1.5 billion in 2010 to US$14.55 billion in 2020.

It is a relationship that works. However, Russia’s war in Ukraine is now having an adverse impact on Sino-German cooperation.

Berlin has, in the past, been highly critical of Beijing’s handling of human rights. Now China’s refusal to condemn the Russian invasion and join Western sanctions against Moscow has called into question the strategic partnership. After all, Germany’s “Zeitenwende” (turning point), postulated by Chancellor Olaf Scholz after Russia’s attack, will also see Berlin readjust its stance on Beijing.

President Frank-Walter Steinmeier announced recently that Germany must not become dependent on China for key raw materials. “In some strategically important fields, our dependence on Chinese raw materials is significantly greater than our dependence on Russian gas in recent years,” he said.

But this statement is based on reactionist views and ill-advised values rather than sound political and economic conclusions. Germany’s U-turn must not disguise that it was caught off guard by Russia’s invasion of Ukraine, despite the red flags.

Germany has over the past decades grown dependent on Russian gas, oil and coal – particularly during Steinmeier’s time as foreign minister.

Despite evidence of Russian President Vladimir Putin increasingly being seen as a pariah, the Russia-Georgia war in 2008 and annexation of Crimea in 2014 – plus contract killings on German soil and hacking attacks on the Bundestag – Merkel and Schröder continued to champion Russian-German relations.

The tone only changed following Putin’s war on Ukraine and subsequent energy crisis, with Germany now facing the possibility of running out of gas, which could leave people without heating this winter.

But China could now inadvertently get caught up in the backlash over Russia’s aggression, amid German naivety, with the false equivalency prevailing in Germany that China is basically another Russia.

This is a misjudgment, however. Russia, with an economy smaller than Italy’s, is essentially a gas station with nuclear weapons that has initiated the most significant war on European soil since the second world war.

Yes, Germany made itself dependent on Russian energy, but this is a temporary issue and the government is working hard to rectify things.

China is the present and the future, and for Berlin to maintain its leading position in Europe, German-Sino relations must continue to flourish, rather than decline.

Of course, it’s possible to be critical of China’s stance on a number of global issues. But Germany should give Beijing the benefit of the doubt and emphasise that there’s no comparison with the regime in Moscow.

Unlike Russia, Germany’s relationship with China is very much two-way. It is not about largely unprocessed raw materials such as oil or gas, but products in complex supply chains. German companies are heavily involved through their investments, while China relies on German technology.

More than two decades ago, business with China accounted for about 1 per cent of German trade volume. Today, more than one-tenth of German imports come from China. German exports to China have also increased significantly, accounting for more than 7 per cent of total exports.

Another pivotal point, especially if Germany and the rest of Europe are serious about going green, is that the European Union is 75-100 per cent dependent on imports for most metals. Among the 30 raw materials the EU classifies as “critical”, several are imported almost exclusively from China, such as rare earths (98 per cent), magnesium (93 per cent) and bismuth (93 per cent).

The EU estimates that with the move towards cleaner energy, demand for cobalt alone will be five times higher by 2030. Moreover, Germany’s ambitious electric-vehicle vision requires lithium, and EU demand could increase 18-fold by 2030.

Steinmeier can demand alternatives to China for raw materials as much as he pleases. But, without China, Europe and in particular Germany will not be in a position to advance ecological change or continue to prosper.

Germany, which has played a positive role in promoting China-EU relations, must be aware of this, and Putin’s war must not be allowed to undo decades of cooperation.

There will always be differences of opinion between Beijing and Berlin. But it shouldn’t hide the fact that positive Sino-German relations have been and continue to be a win-win state of affairs.

Thomas O. Falk is a UK-based independent journalist and political analyst

Russia’s war in Ukraine is more than just a battle of ‘good vs evil’

• Democracy is part of the story, but the truth is that Russia’s decision to invade Ukraine is complex and involves numerous factors
• Ignoring Russia’s ‘civilisational turn’ and mobilised historical memory leads to a flawed understanding and ineffective policies

Nicholas Ross Smith

New Zealand Prime Minister Jacinda Ardern received some scorn recently when she said in a speech to the Lowy Institute that the war in Ukraine should not be characterised as a war of “democracy vs autocracy”. Much of it has centred on the belief that Ardern betrayed the courageous Ukrainians fighting the autocratic Russians for their chance at a democratic future.

Democracy is undeniably part of the story of the war in Ukraine. Remember, it was not the threat of Nato expansion that sparked Russian action against Ukraine in 2014 but, rather, the prospect of Ukraine aligning politically with the European Union.

Importantly, though, the Kremlin’s fear was not democracy in Ukraine per se. Historically, Ukraine has never been close to reaching the kind of reform which would justify calling it a “liberal democracy”. Under Ukrainian President Volodymyr Zelensky, it was not threatening to change this any time soon.

Furthermore, the EU’s once-lauded ability to facilitate democratic transitions has been stymied by domestic issues. What Russia feared most was the perceived threat of having a disloyal regime in Ukraine, the most important country in its self-anointed “zone of privileged interests”.

After witnessing the Arab spring and the toppling of numerous authoritarian regimes across the Middle East and North Africa – especially the brutal demise of Muammar Gaddafi in Libya – the Kremlin chose to see the prospect of having a Western-aligned democratic Ukraine on Russia’s border as something of a Trojan horse.

Furthermore, the broader claim that Russia and China represent a serious global challenge to democracy seems to be tenuous. Russia and China are increasingly authoritarian states that have taken action to undermine liberal democracies.

