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International Players Threatening the Power and Influence of the Dollar

By
Dr. Usman
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For many years, the U.S. dollar has dominated as the primary reserve currency for lending, investing, and international commerce. It has been said that the United States enjoys the “exorbitant privilege” of the supremacy of the dollar. However, there has been growing speculation about the prospect of a new reserve currency to replace the dollar as the global order evolves and new economic powers emerge.

A few possible candidates might emerge as the next reserve currency. The euro, the second-largest reserve currency in the world after the dollar, is one of the most often referenced. One benefit of the euro as a prospective reserve currency is that the European Union, a sizable and stable economic group, supports it. The financial system supporting the euro is likewise well-established and frequently traded.

The Chinese Yuan, which has recently gained popularity in foreign markets, is another challenger. The Yuan has been attempting to become global, and since 2016, it has been a part of the IMF’s basket of reserve currencies.

China is attempting to build its worldwide financial infrastructure to support the Yuan’s usage, which is already utilized for trade and investment on a global scale.

However, the Yuan and the Euro face formidable obstacles in their quest to replace the dollar as the global reserve currency. Regarding the euro, the continued economic and political difficulties that the European Union is now confronting have sparked concerns about the stability and long-term prospects of the currency. High unemployment, slow economic development, and political unpredictability have all been problems for the eurozone, raising doubts about its future as an economic unit.

China’s autocratic regime and lack of openness raise concerns regarding the Yuan’s dependability and credibility. Some analysts are concerned about the Yuan’s viability as a reserve currency due to China’s adoption of economic practices such as currency manipulation to obtain a competitive edge.

There are other possible candidates as well for the position of the following reserve currency. Some have proposed that as digital currencies are independent of any one government or central bank, such as Bitcoin or stablecoins, they may act as a global reserve currency. However, these currencies are not viable choices in the near future due to their volatility and lack of mass acceptance.

The replacement for the dollar will probably not be a single currency but rather a more varied and multipolar system of reserve currencies. There has been talk of extending the use of Special Drawing Rights (SDRs), the IMF’s “reserve currency of last resort,” to stimulate international commerce and investment. Instead of depending entirely on the dollar, governments might diversify their reserves and keep a variety of alternative currencies. With this strategy, the danger of currency swings would be reduced, and the global financial system would be more stable.

When debating the future of the reserve currency system, there are more elements to take into account in addition to these prospective rivals. The U.S.’s position in the world economy is one of these elements. The supremacy of the dollar is closely tied to U.S. power and influence, despite the fact that the U.S. is no longer the only superpower.

The rising popularity of alternative payment methods like digital currencies and blockchain technologies should also be taken into account. These systems might upend established financial structures and have an effect on the function of reserve currencies in the world economy.

In the end, there is no simple solution to the difficult issue of which currency will succeed the dollar as the main reserve currency of the globe. The world is undoubtedly changing, and the existing system of reserve currencies may not be viable in the long run. As a result, politicians and economists need to keep looking at possible fixes and system replacements.

It is crucial to understand that any modifications to the system of reserve currencies will take time and involve extensive coordination and collaboration across nations. Political, economic, and social variables will influence the success of any prospective alternatives to the dollar. Therefore, policymakers and economists must collaborate to create a thorough and inclusive strategy to meet the difficulties and possibilities brought on by the shifting global order.

Any new reserve currency system must also be developed to support increased economic development and financial stability while also taking into account the worries and requirements of all stakeholders. To do this, it will be necessary to weigh conflicting interests and goals carefully and be open to engaging in constructive conversation and cross-sector cooperation.

A variety of variables, including economic trends, geopolitical events, and technological advancements, will influence the future of the reserve currency system.

We can contribute to ensuring a more stable, sustainable, and successful global financial system for future generations by keeping watchful and proactive, as well as by working together to identify and address possible risks and opportunities.

The adoption of a world reserve currency produced by a multilateral organization, like the IMF, has been proposed as one possible answer. This currency, which would be used for international commerce and investment, would be backed by various national currencies. Greater stability may result from this strategy, which would lessen the influence of any one nation or currency in the global financial system.

This strategy, however, might run into severe political and economic challenges and would need extensive coordination and collaboration among nations. Whether such a structure is desirable or even possible in the present geopolitical environment is still being determined.

The creation of regional reserve currencies, such as African or Latin American currencies, is still another feasible approach. These currencies promote better stability and economic integration within those areas by being utilized for trade and investment inside those regions. However, the political and economic stability of the concerned areas would be crucial to the success of such a strategy.

In conclusion, the urgent issue of which currency will succeed the dollar as the main reserve currency of the globe merits considerable thought and investigation. Because of the complexity and interdependence of the global financial system, any modifications to the system of reserve currencies might have significant effects on the world economy.

It seems doubtful that any one currency will soon completely replace the dollar, despite the fact that there are possible alternatives to the dollar, like the euro, the Yuan, or a global reserve currency issued by a multilateral agency. The reserve currency system is more likely to become varied and multipolar in the future, with a variety of currencies contributing to global investment and commerce. Policymakers and economists must be watchful and proactive in looking for new remedies and alternatives to the present system as the global economy changes and develops.

AUKUS Submarine Deal and China’s Move to Join the SEANWFZ Treaty

By
Nazia Sheikh
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While the world is under the threat of nuclear war and an arms race. China confirmed its strong stance as a responsible great power to protect the region from nuclear danger. The move to join the SEANWFZ Treaty shows as responsible behavior of China. SEANWFZ treaty also known as the Bangkok Treaty, was signed by all ASEAN members in December 1995, as a pledge to safeguard the Southeast Asian region as a region free of nuclear and other weapons of mass destruction. The SEANWFZ Treaty is open to signature by the five recognized nuclear-weapon states – China, Russia, the US, the UK, and France. Once China signs the treaty, it will be the first of the five permanent members of the United Nations (UN) Security Council to do so.

The Asia Pacific region again facing nuclear threats as a decision made by the Australian government to acquire a fleet of nuclear-powered submarines as part of a new defense pact with the United States and the United Kingdom.

The deal was announced in September 2021 and has generated significant controversy and debate. Under the deal, Australia will acquire nuclear-powered submarines using technology provided by the United States and the United Kingdom. The move is seen as a major strategic shift for Australia, which has traditionally relied on conventional submarines. Australia will buy as many as five US nuclear-powered submarines and later build a new model with US and British technology.

The AUKUS scheme announced on February 2023 represents the first time a loophole in the 1968 Nuclear Non-Proliferation Treaty (NPT) has been used to transfer fissile material and nuclear technology from a nuclear weapons state to a non-weapons state.

China accused UK and US to violate the objectives of NPT. The IAEA must ensure that no proliferation risks will stem from this project, AUKUS violating the principles of nuclear non-proliferation and increasing the concern in the region for countries like Malaysia and Indonesia. AUKUS claims to adhere to the highest standard on nuclear non-proliferation which is just aimed to deceive the public.

Malaysian scholar John Pang wrote that “AUKUS is the spear tip for the militarization and polarization of Southeast Asia. It is a raw application of the with-us-or-against-us logic of the rules-based order.”

Chinese military expert Song Zhongping believes that to deal with AUKUS, it will be in the interest of China to sign the SEANWFZ treaty. AUKUS possible actions may provoke nuclear proliferation in the region, turning Southeast Asia into a training ground for nuclear weapons and an arena for the dangerous arms race,” Song said.

China’s support for ASEAN’s efforts to build a nuclear-weapon-free zone and willingness to sign the SEANWFZ Treaty is a clear signal against countries that want to exploit certain issues with nuclear technology in the Asia-Pacific, especially in Southeast Asia.

For China, it is crucial to ensure that Southeast Asia maintains a peaceful region free of nuclear proliferation for its security.

But most importantly, China’s willingness to sign the treaty proves the country takes its due responsibility as a major power that seeks peaceful development. It is in contrast to the immature behaviors of the AUKUS countries, especially the UK and the US, both of which are nuclear-weapon states and permanent members of the UN Security Council as China is.

Xu Liping, director of the Center for Southeast Asian Studies at the Chinese Academy of Social Sciences, said Twenty years ago, China was the first among ASEAN’s dialogue partners to join the Treaty of Amity and Cooperation in Southeast Asia. Presently, if China signs the treaty, it will set up a good example and encourage other countries, especially other nuclear-weapon states, to follow its steps.

China’s moves will be just the beginning. Only when more countries, particularly those with nuclear weapons, decide to do the same can maintain regional peace and stability.

There are also concerns about the environmental and safety implications of nuclear-powered submarines. The AUKUS deals also have implications for global arms control and non-proliferation efforts. The use of nuclear power in submarines raises concerns about the potential for nuclear accidents and it has been criticized by some as a step away from efforts to reduce the world’s reliance on nuclear weapons.

It will be hoped that not only ASEAN countries but also more countries in the Asia-Pacific region will see the danger that AUKUS poses. Countries especially major powers should work together to make the region a source of peace and stability, rather than living in constant fear of nuclear proliferation and threats.

Cope India 2023: An Indo-US Strategic Initiative

By
Dr. Attiq Ur Rehman
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The unprecedented growth of various strategic bilateral initiatives between the United States and India has become an undeniable reality and an irrefutable truth in contemporary global power politics, where Washington is formulating various anti-China alliances around the globe through its strategic engagements. American quest for undermining the worldwide rise of China, enabling Beijing to counterbalance Washington’s global engagement, has selected India as an appropriate strategic partner capable of containing China effectively.

The American-China-specific global strategic engagement has developed a strong bilateral strategic partnership with other nations where India is an exception. The Indian and US governments are presently engaged in arranging multileveled interactions of their regular armed forces against common threats.

The recently held joint air exercise, Cope India 2023, is one of the leading bilateral New Delhi-Washington joint ventures, and it has provided an opportunity for the Indian Air Force (IAF) and United States Air Force (USAF) to develop a close strategic collaboration. The Cope India 2023 was the sixth edition of this joint venture of IAF and USAF, which was concluded on April 24, 2023. The Japanese Air Self Defence aircrew participated in this sixth air exercise as an observer, and the Japanese government formally announced its support to the evolving alliance of Indian and US air forces. This exercise was conducted in two phases to increase the interoperability between the air forces of both states. The first phase of this two-week-long exercise emphasized the air forces’ air mobility and the participation of C-130 and C-17 aircraft from both states. The second phase witnessed the participation of Indian frontline fighter aircraft Su-30 MKI, Rafale, Tejas, and Jaguar, whereas the US B1B bombers, MC-130J, and the F-15 fighter aircraft participated in this joint venture on Indian soil. Moreover, the involvement of Airborne Early Warning and Control (AEW&C) and aerial refueling aircraft remained significant parts of this air exercise. The two weeks exercises took place at three main Indian air force stations at Panagarh, Kalaikunda, and Agra. In this bilateral exercise, the two-sided air forces conducted air mobility training, airdrop training, and large-force and fighter-training exercises.

The Cope India air exercise is a series of air force exercises started in 2004 as a fighter training activity, held at Air Station Gwalior, India. The subsequent episodes of Cope India were conducted in 2005, 2006, 2009, and 2018. The recently held sixth episode of this exercise was conducted close to the Chinese border with the aim of sending a specific message to China due to the ongoing border confrontation between India and China. This exercise is fundamentally arranged by the air forces of two strategic partners, which could not be separated from the contemporary global power politics in which the strategic thinkers of the US and India are committed to counterbalancing China in the world by designing various strategic initiatives.

The Cope India is a bilateral initiative intended to follow the model of the Malabar naval exercise with the inclusion of Japan.

Akin to Japan’s involvement in the Indo-US naval exercise, Malabar, the Cope India has the potential to become a trilateral alliance with the addition of Japan, another anti-Chinese nation. The objective of Cope India is to enhance an environment of friendliness between the participating air forces, parallel to providing participants nations with sufficient chances to increase their existing levels of engagement, exchanging of ideas, and learn the best practices of each other. According to the New Delhi-based strategic community, this joint exercise has also provided several opportunities for the participating states to augment their existing strategic collaboration. It is pertinent to mention here that the Indian and Japanese forces have already conducted various joint military exercises with India, such as Sea Dragon 2023 naval exercise.

The Indian government believes that this air exercise reiterates the commitments between the two largest democratic nations to work together against potential threats while boosting their strategic collaboration against common threats. With the help of the US, such exercises contain the substantial potential for intensifying the contemporary strategic competition between the US and China at the global level because the anti-China positions of New Delhi and Washington are the critical factors in formulating a close strategic partnership between India and the US. No doubt, this exercise is purely a matter of bilateral interaction between India and the United States, but the timing and locations of this exercise have alarmed Chinese security. It has attracted the attention of the international strategic community towards South Asia, where the Indian government is diversifying its strategic ties with various other states and continuously arranging different military exercises with other nations. Presently, it is difficult to quantify Chinese responses to this Indo-US strategic activity, but given the ongoing border tensions between New Delhi and Beijing in the Himalayas, it is more appropriate to maintain the leading security architectures of China are closely monitoring the American strategic moves in its surrounding regions. In this way, there is no harm in saying that New Delhi’s growing strategic association with the great powers beyond China could endanger other neighboring states such as Pakistan.

Chinese multiplying economic collaborations with Pakistan is also a serious concern for India, and Indian leadership has translated it as a serious threat to its position in the broader Asian power politics.

Therefore, this Cope India 2023 has communicated the increasing reliance of India on its strategic collaborations with the US, and it has multiplied New Delhi’s constantly increasing aggression against the territorially adjoining nations.

The Changing Dynamics of U.S.-China Relations: Impacts on the Global Economy and Security

By
Noor ul Ain
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The United States and China have a complex and multifaceted relationship that has evolved over the past several decades. The history of U.S.-China relations dates back to the early 19th century when U.S. merchants began trading with China. In the early 20th century, the U.S. and China established diplomatic relations, but this relationship was disrupted by the Communist Revolution in China in 1949. The U.S. did not recognize the People’s Republic of China (PRC) until 1979, and the two countries did not establish formal diplomatic relations until that time.

During the Cold War, the U.S. viewed China as a strategic rival of the Soviet Union, and the two countries cooperated on issues such as arms control and trade. However, tensions remained high, and the U.S. imposed economic sanctions on China after the 1989 Tiananmen Square massacre. In the 1990s, both continued to have a complicated relationship, with disagreements over human rights, trade, and security issues.

In the early 2000s, the relationship began to shift as China’s economy grew rapidly. The U.S. saw China as an economic partner, and the two countries established a complex and interdependent trade relationship. However, tensions continued to simmer over issues such as intellectual property theft and cyber security.

The relationship between the US-China is changing its dynamics in fundamental ways. both states are involved in serious and costly wars of trade that even if fixed through dialogues, will be expected not to give the basis for long-term stability through negotiations, and will likely not provide the basis for long-term stability.

Reasons for the tension between US and China:

In the 21st century, Asia no longer reflects primary global dynamics as it did during the Cold War.

China is rising and challenging US interests while Asia as a continent is increasing in long-term importance to the United States and the world.

Now Asia is home to half of the 20 fastest-growing economies, generates 2/3rd of global growth, and accounts for 40% of global GDP.

The competition for security is not new to US-China relations, but its nature and role in the overall relationship are changing. For many years, US-China conflicts of interest have been apparent on a range of security issues including Taiwan’s status and security, US alliances, Chinese military modernization, nuclear and missile nonproliferation, maritime territorial disputes, and episodic regional security issues. Nowadays, the situation is developing in a new direction. It is because of Chinese military modernization. In the western Pacific, it is aimed at compelling US power projection abilities, and in Asia, China has made great progress in eroding traditional US military advantages. China has accumulated an “amazing amount of weaponry that they developed in a very short period of time. Their economy, is quite solid throughout the world,” Cohen said.

In the Russia-Ukraine war, the US is very concerned that China is providing lethal support to Russia in its war against Ukraine.

The US wants China to condemn special military operations carried out by Russia, as China often says other states to respect the sovereignty of others and seek peaceful resolutions of territorial disputes.

But to US’s disappointment, China has followed a different approach. Moreover, the Taiwan issue has also drawn China’s anger. In Taiwan, China has frequently said the issue is an internal affair. China claims that the self-governed island is its part, and maintains that Taiwan should have no right to have foreign relations. More recently, the relationship is going to get harder after the U.S. shot down an alleged Chinese spy balloon. Moreover, a lack of visits, dialogue, and exchanges raises the danger of conflict between US-China. Both China and U.S. blame each other for the deterioration in ties and say that their own actions are rational responses to the unreasonable aggression of others.

Impacts of US-China changing relations on the Global Economy and Security:

The US and China are the two largest economies in the world, and they have a major impact on global trade. Any changes in their trade relationship, such as tariffs or trade restrictions, can have ripple effects on other countries that rely on trade with them.E.g., if the US imposes tariffs on Chinese goods, Chinese companies may shift their production to other countries, which could disrupt supply chains and affect other countries that rely on Chinese exports.

The US and China are also major investors in each other’s economies. Any changes in their investment relationship, such as restrictions on investment or divestment, can have a significant impact on global financial markets.

E.g., if US investors start pulling their money out of China, it could lead to a decline in Chinese stocks and the value of the Chinese currency, which could affect other countries that have invested in China. Both States are also major players in innovation and technology, and any changes in their relationship could affect global innovation and technological progress. E.g., if the US imposes restrictions on Chinese technology companies, it could limit their ability to innovate and disrupt the global tech landscape.

The U.S.-China relationship is increasingly defined by military tensions, as both countries seek to expand their military capabilities and assert dominance in the Asia-Pacific region. Any escalation of these tensions, such as a military confrontation, could have serious global security implications, as other countries may be drawn into the conflict or be affected by the aftermath. Both are also engaged in a battle for dominance in cyberspace, with both countries accused of engaging in cyber espionage and hacking. This could lead to cyber-attacks on critical infrastructure, such as power grids, financial systems, and communication networks, which could have serious security implications for the entire world.

The U.S.-China relationship also has significant implications for nuclear proliferation, as both countries possess nuclear weapons and play a key role in global non-proliferation efforts. Any changes in their relationship, such as increased military tensions or a breakdown in diplomatic channels, could lead to a greater risk of nuclear conflict or the proliferation of nuclear weapons in other countries.

The U.S. and China also have competing interests in various regions of the world, such as the South China Sea, North Korea, and the Middle East.

Any escalation of regional conflicts could have serious global security implications, as other countries may be drawn into the conflict or be affected by the aftermath. Any significant changes in the US-China relationship could have far-reaching implications for the global economy and global security, and policymakers and business leaders around the world will need to carefully monitor developments, adjust their strategies accordingly and work together to mitigate the risks and prevent escalation of conflicts.

Japan’s Demographic Dilemma: The Challenge of a Declining Birth Rate

By
Isha Noor
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Understanding the Cultural and Social Factors Contributing to Japan’s Population Decline:

Japan’s prime minister Fumio Kishida has warned that the country is on the brink of not being able to function as a society because of its falling birth rate.

With the number of yearly births falling below 800,000 for the first time in 2022, Japan is currently experiencing one of the most severe demographic crises in the world. According to data that Japan’s health ministry, the number of newborns decreased to 799,728 in 2022, the lowest number since records began to be kept in 1899. At the same time period, it was reported that deaths increased by 8.9% to 1.58 million.

Prime Minister Fumio Kishida’s recent speech to parliament brought Japan’s dropping birthrate into sharp relief.  It’s “now or never” to address the nation’s population decline, he said in the 45-minute speech, adding that “Japan is standing on the verge of whether we can continue to function as a society.” He said that he eventually wants the government to double its spending on child-related initiatives. In April, a new government agency to focus on this problem would be established.

Dropping birth rates are a result of a number of reasons, such as growing living expenses, an increase in the number of women in the workforce, as well as easier access to contraception, which encourages women to have fewer children.

The declining social and cultural values are a major factor in Japan’s low birth rate. Family, marriage, and having kids were very important in traditional Japanese society. The emphasis has changed recently, though, moving more towards independence and individualism. Many young individuals place greater importance on their professional and personal objectives than starting a family. Furthermore, because of the high expense of living and the demanding nature of contemporary lifestyles, some Japanese see children as a burden.

Individualism has played a significant role in Japan’s declining birth rate. Japan is a country with a collectivist culture where individuals are expected to prioritize the group’s interests over their own. However, in recent years, there has been a shift towards individualism, where young people are more interested in pursuing their personal goals and ambitions rather than settling down and starting a family. One of the main ways in which individualism has affected Japan’s birth rate decline is through the rise of the “Freeter” and “NEET” phenomena. “Freeter” refers to young people who are not in full-time employment but are working part-time or temporary jobs, while “NEET” refers to young people who are not in education, employment, or training.

Many young people in Japan prefer this lifestyle because it allows them to have more freedom and flexibility to pursue their personal interests, rather than being tied down to a traditional 9-to-5 job and family responsibilities. Another way in which individualism has affected Japan’s birth rate decline is through the rise of the “Konkatsu” trend, which refers to the pursuit of marriage as a personal goal. Many young people in Japan are more interested in finding a partner who shares their interests and values, rather than settling down with someone their family approves of. This trend has led to a delay in marriage and a decrease in the number of children being born. In summary, individualism has contributed to Japan’s declining birth rate by encouraging young people to prioritize their personal goals and interests over traditional family values and responsibilities.

The difficulties of balancing work and family life are another significant factor in Japan’s low birth rate. In the industrialized world, Japan has some of the greatest working hours and fewest vacation days, making it difficult for parents to raise kids and have full-time jobs. Additionally, there aren’t many affordable childcare options, which discourages people from having kids.

Japan is ranked one of the world’s most expensive places to raise a child. Housing prices and education costs are particularly high, which can make it difficult for families to afford children.

Japan’s high cost of living, limited space, and lack of city-based childcare services make it challenging to raise kids, which results in fewer couples having kids.

The declining marriage rate, financial strain, childcare load, later childbearing, and infertility are also some of the variables influencing Japan’s declining birth rate.

This decline in Japan’s birth rate has several significant consequences for the country including an aging population which has put a significant strain on the country’s healthcare system, social security system, and economy. Japan today has a rapidly aging population and a declining labor force. The nation’s finances are being drained by the soaring expense of caring for its elderly residents, who make up a larger percentage of the population. Japan now has the world’s second-highest proportion of people aged 65 and over, according to World Bank data. The nation’s aging population and declining birthrate, which are both happening at a greater rate than anywhere else in the globe, will have a significant influence on the economy and society at large. There is even concern that, if the scenario persists, Japan will lose its status as a developed nation and revert to merely being a little country in the Far East.

The schools in Japan are shut down due to population decline. As the number of children decreases, there are fewer students to fill the classrooms, and some schools become economically unsustainable. Additionally, some families choose to move to larger cities where there are more job opportunities, leaving behind fewer children in rural areas. The schools that are most affected by population decline tend to be in rural areas with smaller populations. In these areas, there may be only one or two elementary and junior high schools serving the entire community. When the number of students drops below a certain threshold, the schools are forced to close, as it becomes difficult to maintain the facilities and provide adequate education with limited resources. According to a report by the Ministry of Education, Culture, Sports, Science, and Technology, more than 40% of elementary and junior high schools in Japan had fewer than 50 students as of 2020. This trend is expected to continue in the coming years as the population continues to decline.

It will be very difficult for Japan to sustain World’s third-largest economy in upcoming years with a smaller workforce and a small number of taxpayers The government should promote work-life balance by encouraging companies to offer more vacation days, flexible working hours, and work-from-home alternatives. To make it easier for parents to balance work and family life, the government should increase support for childcare facilities and introduce financial incentives to encourage people to have children. Otherwise, by 2050, Japan could lose a fifth of its current population.

Revitalizing the Belt and Road Initiative: Exploring the Potential of China-Gulf Economic Cooperation

By
Muhammad Wali Jan
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At the China-Arab Summit and the China-Gulf Cooperation Council Summit in December 2022, China and the Gulf States formed a new strategic partnership based on President Xi Jinping’s vision of win-win cooperation and a community with a shared future. These summits, attended by 10 Arab leaders, marked a milestone in Sino-Arab relations, with a focus on sustainable cooperation, solidarity, and economic development.

The ancient Silk Road has historically connected the Arab States and China, and the Belt and Road Initiative now presents an opportunity to strengthen cultural engagement, trade, innovation, and inclusive peace and development. President Xi’s vision sees the BRI as a means of creating a stronger China-Arab community with a shared future. The BRI partnership priorities align with the PRC-Gulf States relationship, aiming to improve infrastructure, logistics, energy supply, and investment. This multilateral partnership is a game changer, with the whole Gulf region set to benefit. “China’s “Economic Diplomacy” aims to grow trade and economic ties without political interference.

The cooperation between Gulf Cooperation Council’s  States and Beijing is based on economic interdependence.

China has been working to strengthen its relationships with the six member countries of the Gulf Cooperation Council, with particular reliance on China’s imports of oil from Saudi Arabia, Kuwait, and Oman. Similarly, China relies on the Gulf countries for its energy security, with Saudi Arabia accounting for a significant portion of its crude oil import to China in recent years. Trade between China and the GCC has increased significantly over the years, with energy and markets for Chinese goods being the main drivers. The GCC states also offer investment opportunities for China in infrastructure, digital economies, manufacturing, and construction. Technology and facilities have further strengthened the ties between the Gulf region and China’s BRI.

The Gulf Cooperation Council is seeking foreign direct investment to meet local demands and integrate their economies into global supply chains, with recent summits offering the best opportunity for this. Saudi Arabia and the UAE are also investing in new technologies to diversify their economies and create more jobs. In this pursuit of post-oil economic diversification, the Gulf States are increasingly turning to the East, with China being the most sustainable choice promoted by the Belt and Road Initiative (BRI). The strategic engagement of the Gulf States with China is becoming more important in light of the dynamic international and regional situation.

The Belt and Road Initiative (BRI) provides a comprehensive framework for cooperation in the economy, trade, energy, and security between China and Saudi Arabia, supporting Saudi Arabia’s 2030 Vision.

This has ushered in a new era of economic interdependence and an inclusive strategic partnership between the two nations.

Furthermore, based on reports from Saudi state media, China and Saudi Arabia recently inked agreements worth approximately $30 billion. One of the agreements is expected to introduce high-tech complexes, cloud computing, and data centers to Saudi cities through Huawei Technologies. Saudi Arabia has been the primary beneficiary of China’s BRI investments in the Gulf region, amounting to $5.5 billion in deals, demonstrating Beijing’s long-term commitments and ambitions in the Middle East while limiting its investments in other countries due to geopolitical risks.

Since the announcement of the Belt and Road Initiative, Saudi Arabia has experienced consistent growth with Chinese foreign direct investment inflows and investments averaging $654 million in 2019. The Kuwaiti government also included a China-Kuwait BRI partnership in its Vision of Development.

