If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. Attack him where he is unprepared, appear where you are not expected.” - Sun Tzu

In recent months, China’s diplomacy has been a center for debates: the One Belt One Road policy, the recent military White Paper, the increased friction in South China Sea, are all actively discussed and the question at the heart of most topics could be summed up as: what does China want? Indeed, ‘Peaceful rise’ and ‘harmonious world’ are great sounding policies, but how are they translated (and then perceived) into geopolitical realities?

Before going into details, we need to look at the wider picture: the American withdrawal of direct involvement abroad, a European existential crisis, and the apparent rise of emerging powers. From here, it becomes clear that China has more freedom of action than a decade ago, even though we need to remember that the US is and will remain the world’s only superpower for the foreseeable future.

Indeed, China’s priorities are clearly domestic. In addition, its show of strength is grounded in a shifting international order and a fragile economy which is only starting a difficult (only a few countries succeeded) rebalancing. This window of opportunity is magnified by the European and North American fiscal weaknesses which are currently unable to match Beijing’s generous provisions. Yet we would expect that many projects to be little more than white elephants and when the domestic squeeze truly comes, Beijing’s foreign profligacy will have to be reviewed.

In addition, China’s sheer size is a major concern for all partners, from neighbors (large and small, East and West) to farther powers. Everywhere it looks, China is facing discomfort and mistrust. The grand alliances centered around China are yet to materialize, while the opinion in various countries are clearly increasing their demands on Beijing.

Finally, even though it is actively building it, Beijing still lacks international capabilities and experience of foreign operations. From counter-terrorism to building a deep water navy, China has a lot to learn and is potentially facing adversaries with more experience and resources.

We can thus conclude that China is learning to operate in a global environment and manage its interests as best as it can without creating too large backlashes. China will indeed increase its influence abroad, yet it remains to see how successful it will be. While understanding China’s goal and strategies is very important, we also need to acknowledge its limitations and their consequences.

Science, General Knowledge & Environment

Mysterious Earthen Rings Predate Amazon Rainforest – “In fact, the Bolivian Amazon before about 2,000 to 3,000 years ago looked more like the savannas of Africa than today’s jungle environment.

The Unrealized Horrors of Population Explosion – “In Mr. Pearce’s view, the villain is not overpopulation but, rather, overconsumption. “We can survive massive demographic change,” he said in 2011. But he is less sanguine about the overuse of available resources and its effects on climate change.

Why It Pays to Be a Jerk – “Smile at the customer. Take the initiative. Tweak a few rules. Steal cookies for your colleagues. Don’t puncture the impression that you know what you’re doing. Let the other person fill the silence. Get comfortable with discomfort. Don’t privilege your own feelings. Ask who you’re really protecting. Be tough and humane. Challenge ideas, not the people who hold them. Don’t be a slave to type. And above all, don’t affix nasty, scatological labels to people.

Beware the risks of giving staff in China the chop – (Hat tip Lao Ho) – “It’s a conundrum in China, that if you want to replace a legal rep, the change in legal rep document has to be ‘chopped’ by the outgoing legal rep, and if he takes the chops then you can’t make the change.

The Big Meh – (Hat tip Lao Ho) – “A growing number of economists, looking at the data on productivity and incomes, are wondering if the technological revolution has been greatly overhyped — and some technologists share their concern.

History & Geopolitics

A Net Assessment of Europe – “Therefore, the crisis in the European Union will define the broader situation in Russia, and that fundamental crisis appears insoluble within the current framework of discussion.

Kremlinology Then and Now – [Video] – On Russia’s inner politics, from Stalin’s succession to Putin’s current challenges.

Now China starts to make the rules – (Hat tip Lao Ho) – “…Beijing is harnessing all its economic, financial and diplomatic muscle to drive a process of Eurasian integration from its own border to the Middle East, Africa and Europe. That adds up to quite a sphere of influence.

Conversation: China’s Defense Strategy[Video] – Stratfor Military Analyst Paul Floyd and Vice President of Asia-Pacific Analysis Rodger Baker discuss China’s defense white paper and its implications on military strategy and political relations around the world.”

Finance & Economics

ECB fears ‘abrupt reversal’ for global assets on Fed tightening – “Nor has the currency bloc sorted out its essential deformities or embraced any form of fiscal union. “As it stands, the eurozone is a mechanism for divergence among its members, not convergence: real interest rates are highest in the weakest countries, lowest in the strongest.“”

Vers un appauvrissement des Séniors et la liquidation de leur patrimoine – (Hat tip Lolo) – “Le véritable changement viendra du recul du niveau des pensions des futurs retraités, qui ne sera plus évitable très longtemps. En réaction, les séniors qui en auront la capacité compenseront leur perte de pouvoir d’achat par le maintien d’une activité partielle comme c’est désormais largement le cas au Japon, où 45 % des revenus des plus de 65 ans provient de leur travail.

Why China’s stock rocket is pointed at Mars – “The equity market now plays an important role in terms of both the short-term policy objective (i.e., delivering this year’s growth target) and structural reform ambitions. Policy makers appear to have taken a largely benign view of the equity market rally, which, if sustained, can boost GDP by 0.5pp on our estimates through trading-related financial activities, and could add another 0.2pp or so through a rise in consumption from market wealth generation.

Picture of the day: Daily Life, May 2015


About Carlito Riego

"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi