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What will China do next?



“China ate your lunch, Joe,” was Donald Trump’s one-liner in his televised debate last month against challenger Joe Biden.

As the temperature rises in the run-up to the US presidential election on November 3, the world can expect more of such taunts. Trump’s view is clear: China is a global villain that has visited a “plague” upon the world while stealing US jobs and intellectual property. Biden, for his part, has called Xi Jinping, China’s leader, “a thug”.

What is lost as China is used as a blunt rhetorical instrument to win American votes is any sense of how Beijing sees its own historical mission as the world’s emerging superpower. These three books, each of which is excellent in its own way, help to redress this imbalance. 

Two of the books — China’s Good War by Rana Mitter and Superpower Interrupted by Michael Schuman — are about history or, more pertinently, the potency of history in shaping China’s self-image and strategic posture. The other book — The Emperor’s New Road by Jonathan E Hillman — is about how China is projecting its power across the world.

The three are reviewed together because — as each author shows in different ways — in China there is little daylight between historical resonance and future soundings. Echoes and rhymes from the past are played out in the present with an insistence so startling that it can be eerie.

Michael Schuman, a foreign correspondent in Asia for 23 years, makes much of this. He identifies the founder of the Ming dynasty (1368-1644 AD), the Hongwu emperor, as the spiritual kin of Xi Jinping. Not only did both introduce a more personalised rule to the collegial model that prevailed before them, they also nursed a sense of victimhood to fuel fierce nationalism.

The Hongwu emperor, Zhu Yuanzhang, portrayed his dynasty as a renewal of native Chinese rule after a century of discrimination under the Mongols. Xi characterises himself as the champion of the Chinese nation after humiliations brought by western powers. “The narrative of Chinese history that Xi’s propaganda machine drills into the minds of his modern subjects is a tale of national renewal that could easily have been scrawled in a Hongwu edict,” Schuman writes.

The “us versus them” mentality that Xi espouses — and applies increasingly to China’s dealings with the outside world — was clearly stated at a speech he gave in 2014 at Peking University. 

“Since the Opium War of the 1840s the Chinese people have long cherished a dream of realising a great national rejuvenation,” Xi said in his speech. “China used to be a world economic power. However, it missed its chance in the wake of the Industrial Revolution and the consequent dramatic changes, and was thus left behind and suffered humiliation under foreign invasion . . . we must not let this tragic history repeat itself . . . China has stood up. It will never again tolerate being bullied by any nation.”

But is China now turning inward again, just as it did in the Ming? It is as if, Schuman says, the country has transitioned from the type of openness seen in the Tang Dynasty (618-907 AD) — when foreigners, their ideas, customs and trade were generally welcome — to a more Ming-esque xenophobia in the space of the past four decades.

While Deng Xiaoping, the architect of China’s free-market reforms in the late 1970s, set in train a period of unprecedented openness and commercial interaction with the outside world, Beijing in recent years has cooled considerably toward the west. Just as the Ming demonstrated its suspicion toward Mongols and other “barbarians” by building the Great Wall, Xi has erected a “Great Firewall” of online censorship to block foreign influences from infiltrating China over the internet. Economic policy has followed; Beijing now openly champions state actors over private enterprises and has imposed a more restrictive regime for foreign investors.

The drawbacks inherent in this mentality become abundantly clear in Jonathan E Hillman’s book. The “Emperor’s New Road” in the title refers to China’s Belt and Road Initiative (BRI), a programme launched in 2013 to build roads, railways, bridges, ports, networks of power cables and other forms of infrastructure costing in excess of $1tn in more than 100 countries. The aim of this grand endeavour is to boost China’s international influence and win overseas markets for Chinese companies.

As Hillman notes, the ambition behind the BRI is unprecedented. Adjusted for inflation, it is set to cost roughly seven times more than the Marshall Plan, through which the US helped rebuild Europe after the second world war. It is also five times more than the Trump administration proposed and failed to persuade Congress to provide for infrastructure within the US.

But size is by no means everything. As the reader follows Hillman on a journey to several countries participating in China’s grand scheme, it becomes clear that the wheels are falling off the BRI. Corruption is rife. Fiascos are piling up. A China so vaunted for planning its own extraordinary development is revealed as largely unable to pull off the same feat abroad. 

“Since leaving the station, China’s BRI has become a gravy train without a conductor,” writes Hillman, who works at CSIS, a Washington-based think-tank. “Its fevered pace has already exceeded China’s ability to accurately measure, let alone manage, these activities. Corruption and rent-seeking are thriving in the chaos.”

Overall, the book points up a central, unresolved paradox of China in the world. While Chinese companies are now at the forefront of global technology and its construction giants lead the world, its governance models have progressed little since the Ming dynasty. BRI projects are conceived in secrecy, bankrolled mostly by big state banks and subjected to little or no social, environmental or financial scrutiny by the people of recipient countries.

Hillman’s book is at its most beguiling when he recounts his traveller’s tales. At one point, he finds himself in Aktau, a port on the Kazakhstan side of the Caspian Sea. This is a crucial link for the BRI, a place from which cargo and people cross the huge inland sea on ships that connect Asia with Europe.

But Aktau, it seems, did not get the memo about the BRI’s importance. The place seems to operate according to its own concept of time and with little heed for commerce. At the Caspian Shipping Company, which has a local monopoly on ferry tickets, Hillman asks when the next boat may leave.

“Tomorrow, the day after or maybe the day after that,” he is told.

To be sure, not all BRI projects have failed and many are still under construction — such as a 6,617km high-speed railway from south-west China to Singapore and a $5.8bn hydropower dam in Nigeria. But Hillman’s book highlights a glaring reality: China has yet to find a way to project its influence beyond its borders in a way that enhances its national prestige. For all its grand ambition, the BRI so far has succeeded in demonstrating to the world that its governance model does not travel.

This point is crucial because as long as the BRI goes ahead unreformed it will continue to undercut efforts by China to burnish its image in the world and bolster its claims to be a great power. Rana Mitter, a professor at Oxford university and one of the world’s leading Sinologists, investigates such claims in China’s Good War

The title of the book, he says, is intended to be somewhat ironic. In human terms, China’s losses fighting Japan in the second world war are estimated to amount to at least 10m Chinese civilians and some 4m Chinese and Japanese soldiers. But the sense in which the war was “good” resides in the fact that China prevailed, allowing Beijing to participate in creating the postwar order.

“Beijing now argues that China was a creator of the order that emerged in 1945, and that the threat to that order comes from the United States, not China,” Mitter writes. “China is creating a circuit of memory to enhance its standing and authority domestically and internationally, as well as to compete with the long-established circuit of memory that nurtures the narrative of the United States liberating the Asia-Pacific.”

Such a narrative represents a rephrasing of China’s recent history and foreshadows potentially big shifts in China’s strategic posture. Until recently, the war years had been a much-neglected aspect of China’s own historical experience, eclipsed by the glow of the Communist party’s founding myth, which coincided with the same period. 

But now Beijing is going full throttle to bring back the war into its idea of nationhood. In movies, seminars, mass parades and television documentaries, the second world war is claiming a new significance. Xi himself has amplified the discourse with his statement that China was the first signatory to the UN charter, “essentially defining China as the heir to, and protector of, the post-1945 order”, Mitter writes.

The move also has a very modern strategic purpose. By highlighting its wartime role — and seeking international recognition for its huge sacrifices — Beijing is setting itself up to reinforce territorial claims made by the Nationalist government, which did much of the wartime fighting, to vast tracts of the South China Sea and elsewhere.

“In the future, we will hear more about China’s claims to a greater role in the construction of order in Asia and globally,” Mitter writes. “Some of those claims will undoubtedly be coercive. China is unafraid to wield its power in profoundly nonliberal, noncooperative ways, as in its militarisation of the South China Sea and use of economic boycotts to damage Taiwan’s economy.”