China’s success story has influenced other Gulf countries to rely on Chinese support for socioeconomic growth and mutual progress.

During the China-Gulf Cooperation Council summit, President Xi Jinping urged GCC states to cooperate on advanced technologies such as 5G and 6G communication, artificial intelligence, big data, and high-tech start-ups. As a result, 20 Arab states have signed Belt and Road initiative cooperation agreements with China, Some joined the Asian Infrastructure Investment Bank and supported China’s GDI.

By virtue of the Belt and Road Initiative, the Gulf States have supported China’s Global Development Initiative (GDI) and Global Security Initiative (GSI) as proactive approaches to boost their autonomous development capacity, socioeconomic progress, and the UN 2030 Agenda for Sustainable Development. The BRI has the potential to improve the China-Gulf partnership and mutual learning, providing benefits for both sides. More Arab countries are recognizing the chances offered by the BRI due to China’s reputation as a dependable Asian partner, leading to a new direction for this ambitious initiative. These opportunities will strengthen China’s relations with the Arab world, promote joint growth and security, foster future cooperation, and encourage civilizational dialogue.

IMF’s Financial Assistance to Ireland and Lessons for Pakistan

By
Ammar Hassan Sajjad
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Pakistan is faced with a politico-economic impasse and needs IMF’s financial assistance to avert an imminent financial crisis. The country has not been able to complete previous IMF programs as well which is why the mutual trust deficit has also widened. Pakistan, in order to, eliminate the existing trust deficit and avert a financial crisis needs to alter its modus operandi through politico-economic reforms.

Developing countries can learn from examples set by states such as Ireland that have successfully completed and benefitted from IMF programs in the past.

The International Monetary Fund (IMF) came into existence with the Bretton Woods system and revolutionized the global economic system, thereafter. The purpose of the Fund was to promote international monetary cooperation, maintain a multilateral system of payment and ensure the availability of emergency financial assistance.

Such utility enabled the IMF to provide member states with the opportunity to borrow short-term loans and avoid financial disasters during times of recession. Thus, contributing to its effectiveness as an international regulatory authority as well. So far, several states have benefited from the IMF and case studies such as Ireland’s can be useful for Pakistan which continues to struggle in its relationship with the Fund.

Up until the last quarter of the 20th century, Ireland was far behind other European economies. However, tables turned quickly as Ireland transformed into a prosperous European economy. Irish citizens started enjoying low taxes, moderate pay, and increased job opportunities due to incoming multinational investment companies (Coca-Cola, Dell). The booming construction sector accounted for 12 percent of employment in Ireland and, subsequently, the Irish economy blossomed experiencing growth of more than six percent.

With the global financial crisis in 2007, Ireland’s growth bubble also exploded. Home buyers took more loans than they could pay back, properties were littered, and ‘ghost estates’ led to the complete collapse of the construction industry. Clueless stakeholders in Ireland, then, had to look towards the IMF and European Union for an immediate relief package.

Together the IMF and EU provided Ireland with 67.5 billion Euros as loans. The IMF provided Ireland with financial experts along with a multifaceted economic recovery plan. Also, as a part of a three-year recovery program, cuts in civil service, additional income tax, and taxes on vehicles were recommended to which the government complied and, consequently, achieved 8% GDP growth. Soon after, investment firms regained confidence, home prices improved and, by 2017, the unemployment rate went back to less than 7 percent. Irish government’s practice of taking IMF’s advice on the reconstruction of banks, balancing of government finances, and funds allocation for appropriate sectors is a practice that Pakistan’s government can also replicate.

Pakistan’s current financial situation is fragile and the country’s liquid foreign reserves which are constantly depleting stood at $10.14 billion on March 24. In such a volatile situation, IMF’s assistance will carry significant value. However, Pakistan’s case is not as simple since the Country is engulfed in severe politico-constitutional turmoil as well.

Since its membership, Pakistan has signed 23 agreements with the IMF, and no wonder the loans have turned out to be Dutch disease since the country has been involved in a vicious cycle of borrowing and spending to escape long-term economic solutions. Pakistan’s government is still busy in efforts to revive the IMF loan program worth $6.5 Billion in order to tackle the current financial crunch.

Pakistan and IMF are even finding it hard to reach a staff-level agreement. The fact remains that Pakistan would continue to struggle on the economic front until it gets rid of its credit-driven growth and makes fundamental politico-economic reforms.

With regard to economics, Pakistan has to move towards permanent solutions for wealth creation. Also, the country needs to get rid of domestic tax evasion through effective techniques such as a track and trace system. Similarly, in the political domain, the modus operandi needs to be revisited. It is an election year in Pakistan and the country is deeply entrenched in political instability due to polarization that intensified after a successful vote of no-confidence against the former Prime Minister Imran Khan. Even after a year, stakeholders in Pakistan have been unable to reach a consensus over the future course of action. To make things worse, the Election Commission of Pakistan has also decided to postpone elections, in Punjab, that was originally scheduled to be held on April 30. This decision may lead to a constitutional crisis that will hasten the country’s tailspin toward lawlessness and chaos.

It is time that the stakeholders in Pakistan develop a national consensus on the economy and decide that finances would no more be awarded by leadership to local allies for political gains at the cost of national economic interest.

Stakeholders in Pakistan need to realize that with such impudence no amount of IMF bailouts would ever be sufficient and the country would always remain entrenched in deficits.

The understanding is that international organizations are only facilitators and do not guarantee that countries with economic success need to prevail in Pakistan. Learning from the aforementioned, case study of Ireland can be Pakistan’s first step in the positive direction. Ireland was also entrenched in the financial crisis when it sought IMF’s help. Once economic assistance was secured, the country shifted its focus to long-term growth and ignored short-term temptations. Pakistan can, certainly, follow in Ireland’s footsteps but that would require far-sightedness and strong commitment in the overall decision-making paraphernalia.

Pakistan-China Relationship In a Changing World

By
Ambassador Naghmana Hashmi
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4

The world is undergoing profound changes unseen in a century, with increasing sources of turbulence and risks around the world. We are witnessing significant political, strategic, and economic transformation and it would not be wrong to say that the world is in a state of flux and uncertainty.  The end of the cold war heralded the emergence of numerous fast-developing economies in Asia, South America, Africa, and the phenomenal rise of China, strengthening the expectation of the establishment of a multipolar world by the middle of the 21st Century.

The transition from a unipolar to a multipolar world is a period of uncertainty with the emergence of new alignments and new security and economic structures.

On the international front, we see the US-China rivalry fast turning from competition to confrontation. The US believes that China needs to be contained and its global influence countered through a range of political and business protective measures that include activities that the US believes can inhibit, reduce, retard, and slow down China’s growing influence. The growing fear of China’s phenomenal rise and the imminent possibility of China emerging as the most powerful state in the world economically, politically, and strategically resulted in the passage of the notorious China Containment Bill by the U.S.A in 2022 and then declaring China as a threat in its National Security Strategy and other documents. These measures also manifest the insatiable desire of the U.S.A. to continuously have an enemy to fight against. When there is none, they ensure one is created, in this case, China.

