foreignpolicy--2020-04-15--Why Chinese Embassies Have Embraced Aggressive Diplomacy

Welcome to Foreign Policy ’ s weekly China Brief .
The highlights this week : China tries to put out diplomatic fires as its embassies adopt an aggressive tone , new documents reveal Beijing ’ s critical delay in announcing its coronavirus outbreak , and China looks to gain more influence at the World Health Organization after a U.S. announcement .
If you would like to receive China Brief in your inbox every Wednesday , please sign up here .
Elsewhere , France summoned the Chinese ambassador in Paris on Tuesday after his embassy made false claims online that French @ @ @ @ @ @ @ .
The comments follow a pattern of aggressive efforts by Chinese diplomats to depict the rest of the world as slipping into chaos and even to blame other countries for the coronavirus outbreak .
Meanwhile , much of the Chinese medical equipment delivered to Europe during the pandemic has been found to be defective or counterfeited .
The Chinese Embassy in Sri Lanka was temporarily suspended from Twitter this week after a post directed at a Sri Lankan critic using undiplomatic language .
And Kazakhstan , usually eager to curry favor with China @ @ @ @ @ @ @ after the Chinese online platform Sohu published a piece making revanchist claims to Kazakh territory .
Playing to the boss .
The aggressive tone of China ’ s embassies could be the result of a direct order , but it ’ s more likely that individual staffers are adopting methods that they ’ ve seen lead to career boosts for other diplomats—such as the Twitter troll Zhao Lijian , who was appointed foreign ministry spokesperson in January , and the former Ambassador to South Africa Lin Songtian , who was just appointed the @ @ @ @ @ @ @ Association for Friendship with Foreign Countries .
The aggressive style ultimately appears to please President Xi Jinping .
Online abuse .
China ’ s diplomatic problems have been worsened by online nationalists launching themselves over the Great Firewall to attack others .
The latest example : An online spat over a Thai actor who is popular in China liking a controversial tweet escalated between Chinese trolls and Thai Twitter .
( On the Chinese side , Weibo had to close 180 accounts to attempt to stop the fight . )
The rest of @ @ @ @ @ @ @ as paid trolls .
But with many Chinese unemployed , angry , or still stuck at home , the increase in online aggression is likely spontaneous nationalism .
Critical delay revealed .
Official documents recently obtained by the Associated Press show that Beijing delayed informing the Chinese public about its own knowledge of the coronavirus outbreak by six crucial days in January—the period in which the coronavirus raged out of control .
The demand for “ social stability ” before holding an important set of political meetings seemed to influence the delay .
@ @ @ @ @ @ @ s only error , the report is another blow to Beijing ’ s attempts to dodge responsibility for the pandemic .
An interesting question is just who leaked the Chinese documents to the AP .
U.S. officials have been sharing their own documents with journalists—often from long-term hard-line China hawks within the intelligence or diplomatic communities .
But this leak seems to have come from the Chinese side , indicating some unhappiness from within the party with Xi ’ s handling of the crisis .
China ’ s influence over WHO .
U.S. @ @ @ @ @ @ @ end U.S. funding to the World Health Organization ( WHO ) is likely to increase Chinese influence at the organization and within the United Nations as a whole , despite successful U.S. pushback on other issues .
To be sure , WHO mishandled dealing with China from the beginning .
But the United States has announced no alternative to supporting WHO , while China is seizing the opportunity to present the United States as failing to do its part .
China already has its own global health initiative , which has been endorsed @ @ @ @ @ @ @ Taiwan ’ s coronavirus success .
A detailed report ( link in Chinese ) shows how Taiwan detected the threat of the coronavirus as early as Dec. 31 , 2019 , by watching China closely—followed by prompt action by Taiwanese health officials and immediate checks on travelers from Wuhan , where the virus originated .
Taiwan remains one of the pandemic ’ s outstanding success stories , especially given its high degree of travel from China .
On Tuesday , Taiwan reported zero new cases of the coronavirus .
Office dividers .
Although @ @ @ @ @ @ @ from home remains the practice for the offices that can manage it .
That is a striking change from China ’ s normal work culture , which emphasizes staff monitoring and rarely allows remote work except for those at the top of the hierarchy .
Instead , managers now insist on 24/7 access to staff through WeChat and other platforms .
In workplaces that have returned to the office , staff are often reduced or rotated , and physical dividers have been put in place to maintain some social distancing .
Growing debt @ @ @ @ @ @ @ chief threat to the Chinese economy seemed to be the buildup of local debt .
The central government has alleviated immediate risks by increasing transfers to local governments by 25 percent to compensate for revenue losses .
But financial distress is likely to cause some unexpected crises across the country , even as the authorities attempt to keep credit flowing—including possible collapses of so-called shadow banks that acted as lenders of last resort .
Pork prices start to drop .
The price of pork in China has more than doubled over the last @ @ @ @ @ @ @ pig herds , hitting families hard and worrying a government that uses pork prices as a critical measure of inflation .
But in recent weeks there has been a slight drop in prices as companies rushed to buy pork from abroad and the government released part of its pork reserves .
Whether restaurants will open to serve it is another question : Despite some customers returning , restaurants are still imposing sweeping layoffs and wage cuts .
“ Is America ’ s Antibiotic Supply at Risk ?
” by Gardiner Harris and Alex @ @ @ @ @ @ @ a strong piece from a new China-focused publication , the Wire China , on the dangers posed to the global pharmaceutical supply chain by the coronavirus .
Pharmaceutical firms warned of the danger of U.S. reliance on Chinese factories since early in the crisis .
Like much else , there may be a critical gap between when the supply from China diminishes and when production can be shifted elsewhere .
China has threatened a possible embargo to the United States before , which could produce thousands of deaths .
That ’ s it @ @ @ @ @ @ @ feedback at newsletters @ foreignpolicy.com .
You can find older editions of China Brief here .
For more from Foreign Policy , subscribe here or sign up for our other newsletters .

Welcome to Foreign Policy’s weekly China Brief. The highlights this week: China tries to put out diplomatic fires as its embassies adopt an aggressive tone, new documents reveal Beijing’s critical delay in announcing its coronavirus outbreak, and China looks to gain more influence at the World Health Organization after a U.S. announcement.
Welcome to Foreign Policy’s weekly China Brief. The highlights this week: China tries to put out diplomatic fires as its embassies adopt an aggressive tone, new documents reveal Beijing’s critical delay in announcing its coronavirus outbreak, and China looks to gain more influence at the World Health Organization after a U.S. announcement.
If you would like to receive China Brief in your inbox every Wednesday, please sign up here.
China Grapples With Diplomatic Disasters Beijing is trying to put out multiple diplomatic fires this week, as China discriminates against foreign residents amid the coronavirus pandemic and its embassies spread misinformation online. It faces the biggest crisis across Africa, after hundreds of African nationals, mainly from Nigeria, were expelled from their homes in Guangdong and banned from restaurants or shops. The discrimination has caused widespread outrage, including a rare joint complaint by around a dozen African countries. Anti-black racism in China is common, and it has grown more intense in recent years. China’s initial response to the protest was to deny the discrimination, though there have now been some attempts at conciliation.
Elsewhere, France summoned the Chinese ambassador in Paris on Tuesday after his embassy made false claims online that French nursing home workers were abandoning their charges. The comments follow a pattern of aggressive efforts by Chinese diplomats to depict the rest of the world as slipping into chaos and even to blame other countries for the coronavirus outbreak. Meanwhile, much of the Chinese medical equipment delivered to Europe during the pandemic has been found to be defective or counterfeited.
The Chinese Embassy in Sri Lanka was temporarily suspended from Twitter this week after a post directed at a Sri Lankan critic using undiplomatic language. And Kazakhstan, usually eager to curry favor with China, summoned the Chinese ambassador to Nur-Sultan after the Chinese online platform Sohu published a piece making revanchist claims to Kazakh territory.
Playing to the boss. The aggressive tone of China’s embassies could be the result of a direct order, but it’s more likely that individual staffers are adopting methods that they’ve seen lead to career boosts for other diplomats—such as the Twitter troll Zhao Lijian, who was appointed foreign ministry spokesperson in January, and the former Ambassador to South Africa Lin Songtian, who was just appointed the head of the Chinese People’s Association for Friendship with Foreign Countries. The aggressive style ultimately appears to please President Xi Jinping.
Online abuse. China’s diplomatic problems have been worsened by online nationalists launching themselves over the Great Firewall to attack others. The latest example: An online spat over a Thai actor who is popular in China liking a controversial tweet escalated between Chinese trolls and Thai Twitter. (On the Chinese side, Weibo had to close 180 accounts to attempt to stop the fight.) The rest of the world tends to view Chinese nationalists as paid trolls. But with many Chinese unemployed, angry, or still stuck at home, the increase in online aggression is likely spontaneous nationalism.
What We’re Following
Critical delay revealed. Official documents recently obtained by the Associated Press show that Beijing delayed informing the Chinese public about its own knowledge of the coronavirus outbreak by six crucial days in January—the period in which the coronavirus raged out of control. The demand for “social stability” before holding an important set of political meetings seemed to influence the delay. While it wasn’t China’s only error, the report is another blow to Beijing’s attempts to dodge responsibility for the pandemic.