Every country channels its own history in its dealings with the outside world. But China’s history is so long and varied that it can be tricky to know which echoes are sounding the loudest in Beijing at any one time. These three books allow the reader — and the next US administration — to prepare for what China may do next.

Superpower Interrupted: The Chinese History of the World, by Michael Schuman, Public Affairs, RRP$18.99/£25, 384 pages

The Emperor’s New Road: China and the Project of the Century, by Jonathan Hillman, Yale, RRP$28/£20, 304 pages

China’s Good War: How World War II Is Shaping a New Nationalism, by Rana Mitter, Harvard, RRP$27.95/£22.95, 336 pages

James Kynge is the FT’s global China editor

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Emerging Markets

Ecuador’s exporters caught between US and China after debt deal




Exporters in Ecuador are worried that their all-important trade with China will suffer as a result of a controversial agreement the US says is aimed at shutting China out of the South American country’s 5G telecoms network.

The agreement, signed by the US International Development Finance Corporation (DFC) and the Ecuadorean government just days before Donald Trump left office in January, envisages the US buying oil and infrastructure assets in Ecuador on the understanding Quito uses the proceeds to pay off its debt to China.

It also obliges Ecuador to sign up to what the Trump administration called the “Clean Network” — a state department initiative designed to ensure that nations exclude Chinese telecoms services and equipment providers as they build out their high-speed 5G mobile networks.

Adam Boehler, the recently departed chief executive of DFC, has described the deal as a “novel model” to eject China from the Latin American nation.

But it has caused unease in Ecuador, which has become increasingly reliant on exports to China.

“The announcement has generated a lot of inquiries and a lot of doubts,” said Gustavo Cáceres, head of the Ecuadorean-China Chamber of Commerce (CCECH). “We hope our authorities handle this in the best way possible so as not to give the impression that we’re turning our backs on China.”

One of the smallest countries in South America, Ecuador has traditionally exported primarily to the US and Europe, but China is fast catching up. Its share of Ecuador’s exports jumped from 3.9 per cent in 2015 to 15.8 per cent. In the same period, the US’s share fell from 39.4 per cent to 23.7 per cent.

The Chinese buy oil, shrimp, bananas, cut flowers, cacao and timber from Ecuador. Last year, despite the coronavirus pandemic, Ecuador’s exports to China grew more than 10 per cent and, for the first time, the country boasted a trade surplus with Beijing.

The shrimp industry has become particularly important. Since 2016, Ecuador’s shrimp exports worldwide have jumped 86 per cent. The nation of just 17.4m people is now the largest exporter of shrimp in the world, having overtaken India last year, when it exported 676,000 metric tonnes of the crustaceans in trade worth $3.6bn. After oil, shrimp were the country’s most lucrative export commodity.

Over half of that went to China, which, with its expanding middle class, is acquiring a taste for seafood once seen as a luxury.

“China will remain our main market,” forecast José Antonio Camposano, president of Ecuador’s National Chamber of Aquaculture (CNA), which oversees the industry. “We need a smart approach to China. A market of 1.4bn people with the acquisitive power that the Chinese have? I’m a businessman, how can I say no to that?”

The CNA was sufficiently worried by Ecuador’s agreement with the US that it sent a three-page letter to Ecuador’s president Lenin Moreno reminding him of China’s buying power.

While the letter did not mention the DFC deal directly, it urged Moreno — who in his four years in power has shifted Ecuador’s axis away from Beijing and towards Washington, reviving relations with the IMF and renegotiating the country’s debt to bondholders — “to reinforce with senior Chinese leaders the point that the excellent relationship between Ecuador and China remains intact”.

Freshly caught shrimp being packed into containers in Ecuador in 2011
Ecuador’s shrimp industry has fed a growing appetite among China’s expanding middle class © Bloomberg

China’s ambassador to Ecuador, Chen Guoyou, said he was unconcerned by the DFC deal and described media reports that it excluded Chinese companies from Ecuador’s telecoms network as “over-interpretation and gratuitous assumption”.