House Speaker Nancy Pelosi’s visit in 2022 heightened the possibility of the dormant war theatre opening in the Straits of Taiwan, destabilizing the entire region and beyond. Now the controversy over a weather balloon has further made the China-U.S.A relationship completely unpredictable, unstable, and volatile. The balloon saga clearly demonstrates that China-U.S.A. competition is here to stay and has the potential to undermine peace and stability, particularly in the Asia Pacific region.

The United States has substantially expanded its defense budgets incorporating new technologies in its already massive defense capabilities. In the Pacific, Australia at the behest of the U.S.A and as a member of QUAD is now predominantly focusing on the Pacific Islands, Japan, situated off the eastern coast of China with difficult bilateral relations with China after almost 80 years is being encouraged to expand its defense budget gradually coursing it to abandon its peaceful orientation.

In the North East of China we see South Korea clearly demonstrated its preference for the United States in case of any confrontation while India has been chosen to be the strategic partner of the U.S.A in the Indian Ocean Region continues to heighten tensions with China and Pakistan, the all-weather strategic cooperative partner of China. On the other hand, security tensions between the United States and its allies and partners, and China also display signs of escalation. All these political moves by the U.S.A clearly betray its desire to encircle China too, if not stop, at least retard the political and economic rise of China.

China continuously trying to build up its stature as a leading world power that is responsible and desires a peaceful and developed world based on its concept of “Win-Win Cooperation”.

Therefore, we see that on the heels of the Global Development Initiative (GDI) launched in 2021, China launched the Global Security Initiative (GDI) in April 2022.

Developing countries, particularly Pakistan which is situated in an extremely important region, will face severe challenges alongside emerging opportunities. Pakistan needs to navigate these turbulent waters with great strategic vision and political sagacity if it wants to successfully emerge from this flux as a politically and economically strong nation.

Strengthening its all-weather strategic cooperative partnership with China while maintaining its friendly relations with the USA and Europe will be challenging but that is the only wise course of action to take for Pakistan.

Therefore, the coming decades will be the real test of political and strategic farsightedness and a test of its diplomacy.

Pakistan-China friendship has evolved over the past seven decades into a well-rounded relationship based on mutual trust and respect. Today, they truly are “All-Weather Strategic Cooperative Partners” and each other’s strength and “iron brothers”. This relationship has withstood the test of time and continues to demonstrate incredible stability and retain its strategic quality.

CPEC as the flagship project of President Xi Jinping’s Belt and Road Initiative is the unmistakable symbol of this abiding friendship and occupies a pivotal position in the development agenda of Pakistan.

CPEC has immense strategic significance for Pakistan and has already helped Pakistan lay a strong infrastructure for the subsequent development of our industry, agriculture, and human resource.

As a flagship project of the BRI, the China-Pakistan Economic Corridor (CPEC) has already achieved phenomenal success by laying a solid foundation of infrastructure in the energy and transport sectors. Building upon this foundation, Phase II of CPEC would now focus on socio-economic development and poverty alleviation for robust, sustainable, and inclusive growth for Pakistan and the whole region at large.

Pakistan and China are both aware of their respective national challenges, and external variables in the form of global threats including unanticipated military conflicts, global recessions or financial crises, disruptions in energy supply lines, or determined efforts by countries, individually or within broad coalitions, to halt regional and inter-regional connectivity through BRI, coupled with unilateralism, protectionism, and unilateral coercive measure. Pakistan and China are also mindful of common regional issues such as widespread unemployment, changes in rainfall patterns and river flows, sea level rise, the melting of the Himalayan glaciers that feed most Asian continental river systems, and the increasing scarcity of freshwater resources and should try to cooperate in these areas to address these issues.

Similarly, the complementing demographics of Pakistan, with nearly a hundred million people below the age of 25, presents a unique opportunity as a national asset to tap their latent energies and potential skills, in making them effective managers of change for the future. Further, as projected, Pakistan will be around US$ 1.5 trillion in the economy if it can maintain a growth rate of 5% in the coming years. Thus, in realizing their national goals aligned with their respective centennial anniversaries in 2047 and 2049, Pakistan and China should make every effort to realize their common vision of a Pakistan-China shared community of common interests and in doing so contribute in a positive way to the future of mankind.

The Indian Ocean is critical to global trade, security, geopolitics, and geo-economics. Conflicting alignments of the three dozen littoral states, as countries compete for influence in its crowded waterways, have made this region a potential war theatre.

How will the new power dynamics play out, particularly the U.S.A-China competition, Pakistan-India, and China-India rivalry is a question that is gaining significance and urgency by the day and further endangering the stability of the region, which is significant for global maritime trade flows? This growing interest of the major powers and the U.S.A-China competition in the Indian Ocean has serious implications for Pakistan. As the dynamics of world politics change, the Indian Ocean Region (IOR) has become the real theatre of competition between the Western powers and China, and let me add Russia to the mix as well. Now, it has become an integral part of international power dynamics.

Implications for Pakistan are huge as it is not a member of the Indian Ocean Rim Association (IORA), where India is one of the founding members.

Pakistan is directly affected by the actions of these three states as China is a friend, India is a foe and the U.S.A is a transactional partner. The IOR is the future of world politics. With India becoming the sixth largest economy in the world by bypassing France, it naturally has started to assert itself in the region. The Indian hegemonic ambition in the IOR is a matter of deep concern for China as it is heavily dependent on the ocean for its trade activities.

Pakistan is situated at the nexus of the four most dynamic regions of the world – China, South and South-East Asia, the Middle East, and Central Asia. In the current changing world scenario, China has assumed great importance in the region where Pakistan is a close partner of China to pursue peace and stability in the region. Through CPEC Pakistan and China should aim at the establishment of an efficient and integrated system of communications and transport, in order for both to benefit from and contribute to the regional dynamism.

Pakistan is now actively promoting economic corridors and the experiences of China and ASEAN countries in promoting and developing regional and sub-regional corridors will benefit Pakistan/ China, countries of South and Central Asia, and beyond.

Under the new circumstances, Pakistan and China should stand together even more firmly and push forward the all-weather strategic cooperative partnership, building a closer China-Pakistan community with a shared future in the new era. Nowadays, the China-Pakistan Economic Corridor (CPEC) has entered a new stage of high-quality development, and the cooperation between our two sides will have even greater potential. China supports Pakistan in exploring a development path suited to its own national conditions and is willing to share China’s high-quality development opportunities with Pakistan and contribute to Pakistan’s industrialization, urbanization, and digitization.