But the problems in liberal democracies at the moment have more to do with internal issues – such as political polarisation, the rise of extremism and demagoguery and increasing economic hardship – rather than any external interference.

Ardern’s refusal to reduce the Ukraine war to a simple dichotomy should be applauded. She is one of only a few leaders resisting the urge to view the Ukraine war or China’s rise in the Indo-Pacific as simple tales of good vs evil. Such Manicheanism is a hallmark of neoconservatism.

The truth is that Russia’s decision to invade Ukraine is complex and involves numerous factors beyond the lens of democracy vs autocracy. For instance, the “civilisational turn” that has occurred in Russia is extremely important.

When Russian President Vladimir Putin returned to office in 2012, he began explicitly evoking the concept of Russia as a unique, non-European civilisation to justify his strongman rule at home and reassert Russia as a significant global power.

Civilisational states are fundamentally exclusive and insular. While that might result in more domestic cohesion and regime stability, internationally it can be extremely divisive. As foreign policy expert Jeffrey Mankoff argued, Putin’s desire was for Russia to embark on a grand national cause of making Russian civilisation “a cultural and geopolitical alternative to the West”.

Ukraine became an important component of the idea of Russian civilisation, particularly as Russia identifies the medieval state of Kievan Rus as its historical starting point. The politics of historical memory have been front and centre of Russia’s belligerence against Ukraine.

What started as Russian action framed on the pretence that it wanted to “help the Ukrainian brothers to agree on how they should build and develop their country” has morphed into questioning the very existence of Ukraine as a nation.

History, especially when combined with the assertion of a unique civilisation, can be a trap. It might give leaders and politicians significant power at home, but it can also unleash forces they cannot control. As political scientist Maria Mälksoo argues, states that mobilise historical memory run the risk of actually doing “self-inflicted harm to the object of defence in the very effort to defend it”.

The war in Ukraine is further complicated by the legacy of colonialism and postcolonialism. Russia’s denial of Ukraine’s sovereignty and its invasion is, at its heart, an act of recolonisation. Some have likened this to reconstituting the Russian Empire.

All of this is occurring against the backdrop of great power politics. Although hard power largely went out of fashion as a key aspect of understanding international relations in the initial post-Cold-War era, it would be foolish not to realise that power relations are crucial to the calculations of states. Changing regional geopolitical contexts should not be dismissed as unimportant.

Rightly or wrongly, Russia and China interpret Western action as an effort to undermine their power. The United States casts a long shadow and can be ignorant about how this affects non-allies, especially great powers that are notoriously fearful and paranoid.

Ardern made a compelling point when she said diplomacy cannot succeed “if those parties we seek to engage with are increasingly isolated and the region we inhabit becomes increasingly divided and polarised”.

Make no mistake – in the context of the Ukraine war, Russia is undeniably in the wrong. The Ukrainians deserve to win and come out of the conflict with a liberal democratic future and a clear pathway to EU membership.

However, pushing simplistic narratives about the conflict and broader international issues will inadvertently result in simplistic policies that do not grasp the complexity of these issues. On this point, Ardern is right to try to offer a more nuanced view.

Nicholas Ross Smith is an adjunct fellow at the University of Canterbury, New Zealand

China ‘not to blame’ for African debt crisis, it’s the West: study

• High-interest loans from private Western lenders account for most of the burden on countries in Africa, Britain’s Debt Justice charity finds
• Campaigners are calling on the G7 to stop using Chinese loans as ‘distraction’ while letting their own banks, asset managers and oil traders off the hook

Jevans Nyabiage

African countries owe three times more debt to Western banks, asset managers and oil traders than to China, and are charged double the interest, according to a study released on Monday by British campaign charity Debt Justice.

This is despite the growing accusations by the US and other Western countries that China’s lending is behind the debt troubles faced by some African countries.

The study said just 12 per cent of the continent’s external debt was owed to Chinese lenders, compared to 35 per cent owed to Western private creditors, according to calculations based on World Bank data.

Interest rates charged on private loans were almost double those on Chinese loans, while the most indebted countries were less likely to have their debt dominated by China, the study found. The average interest rate on private sector loans is 5 per cent, compared to 2.7 per cent on loans from Chinese public and private lenders.

The study was released ahead of the G20 finance ministers meeting from July 15-16 in Indonesia. Campaigners are calling on Western countries, particularly Britain and the US, to compel private lenders to take part in the Common Framework – the G20’s latest debt relief scheme.

The study found a dozen of the 22 African countries with the highest debts were paying more than 30 per cent of their total external repayments to private lenders. These included Cabo Verde, Chad, Egypt, Gabon, Malawi, Morocco, Rwanda, Senegal, Tunisia and Zambia.

South Sudan is one of the hardest hit in this category, with 81 per cent of its debt repayments going to private creditors, and just 11 per cent to China. Ghana is also paying more than half of its external debt obligations to the private sector, with 11 per cent going to China and the rest to multilateral lenders and other governments.

Chinese lenders accounted for more than 30 per cent of loan payments in six of the 22 most indebted countries – Angola, Cameroon, Republic of the Congo, Djibouti, Ethiopia and Zambia.

The study calculations showed 59 per cent of Angola’s foreign debt payments serviced Chinese lenders. And Djibouti – where China has poured billions of dollars into building ports and free trade zones, and also set up its first overseas military base – makes 64 per cent of its external debt payments to Beijing.

Debt Justice policy head Tim Jones said Western leaders blamed China for debt crises in Africa, “but this is a distraction”.

