Friday News Roundup — November 12, 2021

Friday greetings from Washington, D.C. First and foremost, this week reflect on the service and sacrifice of this nation’s veterans and what we owe them for our safety, security, freedom, and prosperity.

In Washington, what the Biden administration had hoped was the beginning of a focus on, finally, “infrastructure week” became “inflation week” when the key economic indicators came in running very hot. Both the fate of the BBB reconciliation package and the future of the Fed Chairmanship are now bound in the politics of inflation and its very real impact on Americans’ wallets. The political-economic challenge is that while the demand side inflation driven by government spending fits neatly into bumper sticker and soundbite approaches, while the complicated supply side factors of energy markets, meatpacking labor, housing regulation, California ports, and Covid spikes do not.

This week, Joshua reviewed two books on the changing character of war: Anthony King’s “Urban Warfare in the Twenty-First Century” and John Arquilla’s “Bitskrieg”. Both show that whether fought block-by-block or bit-by-bit, the nature of war remains the same.

Space News also published his op-ed on the need for security clearance reform within the commercial space sector. Doing so, he argued, will enhance the security of the industry against Chinese espionage and, at the same time, help bring new entrants into the national security space enterprise.

In this week’s roundup, Dan looks at how the Chinese Communist Party has further enshrined Xi Jinping’s approach to key challenges — and the gauntlet thrown to democracy to meet these challenges too. Robert covers the rapprochement in transatlantic trade issues, while Brian looks at how the world looked at the climate agreement between the U.S. and China. As always we wrap with news you may have missed.

Xi’s Path Ahead & the Challenge to Democracy

Dan Mahaffee

While there had been little doubt, this week’s announcement from the Chinese Communist Party’s central committee made clear that Xi Jinping will be reappointed to a third term, fulfilling what had been started when he led the party to do away with term limits. Elevated to a level on par with Mao Zedong and Deng Xiaoping, the party declared under Xi’s leadership, “the great rejuvenation of the Chinese nation has entered an irreversible historical process.” In a dig at his predecessors, the party plenum also stated that Xi had “resolved many problems that [the party] failed to address for a long time despite intending to do so.”

The problems that China faces are myriad. The business headlines about the collapse of Evergrande and the slow motion insolvency of that company are a highly visible example of the deep indebtedness of China’s economy and the challenges of reorienting that nation’s economy and allocation of capital. China also faces an aging and shrinking population, and measures from the relaxation of the “one child policy” to those aimed at curbing the cost of education and childcare also reflect a desire to encourage Chinese couples to have children. At the same time, the restrictions on the education and tutoring industry have the shared goal of reducing foreign influence over Chinese students — via restrictions on foreign curricula and instructors — and the economic crackdown on the tech sector and companies listing overseas shows how Beijing is seeking to consolidate its control over corporate data, financial information, capital flows, and other arenas that we would see as traditionally commercial and business-related, yet the party increasingly sees as a matter of national security.

It is not solely a matter of doing business. Social credit scores and crackdowns on video gaming by youths demonstrate how the party seeks to shape individual behavior to address perceived societal ills. Rhetoric about “common prosperity” belies a complicated mixture of the aforementioned factors, income inequality, and the transition of the Chinese economy beyond export-led growth and middle income GDP per capita. Nationalist rhetoric and wolf warrior diplomacy about Taiwan, regional rivalries, and competition with the United States and allies reflects a desire to both distract from domestic ills, while also reflecting China’s concerns about its influence and security. The crackdown on Hong Kong and the genocide of the Uighurs show a party willing to do anything to stay in power.

While some of these problems and their interaction are distinctly Chinese, the fundamental challenges are not unique to China. The whole developed world faces the challenge of shrinking and aging populations, growing income inequality, and the impact of technology on the economy and society. On the global stage, insecurity and instability, the impact of climate change, and sustainable and equitable economic development also remain shared challenges.

In China, Xi is developing a model for how these problems can be addressed, and, at the same time, this is a challenge for democracy. While China may not seek to export its model as an ideological challenger, there is a competition between these systems to show that they can deliver results and address these challenges. China’s model, via Xi and the party, is one that emphasizes the role of the state in tackling these, reining in the free market and free enterprise, while also cracking down on foreign influence and those threatening the party’s grip on power. While this is not an authoritarian model Beijing may seek to “export” like our Soviet adversaries in the past, they will happily facilitate and sell the tools needed for its spread. In the battle of ideas, they’re happy to compete, as the announcement about Xi’s appointment also called U.S. democracy a “game of the rich.”

Given these global ubiquity of these challenges, the gauntlet is thrown down for democracies to bring forth their solutions. China offers up its authoritarian answers, while we bicker over whether the challenges are even real. The United States needs to address matters like inequality and a shrinking population, coming to grips with rapid technological change, while also making the investments in infrastructure and innovation for tackle issues from climate change to the competition for global innovation leadership. When the history of the 21st century is written, will it show that democracies met these challenges? It is a question not only for our leaders, but also we the people who choose them.