It is, therefore, essential to set out clear goals and expectations, to be translated into a concrete road map and coherent strategy for balanced human, social, and economic development that would substantially contribute to regional peace and stability. We should provide a conceptual platform for the revival of sustainable and inclusive growth, benefiting the two peoples. This will strengthen the development foundation enabling both China and Pakistan to achieve their development goals. Hence, aiming at achieving a high level of human development and national autonomy associated with a high-income status before the centennial anniversaries towards the middle of this century.

It has now become imperative that both countries aim to raise the existing level of “all-weather strategic cooperative partnership” to new heights with comprehensive regional and global partnership and strategic interaction and alignment, to meet the challenges of the New Era, while adhering to the development goals and aspirations of the two people through a comprehensive and forward-looking plan of action. It is also important to carefully study China’s strategy for socioeconomic development and poverty alleviation and draw lessons from it.

Looking at the future, more vigorous, inclusive, and all-encompassing relations would not only serve the best interest of the two countries but would also ensure peace and stability for the entire region.

Pakistan and China are cognizant of the new and emerging challenges within and arising from economic-political and geo-strategic realignments.

In view of these developments, both countries should aim to build a closer and more meaningful “Pakistan-China Community of Shared Future in the New Era” in line with the principles set forth by the Treaty of Friendship, Cooperation and Good-neighbourly Relations between the People’s Republic of China and the Islamic Republic of Pakistan signed in 2005, the Joint Statement of November 2018 and other bilateral documents focusing on the long-term development of relations.

Internationalization of Pakistan’s Economy

By
Sana Hamid
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3

USA-based global rating company Moody has further downgraded Pakistan’s sovereign credit ratings by further two notches to Caa3-the lowest in three decades-amid international loan negotiations, citing the country’s increasingly fragile liquidity as “significantly raising default risk”. For credibility to be upgraded, the agency implied that Pakistan complies with the demands of the International Monetary Fund (IMF) and expands its engagement with the latter, even beyond its ending period in June 2023. It is pertinent to mention here that while Pakistan has succumbed to the demands of IMF by our government taking various austerity measures, the rollover of at least $1.1 billion still remains a far play which in turn is an encumbrance to Pakistan obtaining loans from other bilateral and multilateral partners. Also, during the previous year, the IMF loan was increased by 45% to settle at Rs. 1.7 trillion by the end of December 2022. So, the question that arises here is whether this method to retain foreign exchange reserves (Forex)-with nothing in sight for its expansion and durability- is sustainable when our already depleting foreign reserves stand at $4.3 billion today.

With the mounting loans, coupled with a lack of repayment resources, the country’s destiny has been placed in the hands of International financial institutions and global power. No political party or National alliance has been able to cope with the country’s economic woes as our utmost focus has remained on casting aspersions on each other and various state institutions instead of working towards National Consensus and National Consolidation at least to overcome the economic suicide that the state is committing today, slowly, deliberately and intermittently.

Pakistan’s utmost problem remains Protracted Policy and Political Chaos compounding and hence compounded by the social vulnerability.

Our policies are governed by ad-hocism and whilst leaders in the parliament spill all their force in pulling each other’s leg, Pakistan’s public debt stands today at $97.5 billion. Recently, PDM has pitched high on the decrease in this public debt by $ 4.7 billion in February 2023, the amount has been paid out of our forex. With no foreseeable development pattern, foreign reserves dipped by a staggering 68% or $12.1 billion to settle at $4.3 billion, as mentioned above. Pakistan is at risk of default and this is the high time for Pakistan to make structural-and might be painful-amendments to our economic odyssey. Instead of looking to various creditors-bilateral and multilateral-for economic assistance that, in the long run, makes Pakistan even more vulnerable to its political interests, Pakistan should capitalize on its international agreements and investments, striving to attract global market but in such a manner that our national interests are served strategically and durably.

Reliance on CPEC as being our only savior would not serve the purpose nor our current modus operandi on this or any other international project will do.

For Pakistan to see the benefits of $25 billion already being invested under the guise of CPEC, it is necessary that transparency, payment, and shareholding equality and Balochistan consensus is attained.

Accountability and Structural introspection are yet another necessity missing in our economic structure. This is what cost Pakistan an 11$ billion penalty (by the International Court for Settlement of Investment Disputes) in the Reqo Diq Case. It is strategic that Pakistan has refurbished the deal and saved the penalty but such policies of appeasement as hurriedly passing Foreign Investment (Promotion and Protection) Bill, 2022, through Parliament to guarantee the protection of foreign investment in connection with Reko Diq might serve as yet another misstep. This is primarily because the utmost hurdle in the reissuing of the license to the company that caused the dispute– has been Tethyan Copper Company involving other stakeholders without taking into account our provincial or federal governments. So, what policy has been incorporated to settle such issues or misgivings?

It is not meant here that project shall be delayed or obstructed but the point to be considered is taking a meticulous road to the coveted destiny so that we are not misled or moved astray. There is a wise saying that a bird in the hand is worth two in the bush, and as Reqo Diq Project is viable to unlock Pakistan’s mineral potential (with the project aiming at producing 200,000 tons of copper and 250, 000 ounces of gold a year for nearly 50 years) and is eyeing on creating 8000 direct and 12, 000 indirect jobs, it is up to the state to show it to the maximization of national interest of the state. It is again up to the government in power to ensure that the 50% share given to the operating Barrick Gold Company (same as Tethyan Copper Company) serves the justifiable benefit of the state and its people.

Pakistan’s energy vulnerability is another pressing catastrophe striking the very essence of our economic prowess. Our natural gas reserves have been depleting at the rate of 9 % per annum now and hence strategic and meticulous completion and operationalization of such projects as the TAPI gas pipeline-1820 km pipeline that tends to deliver 1.3 billion cubic feet of natural gas per day-and Turkmenistan-Afghanistan-Pakistan power pipeline should be the state’s priority. CASA-1000-delivering 1300 MW of electricity to Pakistan and Afghanistan from Kyrgyzstan and Tajikistan hydropower resources that are abundant in summers- is another project that can suffice both our economic woes and our COP-26 obligations of achieving carbon neutrality by 2025.

Pakistan shall extend its engagement with the Central Asian region-a new center for global power politics also in the pursuit of its Nuclear Energy Vision 2050, whereby Pakistan wants to meet one-quarter of its energy requirements by incorporating 40, 000 MW of nuclear energy capacity in our national grid.

It is high time that Pakistan realizes the misadventures of its economic odyssey in such a manner that Pakistan is raised to a pedestal of being an internationally creditworthy and economically fascinating state, whose national image does not revolve around being a security-centric or debt-thirsty state merely. All relevant and capable state institutions, hence, shall be allowed to play their part in the better interest of the state and its people.

