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newstfionline · 7 years

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The World Is Even Less Stable Than It Looks

By Stephen M. Walt, Foreign Policy, June 26, 2017

I’m normally leery of the pervasive threat inflation that tends to dominate discussions of foreign policy. Because the United States is so strong and in such a favorable geopolitical location, pundits and policymakers have to pretend the sky is falling to justify bigger military budgets and convince the public to keep meddling in distant lands. And whether the threat is falling dominos, “creeping Sharia,” the “axis of evil,” or even “violent extremism,” the actual threat these faraway dangers pose is usually exaggerated.

Right now, however, we’re at a moment when I think genuine concern is warranted. This is not to say that we’re on the brink of a major war, let alone a global clash of great powers. But flammable material is accumulating and it is hard to have high confidence in the political leadership in several key countries (including here in the United States). We would all do well to take stock of the global order: Is the world more secure than it was a year ago? Specifically, is the risk of war increasing or decreasing? Is the danger of a serious economic crisis higher or lower? Are the institutional arrangements and norms that help smooth and resolve conflicts of interest and enhance the prospects for international cooperation more or less robust than they were in June 2016?

With apologies to the late Sergio Leone, I’d group recent global developments under three headings: the good, the bad, and the ugly.

The Good. Before descending into fatalistic depression--we’ll get to that soon enough--let’s start with the upside. Despite all the worrisome headlines and a recent slight uptick, the level of conflict between human beings is still at historic lows, and the likelihood that you will die a violent death is vastly lower than it was at nearly all other moments in human history. Nor have the number of low-level conflicts increased significantly over the past year or so, even if one takes the deteriorating situation in the Middle East into account. Although the Islamic State and other terrorist groups have been able to direct or inspire terrorist attacks in more places, the actual risk from terrorism remain relatively low outside active conflict zones such as Syria or Iraq, especially when compared with more prosaic and familiar hazards. Even now, the odds that a European or American will be harmed in a terrorist attack are vanishingly small.

Such encouraging trends are no guarantee of continued tranquility, of course, and one could even argue that complacency could make a spiral into war more likely. But we should still be grateful the world is more peaceful than it was in earlier eras and try to draw the right lessons from that observation. At a minimum, the major powers haven’t fought each other directly for over 70 years, and making sure that continues to be the case remains a critical task.

There are other encouraging straws in the wind as well. For the moment, voters in France, the Netherlands, and Austria have rejected the xenophobic nationalism of politicians like Geert Wilders and Marine Le Pen, and instead embraced the more inclusive and forward-looking visions of leaders like Emmanuel Macron. The Islamic State’s self-proclaimed “caliphate” is now headed for the dustbin of history, and while this won’t eliminate the problem of violent extremism, it is a useful step forward. The peace agreement ending Colombia’s long civil war is holding--at least so far--and the war in Ukraine has settled down into a mostly frozen conflict that seems unlikely to escalate. The EU is in its fifth straight year of economic recovery, despite of the uncertainties surrounding the Brexit process, and European, American, and Japanese publics are increasingly upbeat about economic issues. And (fingers crossed), so far U.S. President Donald Trump hasn’t done much to trigger a trade war (though he still might). I wouldn’t say the glass is half-full, but at least it’s not completely empty.

The Bad. That’s the good news. If you’re looking for things to worry about, alas, one doesn’t have to look far.

In Asia, North Korea’s nuclear and missile capabilities in defiance of global opinion (surprise, surprise), and Trump’s naive hope that China would ignore its own interests and somehow persuade Pyongyang to do what Trump wanted has been exposed as the pipe dream it always was. But this leaves the United States and its Asian allies with no attractive options, and only the “least-bad” choice of reengaging with a country that just killed a U.S. citizen over an alleged purloined poster. Islamist movements appear to be gaining strength in Indonesia and threatening that country’s prior atmosphere of tolerance, and the Philippine government’s wars on drugs and terrorism are wreaking a fearsome human cost with little to show for it. And Trump’s bromance with Chinese President Xi Jinping has done nothing to slow Beijing’s efforts to alter the territorial status quo in the South China Sea. All things considered, it’s hard to see conditions in Asia as safer now than they were a year ago.