An interesting question is just who leaked the Chinese documents to the AP. U.S. officials have been sharing their own documents with journalists—often from long-term hard-line China hawks within the intelligence or diplomatic communities. But this leak seems to have come from the Chinese side, indicating some unhappiness from within the party with Xi’s handling of the crisis.
China’s influence over WHO. U.S. President Donald Trump’s decision to end U.S. funding to the World Health Organization (WHO) is likely to increase Chinese influence at the organization and within the United Nations as a whole, despite successful U.S. pushback on other issues. To be sure, WHO mishandled dealing with China from the beginning. But the United States has announced no alternative to supporting WHO, while China is seizing the opportunity to present the United States as failing to do its part. China already has its own global health initiative, which has been endorsed by WHO chief Tedros Adhanom Ghebreyesus.
Taiwan’s coronavirus success. A detailed report (link in Chinese) shows how Taiwan detected the threat of the coronavirus as early as Dec. 31, 2019, by watching China closely—followed by prompt action by Taiwanese health officials and immediate checks on travelers from Wuhan, where the virus originated. Taiwan remains one of the pandemic’s outstanding success stories, especially given its high degree of travel from China. On Tuesday, Taiwan reported zero new cases of the coronavirus.
Tech and Business
Office dividers. Although Chinese businesses are back online, working from home remains the practice for the offices that can manage it. That is a striking change from China’s normal work culture, which emphasizes staff monitoring and rarely allows remote work except for those at the top of the hierarchy. Instead, managers now insist on 24/7 access to staff through WeChat and other platforms. In workplaces that have returned to the office, staff are often reduced or rotated, and physical dividers have been put in place to maintain some social distancing.
Growing debt crisis. Before the pandemic, the chief threat to the Chinese economy seemed to be the buildup of local debt. The central government has alleviated immediate risks by increasing transfers to local governments by 25 percent to compensate for revenue losses. But financial distress is likely to cause some unexpected crises across the country, even as the authorities attempt to keep credit flowing—including possible collapses of so-called shadow banks that acted as lenders of last resort.
Pork prices start to drop. The price of pork in China has more than doubled over the last year after the African swine fever devastated pig herds, hitting families hard and worrying a government that uses pork prices as a critical measure of inflation. But in recent weeks there has been a slight drop in prices as companies rushed to buy pork from abroad and the government released part of its pork reserves. Whether restaurants will open to serve it is another question: Despite some customers returning, restaurants are still imposing sweeping layoffs and wage cuts.
What We’re Reading
“Is America’s Antibiotic Supply at Risk?” by Gardiner Harris and Alex Palmer, the Wire China
This is a strong piece from a new China-focused publication, the Wire China, on the dangers posed to the global pharmaceutical supply chain by the coronavirus. Pharmaceutical firms warned of the danger of U.S. reliance on Chinese factories since early in the crisis. Like much else, there may be a critical gap between when the supply from China diminishes and when production can be shifted elsewhere. China has threatened a possible embargo to the United States before, which could produce thousands of deaths.
That’s it for this week.
We welcome your feedback at newsletters@foreignpolicy.com. You can find older editions of China Brief here. For more from Foreign Policy, subscribe here or sign up for our other newsletters.


foreignpolicy--2020-04-15--How the Economy Will Look After the Coronavirus Pandemic

This much is certain : The pandemic will lead to permanent shifts in political and economic power in ways that will become apparent only later .
To help us make sense of the ground shifting beneath our feet , Foreign Policy asked nine leading thinkers , including two Nobel-Prize-winning economists , to weigh in with their predictions for the economic and financial order after the pandemic .
We Need a Better Balance Between Globalization and Self-Reliance Economists used to scoff at calls for countries to pursue food or energy security policies .
In a globalized world where borders don ’ @ @ @ @ @ @ @ could always turn to other countries if something happened in our own .
Now , borders suddenly do matter , as countries hold on tightly to face masks and medical equipment , and struggle to source supplies .
The coronavirus crisis has been a powerful reminder that the basic political and economic unit is still the nation-state .
To build our seemingly efficient supply chains , we searched the world over for the lowest-cost producer of every link in the chain .
But we were short-sighted , constructing a system that is plainly @ @ @ @ @ @ @ vulnerable to interruptions .
Just-in-time production and distribution , with low or no inventories , may be capable enough of absorbing small problems , but we have now seen the system crushed by an unexpected disturbance .
We should have learned the lesson of resilience from the 2008 financial crisis .
We had created an interconnected financial system that seemed efficient and was perhaps good at absorbing small shocks , but it was systemically fragile .
If not for massive government bailouts , the system would have collapsed as the real estate bubble @ @ @ @ @ @ @ right over our heads .
The economic system we construct after this pandemic will have to be less shortsighted , more resilient , and more sensitive to the fact that economic globalization has far outpaced political globalization .
So long as this is the case , countries will have to strive for a better balance between taking advantage of globalization and a necessary degree of self-reliance .
This Wartime Atmosphere Has Opened a Window for Change There are fundamental changes that happen from time to time—often during times of war .
Though the @ @ @ @ @ @ @ a foreign power , the COVID-19 pandemic has created a wartime atmosphere in which such changes suddenly seem possible.Though the enemy is a virus and not a foreign power , the pandemic has created a wartime atmosphere in which fundamental changes suddenly seem possible .
This atmosphere , with narratives of both suffering and heroism , is spreading with the disease .
Wartime brings people together not only within a country , but also between countries , as they share a common enemy like the virus .
Those who live in advanced countries @ @ @ @ @ @ @ in poor countries because they are sharing a similar experience .
The epidemic is also bringing us together in countless Zoom get-togethers .
Suddenly the world seems smaller and more intimate .
There is also reason to hope that the pandemic has opened a window to creating new ways and institutions to deal with the suffering , including more effective measures to stop the trend toward greater inequality .
Perhaps the emergency payments to individuals that many governments have made are a path to a universal basic income .
In the United States @ @ @ @ @ @ @ might just have been given new impetus .
Since we are all on the same side in this war , we may now find the motivation to build new international institutions allowing better risk-sharing among countries .
The wartime atmosphere will fade again , but these new institutions would persist .
The Real Risk Is Politicians Exploiting Our Fears Over only a few weeks , a dramatic chain of events—tragic loss of life , paralyzed global supply chains , interrupted shipments of medical supplies between allies , and the deepest global economic contraction @ @ @ @ @ @ @ of open borders.People may self-assess their individual risks and decide to curtail travel indefinitely , reversing 50 years of rising international mobility .
If support for an integrated global economy was already declining before COVID-19 struck , the pandemic will likely hasten the reassessment of globalization ’ s costs and benefits .
Firms that are part of global supply chains have witnessed firsthand the risks inherent in their interdependencies and the large losses caused by disruption .
In future , these firms are likely to take greater account of tail risks , resulting @ @ @ @ @ @ @ and robust —but less global .
In emerging markets , whose embrace of globalization included a steady opening to capital flows , we risk seeing capital controls being reimposed as these countries scramble to shield themselves from the destabilizing forces of the sudden economic stop .
And even as containment measures gradually come off worldwide , people may self-assess their individual risks and decide to curtail travel indefinitely , reversing half a century of rising international mobility .
The real risk , however , is that this organic and self-interested shift away from @ @ @ @ @ @ @ compounded by some policymakers who exploit fears over open borders .
They could impose protectionist restrictions on trade under the guise of self-sufficiency and restrict the movement of people under the pretext of public health .
It is now in the hands of global leaders to avert this outcome and to retain the spirit of international unity that has collectively sustained us for more than 50 years .
Another Nail in the Coffin of Globalization World War I and the global economic depression in the early 1930s ushered in the demise of a @ @ @ @ @ @ @ a resurgence of trade barriers and capital controls , an important explanation for this demise is the fact that more than 40 percent of all countries at the time entered default , cutting many of them off from the global capital markets until the 1950s or much later .
By the time World War II ended , the new Bretton Woods system combined domestic financial repression with extensive controls of capital flows , with little resemblance to the preceding era of global trade and finance.Pandemic-induced recessions may be deep and long—and as in @ @ @ @ @ @ @ spike .
The modern globalization cycle has faced a series of blows since the financial crisis of 2008-2009 : a European debt crisis , Brexit , and the U.S.-China trade war .
The rise of populism in many countries further tilts the balance toward home bias .
The coronavirus pandemic is the first crisis since the 1930s to engulf both advanced and developing economies .
Their recessions may be deep and long .
As in the 1930s , sovereign defaults will likely spike .
Calls to restrict trade and capital flows find fertile @ @ @ @ @ @ @ pre-coronavirus global supply chains , the safety of international travel , and , at the national level , concerns about self-sufficiency in necessities and resilience are all likely to persist—even after the pandemic is brought under control ( which may itself prove a lengthy process ) .
The post-coronavirus financial architecture may not take us all the way back to the preglobalization era of Bretton Woods , but the damage to international trade and finance is likely to be extensive and lasting .