“The truth is their own banks, asset managers and oil traders are far more responsible but the G7 are letting them off the hook.”

Jones said China had taken part in the G20’s Debt Service Suspension Initiative during the pandemic, while private lenders did not. “There can be no effective debt solution without the involvement of private lenders. The UK and US should introduce legislation to compel private lenders to take part in debt relief,” he said.

The G20 initiative, unveiled in May 2020, provided 48 economies with temporary cash-flow relief, delivering about US$12.9 billion in debt service payments by the end of December when it ended.

But the exclusion of private and multilateral lenders meant countries that applied to take part in the initiative saw just 23 per cent of their external repayments suspended.

In 2020, Zambia became the first African country to default – on US$3 billion in dollar-denominated bonds – in the pandemic era. It is now in the process of restructuring about US$17 billion in external debt as a precondition to securing IMF loans of US$1.4 billion.

Lusaka owes Chinese lenders about US$6 billion, which has gone into building mega projects including airports, highways and power dams.

The initiative’s replacement, the G20 Common Framework, allows participating countries to agree to restructure debt with bilateral lenders and the International Monetary Fund (IMF). The nations are then supposed to seek similar debt treatment from private sector creditors.

Only Chad, Zambia and Ethiopia have so far applied for help through the Common Framework, but all are still waiting for debt relief.

The G7 countries have blamed China for the failure of the debt relief programme to help heavily indebted countries avoid default, doubling down in May with a statement from the finance ministers of the world’s seven most advanced economies.

“With regards to the implementation of the Common Framework, it remains essential that all relevant creditor countries – including non-Paris Club countries, such as those like China, with large outstanding claims on low-income countries facing debt sustainability challenges – contribute constructively to the necessary debt treatments as requested,” they said.

Yungong Theo Jong, head of programmes at the African Forum and Network on Debt and Development (Afrodad), said multilateral and private lenders remained the biggest creditors to African governments.

“Loans from China have increased Africa’s indebtedness, but by far less than Western lenders. All lenders must participate in debt relief. Western governments must lead the way by making private lenders cancel debts,” he said.

In the eyes of others, the US is not the benign power it thinks it is

Dani Rodrik

• America’s foreign policy goals are often self-serving, while its designs for a rules-based international order primarily reflect the interests of its business and policy elites
• What’s good for the US may not be good for the world. The sooner Washington recognises that, the better

When I started teaching at Harvard’s Kennedy School in the mid-1980s, competition with Japan was the dominant preoccupation of US economic policy. The book Japan as Number One by Harvard’s premier Japan expert at the time, Ezra Vogel, set the tone of the debate.

I remember being struck back then by the degree to which the discussion, even among academics, was tinged by a certain sense of American entitlement to international pre-eminence. The United States could not let Japan dominate key industries and had to respond with its own industrial and trade policies – not just because these might help the US economy, but also because the US simply could not be No 2.

Until then, I had thought that aggressive nationalism was a feature of the Old World – insecure societies ill at ease with their international standing and reeling from real or perceived historical injustices. American elites, rich and secure, may have valued patriotism, but their global outlook tended towards cosmopolitanism.

But zero-sum nationalism was not far from the surface, which became clear once America’s place atop the global economic totem pole was threatened.

After three decades of US triumphalism following the fall of the Berlin Wall, a similar process is now playing out on a vastly greater scale. It is driven both by China’s rise – which represents a more significant economic challenge to America than Japan did in the 1980s and is also a geopolitical risk – and Russia’s invasion of Ukraine.

The US has responded to these developments by seeking to reassert its global primacy – a goal American policymakers readily conflate with that of establishing a more secure and prosperous world. They regard US leadership as central to the promotion of democracy, open markets and a rules-based international order.

What could be more conducive to peace and prosperity than that? The view that US foreign policy goals are fundamentally benign underpins the myth of American exceptionalism: what is good for the US is good for the world.

While this is undoubtedly true at times, the myth too often blinds American policymakers to the reality of how they exercise power. The US undermines other democracies when it suits its interests and has a long record of meddling in sovereign countries’ domestic politics. Its 2003 invasion of Iraq was as clear a violation of the United Nations Charter as Russian President Vladimir Putin’s aggression against Ukraine.

US designs for “open markets” and a “rules-based international order” often primarily reflect the interests of US business and policy elites rather than smaller countries’ aspirations. And when international rules diverge from those interests, the US simply stays away (as with the International Criminal Court, or most of the core International Labour Organization conventions).

Many of these tensions were evident in a recent speech by US Secretary of State Antony Blinken on America’s approach to China. Blinken described China as “the most serious long-term challenge to the international order”, arguing that “Beijing’s vision would move us away from the universal values that have sustained so much of the world’s progress”.

Blinken is correct that many of the elements of the post-World-War-II order, such as the UN Charter, are not purely American or Western. But it is far from certain that China poses a greater threat to those truly universal constructs than the US does. For example, much of the trouble that US policymakers have with Chinese economic practices relates to domains – especially trade, investment and technology – where universal rules hardly prevail.

According to Blinken, the US “will shape the strategic environment around Beijing to advance our vision for an open, inclusive international system”. Again, who could possibly oppose such a vision?

But China and many others worry that US intentions are much less benign. To them, Blinken’s statement sounds like a threat to contain China and limit its options, while bullying other countries into siding with America.

None of this is to claim an equivalence between current US actions and Russia’s invasion of Ukraine or China’s gross human rights violations in Xinjiang and land grabs in the Himalayas and South China Sea.

