GOOD MORNING FROM LONDON
#1 US-INDIA MILITARY LINK UP
#2 MORE ON SEMI-CONDUCTORS
#3 THE IMF ON BRI
#4 THAW IN CHINA-AUSTRALIA RELATIONS?
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#1 NEW YORK TIMES 19 OCTOBER 2023
US INCREASES ENCIRCLEMENT OF CHINA
When the Salvor, a U.S. Navy rescue and salvage ship, pulled into a port in India’s southeast this summer, the job at hand was patching up the aging vessel. But there was a bigger mission, too: opening another door for a U.S. military trying to stretch out across the Indo-Pacific and counter Chinese power.
The Navy ship was the third in a year to arrive at Kattupalli, an industrial hamlet north of Chennai with a state-of-the-art shipyard. And this time, the visit marked the start of a five-year ship repair agreement — a tangible step toward defense cooperation for two nations pushed together by geopolitics and Washington’s desire to court and strengthen a rising Asian giant…
The deal, which includes another defense contractor in Mumbai, is part of a strategy the Pentagon calls “places not bases” — pursuing access to more sites where the United States has no military installations of its own. In the vast Indo-Pacific, such connections could prove important for deterring China and, in the event of a conflict, sustaining a U.S. mobilization.
GRAHAM PERRY COMMENTS;
THE US AND CHINA ARE AT ODDS. THE TWO COUNTRIES VIE WITH EACH OTHER TO SECURE AN ADVANTAGE. WHILST THE US HAS AN ESTABLISHED MILITARY PRESENCE IN THE SOUTH CHINA SEA AND THE TAIWAN STRAITS CHINA’S NAVY DOES NOT HAVE A PRESENCE ON THE EAST OR WEST COASTS OF THE US. MORE EVIDENCE OF THE US BUILD UP IS APPARENT IN THE US-INDIA AGREEMENT TO PERMIT THE INDIAN PORT OF KATUPALLI TO BE USED TO SERVICE THE US NAVY
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#2 FOREIGN AFFAIRS 19 OCTOBER 2023
SEMICONDUCTORS AGAIN
The United States and China are trapped in a feedback loop of action, counteraction, and hostile suspicion, but their markets are heavily enmeshed. And great-power competition and interdependence are combining to generate new problems. Companies such as the Chinese telecommunications giant Huawei could create a global telecommunications infrastructure with Chinese characteristics. The United States and Europe could do to China’s central bank reserves what they did to Russia’s. If China embargoed or attacked Taiwan, disrupting the operations of Taiwan Semiconductor Manufacturing Company, the world’s largest producer of semiconductors, the results would affect the entire world economy. Information networks, financial flows, and supply chains fuelled explosive economic growth, but they also created new geopolitical vulnerabilities. The United States now has to manage its economic security in a highly interdependent and highly competitive world, where countries are inevitably tempted to exploit the weaknesses of others.
GRAHAM PERRY COMMENTS;
THIS COLUMN HAS FOCUSED ON THE SIGNIFICANCE OF SEMICONDUCTORS. THE US ECONOMY IS VERY VULNERABLE TO AN INTERRUPTION TO THE SUPPLY OF SEMICONDUCTORS FROM TAIWAN. IT IS THIS – MORE THAN ANY INVASION BY CHINA – THAT COULD QUICKLY BRING THE US ECONOMY GRINDING TO A HALT. CHINA MOVES CAREFULLY. IT WILL NOT OVERPLAY ITS HAND BUT THE US KNOWS THAT THERE ARE LIMITS TO THE EXTENT TO WHICH IT CAN THREATEN CHINA.
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#3 ON THE BELT AND ROAD INITIATIVE
THE IMF EXONERATES CHINA FROM CHARGE OF DEBT-TRAP DIPLOMACY – SCMP
China’s lending to Africa may have grown rapidly in the past two decades but Beijing is not the main cause of debt distress in sub-Saharan Africa, the Washington-based International Monetary Fund (IMF) said in its Regional Economic Outlook for Africa report. China’s share of the total sub-Saharan Africa external public debt rose from less than 2 per cent before 2005 to about 17 per cent – or US$134 billion – in 2021, according to the IMF.