The Economy ’ s Preexisting Conditions Are Made Worse by @ @ @ @ @ @ @ preexisting conditions of the world economy .
They will remain reversible through major surgery but turn chronic and damaging absent such interventions .
The first of these conditions is secular stagnation—the combination of low productivity growth , a lack of private investment returns , and near-deflation .
This will deepen as people stay risk-averse and save more following the pandemic , which will persistently weaken demand and innovation .
Second , the gap between rich countries ( along with a few emerging markets ) and the rest of the world in their resilience @ @ @ @ @ @ @ increasingly lead governments to shut off their own economies from the rest of the world .
Third , partly as a result of flight to safety and the apparent riskiness of developing economies , the world will continue to be over-reliant on the U.S. dollar for financing and trade .
Even while the United States becomes less attractive for investment , its attraction will increase relative to most other parts of the world .
This will lead to ongoing dissatisfaction .
Finally , economic nationalism will increasingly lead governments to shut off their @ @ @ @ @ @ @ world .
This will never produce complete autarky , or anything close to it , but it will reinforce the first two trends and increase resentment of the third .
More Than Ever , the World Looks to Central Bankers for Deliverance The economic and financial carnage wrought by the pandemic could leave deep scars on the world economy .
Central banks have stepped up to the challenge by tearing up their own rulebooks .
The U.S. Federal Reserve has bolstered financial markets with asset purchases and provided dollar liquidity to other central @ @ @ @ @ @ @ declared “ no limits ” to its support of the euro and announced massive purchases of government and corporate bonds , and other assets .
The Bank of England is financing government spending directly .
Even some emerging-market central banks , such as the Reserve Bank of India , are considering extraordinary measures—all risks be damned.Central bankers , once considered cautious and conservative , have shown they can act with agility , boldness , and creativity .
Fiscal stimulus by governments , on the other hand , has proved to be politically complicated @ @ @ @ @ @ @ difficult to target where the need is greatest .
Central bankers , once considered cautious and conservative , have shown they can act with agility , boldness , and creativity in desperate times .
Even when political leaders are unwilling to coordinate policies across borders , central bankers can act in concert .
Now and for a long time to come , central banks have become entrenched as the first and main line of defense against economic and financial crises .
They may come to rue this immense new role and the unrealistic @ @ @ @ @ @ @ them .
The Normal Economy Is Never Coming Back As the lockdowns began , the first impulse was to search for historical analogies—1914 , 1929 , 1941 ?
Since then , what has come ever more to the fore is the historical novelty of the shock we are living through .
There is something new under the sun .
And it is horrifying .
The economic fallout defies calculation .
Many countries face a far deeper and more savage economic shock than they have ever previously experienced .
In sectors like retail , @ @ @ @ @ @ @ , the temporary lockdown may prove to be terminal .
Many stores will not reopen , their jobs permanently lost .
Millions of workers , small-business owners , and their families are facing catastrophe .
The longer we sustain the lockdown , the deeper the economic scars , and the slower the recovery .
What we thought we knew about the economy and finance has been radically disturbed .
Since the shock of the 2008 financial crisis , there has been a lot of talk about the need to reckon with radical uncertainty @ @ @ @ @ @ @ uncertainty looks like .
We are witnessing the largest combined fiscal effort since World War II , but it is already clear that the first round may not be enough .
There are few illusions about the unprecedented acrobatics that central banks are performing .
To deal with the accumulated liabilities , history suggests some radical alternatives , including a burst of inflation or an organized public default ( which would not be as drastic as it sounds if it affects government debts held by central banks ) .
If the response by @ @ @ @ @ @ @ flight to safety , it will compound the forces of stagnation .
If the public response to the debts accumulated by the crisis is austerity , that will make matters worse .
It makes sense to call instead for a more active , more visionary government to lead the way out of the crisis .
But the question , of course , is what form that will take and which political forces will control it .
Many Lost Jobs Will Never Return The pandemic and subsequent recovery will accelerate the ongoing digitalization and @ @ @ @ @ @ @ jobs while increasing high-skill jobs during the last two decades and contributed to the stagnation of median wages and rising income inequality.Many low-wage , low-skill , in-person service jobs , especially those provided by small firms , will not return with the recovery .
Changes in demand , many of them accelerated by the economic dislocation wrought by the pandemic , will change the future composition of GDP .
The share of services in the economy will continue to rise .
But the share of in-person services will decline in retail , hospitality @ @ @ @ @ @ @ , and government as digitalization drives changes in the way these services are organized and delivered .
Many low-wage , low-skill , in-person service jobs , especially those provided by small firms , will not return with the eventual recovery .
However , workers providing essential services such as policing , firefighting , health care , logistics , public transportation , and food will be in greater demand , creating new job opportunities and increasing the pressure to raise wages and improve benefits in these traditionally low-wage sectors .
The downturn will accelerate @ @ @ @ @ @ @ workers , gig workers , and workers with multiple employers—leading to new portable benefits systems that move with workers and broaden the definition of employer .
New low-cost training programs , digitally delivered , will be required to provide the skills required in new jobs .
The sudden dependence of so many on the ability to work remotely reminds us that a significant and inclusive expansion of Wi-Fi , broadband , and other infrastructure will be necessary to enable the accelerating digitalization of economic activity .
The COVID-19 pandemic will accelerate a change @ @ @ @ @ @ @ away from U.S.-centric globalization to a more China-centric globalization .
Why will this trend continue ?
The American population has lost faith in globalization and international trade .
Free trade agreements are toxic , with or without U.S. President Donald Trump .
By contrast , China has not lost faith .
Why not ?
There are deeper historical reasons .
Chinese leaders now know well that China ’ s century of humiliation from 1842 to 1949 was a result of its own complacency and a futile effort by its leaders to cut it @ @ @ @ @ @ @ , the past few decades of economic resurgence were a result of global engagement .
The Chinese people have also experienced an explosion of cultural confidence .
They believe they can compete anywhere .
Consequently , as I document in my new book , Has China Won ?
, the United States has two choices .
If its primary goal is to maintain global primacy , it will have to engage in a zero-sum geopolitical contest , politically and economically , with China .
However , if the goal of the United States @ @ @ @ @ @ @ American people—whose social condition has deteriorated—it should cooperate with China .
Wiser counsel would suggest that cooperation would be the better choice .
However , given the toxic U.S. political environment toward China , wiser counsel may not prevail .
“ The Normal Economy Is Never Coming Back ” by Adam Tooze is excerpted from an April 9 essay in Foreign Policy .
“ A More China-Centric Globalization ” by Kishore Mahbubani appeared in the first part of this series in Foreign Policy .

Joseph E. Stiglitz, Robert J. Shiller, Gita Gopinath, Carmen M. Reinhart, Adam Posen, Eswar Prasad, Adam Tooze, Laura D’Andrea Tyson and Kishore Mahbubani

After many weeks of lockdowns, tragic loss of life, and the shuttering of much of the global economy, radical uncertainty is still the best way to describe this historical moment. Will businesses reopen and jobs come back? Will we travel again? Will the flood of money from central banks and governments be enough to prevent a deep and lasting recession, or worse?
After many weeks of lockdowns, tragic loss of life, and the shuttering of much of the global economy, radical uncertainty is still the best way to describe this historical moment. Will businesses reopen and jobs come back? Will we travel again? Will the flood of money from central banks and governments be enough to prevent a deep and lasting recession, or worse?
This much is certain: The pandemic will lead to permanent shifts in political and economic power in ways that will become apparent only later.
To help us make sense of the ground shifting beneath our feet, Foreign Policy asked nine leading thinkers, including two Nobel-Prize-winning economists, to weigh in with their predictions for the economic and financial order after the pandemic.—Stefan Theil, deputy editor
We Need a Better Balance Between Globalization and Self-Reliance
By Joseph E. Stiglitz, a professor of economics at Columbia University, a winner of the 2001 Nobel Memorial Prize in economics, and the author of People, Power, and Profits: Progressive Capitalism for an Age of Discontent
Economists used to scoff at calls for countries to pursue food or energy security policies. In a globalized world where borders don’t matter, they argued, we could always turn to other countries if something happened in our own. Now, borders suddenly do matter, as countries hold on tightly to face masks and medical equipment, and struggle to source supplies. The coronavirus crisis has been a powerful reminder that the basic political and economic unit is still the nation-state.
To build our seemingly efficient supply chains, we searched the world over for the lowest-cost producer of every link in the chain. But we were short-sighted, constructing a system that is plainly not resilient, insufficiently diversified, and vulnerable to interruptions. Just-in-time production and distribution, with low or no inventories, may be capable enough of absorbing small problems, but we have now seen the system crushed by an unexpected disturbance.
We should have learned the lesson of resilience from the 2008 financial crisis. We had created an interconnected financial system that seemed efficient and was perhaps good at absorbing small shocks, but it was systemically fragile. If not for massive government bailouts, the system would have collapsed as the real estate bubble popped. Evidently, that lesson went right over our heads.