China Redefines Restraint on Taiwan

By
Asma Khan Durrani
-
19
PLA

As soon as Tsai Ing-wen arrived in Taiwan from the US, Beijing began a three-day military exercise surrounding the island. This is the second significant military countermeasure that is targeted. The previous instance took place after Pelosi’s trip to Taiwan. This time, it was anticipated that China would use caution, but the outcome was unexpected.

Taiwan miscalculated the outcome entirely. Taiwan took the initiative to transfer the meeting to the US because the governing DPP believed that holding the meeting between Tsai and McCarthy in the US would be less embarrassing for China and prevent more military exercises surrounding the island. Beijing, however, seems unappreciative, and Xi is trying to convey that the “meeting” is more important than the “place.”

The American media misread this occasion as Beijing hosted President Macron of France and President Von der Leyen of the European Commission. It would be embarrassing for the two European dignitaries and detrimental to Sino-European ties to escalate military tensions at this time.

Beijing does not want the international community to misinterpret China’s desire for peace. Expecting China to reach a compromise on the Taiwan issue is simply wishful thinking. Xi spoke directly to von der Leyen and the West; anyone who did so will merely hoist a stone and crush his own feet.

Taiwan is central to China’s essential interests; therefore, its call for peace does not entail giving up on that front. China will not be reluctant to demonstrate its willingness to protect its sovereignty if the West seeks to test this tenet, even if its precise measures may harm Beijing’s ties with the West. In other words, China’s diplomacy is built on the principle that the Taiwan problem should not be brought up internationally.

Tsai Ing-wen’s visit got a frosty reaction because of the Biden administration’s inclination to interact with Beijing. Tsai’s public comments were minimized by the White House, which forbade communication with any government employees with her. In order to demonstrate Washington’s restraint, the US ruling party used this to portray the scene as an opposition party event or even McCarthy’s behavior rather than the official US position. However, mutual trust between the US and China is a requirement for the Chinese side to understand Washington’s restraint.

Since the Biden administration often makes bogus promises to Beijing while advancing US-Taiwan ties, there is no foundation for confidence between the US and China on the Taiwan issue. The disparity between words and deeds leaves little room for faith. This is another American “sausage tactics” method, according to Beijing, which involves moving forward and then taking a step back. As a result, China’s proportionate “restraint” was not what the US had anticipated. There may have been no missile launches over Taiwan this time, which is a reasonable amount of restraint.

McCarthy’s cancellation of his trip to Taiwan and reiteration of the US’s “one-China policy” in front of Tsai seem to have been a surrender by Washington, which is fully aware that manipulating the Taiwan issue is equivalent to handing Beijing permission to overreact and damage the US. The Republican Party has also restricted its urge to perform, merely demonstrating the barest amount of support without sacrificing decorum, yet the results have been beyond expectations.

Is Beijing’s strong stance towards Taiwan conflicted with its call for peace? In reality, they aren’t. The US may read it as follows: China’s “thin-skinned diplomacy” and “overreaction” are meant to contrast China’s image of peace with the US’s aggressiveness. Every time the US crosses the border, it aids China in maintaining the moral high ground and reversing the trend of the Taiwan issue’s globalization.

A regional conflict is not something that ASEAN or India, which are both growing, want to see. As a devoted ally, Japan is adhering to US requests to increase its military, but this does not imply that they are prepared to participate in the Taiwan War.

Washington will discover that the more it plays the Taiwan problem, the more China’s neighbors will hate the US, necessitating China’s military reaction in an effort to maintain peace in the area. A regional conflict is not something that ASEAN or India, which are both growing, want to see. As a devoted ally, Japan is adhering to US requests to increase its military, but this does not imply that they are prepared to participate in the Taiwan War. On the one hand, Beijing advocates for a peaceful reunion with Taiwan, but on the other, it employs a grey zone policy designed to reclaim Taiwan progressively and reduce any opposition from its neighbors.

China is different from Russia in that it will gradually influence events in its favor until it is certain that even the worst outcomes won’t prevent China’s resurgence. Only then will it reveal its true intentions? The “Neocons” depicted Taiwan as the Ukraine of East Asia provided China a “peace loudhailer” to urge its neighbors to support the anti-war cause and allowed China to “overreact” under this pretext to increase military deployments.

The Neocons in the US is both a blessing and a burden for Beijing. Is a war between China and the US over Taiwan inescapable? In other words, the challenge for the US is how to use the inevitable confrontation to its advantage, while the question for China is how to do away with the notion of the US.

Beijing believes that the US would give up on resolving the Taiwan issue via confrontation and instead look for a peaceful solution through accords if it cannot successfully unify the West to undermine China on the issue.

The independence of Europe is essential to achieving this aim, while the independence of other areas like the Middle East, Africa, and Latin America serve as examples for Europe to imitate. This goal requires a clear shift towards a multipolar world. The United States won’t have enough friends once multipolarity becomes an unstoppable trend to influence the Taiwan Strait conflict.

There will be many stressful circumstances along the process, and it won’t be easy. The observation point is which side has established an unchangeable “new normal” in order to determine which party successfully furthers its objectives during the crisis.

What objectives did Beijing want to accomplish with this meeting between Tsai Ing-wen and McCarthy? The “United Sword” military exercise is nothing new since comparable exercises are already commonplace. The “combat readiness patrol,” a new naval inspection operation that lasts for three days, is the actual surprise this time.

In order to “ensure the safety of the ships’ navigation,” the southeastern provinces of China conducted “on-site inspections” of engineering and cargo ships in the northern and central Taiwan Strait. This non-military action aimed to revoke Taiwan’s sovereignty. This indicates that Beijing is attempting to create a new non-military normal to assert its authority. There will undoubtedly be further “sovereign override” measures in the future; the three-day operation is an example.

Although the former president of Taiwan, Ma Ying-jeou, visited China during Tsai’s “transit” to the US and performed a peace aria there, leading much Taiwanese elite to believe that Beijing would not discuss peace on the one hand and bolster its deterrence on the other, well, they also misjudged the content of China’s peace strategy. Xi wants to convey that peace and trust should not be taken for granted but rather must be earned.

Beijing no longer accepts that Washington and Taipei use double-dealing to provoke China while masking their hostile activities to push for Taiwan’s independence.

The 2024 election in Taiwan will not stop Beijing from escalating its military threats. Beijing currently thinks moderate tension would lead the Taiwanese people to treasure the existing calm and resist any aggressive moves instead of temporary tolerance.

Beijing’s countermeasures this time outperformed expectations, reminding the McCarthy and Biden administrations that Taiwan is China’s bottom line and that not a single step should be crossed. If you take two steps ahead, you must take two steps back. China is free to decide what “restraint” means.

Since China has rejected the US desire to abandon the current guardrails and try to create a new one by limiting communication, there are already muted voices in the US calling for an end to the radical remarks on China. The wise choice Americans have realized is that overreacting will have unbearable consequences. A new fence would require China to compromise, which is not doable.

 

 

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