For all its faults, the US is a democracy where critics can openly criticise and oppose the government’s foreign policy. But that makes little difference to countries treated as pawns in America’s geopolitical competition with China, which often struggle to distinguish between the global actions of major powers.

Blinken drew a clear link between China’s authoritarian practices and the country’s presumed threat to global order. This is a mirror-image projection of America’s belief in its own benign exceptionalism. But just as democracy at home does not imply goodwill abroad, domestic repression need not inevitably lead to external aggression. China also claims to be interested in a stable, prosperous global order – just not one arranged exclusively on US terms.

The irony is that the more the US treats China as a threat and attempts to isolate it, the more China’s responses will seem to validate America’s fears.

With the US seeking to convene a club of democracies openly opposing China, it is not surprising that President Xi Jinping cosied up to Putin just as Russia was preparing to invade Ukraine. As the journalist Robert Wright notes, countries excluded from such groupings will band together.

To those who wonder why we should care about the decline of America’s relative power, US foreign policy elites respond with a rhetorical question: would you rather live in a world dominated by the US or by China?

In truth, other countries would rather live in a world without domination, where smaller states retain a fair degree of autonomy, have good relations with all others, are not forced to choose sides, and do not become collateral damage when major powers fight it out.

The sooner US leaders recognise that others do not view America’s global ambitions through the same rose-tinted glasses, the better it will be for everyone.

Dani Rodrik is professor of international political economy at Harvard University’s John F. Kennedy School of Government. Copyright: Project Syndicate

Russia-Ukraine war: Europe failed by not building alliances with Asia

Chandran Nair

• After outsourcing its security to the US and Nato, Europe now finds itself in a pseudo-proxy war. Asia should learn from this lack of strategic leadership
• European leaders lacked the spine to embrace China, India or Russia with an independent foreign policy – instead drinking deeply from America’s warlike doctrine

Lost in the fog of war is the truth that the Russia-Ukraine crisis has revealed the failings of Europe’s leaders on two fronts.

First, why did they not see this coming? Because they are in denial about the nature of their subservient relationship with an increasingly reckless and hegemonic United States.

Second, why do they maintain this relationship with America? Because they lack the spine to embrace the alternative: an independent foreign policy on a more equal standing with the rest of the world – especially with Asian powers such as China and India.

If Europe, with its history of triggering global wars, is to move towards peace once more then it must first face up to these leadership failings and chart a new course based on something more than narrow alliances rooted in a shared European heritage and race.

Wars must be avoided at all cost and it takes true leadership to maintain peace, not ideological posturing and pandering to special relationships. Countries always act in their self-interest – the protection of national security, for example – but in this instance the leaders of Europe failed to protect their citizens by imposing a national security threat upon Russia.

This is not a defence of Vladimir Putin. Instigating war and its horrors is unforgivable, and he must be held responsible for his actions. But we should not be blindsided: it is a geopolitical reality that any country would feel its national security was at risk when faced with a military coalition, which it cannot join, expanding towards its borders. This type of provocation is intolerable and Western leaders should not have expected it to be endured.

Yet many in the West still arrogantly believe all other nations must mirror their ideologies and are deserving of antagonism if they do not. This stance is naively insufficient for a multipolar, globalised world that is sadly also overmilitarised – something Europe should have already recognised.

If China, India or Venezuela began a process similar to Nato’s expansion with their neighbouring countries, it would cause geopolitical uproar – the mere presence of Chinese ships at the edges of the South China Sea triggers anti-China sentiment from the West.

War is avoided through diplomacy, communication, and an acute understanding of the fears and concerns of others. Leaders in Asia understand this, for the most part, given the wars the region has endured – many of which have their roots in the colonial era – and as such, they invariably push for peace and not military escalation. Witness Southeast Asia, which since the end of the Vietnam war – fought to liberate the country from centuries of foreign domination – has not seen a major conflict. Despite the presence of foreign military powers like the US, the region has maintained a non-aligned foreign policy and tried not to take sides.

America’s determination to dominate Asia militarily has typically been justified by a carefully crafted and crafty narrative that Asian nations are apparently incapable of building and enjoying peace without the military presence of the most warlike nation on the planet.

Europe’s leaders have gone to great lengths to conceal their lack of leadership by transforming Putin into a pariah and even calling for regime change, instead of pursuing a diplomatic approach. In doing so, they and the international commentators that echo them abdicate responsibility for not pre-empting the war; they can instead lay the blame entirely at Putin’s door and paint him as a movie-style villain. So it was with Saddam Hussein, Muammar Gaddafi, and anyone else seen as unsavoury by the West. The same treatment is now being meted out to Chinese President Xi Jinping. But diplomacy means forging friendships, even with enemies, to avoid catastrophic outcomes. This simple logic and calculus was cast aside as Europe outsourced its security to the US and Nato.

Which leads us to the first front: European leaders were helpless to prevent this war from occurring because of their coveted close relationship with America.

This relationship is ultimately predicated on a shared European heritage and the post-war ideological unification of the US and Europe as leaders of the “free world”, which the rest of the world now largely sees as an outdated coalition of Caucasian nations spearheaded by the Anglosphere. Europe – Britain especially – has desperately tried to maintain this “special” relationship with big brother America in recent decades, leading many European leaders to outsource decision-making to Washington on issues of geopolitical importance, from interventions in the Middle East to trade agreements, economic restructuring, and sanctions. This in turn further emboldened the US and encouraged its belligerence.