The economic system we construct after this pandemic will have to be less shortsighted, more resilient, and more sensitive to the fact that economic globalization has far outpaced political globalization. So long as this is the case, countries will have to strive for a better balance between taking advantage of globalization and a necessary degree of self-reliance.
This Wartime Atmosphere Has Opened a Window for Change
By Robert J. Shiller, a professor of economics at Yale University, a winner of the 2013 Nobel Memorial Prize in economics, and the author of Narrative Economics: How Stories Go Viral and Drive Major Economic Events
There are fundamental changes that happen from time to time—often during times of war. Though the enemy is now a virus and not a foreign power, the COVID-19 pandemic has created a wartime atmosphere in which such changes suddenly seem possible.Though the enemy is a virus and not a foreign power, the pandemic has created a wartime atmosphere in which fundamental changes suddenly seem possible.
This atmosphere, with narratives of both suffering and heroism, is spreading with the disease. Wartime brings people together not only within a country, but also between countries, as they share a common enemy like the virus. Those who live in advanced countries can feel more sympathy with those suffering in poor countries because they are sharing a similar experience. The epidemic is also bringing us together in countless Zoom get-togethers. Suddenly the world seems smaller and more intimate.
There is also reason to hope that the pandemic has opened a window to creating new ways and institutions to deal with the suffering, including more effective measures to stop the trend toward greater inequality. Perhaps the emergency payments to individuals that many governments have made are a path to a universal basic income. In the United States, better and more universal health insurance might just have been given new impetus. Since we are all on the same side in this war, we may now find the motivation to build new international institutions allowing better risk-sharing among countries. The wartime atmosphere will fade again, but these new institutions would persist.
The Real Risk Is Politicians Exploiting Our Fears
By Gita Gopinath, the chief economist of the International Monetary Fund
Over only a few weeks, a dramatic chain of events—tragic loss of life, paralyzed global supply chains, interrupted shipments of medical supplies between allies, and the deepest global economic contraction since the 1930s—has laid bare the vulnerabilities of open borders.People may self-assess their individual risks and decide to curtail travel indefinitely, reversing 50 years of rising international mobility.
If support for an integrated global economy was already declining before COVID-19 struck, the pandemic will likely hasten the reassessment of globalization’s costs and benefits. Firms that are part of global supply chains have witnessed firsthand the risks inherent in their interdependencies and the large losses caused by disruption. In future, these firms are likely to take greater account of tail risks, resulting in supply chains that are more local and robust—but less global. In emerging markets, whose embrace of globalization included a steady opening to capital flows, we risk seeing capital controls being reimposed as these countries scramble to shield themselves from the destabilizing forces of the sudden economic stop. And even as containment measures gradually come off worldwide, people may self-assess their individual risks and decide to curtail travel indefinitely, reversing half a century of rising international mobility.
The real risk, however, is that this organic and self-interested shift away from globalization by people and firms will be compounded by some policymakers who exploit fears over open borders. They could impose protectionist restrictions on trade under the guise of self-sufficiency and restrict the movement of people under the pretext of public health. It is now in the hands of global leaders to avert this outcome and to retain the spirit of international unity that has collectively sustained us for more than 50 years.
Another Nail in the Coffin of Globalization
By Carmen M. Reinhart, a professor of international finance at the Harvard Kennedy School and the author, with Kenneth S. Rogoff, of This Time Is Different: Eight Centuries of Financial Folly
World War I and the global economic depression in the early 1930s ushered in the demise of a previous era of globalization. Apart from a resurgence of trade barriers and capital controls, an important explanation for this demise is the fact that more than 40 percent of all countries at the time entered default, cutting many of them off from the global capital markets until the 1950s or much later. By the time World War II ended, the new Bretton Woods system combined domestic financial repression with extensive controls of capital flows, with little resemblance to the preceding era of global trade and finance.Pandemic-induced recessions may be deep and long—and as in the 1930s, sovereign defaults will likely spike.
The modern globalization cycle has faced a series of blows since the financial crisis of 2008-2009: a European debt crisis, Brexit, and the U.S.-China trade war. The rise of populism in many countries further tilts the balance toward home bias.
The coronavirus pandemic is the first crisis since the 1930s to engulf both advanced and developing economies. Their recessions may be deep and long. As in the 1930s, sovereign defaults will likely spike. Calls to restrict trade and capital flows find fertile soil in bad times.
Doubts about pre-coronavirus global supply chains, the safety of international travel, and, at the national level, concerns about self-sufficiency in necessities and resilience are all likely to persist—even after the pandemic is brought under control (which may itself prove a lengthy process). The post-coronavirus financial architecture may not take us all the way back to the preglobalization era of Bretton Woods, but the damage to international trade and finance is likely to be extensive and lasting.
The Economy’s Preexisting Conditions Are Made Worse by the Pandemic
By Adam Posen, the president of the Peterson Institute for International Economics
The pandemic will worsen four preexisting conditions of the world economy. They will remain reversible through major surgery but turn chronic and damaging absent such interventions. The first of these conditions is secular stagnation—the combination of low productivity growth, a lack of private investment returns, and near-deflation. This will deepen as people stay risk-averse and save more following the pandemic, which will persistently weaken demand and innovation.
Second, the gap between rich countries (along with a few emerging markets) and the rest of the world in their resilience to crises will widen further.Economic nationalism will increasingly lead governments to shut off their own economies from the rest of the world.
Third, partly as a result of flight to safety and the apparent riskiness of developing economies, the world will continue to be over-reliant on the U.S. dollar for financing and trade. Even while the United States becomes less attractive for investment, its attraction will increase relative to most other parts of the world. This will lead to ongoing dissatisfaction.
Finally, economic nationalism will increasingly lead governments to shut off their own economies from the rest of the world. This will never produce complete autarky, or anything close to it, but it will reinforce the first two trends and increase resentment of the third.
More Than Ever, the World Looks to Central Bankers for Deliverance
By Eswar Prasad, a professor of trade policy at Cornell University, a senior fellow at the Brookings Institution, and the author of Gaining Currency: The Rise of the Renminbi
The economic and financial carnage wrought by the pandemic could leave deep scars on the world economy. Central banks have stepped up to the challenge by tearing up their own rulebooks. The U.S. Federal Reserve has bolstered financial markets with asset purchases and provided dollar liquidity to other central banks. The European Central Bank has declared “no limits” to its support of the euro and announced massive purchases of government and corporate bonds, and other assets. The Bank of England is financing government spending directly. Even some emerging-market central banks, such as the Reserve Bank of India, are considering extraordinary measures—all risks be damned.Central bankers, once considered cautious and conservative, have shown they can act with agility, boldness, and creativity.
Fiscal stimulus by governments, on the other hand, has proved to be politically complicated, cumbersome to implement, and often difficult to target where the need is greatest.
Central bankers, once considered cautious and conservative, have shown they can act with agility, boldness, and creativity in desperate times. Even when political leaders are unwilling to coordinate policies across borders, central bankers can act in concert.
Now and for a long time to come, central banks have become entrenched as the first and main line of defense against economic and financial crises. They may come to rue this immense new role and the unrealistic burdens and expectations it will impose on them.
The Normal Economy Is Never Coming Back
By Adam Tooze, a history professor and the director of the European Institute at Columbia University, and the author of Crashed: How a Decade of Financial Crises Changed the World
As the lockdowns began, the first impulse was to search for historical analogies—1914, 1929, 1941? Since then, what has come ever more to the fore is the historical novelty of the shock we are living through. There is something new under the sun. And it is horrifying.
The economic fallout defies calculation. Many countries face a far deeper and more savage economic shock than they have ever previously experienced. In sectors like retail, already under fierce pressure from online competition, the temporary lockdown may prove to be terminal. Many stores will not reopen, their jobs permanently lost. Millions of workers, small-business owners, and their families are facing catastrophe. The longer we sustain the lockdown, the deeper the economic scars, and the slower the recovery.
What we thought we knew about the economy and finance has been radically disturbed. Since the shock of the 2008 financial crisis, there has been a lot of talk about the need to reckon with radical uncertainty. We now know what truly radical uncertainty looks like.
We are witnessing the largest combined fiscal effort since World War II, but it is already clear that the first round may not be enough. There are few illusions about the unprecedented acrobatics that central banks are performing. To deal with the accumulated liabilities, history suggests some radical alternatives, including a burst of inflation or an organized public default (which would not be as drastic as it sounds if it affects government debts held by central banks).
If the response by businesses and households is risk-aversion and a flight to safety, it will compound the forces of stagnation. If the public response to the debts accumulated by the crisis is austerity, that will make matters worse. It makes sense to call instead for a more active, more visionary government to lead the way out of the crisis. But the question, of course, is what form that will take and which political forces will control it.
Many Lost Jobs Will Never Return
By Laura D’Andrea Tyson, a professor at the Haas School of Business at the University of California, Berkeley, and a former chair of the U.S. President’s Council of Economic Advisers under the Clinton Administration
The pandemic and subsequent recovery will accelerate the ongoing digitalization and automation of work—trends that have eroded middle-skill jobs while increasing high-skill jobs during the last two decades and contributed to the stagnation of median wages and rising income inequality.Many low-wage, low-skill, in-person service jobs, especially those provided by small firms, will not return with the recovery.
