Tiptoeing to Freer Markets – China and the Shanghai Pilot Free Trade Zone

Shanghai Waterfront

 

I apologize to all those who regularly read these posts.  They have, unfortunately, failed to be regular recently.

But I have been out there in the wide world – first in Russia at the St. Petersburg Summit and all last week in China. I shall report more on both these trips in the near future.

I did want to report, however, on an interesting experiment now underway – at least as of Sunday September 29th – China’s Shanghai pilot free trade zone (FTA).The FTA, it appears, is the cutting edge of the new leadership’s effort to bring more market and less regulation to China’s economy.  The FTA is 29 square kilometres in the north eastern section of Shanghai – stringing together areas of docks, hangars and warehouses in the Pudong district.

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At The G20 St. Petersburg Summit

For the last several days I have been in St. Petersburg Russia to attend the G20 Leaders Summit.  A number of colleagues have joined me here at the media center at the Summit.  I thought before the release of the Communique and related documents that I would hold a series of interviews with colleagues to get their take on the Summit.

First a conversation with Yves Tiberghien a Senior Fellow at the Global Summitry Project at the Munk School of Global Affairs and the Director of the Institute of Asian Research at the University of British Columbia.

Yves …

 

 

The Stars Appear to Not Be Aligned – The G20 Summit in St. Petersburg

So putting the last items in the bag for the trip to St. Petersburg.  This one looks like trouble.  Five years in to G20 Leaders Summits and St.  Petersburg would appear to have all the characteristics of a major distraction.  This would not be the first.  I certainly remember how the Greek Euro crisis drove France’s G20 Agenda at Cannes right off the cliff.  It would appear that Syria – and the use of military force in retaliation for the use of chemical weapons –  could be even more of an agenda killer.

 

Operating from Weakness, Not Strength – the CPC and Xi Jinping

Xi Jinping

Chris Buckley of the NYT reopened yesterday in the main western press the question of Document No 9 (sounds like a title to a movie).  This document first identified, apparently, by the Economist is supposedly a “secret” CPC document, according to Buckley, that has “undertaken a “mass line” campaign to enforce party authority that goes beyond the party’s  periodic calls for discipline.”  The document calls on the Party to oppose the promotion of western constitutional democracy. The narrative suggests that leftists in the Party have also picked up the anti-western critique to oppose the market reforms that Xi and the leadership are pressing for.

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Moving Forward Incrementally – The G20 Continues

Finance Ministers and Central Bankers G20 Meeting Moscow July 2013

Finance Ministers and Central Bankers Moscow July 2013 Image Credit: x.dawn.com

The Finance Ministers and Central Bankers of the G20 met as scheduled in Moscow at the end of the week.  This periodic meeting is just a part, though a key part, of the “iceberg” that is global summitry today.  A fascinating factoid – this meeting of “finance” officials does not generally include the central bank officials when it gathers at the actual G20 Leaders Summit.  Given the key role that central bankers have been playing in trying to “right” the global economy, that probably should come to an end.  But in any case their communiqué underlined the Iceberg Theory that I and others have identified for some time.

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Expanding the Media Platforms at Rising BRICSAM

Alan Alexandroff, currently the Director of the Global Summitry Project at the Munk School of Global Affairs at the University of Toronto,  has been blogging at Rising BRICSAM for some five years.  By way of the announcement below, the blog master now signals that Rising BRICSAM is taking a big leap forward with the expansion of the blog to include video posts as well as the traditional blog posts.

In addition with this announcement the blog master is signalling that interviews as well as commentary will soon be a part of Rising BRICSAM.

 

Engaging in Concert – The Fifth S&ED

 

This coming week the fifth round of the S&ED (Strategic and Economic Dialogue) between China and the US will be held in Washington.  Many have characterized this as a monumental “bureaucratic circus”  with each side bring as many as two hundred officials to these now annual meetings.  And at times these events indeed have appeared to be like that – a kind of gigantic bilateral “meet and greet”.