Common Approach to Steel and Aluminum Adds Momentum to U.S.-EU Relationship

Robert W. Gerber

In recent months, U.S. and EU leaders have notched significant progress in normalizing and strengthening the transatlantic relationship. First, resolution of the decades long Boeing-Airbus subsidies dispute in June. Then the first meeting of the U.S.-EU Technology and Trade Council, followed by opening of U.S. airports to vaccinated European travelers. The U.S. and the EU have also agreed on a path forward for R&D collaboration. And on October 31, President Biden and European Commission President Ursula von der Leyen announced an end to the Trump-era “Section 232” tariffs on steel and aluminum imports from the EU. These would be replaced by Tariff Rate Quotas (TRQs), which are essentially ceilings on volumes of imports. (The U.S. will maintain Section 232 tariffs on Chinese steel and aluminum tariffs.) The EU will now cancel their planned retaliatory tariffs on certain U.S.-produced goods, which was set to take effect December 1. The U.S. manufacturing sector, facing twin pressures of rising prices and supply chain constraints, welcomed the tariff breakthrough. President Biden said the agreement represented a “new era” of transatlantic cooperation. Von der Leyen, who was in Washington, DC this week for meetings at the White House and to accept the Atlantic Council’s Distinguished Leadership Award, said the agreement “marks a milestone in a renewed EU-U.S. partnership…We have restored trust and communication.”

Of note is that the USTR factsheet on the steel deal recognizes “the importance of the transatlantic relationship” stating, “The United States and EU are like-minded partners with shared democratic values and similar economic and security interests.” This blending of trade policy and foreign policy signifies a major break in strategy from the Trump-era USTR under Robert Lighthizer, who largely kept U.S. foreign policy interests outside of trade considerations. Another remarkable aspect of this deal is a pledge to negotiate “future arrangements “for trade in the steel and aluminum sectors that take account of both global non-market excess capacity as well as the carbon intensity of these industries.” This will be an effort to create a new trade regime that disfavors producers like the PRC who are responsible for flooding global markets with subsidized steel produced without regard to environmental impact. Some skeptics have called this concept “managed trade,” and it could be challenged at the WTO — although the WTO’s effectiveness and relevance has been on the decline for some time. Nevertheless, the concept could be an important new measure in the trade policy toolbox for the United States, the EU, Japan, and others — if it can be brought to fruition. And it bodes well for better strategic alignment on trade policy between Brussels and Washington in the face of unfair and climate-adverse competition from the PRC.

Foreign Press Reactions to U.S. and China Moves at COP26

Brian Byrne

Today marks the final day of the two-week United Nations Climate Change Conference in Glasgow, also known as COP26. Delegates from two hundred countries met to discuss the challenges and potential solutions to address climate change, pledging commitments and offering policy proposals. The Biden Administration planned for the United States’ triumphant return as a global leader on climate change, but global reaction has been more of a mixed bag.

COP26 is a public relations opportunity, where a nation’s leaders present a tailored message to the rest of the world, so there is no better way to examine which message has come across than to read the news coming out of other countries. International press coverage of the U.S. presence at COP26 has alternated between skepticism and approval.

A pervasive narrative running in newspapers overseas is that President Biden has been unable to rally his party, even though it maintains control of Congress, around climate change. The French publication La Presse printed an article titled “U.S. President goes to COP26 with almost empty hands,” which delves into the domestic political situation that has held up the Build Back Better bill in the Senate. Franceinfo focused on the same story with the headline “COP26: why is the United States lagging behind in the fight against global warming?” The foreign press has also emphasized Biden’s need to distance the United States from President Trump’s inaction on climate change. SkyNews wrote that the United States is confronting “a lingering sense of shame over the Trump era and his withdrawal from the Paris climate accord.”

Beyond issues of domestic U.S. policy, the international press has been concerned with U.S.-China tension over climate. The South China Morning Post wrote that “U.S.-China cooperation could be the catalyst for a historic agreement on climate change,” but a certain amount of competition could “[spur] the two nations in a ‘race to the top.’” Aljazeera reported November 2 on Biden’s criticisms of China with the headline “Biden says China, Russia failed to lead at COP26 climate summit,” albeit this was before the November 10 U.S.-China announcement they would “work together and with other Parties to strengthen implementation of the Paris Agreement.” The United States and China are the world’s two largest economies and polluters, so the tension between them is a consequential story.

The German newspaper Die Welt covered the surprise joint Chinese-U.S. climate declaration with approval, focusing on U.S. climate envoy John Kerry’s assertion that “cooperation on climate protection is the ‘only way’ to cope with the climate crisis,” and highlighting UN Secretary General António Guterres’ statement that “the agreement between the two countries is a ‘step in the right direction.’” The BBC published the headline “COP26: Cautious welcome for unexpected U.S.-China climate agreement,” which characterizes the move as “‘not a game changer’ but a big step forward.”

AfricaTimes reported on President Kenyatta’s speech in which he expressed deep concern about the shortage of financial resources for developing countries and the fact that the item on Africa’s special needs and circumstances was not included in the draft COP document, despite the vulnerability of Africa to climate change.

Overall, while COP26 has grabbed headlines worldwide, international press coverage has characterized the event with a sense of wariness that the conference will ultimately amount to symbolic messaging as opposed to actual reform.

News You May Have Missed

Concerns about Ethiopia grow as Rebels advance on capital

Speaking with reporters, Secretary of State Blinken shared concerns about the growing prospect of all out conflict or the collapse of Ethiopia as Tigrayan rebels have advanced closer to the capital of Addis Ababa. Blinken encouraged a ceasefire and negotiations, as the United States is backing the efforts of the African Union and its mediator, former Nigerian President Olusegun Obasanjo.

Norwegian Underwater Sensors’ Cables Mysteriously Cut

A network of underwater sensors used by the Norwegian state-operated Institute for Marine Research have been taken offline as their cables were mysteriously cut. The sensors, in addition to providing data about marine conditions, can also help in the tracking of submarines. Naturally, suspicion has turned to Russia regarding this.

The views of authors are their own and not that of CSPC.

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