It has also prevented Europe’s leaders from creating an independent strategic foreign policy approach that places them in control of their own regional security. A key tenet of this strategy should have been cultivating ties with Russia and China 20 years ago to build world peace. Instead, the Europeans chose to tether themselves to an insecure America and allow themselves to be drawn into an ideological partnership of global dominance and supremacy, based on Cold War mindsets – a position that is singularly unsuited to guarding Europe’s self-interest and its critically important role in the emerging post-Western world.

Europe saw China simply as a trading partner and a threat, rather than an ally. More often than not, it chose to follow the prescriptions of the US – a country that has been at war for much of its existence, and that allows domestic politics to become the catalyst for militaristic intervention in other parts of the world.

Rather than working with Russia to prioritise peace, European leaders drank deeply from US doctrine and ultimately capitulated to it. Now, Europe is caught in a bind: looking to American foreign policy as its North Star when this was what got it into this unnecessary war in the first place. After all, the US is unlikely to come to Europe’s aid if the conflict worsens – funding and weapons are one thing, but ground, naval, and air support against another nuclear power is not on America’s agenda. And there is no reason to expect a domestically insecure Joe Biden will sue for peace when he is desperate to strengthen his position with the American public by showing how tough and righteous he is. If that means war in Europe against one of America’s detractors, so be it.

The business of war

European leaders should have been acutely aware that the US has the largest military-industrial complex in the world. Since 9/11, one-third to one-half of the Pentagon’s US$14 trillion in spending has gone to for-profit defence contractors, while dozens of members of Congress and their families own millions of dollars’ worth of stock in these companies. America is the most capitalist country in the world, and the arms industry is big business. But the market can only grow if conflict and military expenditure increase around the world. For European leaders to be aware of this and not act accordingly is a failure of strategic leadership. There is a lesson here for Asia, too: make military spending a large part of your national budget and economy, and ruin awaits on many fronts.

Why did the Europeans not act on this knowledge? Answering this question brings us to the second front: they do not have the backbone to stand up to Washington and sacrifice elements of their relationship with the US, which offers them a disproportionate place in the global hierarchy of nations, so they can be free of American influence in their affairs. By the same token, how much longer will Japan kowtow to a US foreign policy that is increasingly dictated by neocons and instead forge one that is independent and built with its Asian neighbours?

It should have been clear to the Europeans since the turn of the millennium that America’s political system was beginning to become a destabilising global force, rather than a unifying one. Yet no European leader has taken concrete steps to limit US interventionism or create an independent foreign-policy approach. The result is that Europe now finds itself in a pseudo-proxy war with Russia – a conflict that is right on its doorstep, not in some faraway place in the Middle East or Asia.

Where is the European leader willing to call this out with one simple statement? And better yet, follow it up with diplomatic action? What is the principle that European leaders think they are defending when negotiations break down and lives continue to be lost?

Moral posturing

Europe’s lack of leadership was not much talked about before the crisis. But just as war has united the West in its desperation to maintain the anachronistic “struggle of light over dark” (an actual quote from The Economist to describe the conflict) that so defines its moral posturing, so has it given voice to those observers and commentators seeking to bring periphery conversations to the surface. European leaders should heed such opinions, even if they are a departure from the actions of their forebears.

Europe should come to terms with the end of empire, and centuries of privilege, and reach out to Asian powers that are going to shape the course of the 21st century. That means making allies of China, India, and Indonesia – total population 3 billion – rather than condescendingly viewing them as former colonies not worthy of a “special” relationship. They may not share a common European heritage, but do such archaic and even racist ideas still matter in the 21st century?

Europe needs to come to terms with the harsh reality that America is not on its side, because what drives the US geopolitically is ultimately domestic gain – both bolstering its position as global hegemon and retaining its economic privileges, such as its dollar as the world’s reserve currency. Asian leaders, meanwhile, need to understand that despite the significant build-up of US military power in the region over the last half-century, it is not in their best interests to allow “Nato-isation” to occur. Asia needs to work collectively to curb US military expansion and make sure Washington understands that the region is not made up of client states, and is in fact capable of maintaining peace without outsourcing its security like the Europeans.

After spouting righteous rhetoric against Russia and Putin, European leaders are finding themselves face-to-face with militaristic escalation that they are not equipped to deal with. This is not a war that generals marched into; it is a war that politicians lacking strategic leadership skills allowed to happen. Across Asia, political leaders need to be aware of this all important lesson.

Chandran Nair is founder and CEO of the Global Institute for Tomorrow and member of the Club of Rome’s executive committee. He is also the author of ‘Dismantling Global White Privilege: Equity for a Post-Western World’ and ‘The Sustainable State: The Future of Government, Economy and Society’.

American aggression needs to be reined in for the good of Asia and the world

 Chandran Nair

• Decades of exceptionalism, ideological obsessions and a deep-rooted sense of superiority is catching up with the United States
• The world needs to appreciate the rapid shifts in the global order arising from the US’ toxic domestic situation, and how its political elite distracts people from its decline with an aggressive foreign policy anchored in outdated doctrines

US President Joe Biden visited Asia last week and triggered panic across the region when he spoke out of turn and unproductively about war with China.

At a time when the world is reeling from the effects of the war in Ukraine and when so much of the region is still trying to recover from the pandemic, including the economic fallout, Biden chose not to speak about peace and collaboration but instead deliberately fuelled tensions. This is unconscionable.

It is high time for leaders of the region to no longer remain passive to such bullying and reckless behaviour, or worse, exude subservience in the presence of Western leaders by outsourcing the management of regional issues and differences to them, including bilateral tensions.