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And Why There; and Why Now and Why Them – The G8 at Lough Erne Norther Ireland

So so much for a return to the informal.  There was all this talk at Camp David about reducing the length of communiqués – to go back to an earlier time of G7 simplicity and face-to-face leadership.  One of my good colleagues, Stewart Patrick at the Council of Foreign Relations (CFR) in a blog post at the Internationalist his blog at CFR (I should note the post was prepared pre-summit meeting) fell prey to host hype and the general view from the established states of the G8 of the value of the oldest of informals the G8 – or more precisely the G7 and the G8.     Stewart Patrick chiming in on  the continuance of the G7/8 declared:

One of the G8’s obvious advantages over the G20 is its modest size, which enables the unscripted, candid dialogue that world leaders crave.  The first summit of this kind, a G-5 meeting … remains the model for this sort of interaction.  After intimate discussions over the world economy, the leaders produced a concise declaration of only fifteen paragraphs.  David Cameron, this year’s host, is anxious to go back to those first principles.  There will be no lengthy communique.  No armies of officials telling each other what each of their leaders think.  As last year’s Camp David summit, leaders will roll up their sleeves, outside the prying eyes of cameras and reporters, and get down to business.

Well, I suppose the best you can say, was – that was then, and this is now.  So the Camp David communiqué – a relatively svelte 39 paragraphs over a mere eight pages and accompanied by serious declarations of  the end of lengthy communiqés, proved not to be. The Lough Erne communiqué is a rather “plump” one might even venture to say “bloated” 95 paragraphs over 22 pages with appendices that include a “G8 Action Plan to prevent the misuse of companies and legal arrangements”, another annex the “G8 Open Data Charter”, a section on “Collective Actions” and a G8 Lough Erne Declaration, a document on tax evasion.  In all we have at least 33 pages – and a host of declarations.

Now before I try to summarize what this cascade of documents suggests about the G8, it is worth noting that Patrick attempts to characterize the global summit landscape. It is, “dare I say” a rather US-centric vision of “let a hundred flowers bloom”.  As Patrick describes it, and in the effort tries to put Ian Bremmer’s rather bleak “G-zero” world  to rest:

In fact, the “G-Zero” label is misleading – a barren caricature of the rich landscape of international cooperation that actually does exist.  What is distinctive about our era is not the absence of multilateralism, but its astonishing diversity and flexibility.  When it comes to collective action, states are no longer focusing solely or even primarily on universal, treaty-based institutions like the United Nations – or even a single apex forum like the Group of Twenty (G20).  Instead, governments have adopted an ad hoc approach, coalescing in a bewildering array of issue-specific transient bodies depending on their situational interests, shared values, and relevant capabilities.  Welcome to the “G-X” world.

The dismissal of the G-Zero world is probably right, and the “bewildering array of issue-specific and sometimes transient bodies” may indeed also be correct but this is nothing I think we should be celebrating.  As I have argued in past blog posts the reality of US leadership is that it unfortunately has found the G20 really heavy work and so has joined in in the policy generating process in a variety global summit settings that has, if nothing else, undermined the G20 legitimacy as the apex of at least global economy summitry and left most of wondering where are we going to get international policy outputs from in global summitry.

The fact is if you read the G8 Lough Erne communiqué, the rather hortatory nature of so many elements of the declaration leaves one – well “cold”.  What’s the likelihood of implementation? And how many of these declarations need to be taken to the G20 to obtain the necessary “buy-in” to constitute a collective push to advance a particular policy?

Now I am not one to generally question agendas in the global summitry context but this summit really suffers from a major disconnect between what the officials spent, I suspect, months preparing and what the public got to see and hear at the Leaders Summit.  The communiqué is a vast display of tasks, declarations and policy initiatives with a focus on what the host David Cameron declared was the focus of this summit – trade, taxes and transparency – and a day and half of combat and cajoling with Russia over the Syria conflict.  Syria, however, is assigned to the back of the communiqué (though it is a subject mentioned in the preamble).  If you miss it, Syria is examined in paragraphs 82 to 87.