The same gloomy conclusion applies to the Middle East, only more so. The Islamic State may soon be a thing of the past--at least in terms of holding territory--but the exceedingly complex, multifaceted, and interrelated conflicts in Yemen, Syria/Iraq, and between Qatar and Saudi Arabia create much more potential for trouble than was present back in 2016. The impending defeat of the Islamic State has intensified its opponents’ efforts to control its former territory, with outside powers ramping up their involvement while diplomatic efforts languish. U.S. military involvement has risen steadily--with scant input from Congress or the American public--and U.S. aircraft recently shot down Iranian drones and a Syrian fighter plane. The latter act prompted Moscow to issue a direct warning against further U.S. attacks and to suspend the communications channel created to minimize the risk of an inadvertent clash between U.S. and Russian forces. And to make matters worse, an emboldened Saudi Arabia is continuing its brutal military campaign in Yemen while simultaneously trying to force neighboring Qatar to silence Al Jazeera, sever its contacts with Iran, and basically accept Saudi predominance. Maybe you can see a silver lining in all these developments, but I can’t. The worst case for the United States would be involvement in another big Middle East war arising “from sheer incompetence and incoherence rather than by design,” as Jim Lobe and Giulia McDonnell Nieto del Rio put it.

Meanwhile, it’s “déjà vu all over again” in Afghanistan, with the United States about to reverse Barack Obama’s drawdown and send more troops back into an unwinnable war. Exactly why this step is in America’s national interest remains unclear, and at least nobody is trying to pretend that this decision (which Trump has delegated to Secretary of Defense James Mattis) is going to produce anything that might be termed “victory.” Instead, in a disturbing echo of the Indochina war, the United States is operating a new version of the “stalemate machine,” doing just enough to not lose. We know we can’t win; at this point we can’t break even, yet neither Democrats nor Republicans will let us out of the game.

Last but not least, the institutional underpinnings of the present international system continue to fray. The importance of such institutions is sometimes exaggerated, but even hard-nosed realists understand that strong institutions can facilitate cooperation among like-minded states and lend greater predictability to important international relationships. NATO is intact but weaker than it was a year ago, and doubts about the U.S. role in Asia have been rising following Trump’s renunciation of the Trans-Pacific Partnership and his erratic responses to events in Korea and the Philippines. Instead of being able to count on help from close allies in most circumstances, today the United States faces a Germany whose leader wants Europe to “chart its own course,” and a Canada whose foreign minister says “International relationships that had seemed immutable for 70 years are being called into question,” adding that America’s decisions are forcing Canada “to set our own clear and sovereign course.�� Such sentiments are not a sign of the apocalypse, but they do not herald easier ties between the United States and its most important neighbors and allies.

The Ugly. These developments would be worrisome enough if we had a surplus of gifted and farsighted strategists at the helm of the world’s major powers, the modern-day equivalents of Franklin Roosevelt, George Marshall, Konrad Adenauer, or Charles de Gaulle. Heck, at this point I’d take Maggie Thatcher, Zbigniew Brzezinski, James Baker, Jacques Chirac, and any number of past leaders who made some big mistakes but also got a number of big things right and did not enter public service largely either to fleece the public or to gratify their own egos.

What do we see instead? In the United Kingdom, two successive prime ministers have inexplicably committed remarkably maladroit acts of self-defenestration. The first was David Cameron, who ended his political career by pledging to hold a referendum on leaving the European Union (which he opposed) and then losing. The second is Theresa May, who called a snap election earlier this month that cost her party its Parliamentary majority. France has gone from the “bling-bling” of Nicolas Sarkozy to the hapless Francois Hollande and is now betting on the as-yet untried Macron. Italy hasn’t had effective political leadership since--oh, I don’t know, Garibaldi? Recep Erdogan in Turkey has proven to be extremely adept at consolidating power and extremely bad at actually running the country, and there are equally depressing examples of incompetent leadership in Brazil, Afghanistan, Poland, and throughout the Middle East.

But the United States is determined not to be beaten in this competition of political incompetence. If the consequences were not potentially so dire, the Trump administration’s collective ineptitude would be a great source of comic relief. I’m not talking about controversial policy decisions about which reasonable people might disagree (such as the pros and cons of giving regional military commanders greater authority over operations in their respective areas), I’m talking about foreign-policy actions that seem inspired more by the Keystone Cops or Three Stooges than by Clausewitz, Kennan, or Sun Tzu.

Indeed, only six months into Trump’s presidency, it’s becoming hard to keep track of all the squirm-inducing moments. There was the brief sage of Trump’s initial national security advisor, Mike Flynn, who lasted in his job a mere 25 days, or the appointment of self-styled “terrorism expert” Sebastian Gorka. There was Trump’s bizarre speech at CIA headquarters the day after he was inaugurated, in which he rambled on about the crowd size at his inauguration ceremony and complained about media coverage. There was the “armada” he said was heading toward North Korea when it was actually steaming in the opposite direction, and his on-again, off-again, on-again attitude toward NATO and Article 5. There were the press releases, tweets, and announcements that misspelled the names of foreign leaders and the mini-crisis that erupted when Trump announced South Korea should pay for the THAAD missile-defense system that the U.S. had insisted be deployed there. And then there’s Trump’s weird decision to gut the State Department (apparently with the full support of his secretary of state) and to assign sensitive diplomatic tasks to his son-in-law, despite the latter’s complete lack of foreign-policy experience and checkered business career. And don’t even get me started about Trump & Co.’s handling of relations with Russia and Kushner’s amateurish attempts to create some sort of backchannel to Moscow. With a record like this to defend, it’s no wonder the White House is trying to keep the press and the public in the dark about what it’s doing.