Biden’s comments brought into clear focus Washington’s fearful obsession over the rise of China, which is an unprecedented challenge to its assumed role as global leader. This challenge is made much more uncomfortable for the US and its Western allies by the fact China is a non-Caucasian civilisation, and its rise upturns 400 years of Western dominance of world affairs, often referred to as the “rules-based” global order.

But the truth is that decades of exceptionalism, ideological obsessions and a deep-rooted sense of superiority is catching up with the US. There exists a major frontline within the nation that is tearing it apart but about which its leaders remain in full denial.

As soon as Biden returned to the US after his warmongering mission to Asia, he was greeted by the latest in an ongoing tragedy at home – 21 people, including 19 children, killed by a domestic terrorist armed by America’s home-grown merchants of death, the gun industry.

Biden’s response was to scold the nation, by lamenting, “When are we going to stand up to the gun lobby?” A plea of a helpless man, coming from supposedly the world’s most powerful leader.

What, therefore, gives Biden the right to posture as the leader of the so-called free world? His statements are primarily based on an outdated reliance on projecting America’s military might and apparent willingness to go to war to defend the world against the US version of the “bad guys”. This is despite its defeat in all the major wars it has triggered over the last half a century, from Vietnam and Iraq to Afghanistan. All examples of people seeking to be free of foreign occupation.

The long-held fear across Asia of a reckless militaristic empire starting a war here is quickly being replaced by a new realisation and awakening: that all of these machinations are the desperate throes of a nation that is entirely unwilling to share power with others, and is internally wracked by conflict and social decline.

The US thus desperately seeks refuge or even reassurance in its self-appointed role as leader of the “free world”, driven by a desperate desire to retain its privileges by projecting aggression across the world.

Much of this hinges on the leveraging of fig leaves, such as leading the fight against authoritarian states, defending democracy or standing up for universal values and providing security guarantees for the nations of the world.

But in reality, the US is seemingly incapable of protecting even its children. So, Biden came to Asia, spoke and war mongered but he did not conquer. People across the world have begun to see through the veneer of American exceptionalism, as the bullying and intimidation has persisted for too long.

The hypocrisy is far too obvious to explain away. This is a tipping point, as formerly colonised populations around the world – subservient through centuries of indoctrination – are now beginning to see the emperor with no clothes on.

To understand the implications of the decline of the US on the rest of the world, one has to understand the true nature of the broken state of affairs. This means looking well beyond the supposed might of the American economy.

The reliance on economic performance indicators to assess the strength of the US and amplify its power, glosses over deep-rooted structural failings, and this is a grave mistake – and even a form of denial. These are wholly superficial and inappropriate indicators of a society’s well-being and resilience.

A true reflection of the realities in the US would include the following indicators:

• The unabated gun violence and the killing of its children, to which a corrupt political system has been unresponsive. A nation that cannot protect its children from such wanton slaughter is immoral and has no right lecturing the world about values, human rights or democracy.

• The continuing large-scale systemic discrimination of black people, including killings such as the one in Buffalo.

• An entrenched industrial military complex (IMC) that thrives on selling and exporting guns, weapons and war.

• A growing right-wing white supremacist movement now led by the former President who only last week sharing a post speaking about an impending civil war – incitement?

• Extreme and growing inequalities, yet a completely detached belief among the majority that a “thriving economy”, which in reality serves the very rich, represents success and progress. This is worsened by the degree of idolisation in American media.

• The widespread and slow death being inflicted on millions of Americans by the nature of their consumption habits, abetted by the structure of the US’ unfettered capitalist economy – in particular the stranglehold of the junk food and pharmaceutical industry. The Covid-19 pandemic further exposed the severity of this underlying health crisis.

• A public that is inured to foreign conflict and has scant regard for the death and destruction inflicted on non-Americans by the country’s never-ending wars.

This is not to say other countries do not have some of these issues. But none exist on this scale. Most importantly, no other country with these large scale internal challenges borne out of political failure and societal fissures seeks to relentlessly occupy the higher moral ground and impose upon or dictate to others in order to maintain economic dominance; not even China.

The world, and especially a fast-growing Asia, needs to appreciate the rapid and fundamental shifts in the global order arising from the US’ toxic domestic situation, and how its political elite distracts the world and Americans from its decline (and obvious lack of moral authority) with an aggressive foreign policy anchored in outdated doctrines. Their recklessness threatens all of us. This dangerous trend will reach a potentially catastrophic tipping point far more significant than those expressed at the World Economic Forum last week in response to the war in Ukraine.

It is time for the world, perhaps led by the large nations of Asia, to demilitarise the world of the American Military Industrial Complex (AMIC) by developing a 21st century doctrine of security and peace that is not tethered to the war machine that is the AMIC.

It is an oxymoron to talk about peace and security guarantees and expect to be led by a nation that has been at war for 93 per cent of the time since its independence and has the world’s largest defence spend – more than the next nine countries combined. With so much capital, the door is wide open for vested interests, and the defence industry has dangerously become a significant player in the US economy.

Europe is only beginning to understand, albeit rather late in the day, the consequences of outsourcing its security to a war industry with such interests, given that the AMIC now appears to have seen an opportunity to prolong the conflict in Ukraine and serve its interests.

The AMIC poses an existential threat to world peace because it has partially captured the political economy of the most powerful country on the planet.

Five of the nation’s biggest defence contractors spent a combined US$60 million to lobby the US government in 2020. The media worships military people – who have investments in defence stocks – and have them on their payroll. Many politicians have stakes in the military industrial complex, and the tech and finance industries are embedded in it.

