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China Policy Institute: Analysis

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China-North Korea Relations: Pitfalls and Possibilities

Written by Timothy Rich

China is frequently viewed through a myopic lens when it comes to North Korea. It is technically committed to the country’s defence under the 1961 Sino-North Korean Mutual Aid and Cooperation Friendship Treaty and is a lifeline to the Hermit Kingdom that undermines efforts to sanction the regime over its continued nuclear weapons and ballistic missile tests. China comprises roughly three-quarters of North Korea’s imports and exports and even after the 2016 nuclear test, China emphasised that sanctions should not harm “normal trade”. However, oversimplifying China-North Korea relations creates a convenient scapegoat for Western observers frustrated over the lack of progress on rein in Pyongyang. This overlooks long-standing tensions between the two countries and risks overestimating China’s influence over its neighbour. At the same time, Chinese influence encourages domestic reforms in North Korea and although piecemeal, these reforms suggest ways to constrain North Korean belligerence. Continue reading “China-North Korea Relations: Pitfalls and Possibilities”

Targeting Northeastern Tigers: The Anti-Corruption Campaign in Liaoning

Written by Adam Cathcart

In assessing the depth and the impact of Xi Jinping’s anti-corruption campaign, few provinces are as interesting as Liaoning (遼寧). The reason for this curiosity comes in part because Liaoning, quite simply, is the buckle on the north-eastern “rust belt,” having once been the beating industrial heart and the molten steel veins of the Chinese Communist Party (CCP) modernization project. Today, it is also an area where extensive corruption has come to light amid industrial restructuring, a downturn in the coal industry, uniquely negative economic numbers, and a huge election-fraud scandal exposed last September. Continue reading “Targeting Northeastern Tigers: The Anti-Corruption Campaign in Liaoning”

Fiscal Starvation: The Unintended Consequences of Xi Jinping’s Anti-Corruption Campaign

Written by Hiroki Takeuchi.

President Xi Jinping’s fierce anti-corruption campaign has been one of his signature reform policies since his inauguration as General Secretary of the Chinese Communist Party (CCP) in 2012. The campaign seemed to be the right policy to secure the future of the Party. Official corruption has been rampant in China and has become one of the major sources of public dissatisfaction. The CCP leadership has feared that corruption, if left unaddressed, could undermine the stability of one-party rule. Perhaps ironically, however, the success of Xi’s campaign has itself undermined the basis of one-party rule. Continue reading “Fiscal Starvation: The Unintended Consequences of Xi Jinping’s Anti-Corruption Campaign”

The costs of normalisation: Norway and Mongolia respond to Chinese sanctions

Written by Jichang Lulu

Norway and Mongolia made amends with China almost simultaneously last December, to normalise relations after being sanctioned for tolerating, respectively, a Nobel prize to a Chinese dissident and a Dalai Lama visit. Despite the similarities between the two countries’ statements of (non-)contrition, a closer analysis suggests that Mongolia conceded less to Chinese pressure, despite higher economic stakes. Such an analysis, based on an examination of Mongolian-language sources, has been missing from most western reporting on the issue. Instead, headlines have largely echoed Chinese state-media reports, earning them a rare triumph in the struggle for global ‘discourse power’ (huayu quan 话语权). Lessons from Mongolia can help assess the value Norway’s concession has for China as foreign policy goods, as well as gauge to what extent it was ‘forced’ or necessary. A proper understanding of China’s sanctions and their effect on Norway should inform policy making in the Arctic region, where China’s engagement can only be expected to increase in the medium term. Now they’ve been successfully tested, boycotts and sanctions could be deployed again, should civil society in any of the region’s democracies clash hard enough with the ‘core interests’ of an authoritarian power. Continue reading “The costs of normalisation: Norway and Mongolia respond to Chinese sanctions”

Japan’s Indigenous Weapons Development and Regional Defense Cooperation

Written by Scott N. Romaniuk, Tobias J. Burgers and Shih-Yueh Yang.

Japan has been active in weapons research and development (WRD) for several decades. During the 1990s, Tokyo and Washington penned an agreement to develop newer and more sophisticated weapons systems, including technology designed to conceal and designed to kill. In fact, many of these military agreements have been kept secret for years. These weapon development ranged from an improvement in underwater machines making them less susceptible to detection, to missile-based target-seeking devices and newer, faster, and more powerful rockets to enhance existing missile systems. Continue reading “Japan’s Indigenous Weapons Development and Regional Defense Cooperation”

China Faces the Impossible Trinity

Written by Victor Shih.

For much of the past decade, Chinese policy makers sold the idea that it alone circumvented the impossible trinity, an idea proposed long ago by Robert Mundell and Marcus Fleming. To revisit the argument, the economists argued that out of the three options of free capital flow, a fixed exchange rate, and monetary policy independence, central banks could only choose two. The idea behind this theory is very intuitive. Put simply, and assuming the capital account is open, a central bank which decides to lower interest rates would be unable to maintain fixed exchange rates with other currencies because money would flow out of a country in search for higher yields. This in turn would put downward pressure on a currency. To prevent this from happening, central banks or governments could impose very draconian capital control, preventing funds from flowing out of the country. But here free capital flow has been sacrificed, and the impossible trinity conditions are once again satisfied. Continue reading “China Faces the Impossible Trinity”

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