Changes in demand, many of them accelerated by the economic dislocation wrought by the pandemic, will change the future composition of GDP. The share of services in the economy will continue to rise. But the share of in-person services will decline in retail, hospitality, travel, education, health care, and government as digitalization drives changes in the way these services are organized and delivered.
Many low-wage, low-skill, in-person service jobs, especially those provided by small firms, will not return with the eventual recovery. However, workers providing essential services such as policing, firefighting, health care, logistics, public transportation, and food will be in greater demand, creating new job opportunities and increasing the pressure to raise wages and improve benefits in these traditionally low-wage sectors. The downturn will accelerate the growth of nonstandard, precarious employment—part-time workers, gig workers, and workers with multiple employers—leading to new portable benefits systems that move with workers and broaden the definition of employer. New low-cost training programs, digitally delivered, will be required to provide the skills required in new jobs. The sudden dependence of so many on the ability to work remotely reminds us that a significant and inclusive expansion of Wi-Fi, broadband, and other infrastructure will be necessary to enable the accelerating digitalization of economic activity.
A More China-Centric Globalization
By Kishore Mahbubani, a distinguished fellow at the National University of Singapore’s Asia Research Institute and the author of Has China Won? The Chinese Challenge to American Primacy
The COVID-19 pandemic will accelerate a change that had already begun: a move away from U.S.-centric globalization to a more China-centric globalization.
Why will this trend continue? The American population has lost faith in globalization and international trade. Free trade agreements are toxic, with or without U.S. President Donald Trump. By contrast, China has not lost faith. Why not? There are deeper historical reasons. Chinese leaders now know well that China’s century of humiliation from 1842 to 1949 was a result of its own complacency and a futile effort by its leaders to cut it off from the world. By contrast, the past few decades of economic resurgence were a result of global engagement. The Chinese people have also experienced an explosion of cultural confidence. They believe they can compete anywhere.
Consequently, as I document in my new book, Has China Won?, the United States has two choices. If its primary goal is to maintain global primacy, it will have to engage in a zero-sum geopolitical contest, politically and economically, with China. However, if the goal of the United States is to improve the well-being of the American people—whose social condition has deteriorated—it should cooperate with China. Wiser counsel would suggest that cooperation would be the better choice. However, given the toxic U.S. political environment toward China, wiser counsel may not prevail.
“The Normal Economy Is Never Coming Back” by Adam Tooze is excerpted from an April 9 essay in Foreign Policy.
“A More China-Centric Globalization” by Kishore Mahbubani appeared in the first part of this series in Foreign Policy.
This article is part of Foreign Policy’s ongoing series about the world after the COVID-19 pandemic. Other installments include:
How the Global Order Will Be Changed Forever by John Allen, Nicholas Burns, Laurie Garrett, Richard N. Haass, G. John Ikenberry, Kishore Mahbubani, Shivshankar Menon, Robin Niblett, Joseph S. Nye, Jr., Shannon K. O’Neil, Kori Schake, Stephen M. Walt
How Urban Life Will Be Transformed by Richard Florida, Edward Glaeser, Maimunah Mohd Sharif, Kiran Bedi, Thomas J. Campanella, Chan Heng Chee, Dan Doctoroff, Bruce Katz, Rebecca Katz, Joel Kotkin, Robert Muggah, Janette Sadik-Khan
The Future of Government by James Crabtree, Robert D. Kaplan, Robert Muggah, Kumi Naidoo, Shannon K. O’Neil, Adam Posen, Kenneth Roth, Bruce Schneier, Stephen M. Walt, Alexandra Wrage
The Future of Travel by James Fallows, Vivek Wadhwa, Pico Iyer, Rolf Potts, Elizabeth Becker, James Crabtree, Alexandre de Juniac
The Future of Entertainment, Culture, and Sports by Audrey Azoulay, Rahul Bhatia, Rick Cordella, Mark C. Hanson, Baltasar Kormakur, Jonathan Kuntz, David Clay Large, James S. Snyder
The Future of Schools and Universities by Arne Duncan, Andreas Schleicher, Mona Mourshed, Jennifer Nuzzo, Ludger Woessmann, Salvatore Babones, Davesh Kapur, Michael D. Smith, Dick Startz


foreignpolicy--2020-04-15--China Is Bargain Hunting—and Western Security Is at Risk.

China Is Bargain Hunting—and Western Security Is at Risk .
On April 7 , a Chinese company suffered a surprising setback in the United Kingdom .
Following an uproar by British legislators , an arm of the Chinese state-owned investment firm China Reform had to abandon its bid to dominate Imagination , a leading British technology firm that makes smartphone chips .
Even if that effort failed , others are likely to succeed .
That ’ s because many Western manufacturers of popular products will face financial uncertainty as a result of the coronavirus pandemic , making them easy prey @ @ @ @ @ @ @ on a corporate buying spree in the West .
Canyon Bridge , a Cayman Islands-based outfit that is majority-owned by China Reform , bought Imagination in 2017—but the U.K. government didn ’ t intervene .
This month , however , when China Reform attempted to put four directors on Imagination ’ s board and thus seize control of the company , British members of Parliament rebelled ; China Reform abandoned the attempt .
Imagination is well known , but across Europe , North America , and other advanced economies there are countless cutting-edge @ @ @ @ @ @ @ and electronics that are neither as rich nor as well funded as Imagination .
And like most other companies , they ’ ve been hit by the standstill that coronavirus has imposed on the economy .
A recent survey of more than 10,000 Japanese firms , for example , showed that 63 percent predicted the coronavirus would have a negative impact on their business performance .
Many Western manufacturers of popular products will face financial uncertainty as a result of the coronavirus pandemic , making them easy prey for Chinese companies China Reform @ @ @ @ @ @ @ part of a major Chinese acquisition spree in Europe and North America over the past few years .
Last year , for example , Chinese entities invested 11.7 billion euros ( nearly $ 13 billion ) in European Union countries , the vast majority of it in mergers and acquisitions and only a minimal share going to forming new companies .
In 2018 , Chinese entities invested some $ 25 billion in the United States .
Government support makes it even easier for Chinese companies to buy foreign firms .
Chinese acquisitions have @ @ @ @ @ @ @ In 2003 , Chinese mergers and acquisitions of foreign companies amounted to $ 1.6 billion .
By 2006 it had shot up to $ 18.2 billion , often involving takeovers of Western household names .
But many of those acquisitions , such as TCL ’ s takeover of France ’ s Thomson Electronics , ended in failure .
Then came the 2008-2009 financial crisis , which presented another opportunity for Chinese businesses .
In a manner similar to what the world may now be about to experience , they went on an acquisition @ @ @ @ @ @ @ that , too , went south for many of them when the acquired companies ’ value continued to slump , as Wang Duanyong of Shanghai International Studies University pointed out in a 2011 paper .
China Has Its Eyes on Serbia Beijing is using the coronavirus pandemic to expand its influence into the EU ’ s backyard .
The populist Five Star Movement has become China ’ s chief enabler as Beijing spreads disinformation about the origins of the coronavirus while sending aid shipments to EU countries where it seeks influence .
But @ @ @ @ @ @ @ its attention from Western legacy companies to , for example , state-of-the-art technologies and research and development facilities .
Today ’ s investments and takeovers continue in that mode and are often part of China ’ s Made in China 2025 strategy , through which China plans to become a superpower in technology , manufacturing , and cybertechnology .
As Max Zenglein and Anna Holzmann of the Mercator Institute , a German think tank , note in a new report on Made in China 2025 , “ in smart manufacturing , digitalization and @ @ @ @ @ @ @ and leave foreign competitors behind.
” A key part of the strategy is to buy up Western firms .
In a 2019 report , the Swedish Defence Research Agency found that Chinese acquisitions of Swedish firms have accelerated since 2014 .
What ’ s more , half of the takeovers fall within focus areas of Made in China 2025 .
Today ’ s investments and takeovers continue in that mode and are often part of China ’ s Made in China 2025 strategy , through which China plans to become a superpower in @ @ @ @ @ @ @ Indeed , Chinese investments now target Made in China 2025 ’ s core sectors .
Northern Europe—home of many innovation-heavy smaller businesses—is currently China ’ s top investment target in Europe .
By contrast , the Chinese buy almost no firms in Central and Eastern Europe , apparently because those countries don ’ t have enough cutting-edge firms in China ’ s preferred sectors .
Another report by the Mercator Institute , the “ Chinese FDI in Europe : 2019 Update , ” points out that Chinese companies also engage in enormous quantities @ @ @ @ @ @ @ sensitive nature—with Western counterparts .
In the United States , the government has woken up to the national security implications of losing sensitive capabilities to China ; the Committee on Foreign Investment in the United States ( CFIUS ) now plays a very active role in screening potential takeovers on national security grounds .
( Last year , it famously forced a Chinese company to reverse its acquisition of the gay dating app Grindr . )
The EU has no CFIUS , only a largely toothless screening mechanism .