Why does any of this matter? Because the greatest achievements of U.S. foreign policy since World War II has been its ability, when it chose, to keep wars from breaking out or to end them quickly when they did occur. As I’ve explained before, a peaceful world is very much in the U.S. national interest, given how secure and well-off the United States already is. The combination of military strength and skilled diplomacy helped keep the peace in Europe and in much of Asia throughout the Cold War, and often (but not always) played a stabilizing role in the Middle East. It required not just credible military power, but also politicians who understood how the world worked and what the interests of others were, had a clear sense of America’s own interests, and were sufficiently consistent that others could count on them to do what they had promised.

By contrast, America’s biggest foreign-policy failures occurred when U.S. leaders started wars on our own (Iraq, 2003), escalated them for no good reason (Vietnam, 1965), or turned a blind eye to simmering conflicts and missed opportunities for peace (Korea in 1950 and the Middle East in 1966-67, 1971-72, and 1982). And many of these errors arose from impulsive and ignorant leaders who knew relatively little about the situations they were trying to manage.

Today, the United States isn’t disengaging from world affairs or adopting a new and well-thought out grand strategy, such as offshore balancing, but it is hardly acting as a clear or consistent defender of peace and the status quo. On the contrary, Washington is still trying to determine the future fate of Afghanistan, still hoping for regime change in several countries it doesn’t like, encouraging its proxies in the Middle East to escalate their local quarrels, and using increasing levels of military power to try to solve problems--such as terrorism and insurgency--whose roots are essentially political. The United States has pretty much abandoned its role as a potential mediator in lots of potential hotspots, and it would be naive to expect all of these conflicts will to simmer down on their own.

If the past 25 years have taught us anything, it is that few foreign-policy problems can be solved simply by blowing things up. The United States is still unsurpassed at that sort of thing, but the real challenge is devising political solutions to conflicts once the guns have fallen silent. We’ve been singularly bad at this in recent decades, and Trump’s disdain for diplomacy will just impair us even more.

The result is looking like the worst of both worlds: The United States is still engaged in most of the world’s trouble spots, but the ship of state is now being steered by an inexperienced skipper lacking accurate charts, an able crew, or even a clear destination. I don’t know about you, but that situation doesn’t make me feel safer, either.

#global stability #global order #war #global threats

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paulckrueger · 5 years

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Summertime State of Play for the Central Banks

Whether or not the upcoming rate cuts in the US and the EU turn out to be “insurance cuts” or the beginning of an easing cycle into a recession is critically important to ideal macro-driven investment positioning. To the extent the central bankers can engineer another dovish course correction which prolongs the global economic expansion in real terms, which is by far the dominant narrative currently reflected in risky asset prices, it will be a job well done. The challenge, though, is that simply easing policy at the end of an expansion doesn’t reliably prevent recessions. Otherwise, with skillful central bankers in charge, countries could ostensibly avoid recessions forever. Optimism is running high this time around though, at least in the US, because there are no flagrant examples of systemically-important excess leverage, and there is a distinct lack of late-cycle inflationary pressure, both of which tend to precede recessions. There should be, of course, inflationary costs of excessively loose policy, but those are lingering deep in the background, almost irrelevant for now. More problematic at the current juncture are the twin challenges of diminishing marginal economic benefit of loose policy, and the successively lower starting points for policy rates as economies experience slowing performance. Of course, this is especially true in Europe and Japan where policy rates are already negative.

When viewed in isolation and in light of very recent data, the case for rate cuts in the US may seem somewhat flimsy. Yes, inflation is below target, but it’s stable, and the data on the US consumer remains robust. The labor market is strong, wages are growing, and consumer balance sheets are healthy. However, it’s probably not appropriate to view the US in isolation from the rest of the world, nor is it appropriate to view the US economic health solely in light of very recent economic data. Late last year, evidence surfaced in the housing market and cyclical underperformance of broader US economic data that the Fed had overtightened, i.e. gotten above the neutral rate of interest. Remember the confusion and conflicting official views of where in fact the neutral rate of interest was? See: Off Message. Subsequently, once it was clear enough that the monetary policy environment was likely suppressing economic growth, Chair Powell’s pivot toward dovish accommodation at the turn of the year kicked off a remarkable loosening of financial conditions. Though policy rates have remained unchanged, the (mostly) consistent and intensifying commitment to dovish policy this year has been enough to reduce long term rates by a further 70 bps, tighten Investment Grade credit spreads by 50 bps, boost stock prices by 20-odd percent, cut the VIX in half, and keep the dollar basically range-bound. Frequent readers know my obsession with the relevance of FCIs (Financial Conditions Indices) and hence the major relaxation of capital costs year-to-date should be positively affecting the recent economic data. So, in short, while it feels like the US is doing well-enough and doesn’t need a rate cut, the anticipation of multiple rate cuts in which investors have been marinating for seven months means the Fed needs to deliver a 25 bps cut to merely maintain the easy financial conditions they have apparently worked hard to achieve. Thematically, it’s almost as if they have been grasping at reasons to cut rates.1