“China respects the sovereign and independent decision of the Ecuadorean government to develop pragmatic, balanced and diverse partnerships with other countries,” he told the Financial Times in an email.

Responding to his comments, one of the former Trump administration officials who negotiated the deal said it had been made explicitly clear in the text that the agreement was contingent on the country participating in the “Clean Network” — which would prevent it from including Huawei or any other Chinese company in its telecoms network.

The future of the deal, and indeed Ecuador’s future relations with China and the US, will depend in part on the outcome of the country’s presidential election on April 11. It pits leftwing economist Andrés Arauz against Guillermo Lasso, a conservative former banker. 

Arauz has the backing of Rafael Correa who took Ecuador out of the US’s orbit and pushed it towards China while serving as president from 2007 until 2017. He broke off relations with Washington’s financial institutions and signed a series of loans-for-oil deals with the Chinese. If Arauz wins the election he is likely to seek support from Beijing and might rip up the DFC agreement, particularly now Trump is no longer in office.

In contrast, Lasso told the FT previously the deal was “a pleasant surprise” and “good news” for Ecuador.

“It’s clear that the US is our principal ally and in my government I would look for an even closer alliance with the US,” he said.

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Brazil virus variant found to evade natural immunity




The P.1 Covid-19 variant that originated in Brazil and has spread to more than 25 countries is around twice as transmissible as some other strains and is more likely to evade the natural immunity people usually develop from prior infection, according to a new international study.

The research, conducted by a UK-Brazilian team of researchers from institutions including Oxford university, Imperial College London, the University of São Paulo, found that the P.1 variant was between 1.4 and 2.2 times more transmissible than other variants circulating in Brazil. 

It was also “able to evade 25-61 per cent of protective immunity elicited by previous infection” with any earlier variant, the researchers found, in a sign that current vaccines could also be less effective against it.

International concern about the P.1 variant has escalated recently, with more than 25 countries detecting the variant, including Belgium, Sweden and the UK, which has identified six cases.

The scientists are expected to release a paper describing the research on Tuesday. Dr Nuno Faria, the lead author, did not immediately respond to a request for comment. The study has not yet been peer reviewed.

The researchers have dated the emergence of the P.1 variant to November 6, 2020, around one month before cases began to surge for a second time in the Brazilian city of Manaus. They found that the proportion of cases classified as P.1 in Manaus increased from zero to 87 per cent in the space of 7 weeks. 

The paper concluded: “Our results further show that natural immunity waning alone is unlikely to explain the observed dynamics in Manaus, with support for P.1 possessing altered epidemiological characteristics.”

“Studies to evaluate real-world vaccine efficacy in response to P.1 are urgently needed,” it added.

The researchers also found that infections were 10 to 80 per cent more likely to result in death in Manaus after the emergence of P.1. However, the authors cautioned that it was not possible to determine whether this meant the variant was more lethal or whether it was a result of increased strain on the city’s healthcare system, or a combination of both. 

The P.1 variant has over 17 mutations, which alter its genetic sequence from the virus originally identified in Wuhan, including 3 key changes to the spike protein that it uses to enter human cells.

Researchers in Brazil have been using genetic sequencing technology developed by Oxford Nanopore in the UK to identify and track the variant. The technology was first used in Brazil during the Zika outbreak in 2015.

Dr Leila Luheshi, director of applied and clinical markets at Oxford Nanopore, told the Financial Times that while the B.1.1.7 variant in the UK has similar properties of high transmissibility to P.1 — it is thought to be around 1.5 times as transmissible as variants that preceded it — there was no evidence to date that it evaded past natural immunity in the same way. Studies so far have also shown that current vaccines retain their efficacy against B.1.1.7.

Luheshi said that the concern with P.1 is that “because it has these mutations around the spike . . . the hypothesis is that the vaccine will be less effective.” But she added that there is not yet definitive evidence to support this theory. 

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Emerging Markets

Coronavirus latest: Production glitches to delay Johnson & Johnson vaccine distribution




Coronavirus latest: Production glitches to delay Johnson & Johnson vaccine distribution

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