Some countries are stricter @ @ @ @ @ @ @ government introduced a new bill that allows regulators to scrutinize investments that are likely to affect the country ’ s security .
( Previous German legislation requires government approval for all investments over 10 percent that pose a direct threat to national security . )
The U.K. government screens acquisitions in the military , dual-use , computing hardware , and quantum technology sectors .
If a Chinese outfit offers a good price to an ailing Western maker of , say , advanced sewage technology , will the board turn it down as matter @ @ @ @ @ @ @ unlikely .
Here ’ s the thing : Lots of companies with cutting-edge technology are not active in national security , even when national security is defined broadly .
They simply make extremely good parts or products , or offer extremely good services , that are vital to their country ’ s economy .
Ventilators—primarily made by U.S. and European companies—are currently demonstrating their value to every country ’ s well-being , and there are countless other similarly vital and even more technologically advanced products .
But now businesses are suffering from the @ @ @ @ @ @ @ private companies not active in the national security sector , they ’ re not bound by strict regulations .
Their boards ’ only objective is to balance the books .
If a Chinese outfit offers a good price to an ailing Western maker of , say , advanced sewage technology , will the board turn it down as matter of patriotic duty ?
It ’ s unlikely .
At the moment , nothing is more urgent than the medical care of coronavirus victims .
But the care of ailing companies shouldn ’ t @ @ @ @ @ @ @ government demonstrated when sending medical supplies to Italy after EU member states had failed to do so , it rapidly spots and exploits Western vulnerabilities .
Bloomberg reports that China-based banks are already seeing a spike in requests from Chinese outfits interested in acquiring European companies .
Many Western governments have already passed business aid packages to make sure companies don ’ t go under .
But that ’ s not enough .
Margrethe Vestager , the European commissioner for competition , has just proposed that governments buy stakes in vital companies to @ @ @ @ @ @ @ need to screen Chinese raiders taking advantage of the coronavirus .
“ The U.K. government shouldn ’ t act on one-off cases because individual legislators start lobbying , ” suggested Ruth Smeeth , who was until last November a member of the British Parliament ’ s Defense Committee .
“ That only means that high-profile businesses are examined , not the smaller players who may be even more relevant.
” As for the EU , Sven-Christer Nilsson , a former CEO of the Swedish telecommunications giant Ericsson , told Foreign Policy that “ @ @ @ @ @ @ @ , as do the individual member states .
We can ’ t wait , or we will see the Chinese giving offers companies can ’ t refuse.
” The American CFIUS , in turn , needs to rethink what constitutes national security—ventilators clearly do .
They must also ask if national security is the only criterion for rejection .
Indeed , takeovers should be screened too for the damage they could do to the economy .
“ If we have learned anything from the current crisis , it should be that the definition @ @ @ @ @ @ @ has been insufficient , ” said Smeeth .
“ Our world has changed beyond recognition , and by default so have our core industries .
Our mergers and acquisitions policies need to reflect that .
”

On April 7, a Chinese company suffered a surprising setback in the United Kingdom. Following an uproar by British legislators, an arm of the Chinese state-owned investment firm China Reform had to abandon its bid to dominate Imagination, a leading British technology firm that makes smartphone chips. Even if that effort failed, others are likely to succeed.
On April 7, a Chinese company suffered a surprising setback in the United Kingdom. Following an uproar by British legislators, an arm of the Chinese state-owned investment firm China Reform had to abandon its bid to dominate Imagination, a leading British technology firm that makes smartphone chips. Even if that effort failed, others are likely to succeed.
That’s because many Western manufacturers of popular products will face financial uncertainty as a result of the coronavirus pandemic, making them easy prey for Chinese companies, which are already on a corporate buying spree in the West.
Canyon Bridge, a Cayman Islands-based outfit that is majority-owned by China Reform, bought Imagination in 2017—but the U.K. government didn’t intervene. This month, however, when China Reform attempted to put four directors on Imagination’s board and thus seize control of the company, British members of Parliament rebelled; China Reform abandoned the attempt.
Imagination is well known, but across Europe, North America, and other advanced economies there are countless cutting-edge firms in key sectors such as biotech and electronics that are neither as rich nor as well funded as Imagination. And like most other companies, they’ve been hit by the standstill that coronavirus has imposed on the economy. A recent survey of more than 10,000 Japanese firms, for example, showed that 63 percent predicted the coronavirus would have a negative impact on their business performance.
Many Western manufacturers of popular products will face financial uncertainty as a result of the coronavirus pandemic, making them easy prey for Chinese companies
China Reform’s majority stake in Imagination is part of a major Chinese acquisition spree in Europe and North America over the past few years. Last year, for example, Chinese entities invested 11.7 billion euros (nearly $13 billion) in European Union countries, the vast majority of it in mergers and acquisitions and only a minimal share going to forming new companies. In 2018, Chinese entities invested some $25 billion in the United States. Government support makes it even easier for Chinese companies to buy foreign firms.
Chinese acquisitions have caused headaches in Western capitals before. In 2003, Chinese mergers and acquisitions of foreign companies amounted to $1.6 billion. By 2006 it had shot up to $18.2 billion, often involving takeovers of Western household names. But many of those acquisitions, such as TCL’s takeover of France’s Thomson Electronics, ended in failure.
Then came the 2008-2009 financial crisis, which presented another opportunity for Chinese businesses. In a manner similar to what the world may now be about to experience, they went on an acquisition spree among weakened Western outfits. But that, too, went south for many of them when the acquired companies’ value continued to slump, as Wang Duanyong of Shanghai International Studies University pointed out in a 2011 paper.
Read More Serbian President Aleksandar Vucic and Chinese President Xi Jinping attend a meeting. Serbian President Aleksandar Vucic and Chinese President Xi Jinping attend a meeting. China Has Its Eyes on Serbia Beijing is using the coronavirus pandemic to expand its influence into the EU’s backyard. Argument | Vuk Vuksanovic From left: Chinese President Xi Jinping; He Lifeng, the chairman of China's National Development and Reform Commission; Italian Labor and Industry Minister and Deputy Prime Minister Luigi Di Maio; and Italian Prime Minister Giuseppe Conte attend a signing ceremony following their meeting at Villa Madama in Rome on March 23, 2019. From left: Chinese President Xi Jinping; He Lifeng, the chairman of China's National Development and Reform Commission; Italian Labor and Industry Minister and Deputy Prime Minister Luigi Di Maio; and Italian Prime Minister Giuseppe Conte attend a signing ceremony following their meeting at Villa Madama in Rome on March 23, 2019. China Isn’t Helping Italy. It’s Waging Information Warfare. The populist Five Star Movement has become China’s chief enabler as Beijing spreads disinformation about the origins of the coronavirus while sending aid shipments to EU countries where it seeks influence. Argument | Mattia Ferraresi Indian Prime Minister Narendra Modi arrives in Kathmandu, Nepal, for a summit of the South Asian Association for Regional Cooperation on Nov. 25, 2014. Indian Prime Minister Narendra Modi arrives in Kathmandu, Nepal, for a summit of the South Asian Association for Regional Cooperation on Nov. 25, 2014. India Is Pushing Back Against China in South Asia Beijing’s attempts to encircle New Delhi are being systematically reversed. Analysis | Derek Grossman
But China, Inc. persevered. It shifted its attention from Western legacy companies to, for example, state-of-the-art technologies and research and development facilities. Today’s investments and takeovers continue in that mode and are often part of China’s Made in China 2025 strategy, through which China plans to become a superpower in technology, manufacturing, and cybertechnology. As Max Zenglein and Anna Holzmann of the Mercator Institute, a German think tank, note in a new report on Made in China 2025, “in smart manufacturing, digitalization and emerging technologies, China wants to leapfrog and leave foreign competitors behind.” A key part of the strategy is to buy up Western firms. In a 2019 report, the Swedish Defence Research Agency found that Chinese acquisitions of Swedish firms have accelerated since 2014. What’s more, half of the takeovers fall within focus areas of Made in China 2025.
Today’s investments and takeovers continue in that mode and are often part of China’s Made in China 2025 strategy, through which China plans to become a superpower in technology, manufacturing, and cybertechnology.
Indeed, Chinese investments now target Made in China 2025’s core sectors. Northern Europe—home of many innovation-heavy smaller businesses—is currently China’s top investment target in Europe. By contrast, the Chinese buy almost no firms in Central and Eastern Europe, apparently because those countries don’t have enough cutting-edge firms in China’s preferred sectors. Another report by the Mercator Institute, the “Chinese FDI in Europe: 2019 Update,” points out that Chinese companies also engage in enormous quantities of research and development collaboration—often of a sensitive nature—with Western counterparts.
In the United States, the government has woken up to the national security implications of losing sensitive capabilities to China; the Committee on Foreign Investment in the United States (CFIUS) now plays a very active role in screening potential takeovers on national security grounds. (Last year, it famously forced a Chinese company to reverse its acquisition of the gay dating app Grindr.)
The EU has no CFIUS, only a largely toothless screening mechanism. Some countries are stricter: Earlier this month, the German government introduced a new bill that allows regulators to scrutinize investments that are likely to affect the country’s security. (Previous German legislation requires government approval for all investments over 10 percent that pose a direct threat to national security.) The U.K. government screens acquisitions in the military, dual-use, computing hardware, and quantum technology sectors.
