1.
What Does France's President Want to Achieve in China?
On
the eve of President Macron’s visit to China, the relationship is caught
between expectations and frustrations.
The Diplomat January 03, 2018
President
Emmanuel Macron has chosen: He will go to China for his first visit to Asia. To
those around him, who argue for a strengthening of ties between Paris and
Beijing, it is an obvious choice. China is the second largest economy in the
world; its overwhelming “Belt and Road” project seems to offer unlimited
opportunities. And of course, for France, which has the ambition to play a
global role on the international scene, China seems to be the right partner: a
nuclear power and permanent member of the United Nations Security Council, with
a veto right that weighs on all major decisions. Moreover, for a French
president who wants to assert himself as the antithesis, if not the equal of
U.S. President Donald Trump, “mighty China” offers the opportunity to play that
role.
Beijing
knows all this, and needs allies to face an American power that, contrary to
the initial hopes of the Chinese leadership, might be unpredictable but has not
given up its engagement in Asia. And not everyone in Paris appreciates the
growing uneasiness and tensions in the region, far beyond the nuclear crisis in
the Korean peninsula, around China’s future role. Confident in this lack of
awareness, Chinese leaders look forward to a reception where flattering could win
the support of a French president whose model is de Gaulle, and who hitherto
has tended to focus — and know — much more about Europe and its environment
than about faraway Asia.
The
ambition of the Chinese leadership is to persuade the French president to
position himself on issues like North Korea as a “go-between,” defending
“dialogue” against the more “aggressive” posture of the United States, and to
implicitly recognize by his choices the pre-eminence of China in the region.
Macron may be all too ready to welcome that role.
Yet,
everything might not be that simple in this first visit. Opportunities and
commonalities do exist. However, mutual expectations are far from coinciding
perfectly. And the frustrations that also characterize the Sino-French relationship
have not disappeared.
For
Beijing, France is never better than when it confines itself to its role of
“old friend of China.” This role should be that of the constant supporter of
“multipolarism,” against the “hyperpuissance” (a French concept) of the United
States. This, without stressing the fact that, if China is favorable
to the “democratization of international relations,” its only objectives
are actually to increase its room for maneuver by driving a wedge between
like-minded liberal democracies, and to establish itself as the uncontested
leader of the Asian pole.
This
ambition however, does not correspond to the evolution of the contemporary
world. It cannot serve the interests of France in an area where the will to
find support against a destabilizing and too assertive Chinese power is the
common point of all of Beijing’s neighbors. In other words, for Paris, which
indeed is not an irrelevant player in the region, the question of “siding” with
or against China, and its strategic and economic consequences, cannot be
avoided.
France
is the only European country with direct territorial interests in the
Asia-Pacific. By multiplying military cooperation deals, with Australia,
Indonesia, or India for example, or maybe tomorrow with Japan, France also
plays a major role in defense capacity building in the region. As such, and
because of its position in a post-Brexit European Union, and at the UN, what
France does is of interest to countries whose primary strategic objective
is to balance a Chinese power obsessed by its own strategy of “rejuvenation”
through assertiveness.
The
second factor of frustration, of which the French president seems much more
conscious as it directly relates to France socio-economic issues, is that of
the persistent lack of balance in economic relations and trade. China may be
perceived as an economic superpower; however, it still needs high growth to try
to preserve political stability. Beijing is not ready to give up any export
market, nor any strategy of division between individual members of the European
Union to gain better access to benefits.
In
terms of investments, the PRC, whose party-state has the capacity to act
without checks – contrary to norms-abiding democratic governments – is
also ready to seize all opportunities that can feed its own development,
particularly in advanced technologies, at the fringe of the civilian and the
military.
Faced
with these undisguised ambitions, Macron is the first to plead with such
clarity for more reciprocity, and France supports the strengthening of
regulations for Chinese investments in sensitive sectors. Similarly, with
regard to the Belt and Road Initiative, the flagship project of President
Xi Jinping to achieve his “China dream,” France remains cautious and aware of
its many financial and governance pitfalls.
Beijing
– as with any other partners – would like the Franco-Chinese relationship to be
entirely at the service of its own priorities. On the contrary, the strategic
and economic interests of France in Asia are multiple and cannot be limited to
an exclusive partnership with the People’s Republic of China. The successes of
the new French presidency’s “Asian policy” will be appreciated only
in light of the capacity that Paris will demonstrate — by concrete actions
— to maintain a necessary balance between the powers of the region.
Project Syndicate Jan 24, 2018
In
pursuit of another "grand coalition" government, Germany's Social
Democrats and Christian Democrats have published a provisional agreement
outlining their proposed agenda. But the program party leaders have devised
seems to have been inspired by a wish not to offend rather than a desire to
confront the country's challenges.
MUNICH
– Germany’s Social Democrats (SPD), the Christian Democratic Union, and the
CDU’s Bavarian sister party, the Christian Social Union (CSU), have agreed to
pursue another “grand coalition” government, and have published a 28-page
agreement outlining their proposed policy agenda.
The
agreement comes months after an election in which the SPD and CDU/CSU advanced
rather different economic-policy views. Whereas the SPD has focused on the need
for more redistribution and public spending, the CDU/CSU has promised “tax cuts
for all” and a more restrictive refugee policy. The question now is whether a
coalition comprising such ideologically divergent forces can truly prepare
Germany for the challenges that await it.
In
the months and years ahead, German policymakers will need to manage the
transition into the digital era, in order to preserve the country’s
competitiveness. They must also stabilize the welfare state at a time of rapid
population aging. And they must develop a rational migration policy. On top of
this full domestic agenda, many are looking to Germany to keep the European
Union together.