The World Bank’s International Debt Report said sub-Saharan Africa’s total external debt stood at US$790 billion in 2021, a figure that more than doubled in about a decade. Through the Belt and Road Initiative, China provided African countries with a new source of infrastructure financing that funded mega projects, such as ports, railways, power dams, highways and bridges. Beijing was now the largest bilateral official lender to countries in the continent, the fund said.
But China’s share in sub-Saharan Africa’s overall sovereign debt, or public debt, was still relatively small – about 6 per cent of the total – the IMF said.
“It is noteworthy that the debt owed to China has not been the principal contributor to the region’s public debt surge in the past 15 years,” the IMF said in a side report about sub-Saharan Africa’s economic relations with China that it released early this month.
Saying China is not the main problem in sub-Saharan Africa’s debt overhang may debunk criticism from the West that lending by Beijing has driven up debt to unsustainable levels for a number of nations in Africa. Critics, especially the US, accuse Beijing of engaging in “debt trap diplomacy”, leaving countries saddled with loans they cannot afford.
China has denied the debt trap allegations. Instead, it has pointed the finger at multilateral financial institutions and commercial creditors which account for more than 80% of sovereign debt for developing countries.
In many ways, the Belt and Road’s first decade has been a startling success. More than 150 countries have signed up to the scheme, including 18 of the European Union’s 27 members. That helped make China the developing world’s largest creditor, boosting its diplomatic and geopolitical clout. It has also brought concrete benefits to many developing countries, where roads and railways would otherwise have gone unbuilt.
GRAHAM PERRY COMMENTS;
AT LAST THE IMF EXONERATES CHINA FROM THE ALLEGATION THAT THE BELT AND ROAD INITIATIVE IS MERELY DEBT-TRAP DIPLOMACY. MORE THAN 150 COUNTRIES HAVE SIGNED UP TO BRI INCLUDING 18 OF THE EU’S 27 COUNTRIES. ROADS AND RAILWAYS HAVE BEEN BUILT ON LAND WHICH – BUT FOR THE BRI – WOULD HAVE REMAINED MUD TRAILS AND SWAMPS.
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#4 THAW IN CHINA-AUSTRALIA RELATIONS
Australia’s prime minister, Anthony Albanese, announced on Sunday that he would visit China early next month, meeting with its top leader, Xi Jinping – another sign of easing tensions between the two nations, along with the recent release of a detained Australian journalist and a breakthrough on talks aimed at removing high tariffs on Australian wine that China imposed three years ago.
China is Australia’s biggest overseas market, with exports and services to China forming nearly one-third of Australia’s overall trade. But that relationship suffered a heavy blow in April 2020, after the prime minister at the time, Scott Morrison, called for an independent investigation into the origin of Covid-19. Beijing retaliated with high tariffs on Australian barley, beef, cotton, coal and wine.
In 2019, Australia had shipped wine with a value of $800 million to China; sales there dropped 97% in the first year after tariffs were imposed. As storage tanks overflowed, farmers faced a choice between selling grapes at a huge loss or keeping costs to a minimum and not harvesting.
GRAHAM PERRY COMMENTS; THIS DEVELOPMENT IS ALSO PART OF THE CONTINUING WORLD STRUGGLE BETWEEN CHINA AND THE US. THE FOCUS WILL NOW SWITCH TO THE US/UK/AUSTRALIA AGREEMENT TO BUILD FOUR NUCLEAR POWERED SUBMARINES WHICH IT IS INTENDED SHOULD PATROL IN THE SOUTH CHINA SEA, CHINA VIEWS THIS AGREEMENT AS PRIMARILY AIMED AT CHINA
