November 4th, 2024

Trade 

Beijing Reapproaches Its Trade Relations

By Contributor Caden Hubbs

China is set to slash tariffs on the world's “least-developed” countries, furthering its free trade agenda with the Global South.

A Departure From Protectionism: Last Friday, the Chinese Envoy to Afghanistan announced that China would be offering the Islamic Republic a “zero-tariff treatment for 100 percent [of] tariff lines,” effectively eliminating all taxes on Afghani goods crossing the Chinese border. This announcement is in reference to a plan recently unveiled by China’s Customs Tariff Commission that is planned to eliminate all tariffs within a set annual quota. This tariff reduction strategy is meant to further China’s broader initiative to lower trade barriers with developing countries in a long-term bid to tap into the developing world's vast, unrealized raw resource capacity. 

China’s Growing Pains: As China pushes to modernize manufacturing, it has found difficulty acquiring the resources necessary to achieve growth targets. China has turned to Africa and other developing countries to fill this gap, investing in extraction industries and the infrastructure necessary to transport their products back to China. Afghanistan presents a tempting prize, offering a vast amount of untapped metal deposits. One of the avenues China has utilized to cement its ability to invest in developing countries and gain returns has been unilateral trade deals. The most recent deal, which has entirely eliminated tariffs, built upon Beijing's previous efforts to open trade, following a deal penned in 2021 and a separate deal in 2023. These efforts have steadily lowered China’s tariff rate on products imported from developing countries, enabling the country to import raw materials at a lower cost than otherwise possible.

End of the Road: China’s overseas efforts have encapsulated much of China’s investment capacity. Compounded by uncertainty in the domestic economy, Chinese businesses see overseas investment as a lucrative opportunity. However, several of the projects funded by Chinese investors have seen little return on investment while exposing Chinese firms to risk. This isn't a problem as long as these projects have regular access to new capital, but now this previously uninterrupted flow of capital seems to be drying up, with the Belt and Road initiative, China’s preferred vehicle for capital accumulation, failing to reach its funding goals and experiencing rampant corruption. Beijing's most recent move is likely motivated by a desire to attract greater interest from domestic investors, but if Beijing fails to attract enough capital to its projects, its leadership will be forced to cut its losses on numerous projects. 

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Defense

Inflammation of Tensions Following Taiwan Arms Deal

By Contributor Lindsey Spain

The United States approved a $2 billion arms sale package to the Republic of China, in a maneuver that has garnered the criticism of China’s political elite.

International Armament: On the 25th of October 2024, the Defense Security Cooperation Agency announced the U.S.’s approval of an arms sale amounting to $2 billion to the R.O.C., better known as Taiwan. Included in the package are three National Advanced Surface-to-Air Missile Systems (NASAMS) and 123 Advanced Medium Range Air-to-Air Missile (AMRAAM-ER) missiles, amounting to $1.16 billion, with the additional $828 million including advanced radar systems. The shipment of the NASAMS, recently used on the Ukrainian front lines, will be the first such transaction to Taiwan. 

Drastic Defense: Upon his election on the 13th of January 2024, Taiwanese President Lai Ching-te of the Democratic Progressive Party (DPP) promised to increase defense spending to counter increased threats from the P.R.C. Taiwan’s recent arms negotiation comes in the wake of a recent military drill by the P.R.C., in which they launched a record 125 J-15  aircraft in addition to their Liaoning aircraft carrier in the Taiwan Strait. China’s Ministry for National Defense stated that the drills were punishment for Taiwan’s refusal to acknowledge their status as a subsidiary of the P.R.C., mere days after President Lai Ching-te reaffirmed his commitment to “resist annexation” at a celebration for Taiwan’s “National Day” on the 10th of October 2024. 

Domestic Implications: Under its “One China Policy”, the U.S. recognizes the administration in Beijing as the only official Chinese government, maintaining official diplomatic ties. However, in accordance with H.R.247, also known as the Taiwan Relations Act, the U.S. is committed to “the preservation of human rights of the people of Taiwan,” much to the ire of Beijing. This contentious relationship has been exacerbated in magnitude under the administration of President Xi Jinping, with a doubling of warplane incursions into Taiwan’s Air Defence Identification Zone (ADIZ).

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Diplomacy

Cooperation and Expansion: The 16th Annual BRICS Summit

By Contributor Surya Ambatipudi

The 2024 BRICS summit in Kazan saw a recommitment to political and economic cooperation by member states, alongside the addition of four new countries.

Summit Proceedings: From October 22-24, Russia hosted the 16th annual BRICS summit in the city of Kazan. The summit served as a symbolic victory for President Vladimir Putin, who had been isolated and sanctioned by the Western world. For China, the meeting served to reaffirm its position as a leader of the Global South. Spokesperson Jagannath Panda from the Institute for Security and Development Policy’s South Asian and Indo-Pacific Affairs Center stated, "a geopolitical ring with the lead of China and the strong support of Russia” was being created. The Kazan Declaration, a culmination of commitments resulting from the meeting, emphasized the importance of empowering the Global South and criticized Western sanctions. Additionally, four new members (Egypt, Ethiopia, Iran, and the United Arab Emirates) were added to the organization, along with 13 partner countries that include, Indonesia, Nigeria, and Thailand. 

Recent Diplomatic Developments: The summit began just two days after a disengagement deal was signed between China and India regarding tensions at the Himalayan border. The two nations have had a history of unstable relations stemming from territorial disputes and China’s generally warm relationship with Pakistan. The recent deal, however, symbolizes a new chapter in India-China cooperation. India’s Prime Minister Narendra Modi and Xi Jinping engaged in bilateral talks during the summit itself, which were reported to have been civil and less tense than previous talks. Moreover, the two engaged in a “historic” handshake to symbolize a thaw in their relationship. Despite this, India’s opposition to China’s Belt and Road Initiative remains a point of contention, and amidst the BRICS summit, Brazil has added fuel to the fire. Brazil, like India, rejected taking part in the initiative and stated that they sought a relationship with China that went beyond formal commitments. 

China’s Expansion of Influence: China’s influence on member states, partners, and other countries with ties to BRICS is especially evident in Africa. Just days before the summit began, South Africa relocated its Taiwanese liaison office from its administrative capital, Pretoria, to Johannesburg, symbolizing an attempt to appease China. Additionally, China has invested billions of dollars in infrastructure and development in countries that have submitted applications to join BRICS, like in the new member of Ethiopia, where it allocated over $5 billion in economic development, creating over 600,000 jobs. China’s role in BRICS is powerful and influential, making it a major player in crafting an alliance as an alternative to the West.