As
many commentators have pointed out, Germany’s new government will benefit from
a budget surplus, because the booming economy, coupled with peculiarities of
the German tax code, has boosted government revenues over the last four years.
Even by pursuing the balanced-budget policy described in its provisional coalition
agreement, the government will have room either for more spending or tax cuts
amounting to €46 billion ($56 billion) – around 0.3% of GDP – over four years.
According
to the coalition agreement, €36 billion of the surplus will be allocated to
various outlays such as transfers to families, higher agricultural and regional
subsidies, housing-construction incentives, roads and related infrastructure,
universities and school buildings, and even the military.
That
leaves just €10 billion for tax cuts, which will take the form of reductions in
the solidarity surcharge (Solidaritätszuschlag), a special income tax
that was introduced in 1991 to finance German reunification. The grand
coalition envisions abolishing this tax for everyone except the top 10% of earners,
who generate more than half of the revenue from it.
But
when one considers the effects of “bracket creep,” the outlook for taxpayers
worsens. Unlike most other developed countries, Germany’s tax system lacks an
automatic adjustment mechanism to prevent inflation from pushing households
into higher tax brackets. And while discretionary adjustments do take place,
they hardly provide full compensation to countless households that end up
paying more tax than they should.
In
fact, at the current rate of bracket creep, Germany’s tax revenues will
increase by roughly €50 billion over the next four years. Halving the
solidarity surcharge no earlier than 2021 will come nowhere close to offsetting
that.
All
told, nobody is particularly enthusiastic about the coalition agreement,
including the SPD. Despite the coalition agreement’s emphasis on spending, the
SPD fears that participating in another grand coalition will further damage its
public standing, and drive more of its voters into the arms of the radical left
or the far-right Alternative für Deutschland (AfD).
For
others, the problem is not politics, but the agenda itself: for all of its
specific provisions, it achieves very little. When spread over four years, an
additional €2 billion spent on defense, €600 million on universities, and €4
billion on housing will make little difference.
3. U.S.
Tariffs, Aimed at China and South Korea, to Hit Targets Worldwide
The New York Times JAN. 23, 2018
A
solar panel project, at left, in Wuhan, China. The United States accuses China
of swamping the market with cheap, subsidized solar panels. But those panels
are increasingly made in other countries.CreditKevin Frayer/Getty Images
DAVOS, Switzerland — When the
Trump administration unveiled tariffs on imports of solar panels and washing machines — industries
dominated by Chinese and South Korean businesses — they deliberately applied
them to products from around the world.
The move on Monday, in the eyes of United
States trade officials, reflected the complexities of modern global trade.
Though companies from just two countries account for the majority of both
sectors, those firms have set up factories in multiple locations across
national borders.
As
a result, the tariffs will affect factories and workers in a variety of
countries, reflecting the globalized supply chains and byzantine corporate
ownership structures that are at the heart of many ubiquitous products.
The
administration’s decision was followed on Tuesday by the announcement that a
group of 11 countries would resurrect the Trans-Pacific Partnership, the pact
that Mr. Trump pulled out of a year ago. The agreement, expected to be signed
later this year, further complicates the president’s trade policies.
The
solar panel case in particular has been a case study in the complexity of
global trade. Suniva, one of the American solar companies that had sought the
tariffs, filed for bankruptcy protection last year, citing the effects of Chinese
imports. But the majority owner of Suniva is itself Chinese, and the company’s
American bankruptcy trustee supported the trade litigation over the objections
of the Chinese owners.
Here
is a rundown of the wide-ranging impact the new tariffs may have.
Will there be a backlash?
Possibly
— but not without costs for all the countries involved.
China
and South Korea could take their complaints to the World Trade Organization,
which arbitrates international trade disputes.
If
the W.T.O. sided with those countries, the United States would be under considerable
pressure to back down. If it did not, there would be two major sets of
consequences. For one, the World Trade Organization could greenlight other
countries’ setting similar trade limits. More broadly, it would raise the
question of whether the United States accepts the organization’s decisions — Robert E.
Lighthizer, the United States trade representative, has argued for years that
such decisions should, essentially, be advisory.
The
United States market has long been very attractive to foreign companies, and
not just for its large and affluent set of consumers. Its tariffs on imports
are much lower than those of most other countries, and it also has relatively low
sales taxes. But President Trump has regularly questioned whether existing free
trade agreements are in the best interests of the country, making it possible
that such favorable terms may erode.
Still,
China and South Korea have leverage of their own. They are big importers of
American-made machinery and agricultural products, and China, in particular,
has long been a big buyer of soybeans and other crops from states that
supported Mr. Trump in the 2016 election.
Indeed,
as an enormous consumer of all types of global goods, China could also easily
punish American companies by opting to buy from international competitors. For
instance, it could opt for Airbus planes over Boeing’s or crack down on General
Motors while leaving Volkswagen alone.
A
trade fight would, however, be painful. Both China and South Korea export a lot
more to the United States than they import, meaning higher tariffs could hit their economies harder.
Who else could be affected?
The
United States accuses China of swamping the market with artificially cheap,
subsidized solar panels. But increasingly, those panels come from elsewhere.
Steep tariffs imposed in 2012 on solar panels imported from China have made it
cheaper for Chinese companies to assemble the panels in factories elsewhere
before shipping them to the United States.
Countries
like Malaysia and South Korea now account for most of the United States’ solar
imports, according to data from Global Trade Atlas, a database maintained by
the research firm IHS Markit.