For this reason, the US is believed to be one of the biggest threats to world peace. The military industrial complex has become so large that it does not care about winnable wars. It simply needs wars, period.

Overcoming the challenge presented by the AMIC can be compared with the task of decarbonising the world through a move towards more non-fossil fuel energy sources. It will be a long march, but the world did not start by asking the fossil fuel industry to come up with solutions, and nor does the world ever expect the sector to be fully supportive.

Instead, new frameworks and doctrines have been created for a new major transformation of our energy future. We need the same to tackle the AMIC and its natural penchant for war.

This is a massive industry with tentacles everywhere in the US, including among lawmakers, media groups and the tech and financial industry. Overseas it is omnipresent, with an unknown number of subsidiaries around the world, aided by corrupt governments who are clients.

It is no secret that defence budgets in most developing countries are where large-scale corruption is most prevalent. It is a money spinner just like the fossil fuel industry, and taming it will require bold new approaches about shaping the future of the world.

It will need to start with a revolution of the mind among Asian leaders, including the complete rejection of their subservience to the US and its Western alliance. Asian leaders should recognise that by curbing their need to emulate or seek guidance or legitimacy from America in foreign policy affairs, they will reduce opportunities to feed the AMIC and thereby sow the seeds for a less risky future based on regional self-determination.

This is the first step towards rebuffing the confrontational ideologies of the USA and it Western allies and for building a new framework that will once and for all toss the tensions of the past into the dustbin of history, which have been so expertly used by Western powers to continue to divide the nations of Asia.

This will allow for regional heavyweights like China, Japan, Korea, India, Indonesia to come together and map a new future for the region rather than continue to be actors in a divide and rule, neocolonial geopolitical theatre marshalled by the US.

It will compel a rising power like China to honour its commitment to a peaceful rise as the demilitarisation of the AMIC becomes an enabling doctrine for a new regional peace and security pact. This outcome is not a far-fetched undertaking, as the example of Asean has proven.

While far from perfect, Asean has slowly and surely built a doctrine of its own that has allowed for peaceful coexistence in a way that also works to improve the livelihoods of its people. It has, most importantly, avoided war despite the presence of the AMIC.

The behaviour of the Korean and Japanese leaders during the visit of the US president was awkward to watch and not befitting of these two great nations and their cultures and seemed to belong to a bygone era. Imagine a peace and security treaty involving China, Japan and Korea that does not involve current day security guarantees by the US and its Western allies, which to date have only served to divide and heighten tensions.

Asian leaders need to realise that a post-Western world is being born, and that means drawing new lines of alliances and steering a new course, which will be a departure from the highly dangerous drivers of US and Western intentions in the region, rooted in preserving an old archaic and even imperial order.

Ideally, Europe will be a willing partner, but it now seems unlikely as the war in Ukraine and the billions of dollars of US military aid flowing in is only going to make Europe behave like client states of the US, Nato and the AMIC.

Chandran Nair is the founder of the Global Institute for Tomorrow and ExCom member of the Club of Rome. He is also the author of ‘Dismantling Global White Privilege: Equity for a Post-Western World’ and ‘The Sustainable State: The Future of Government, Economy and Society’.

Chandran Nair is the founder of the Global Institute for Tomorrow and ExCom member of the Club of Rome. He is also the author of ‘Dismantling Global White Privilege: Equity for a Post-Western World’ and ‘The Sustainable State: The Future of Government, Economy and Society’.

China's Gen Z has the power to make or break Western brands

BLOOMBERG

They’ve got money to burn, eschew foreign labels, and are driven by a swelling sense of nationalism that can ensnare even the biggest global brands. They’re China’s Generation Z and they’re shaking up shopping.

The 270-million-strong cohort born since the mid-1990s is already flexing their power: they have the fastest spending growth out of any generation in China, are top buyers of cosmetics and tourism services, and have upended online shopping.

Their influence will only grow, with spending set to rise fourfold to 16 trillion yuan (S$3.3 trillion) by 2035, according to China Renaissance.

Meeting the demands of the young, nationalistic and exacting Gen Z will require an immense shift in how Western companies - who have bet that decades of demand for foreign goods will endure - do business in China and poses an unprecedented challenge to their market dominance.

It also sets the stage for a rise in domestic companies to meet growing appetite for, and pride in, China-made goods.

“Gen Z is the first real consumer generation in China,” said Mr Zak Dychtwald, founder of trend research company Young China Group. “Similar to the baby boomers in the US, China’s Gen Z are redefining the country’s consumer economy and will continue to do so in every single life stage that they go through.”

It’s not just the sheer size of the market that sets them apart from their peers. Unlike their counterparts in the US or Europe, who grew up during the global financial crisis and its aftermath, China’s young shoppers have known nothing but sustained growth - the pandemic is the first major blight on the economy in their lifetimes - and many were only-child ‘emperors,’ doted upon by parents willing to spend to meet their every need.

That’s now reflected in their money habits. About a quarter of China’s Gen Z don’t save at all, compared with the global average of 15 per cent, according to an OC&C report.

They’re also more likely to be impulsive with their purchases. The term Moonlight Clan has been coined to describe people who spend their entire paychecks each month - or an entire lunar cycle, according to McKinsey & Co.

The group also prefers to spend their money on themselves, and is less inclined to have kids or buy property, which are becoming increasingly unaffordable.

But what truly sets China’s Gen Z apart from previous generations, and poses the greatest threat for multinationals from Sony Group Corp to Christian Dior SE and Nike Inc is their growing nationalism, fuelled by Beijing’s desire to flex the country’s rising global clout.