If a Chinese outfit offers a good price to an ailing Western maker of, say, advanced sewage technology, will the board turn it down as matter of patriotic duty? It’s unlikely.
Here’s the thing: Lots of companies with cutting-edge technology are not active in national security, even when national security is defined broadly. They simply make extremely good parts or products, or offer extremely good services, that are vital to their country’s economy.
Ventilators—primarily made by U.S. and European companies—are currently demonstrating their value to every country’s well-being, and there are countless other similarly vital and even more technologically advanced products. But now businesses are suffering from the effects of the coronavirus. And as private companies not active in the national security sector, they’re not bound by strict regulations. Their boards’ only objective is to balance the books. If a Chinese outfit offers a good price to an ailing Western maker of, say, advanced sewage technology, will the board turn it down as matter of patriotic duty? It’s unlikely.
At the moment, nothing is more urgent than the medical care of coronavirus victims. But the care of ailing companies shouldn’t be far behind. As the Chinese government demonstrated when sending medical supplies to Italy after EU member states had failed to do so, it rapidly spots and exploits Western vulnerabilities. Bloomberg reports that China-based banks are already seeing a spike in requests from Chinese outfits interested in acquiring European companies.
Many Western governments have already passed business aid packages to make sure companies don’t go under. But that’s not enough. Margrethe Vestager, the European commissioner for competition, has just proposed that governments buy stakes in vital companies to prevent Chinese takeovers. They will also need to screen Chinese raiders taking advantage of the coronavirus. “The U.K. government shouldn’t act on one-off cases because individual legislators start lobbying,” suggested Ruth Smeeth, who was until last November a member of the British Parliament’s Defense Committee. “That only means that high-profile businesses are examined, not the smaller players who may be even more relevant.”
As for the EU, Sven-Christer Nilsson, a former CEO of the Swedish telecommunications giant Ericsson, told Foreign Policy that “it absolutely has to establish a CFIUS, as do the individual member states. We can’t wait, or we will see the Chinese giving offers companies can’t refuse.”
The American CFIUS, in turn, needs to rethink what constitutes national security—ventilators clearly do. They must also ask if national security is the only criterion for rejection. Indeed, takeovers should be screened too for the damage they could do to the economy.
“If we have learned anything from the current crisis, it should be that the definition we have been using of national security has been insufficient,” said Smeeth. “Our world has changed beyond recognition, and by default so have our core industries. Our mergers and acquisitions policies need to reflect that.”


foreignpolicy--2020-04-15--U.N. Backs Down on Partnership With Chinese Firm for 75th Anniversary

U.N .
Backs Down on Partnership With Chinese Firm for 75th Anniversary The United Nations has backtracked on a pact with the Chinese telecommunications giant Tencent Holdings to provide videoconferencing and text services for the international organization ’ s 75th anniversary , following backlash from U.S. officials and lawmakers as well as human rights groups .
Critics claim the arrangement rewards a company that has enabled Beijing ’ s digital surveillance efforts and stifled free speech on the internet in China .
Late last month , the U.N. sparked a political firestorm when it announced plans to enlist the help @ @ @ @ @ @ @ game giant to serve as a platform for an online discussion with millions of netizens around the world on the future of the U.N. in the run-up to its 75th anniversary observance .
Over the following weeks , U.S. lawmakers and human rights advocates pressed the U.N. to ditch the deal , saying it would tarnish the international organization ’ s reputation as a champion of free expression and human rights .
Louis Charbonneau , the U.N. director for Human Rights Watch , said he hoped the decision to freeze the agreement was @ @ @ @ @ @ @ Tencent isn ’ t an appropriate partner .
Conveying underserved legitimacy on an enabler of Chinese censorship and surveillance is a bad idea.
” “ China has been trying to use the U.N. system to whitewash its abysmal human rights record , and the U.N. shouldn ’ t allow itself to be a participant in that whitewash , either willing or unwilling , ” Charbonneau told Foreign Policy .
“ The U.N. will hopefully go back to the drawing board and find a way to reach out to the people of China this @ @ @ @ @ @ @ promotion of an enabler of Chinese government oppression.
” The backlash comes as the international organization is increasingly caught up in the middle of a geopolitical squabble between the United States and China over Beijing ’ s growing clout on the world stage .
On Tuesday , President Donald Trump announced he would freeze U.S. funding to the World Health Organization , pending an investigation into China ’ s initial response to the coronavirus pandemic .
On March 30 , the U.N. announced a global partnership with Tencent aimed at reaching “ millions @ @ @ @ @ @ @ to their thoughts on what the world should look like in 25 years , and what role international cooperation should play in solving global challenges like climate change and pandemics such as the coronavirus , ” according to the press release , which has since been removed from the U.N. website .
The arrangement granted the U.N. access to the Chinese firm ’ s business videoconferencing and text services , VooV Meeting platform , WeChat Work , and a translation engine , Tencent Artificial Intelligence Simultaneous Interpretation .
Privacy advocates were quick to @ @ @ @ @ @ @ Chinese tech giants , has abetted China ’ s expansive surveillance state and strict censorship on its own citizens .
Beijing exerted tight control over access to information on the coronavirus during the country ’ s initial outbreak .
Tencent ’ s WeChat scrubbed keywords related to the virus as early as December , as the Financial Times reported , likely hindering both Chinese citizens ’ and foreign countries ’ access to vital information on the outbreak in its early days .
The Times previously reported on the United Nations ’ relationship with @ @ @ @ @ @ @ of the coronavirus has become a key point of contention with the Trump administration , as U.S. officials accuse Beijing of bungling the vital early stage of the outbreak by covering it up and dismissing international assistance , paving the way to its eventual global spread .
Initially , U.N. officials praised the partnership as it scrambled to transition its long-planned anniversary celebration to digital platforms amid the pandemic lockdown .
“ Through Tencent , we will be able to hold online dialogues across borders , across different age groups with many people @ @ @ @ @ @ @ Hochschild , the U.N. secretary-general ’ s special advisor for the 75th anniversary , said in a videotaped statement .
“ We ’ ll be able to have access to better videoconferencing and digital dialogue tools .
We believe that these global platforms can provide a vital venue for global solidarity.
” “ Tencent is honored to participate and facilitate UN75 global conversations , ” Martin Lau , the president of Tencent , said in a subsequent April 1 press release announcing the partnership , before the U.N. backtracked .
“ We will @ @ @ @ @ @ @ to support online meetings and idea exchanges for the UN , with the aim of bringing the global village even close together and overcoming global threats through extensive dialogue and cooperation.
” But U.N. officials began having second thoughts following swift public criticism and behind-the-scenes queries from congressional staff and other U.S. officials .
“ Considering one of the partnership ’ s goals is to discuss the future we want to see , what happens when people discuss these sensitive topics on a Tencent platform ?
Will they be censored ?
What happens @ @ @ @ @ @ @ are in China ?
” Michael Caster , a human rights advocate and co-founder of Safeguard Defenders , an organization that monitors human rights in China , asked in an op-ed for Nikkei Asian Review .
Tencent did not respond to an emailed request for comment .
U.N. officials privately acknowledged that the announcement was made in haste and that the organization is undertaking a review of its relationship with Tencent to determine whether it can address the concerns of its critics .
But they insisted that Tencent was only one of a @ @ @ @ @ @ @ Twitter , Facebook , Google , and Kahoot , that the U.N. has reached out to to participate in the 75th anniversary event .
One U.N. official said the organization is now consulting internally to see whether the criticism from human rights groups about the need for data privacy and data anonymity can be addressed in “ a possible agreement to ensure adequate safeguards are put in place .
But no agreement has been concluded.
” The latest controversy comes as the United States wages a diplomatic battle against another Chinese tech company @ @ @ @ @ @ @ build up foreign countries ’ 5G telecommunications infrastructure .
Both cases reflect how fraught relations between Washington and Beijing are , particularly as top U.S. leaders and lawmakers blame their Chinese counterparts for mishandling the country ’ s coronavirus outbreak that led to the global pandemic .
The U.N. collaboration raised questions as to whether Tencent ’ s so-called “ moderation rules ” —its policy regarding what speech will be censored on its platforms—would apply to the U.N. dialogue and whether such rules would limit the ability of Chinese netizens to participate without @ @ @ @ @ @ @ Kaye , the U.N. special rapporteur on the promotion and protection of the right to freedom of opinion and expression—an independent expert .
“ There is a broader question of whether the United Nations should collaborate with companies that have serious restrictions on the nature of public debate allowed on their platforms , ” he said .
Many other communication platforms , such as Twitter and Facebook , are banned in China—potentially limiting the United Nations ’ options in picking a platform to stream its meetings worldwide .
In internal U.N. communications obtained @ @ @ @ @ @ @ s partnership with Tencent , a U.N. official said a global survey for the 75th anniversary , publicly available on its website , was “ not readily accessible in China.