Though again I am not one to spend too much time worrying at who is at the table, I do tend to agree with comments recently from former national security advisor Zbigniew Brzezinski.  For him the notion that Syria is being discussed with the former imperial types – the UK and France – much despised in the region as opposed to the wider circle – dare I say  – the G20 – makes little sense.  But then Zbig has little good to say about current US policy which he believes is too little too late.  The US needs to focus on a peace setting, though stabilizing the sides – making it clear that neither can obtain their objectives through the use of force – is probably a critical element.  As for that I don’t sense the Russians are prepared to “play ball” yet on that front.  The horror goes on.

With the Lough Erne Summit now in the books we are back to the same overhyped diplomatic-speak document from the G8. While the incremental policy making  of officials is critical, the Eight have done themselves few favors by the disconnect between the Leaders activities and the that of their officials.

And one last thing is rather pathetic statement in the communiqué about their own accountability – once again highlighting the limit to the transparency of leaders.  The Report is described at paragraph 51 as a:

… comprehensive report covering the 56 development commitments that were the subject of the 2010 Comprehensive Accountability Report and the additional commitments Leaders made at Muskoka, Deauville, and Camp David Summits.

And their conclusion (subject to wading through the Accountability Report 2013):

The Report shows good progress in areas such as supporting maternal and child health; access to clean water; improving food security; and the helping to build peace and security. particularly in Africa.  But it also identifies that more action is required to deliver on our promises in some areas.

So for the ordinary citizen – there is no transparency offered by the G8 in the communiqué.  We deserve better.

Image Credit: insideireland.ie

Without Trust and Without Paranoia: US-China Relations

It was a time for informal face-to-face contact – just ended – the California summit between Presidents Xi and Obama. There is a strand of global summitry that emphasizes contact between leaders. Such contact can be disastrous of course. Kennedy’s encounter with Khrushchev in Vienna in June 1961, left leaders with misconceptions about the other that ultimately led each to take steps that raised threats and crisis. Let’s hope that nothing like this occurs as a result of this summit. And the reality is that the ‘world of summits’ has changed mightily. The two presidents will see each other again shortly in St. Petersburg Russia at the G20 Leaders Summit. And they will meet again shortly thereafter in Asia at the EAS.

What can we draw as the consequences of this informal meeting of the leaders of these two great powers? Ostensibly the two leaders are searching for a “new type of great power relationship” (xinxing daguo guanxi) – The announcement of this informal summit and the search for a different kind of relationship – read all that as an effort by IR types to avoid what international relations theory tells is the likely outcome of rivalry, friction and conflict between an established superpower and a rising one. Thus many of the foreign policy experts have indeed waded in to describe what might result from such a meeting – and give some expression to the ongoing Sino-American relationship.

Stephen Walt at Foreign Policy, the consummate realist suggested a modest result:

Neither Obama nor Xi can alter the core interests of the two countries, or wish away the various issues where those interests already conflict or are likely to do so in the future. The best they can achieve is a better understanding of each other’s red lines and resolve and some agreements on those issues where national interests overlap. In this way, each can hope to keep things from getting worse and at the margin make relations a bit warmer. … But even if Obama is successful this weekend, this effort is unlikely to prevent Sino-American rivalry from intensifying in the future. The basic problem is that the two state’s core grand strategies are at odds and good rapport between these two particular leaders won’t prevent those tensions from reemerging down the road.

Walt acknowledges the description just referred to is a pessimistic one (he does describe a far more optimistic alternative) based on “… Sino-American rivalry in the future no matter how well Obama and Xi (or their successors) get on this weekend. And so for Walt “intense competition is likely”.