It has put governments and companies on an increasingly delicate footing, lest they find themselves at the centre of a storm of criticism.

Young, proud Chinese drove the backlash against Hennes & Mauritz AB and Nike after the companies denounced the use of cotton from the Xinjiang region due to accusations of human rights violations against its Uighur minority. H&M, in particular, has become a cautionary tale with its business in China yet to recover.

The gap left behind paved the way for local rivals like Anta Sports Products Ltd and Li Ning Co - who support Xinjiang cotton - to surpass them in sales by introducing products targeting local consumers, including apparel emblazoned with Chinese characters and sneakers inspired by the Forbidden City.

By the end of January 2022, Anta and Li Ning dominated 28 per cent of sneaker sales, 12 percentage points higher than before the Xinjiang outcry.

It’s a shift echoed across other consumer segments, with local drink maker Genki Forest to cosmetic brand Perfect Diary gaining market share and customer loyalty in sectors that used to be dominated by international names.

Local brands’ “key focus is maintaining their brand position relevant to the Chinese consumers, while global brands must balance not only the trends in China, but also globally to ensure it does not become different things in different countries,” said Mr Kenny Yao, a director at AlixPartners Shanghai, a consulting firm that advises clients on developing businesses in China.

Unimpressed

Unlike their parents, China’s Gen Z tends to be less impressed by products simply because they’re foreign. Western trends dominated the market once China started to open up to foreign investment in the late 1970s.

It sparked an influx of brands from McDonald’s Corp to Toshiba Corp, Adidas and Starbucks Corp. That helped fuel China’s rise into the world’s second-biggest economy.

Ms Sarah Lin, a 22-year-old student in Beijing, said her parents still get excited by items that only have foreign-language labels because they assume it’s a premium product.

But during the time she studied abroad, she realised many brands considered high end in China are mass-market names at home. Now, she prefers to research products and is happy to buy domestic names due to their improving quality and designs that appeal to her.

“In the past, people would think those who wear Li Ning can’t afford Nike, but foreign brands are not as mysterious to me as to my parents,” said Ms Lin. “I don’t want to pay any premium for a brand’s origin, I’ll only pay for its designs and value for money.”

Meeting the needs of more discerning customers is also proving a challenge for some foreign brands. Each year, companies from LVMH to Zara roll out collections of handbags to sweaters to mark the Lunar New Year, but their styles - usually emblazoned with traditional folk art and lots of red and gold - are often made fun of by young Chinese consumers who want to express their individual style rather than buy mass-produced fashion that treats them as a monolith.

Other firms have been more targeted in appealing to Gen Z. Prada SpA’s recent Lunar New Year collection involved a competition for under-30s artists to have their work judged and chosen for a project. Toothpaste brand Crest used a multi-day immersive event that had users solving a murder mystery as part of a new-product launch.

Growing pride

A growing sense of cultural pride has developed alongside a maturation of Chinese brands. And while the shift to buying local isn’t unique to China, few places in the world have the extensive government support and state media apparatus to push the idea on to consumers so comprehensively.

The revival of hanfu - a traditional, flowing style of clothing characterised by a robe worn over a skirt - is a case in point.

Initially a small-scale movement in the mid-2000s, it’s grown into a market worth 10 billion yuan a year and is drawing investor interest. Designer Shisanyu raised over 100 million yuan in an April last year, led by Loyal Valley Capital and Bilibili, while Sequoia-backed retailer Shierguangnian has emerged as a top seller.

Like their peers worldwide, China’s Gen Z grew up online and the country’s use of social-commerce has become an increasingly important tool for brands.

The sales channel, which allows users to buy products through social media platforms and interact directly with live streamers, is expected to grow into a more than US$1.6 trillion (S$2.2 trillion) business by 2025.

That’s about half of total e-commerce sales and up from one-fifth in 2019, according to China Renaissance.

It’s proved to be a fertile source of revenue for domestic brands. Florasis, a Chinese cosmetics brand founded in 2017, has become the country’s biggest, supported by livestreamers who demonstrate products and engage with users.

But Western firms, not as accustomed to the method of selling, have had more mixed results.

An hour-long livestream by Louis Vuitton in 2020 drew viewers, but also complaints that the setting was too low-end for the luxury label. Both domestic and foreign firms are also grappling with mounting short-term headwinds as China’s pursuit of Covid Zero leaves it stuck in a cycle of lockdowns and reopenings that are taking a growing economic and social toll.

The youth jobless rate hit a record in April and Gen Z has the most conservative view on increasing spending this year, according to an OC&C report in December.

Demanding tastes

Still, Gen Z’s increasing power means their preferences will re-shape the consumer sector for decades to come.

“Foreign brands need to be aware that, compared with older generations, China’s young shoppers are even more demanding,” said Ms Veronica Wang, partner at OC&C Strategy Consultants.

They “can no longer enter the market arrogantly, saying ‘hey this is our cool product, take it’. They need to try understanding better what Chinese consumers want and like, embracing Chinese culture and being more open-minded to adjust themselves to fit in the local market.”

Ms Wang highlighted South Korean eye-wear brand Gentle Monster as an overseas label able to gain ground with younger Chinese consumers through constant product innovation and themed stores, which speak to Gen Z’s desire for a memorable experience.

Foreign companies will also need to empower their teams in China, who can better read local consumption patterns and make rolling out new products more efficient.

“The greatest misperception of China is that modernisation means Westernisation,” said trend researcher Mr Dychtwald. “That’s been the gamble for all brands.”