” “ As such , Tencent has offered to help create an online platform in China to help disseminate the survey to people in China , ” the official wrote .
“ Survey responses will also be treated with the same data and anonymity protection that we afford through our one-minute UN75 survey elsewhere.
” Several U.S. congressional Democratic and Republican staffers tracking @ @ @ @ @ @ @ : Chinese censorship guards likely prevented access for its citizens to a U.N. survey , so the U.N. enlisted the help of a Chinese company abetting that censorship to disseminate the survey .
“ That raises a lot of concerns if [ the U.N. is ] making a decision to reach a global audience .
The only companies you can choose are the Chinese ones because the Chinese are prohibiting Western companies from actually operating there , ” one Republican congressional staffer said .
The U.N. is seeking to solicit views from ordinary @ @ @ @ @ @ @ other members of civil society to present to world leaders assembled at the United Nations in September .
The 75th anniversary committee has received just more than $ 7.6 million in total funding , including more than $ 3 million in contributions from China , Germany , France , Iceland , Ireland , Portugal , the Netherlands , Turkey , Sri Lanka , South Korea , Sweden , Switzerland , and the United Arab Emirates .
A group of American and European foundations , including the Bill & Melinda Gates Foundation , the @ @ @ @ @ @ @ , and the United Nations Foundation , contributed nearly $ 4.5 million .
The Chinese government contributed about $ 300,000 , while the United States , which has protested Beijing ’ s growing influence at the United Nations , contributed nothing .

The United Nations has backtracked on a pact with the Chinese telecommunications giant Tencent Holdings to provide videoconferencing and text services for the international organization’s 75th anniversary, following backlash from U.S. officials and lawmakers as well as human rights groups. Critics claim the arrangement rewards a company that has enabled Beijing’s digital surveillance efforts and stifled free speech on the internet in China.
The United Nations has backtracked on a pact with the Chinese telecommunications giant Tencent Holdings to provide videoconferencing and text services for the international organization’s 75th anniversary, following backlash from U.S. officials and lawmakers as well as human rights groups. Critics claim the arrangement rewards a company that has enabled Beijing’s digital surveillance efforts and stifled free speech on the internet in China.
Late last month, the U.N. sparked a political firestorm when it announced plans to enlist the help of the Chinese social media and video game giant to serve as a platform for an online discussion with millions of netizens around the world on the future of the U.N. in the run-up to its 75th anniversary observance. Over the following weeks, U.S. lawmakers and human rights advocates pressed the U.N. to ditch the deal, saying it would tarnish the international organization’s reputation as a champion of free expression and human rights.
Louis Charbonneau, the U.N. director for Human Rights Watch, said he hoped the decision to freeze the agreement was “a sign the U.N. recognize that Tencent isn’t an appropriate partner. Conveying underserved legitimacy on an enabler of Chinese censorship and surveillance is a bad idea.”
“China has been trying to use the U.N. system to whitewash its abysmal human rights record, and the U.N. shouldn’t allow itself to be a participant in that whitewash, either willing or unwilling,” Charbonneau told Foreign Policy. “The U.N. will hopefully go back to the drawing board and find a way to reach out to the people of China this year that doesn’t involve the promotion of an enabler of Chinese government oppression.”
The backlash comes as the international organization is increasingly caught up in the middle of a geopolitical squabble between the United States and China over Beijing’s growing clout on the world stage. On Tuesday, President Donald Trump announced he would freeze U.S. funding to the World Health Organization, pending an investigation into China’s initial response to the coronavirus pandemic.
On March 30, the U.N. announced a global partnership with Tencent aimed at reaching “millions of people across the globe to listen to their thoughts on what the world should look like in 25 years, and what role international cooperation should play in solving global challenges like climate change and pandemics such as the coronavirus,” according to the press release, which has since been removed from the U.N. website.
The arrangement granted the U.N. access to the Chinese firm’s business videoconferencing and text services, VooV Meeting platform, WeChat Work, and a translation engine, Tencent Artificial Intelligence Simultaneous Interpretation.
Privacy advocates were quick to point out that Tencent, like other Chinese tech giants, has abetted China’s expansive surveillance state and strict censorship on its own citizens. Beijing exerted tight control over access to information on the coronavirus during the country’s initial outbreak. Tencent’s WeChat scrubbed keywords related to the virus as early as December, as the Financial Times reported, likely hindering both Chinese citizens’ and foreign countries’ access to vital information on the outbreak in its early days. The Times previously reported on the United Nations’ relationship with Tencent.
China’s initial handling of the coronavirus has become a key point of contention with the Trump administration, as U.S. officials accuse Beijing of bungling the vital early stage of the outbreak by covering it up and dismissing international assistance, paving the way to its eventual global spread.
Initially, U.N. officials praised the partnership as it scrambled to transition its long-planned anniversary celebration to digital platforms amid the pandemic lockdown.
“Through Tencent, we will be able to hold online dialogues across borders, across different age groups with many people all over the world,” Fabrizio Hochschild, the U.N. secretary-general’s special advisor for the 75th anniversary, said in a videotaped statement. “We’ll be able to have access to better videoconferencing and digital dialogue tools. We believe that these global platforms can provide a vital venue for global solidarity.”
“Tencent is honored to participate and facilitate UN75 global conversations,” Martin Lau, the president of Tencent, said in a subsequent April 1 press release announcing the partnership, before the U.N. backtracked. “We will spare no effort in providing technical solutions to support online meetings and idea exchanges for the UN, with the aim of bringing the global village even close together and overcoming global threats through extensive dialogue and cooperation.”
But U.N. officials began having second thoughts following swift public criticism and behind-the-scenes queries from congressional staff and other U.S. officials.
“Considering one of the partnership’s goals is to discuss the future we want to see, what happens when people discuss these sensitive topics on a Tencent platform? Will they be censored? What happens to people saying these things if they are in China?” Michael Caster, a human rights advocate and co-founder of Safeguard Defenders, an organization that monitors human rights in China, asked in an op-ed for Nikkei Asian Review.
Tencent did not respond to an emailed request for comment.
U.N. officials privately acknowledged that the announcement was made in haste and that the organization is undertaking a review of its relationship with Tencent to determine whether it can address the concerns of its critics. But they insisted that Tencent was only one of a number of international tech companies, including Twitter, Facebook, Google, and Kahoot, that the U.N. has reached out to to participate in the 75th anniversary event.
One U.N. official said the organization is now consulting internally to see whether the criticism from human rights groups about the need for data privacy and data anonymity can be addressed in “a possible agreement to ensure adequate safeguards are put in place. But no agreement has been concluded.”
The latest controversy comes as the United States wages a diplomatic battle against another Chinese tech company, Huawei, as it seeks to build up foreign countries’ 5G telecommunications infrastructure. Both cases reflect how fraught relations between Washington and Beijing are, particularly as top U.S. leaders and lawmakers blame their Chinese counterparts for mishandling the country’s coronavirus outbreak that led to the global pandemic.
The U.N. collaboration raised questions as to whether Tencent’s so-called “moderation rules”—its policy regarding what speech will be censored on its platforms—would apply to the U.N. dialogue and whether such rules would limit the ability of Chinese netizens to participate without fear of reprisals, according to David Kaye, the U.N. special rapporteur on the promotion and protection of the right to freedom of opinion and expression—an independent expert.
“There is a broader question of whether the United Nations should collaborate with companies that have serious restrictions on the nature of public debate allowed on their platforms,” he said.
Many other communication platforms, such as Twitter and Facebook, are banned in China—potentially limiting the United Nations’ options in picking a platform to stream its meetings worldwide.
In internal U.N. communications obtained by Foreign Policy justifying the organization’s partnership with Tencent, a U.N. official said a global survey for the 75th anniversary, publicly available on its website, was “not readily accessible in China.”
“As such, Tencent has offered to help create an online platform in China to help disseminate the survey to people in China,” the official wrote. “Survey responses will also be treated with the same data and anonymity protection that we afford through our one-minute UN75 survey elsewhere.”
Several U.S. congressional Democratic and Republican staffers tracking the issue highlighted the irony in this: Chinese censorship guards likely prevented access for its citizens to a U.N. survey, so the U.N. enlisted the help of a Chinese company abetting that censorship to disseminate the survey.
“That raises a lot of concerns if [the U.N. is] making a decision to reach a global audience. The only companies you can choose are the Chinese ones because the Chinese are prohibiting Western companies from actually operating there,” one Republican congressional staffer said.
The U.N. is seeking to solicit views from ordinary individuals, think tank experts, and other members of civil society to present to world leaders assembled at the United Nations in September.
The 75th anniversary committee has received just more than $7.6 million in total funding, including more than $3 million in contributions from China, Germany, France, Iceland, Ireland, Portugal, the Netherlands, Turkey, Sri Lanka, South Korea, Sweden, Switzerland, and the United Arab Emirates.
A group of American and European foundations, including the Bill & Melinda Gates Foundation, the Ford Foundation, the Open Society Foundations, and the United Nations Foundation, contributed nearly $4.5 million. The Chinese government contributed about $300,000, while the United States, which has protested Beijing’s growing influence at the United Nations, contributed nothing.