Then there is Walt’s FP compatriot – Dan Drezner. Now Drezner is no realist – and in fact in some ways leans more to a neo-liberal framing of international relations (I suspect Dan may not buy this). But Drezner reflected on this upcoming summit at his blog (I anticipate that this blog post is not his final word on this) by referencing Harvard’s Iain Johnston in a piece Jognston wrote recently for International Security examining the growing Chinese assertiveness – which Johnston largely rejects. The lesson for Drezner is China is no revisionist power. As he argues, “Since 2008, China has had multiple opportunities to disrupt the US-Created international order, and Beijing has passed on almost all these opportunities.” So for Drezner the landscape is filled with collaborative opportunities between the US and China:

Now let’s be clear – China is doing almost all of this to advance its own narrow self-interest. None of the above means that China is suddenly going to embrace the US perspective on human rights or the South China Sea. Still, there are a healthy number of issue areas where China’s interests are pretty congruent with the United States, and where China has taken constructive policy steps. … My main point here is that China is a great power that is inevitably going to disagree with the United Sattes on a host of issues. China is not, however, a revisionist actor hell-bent on subverting the post-1945/post 1989 global governance. To use John Ikenberry’s language, recent Sino-American disputes are taking place within the context of the current international order. They are not about radical changes to that international order. Indeed, contrary to the arguments of some, the current system has displayed surprising resilience.

In a curious way this perspective resonates if only a little with a far more pessimistic view – that expressed most pointedly by Yan Xuetong the Dean of the Institute of Modern International Relations at Tsinghua University. A strong nationalist, and realist, Yan Xuetong is not well known outside China-expert circles. FP did themselves and their publics a great favor in printing a post by the Dean entitled, “Let’s Not be Friends“. For some time now Yan Xuetong has been arguing that leaders and their officials should not promote a vision of a trust-based collaborative relationship – those arguing for it will only be disappointed. The US and China are competitors. But that need not prevent incidents of collaboration:

States cooperate not because of mutual trust, but because of shared interests that make cooperation safe and productive. China and the United States should look hard to identify what these incentives and shared interests are – and focus on developing positive cooperation when their interests overlap or complement one another, such as on denuclearization of the Korea Peninsula, and preventive cooperation when their interests conflict, such as on preventing collisions in [the] South China Sea. … Preventive cooperation differs from positive cooperation because it is based on conflicting — rather than shared — interests. … Areas of friction are likely to become more common in the coming years, but the two countries can skillfully manage their competition if they work to minimize these emerging conflicts — not only in the military sector but also in nontraditional security sectors such as energy, finance counterterrorism in the Middle East, anti-piracy in Somali Sea, and even climate change. … Encouraging China and the United States to prioritize preventive cooperation does not mean they should abandon efforts to build mutual trust. However, it does mean the two countries can stabilize their strategic relations without it. The worst-case scenario is not that China and the United States is not that China and the United States will face more strategic conflicts in the coming years, but that they never learn how to develop cooperation based on the lack of mutual trust, thus allowing a small conflict to escalate into a major one.

I suppose it is a framing a little like: “don’t trust but verify”. The dilemma I fear however is that all this realist formulation will lead – at least in US circles if not Chinese ones – to analogize the relationship to something like the cold war contestants, even as they draw distinctions between the two sets of rivals. Simplistic competitive framing is too easy and too familiar. The Washington-types that always lean on “hedging” and insist on greater military preparedness will target the competitive and forget the collaborative. Inexorably the US and China will be characterized as the new cold war rivals.

I have argued for the necessity of wedging cooperation into the relationship and rejecting any logic to US-Soviet competition. In the past I have argued that “both friend and foe” (yi di yi you) is the better framing for the great power relationship than “neither friend nor foe” (fei di fei you) – a framing often used by Chinese experts. Starting at the post, “Not Required to Choose – A Strategy for US-China Relations” I have argued that defining the relationship as including a collaborative dimension is necessary to avoid sliding into a more difficult unpleasant great power relationship. Yes, it will be difficult especially for US decision-makers to retain the partnership aspect – that is both collaborative and competitive. -Without that collaborative element to the relationship, however, Washington leadership will be all too willing to accept just a rivalrous competitive relationship with China. It is after all politically so much easier.

Let’s not make it easy for the claque.

Image Credit: channelnewsasia.com