Ming Pao Articles Quoting Me About Quad and International China Strategy

Ming Pao in Hong Kong on March 31 and April 2 published articles on the Biden Administration’s China strategy and the Quad. Two sections quote me. The gist: The Administration is working with others who share concerns about China’s increasingly pushy posture in economic relations, in the South China Sea, in Hong Kong or in international organizations.  Rather than letting China isolate each country, we can take a common stance on the “rules of the road.”

The reporter also asked about whether India’s purchase of S-400 missiles from Russia will disrupt our cooperation. While Congress passed a law in 2017 authorizing sanctions for such purchases, the Adminsitration will likely just disregard the purchases and pursue strategic interests with India. Nonetheless, the purchase is a reminder that India’s interests are generally aligned with those of the US but India will always go its own way.

What I sent them in English:

—  The Quad and other meetings with Europe and friends in Southeast Asia, represent a chance to work with others who share concerns about China’s increasingly pushy posture in economic relations, in the South China Sea, in Hong Kong or in international organizations.  Rather than letting China isolate each country, we can take a common stance on the “rules of the road” be they trading rules, human rights or behavior in diplomatic relationships.  China will feel increased pressure because its practices under the current administration are out of step with what the rest of the world sees as fair, and that “rest of the world” talks to each other about China.
—  India has long purchased Russian weapons so it shouldn’t be surprising that they want to buy these missiles –a sale first announced in 2018. Unfortunately, Congress had passed a law in 2017 called the Countering America’s Adversaries Through Sanctions Act (Caatsa), that requires the President to invoke sanctions against countries that buy Russian weapons.  At the time, under President Trump, the White House and State Department cited the law as potentially unconstitutional in restricting the President’s authority in foreign affairs.  Thus, it remains to be seen whether the new Administration will invoke sanctions, use the threat to pressure India, or ignore the sale and see if Congress responds.

And the Chinese pages from Ming Pao on 31 March and 2 April 2021:

China’s Economy — still no solid signs of reform

FinalAnswersforRenDa–ChongyangInstitute    This spring, at the request of the Chongyang Institute of Finance at Renmin University, I wrote a few paragraphs on the Chinese economy in advance of the National People’s Congress.    As I head out to Shanghai and Beijing late this month, including an event with the Chongyang Institute, I thought I’d post my answers to their questions.  They were written for a Chinese audience and are a bit repetitive so here’s the summary (slightly updated):

—  China’s leaders have identified the reforms necessary for continued long-term growth:   rebalance to put more money in the hands of consumers and let markets play a greater role.

—  At present, growth of household disposable income is more important than GDP growth; indeed, with growing incomes Chinese families can live better even as the economy slows down.

— China’s decision to use market mechanisms more is also spot on; liberating energies of an educated population, of the new service industries, and of China’s growing army of creators is much more important than protecting existing behemoths and state enterprises.

—  Unfortunately, the numbers don’t show the reform yet.  The GDP continues to growth faster than household disposable income, through the first quarter of this year.   

—  China is borrowing more and investing more but growing less.  That’s not a good sign: there’s more going in, less coming out of the economy.

—  Also not a good sign is that economic stimulus, steel production, and financial markets are being managed by government intervention rather than subjecting them to more market discipline.

So, we watch, wait and anticipate the readjustment of the Chinese economy.    It hasn’t happened yet. The longer it is postponed, the more difficult and bumpy the transition will be.