Now, by a circular argument, I can also make the case that because financial conditions are so loose, cutting by 50 bps this month is unnecessary and ill-advised. The interest rate market has only a modest possibility of 50 bps implied in the pricing for the July meeting (24.5% according to Bloomberg WIRP as of mid-afternoon on 7/16), so the rates market isn’t really “demanding” a 50 bps cut. The real probability of 50 bps is actually less because the choices are not simply 25 or 50. The Fed may actually cut the IOER and RRP rates by 30 bps to again re-center the effective Fed Funds rate within their target range. And that’ll be a real 30 bps cut, not 25. This is my base case, because it seems like a nice way give some satisfaction to the various dovish perspectives on the committee.

In addition, the US economic performance shouldn’t be viewed in isolation from global growth data as it relates to ideal Fed policy. That global data remains weak, and it may or may not turn up, and ultimately the distinction will determine (in my view) whether the Fed cut is just insurance, or the beginning of a protracted cutting cycle. Somewhat annoyingly, there are at least two international linkages which are contributing to the need for the Fed to deliver a rate cut despite “OK” US data – first, if global growth remains weak and further easing is economically justified from the other G7 central banks, the dollar will likely strengthen. Secondly, large cap US companies have significant non-US revenue dependency, so while they are American companies, many are sensitive to non-US growth slowdowns. Historically, as global growth and global trade volumes slow, S&P earnings growth also suffers and hence, so do stock prices and credit metrics. So despite healthy domestic data, financial conditions can tighten again through both the currency and risk asset channels, thereby necessitating a response from the Fed which they can choose to do preemptively.

So which is it going to be, insurance cuts or cutting cycle? It’s too soon to tell for sure, but factors unrelated to the healthy US consumer and labor market are likely to be the determinant. If the US dispute with China ends (I define this as tariffs are rolled back to 2017 levels), then a late cycle global growth rebound would be likely. Unfortunately my view remains that the current tariff levels remain in place for enough time to affect the growth and trade volumes directly and indirectly through supply chain rerouting and slower fixed investment. This still isn’t enough at this point for me to call for a continuation downward in global growth. A lot of good has been done by loose financial conditions, which will continue to help offset the status quo trade impacts. It’s close though, and even marginal hawkish decisions on the trade front would be enough to tip the balance.

1Thanks to Brandon Merrill for the help on this rationale.

The post Summertime State of Play for the Central Banks appeared first on http://blog.jpmorganinstitutional.com/.

from Surety Bond Brokers? Business https://blog.jpmorganinstitutional.com/2019/07/summertime-state-of-play-for-the-central-banks/

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angrycollectordaze-me-blog · 5 years

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Paper代写：British diplomacy towards China

本篇paper代写- British diplomacy towards China讨论了英国对中国的外交。英国外交素来讲究现实主义，表现为审时度势，努力使自己不处于过分被动、尴尬的境地。由于战后自身力量衰退、对美国依赖加深，英国在许多国际事务上支持和追随美国的立场，对新中国的政策总体上同美国一致，即力图防止中国在亚非地区特别是东南亚地区影响的扩大。另一方面，在中国问题上英国又没有完全按美国意志行事，并不顾美国的反对承认了新中国。英国这一理性的外交举动给中国政府和人民留下了务实与友好的印象，为日后两国关系的发展打下了较好的基础。本篇paper代写由51due代写平台整理，供大家参考阅读。

British diplomacy always pays attention to "realism", which is reflected in taking the situation into consideration and trying not to be in an excessively passive and embarrassing situation. This is an incisive summary of the essence and characteristics of British diplomacy by Mr. Chen leimin.

As an established capitalist power and colonial power, Britain has accumulated rich international political experience in hundreds of years of international exchanges and struggles, and forged profound diplomatic tradition and superb diplomatic skills. These intangible diplomatic assets are helpful for Britain to retain certain influence in international affairs. Although the national strength declined sharply after the World War II and the diplomatic space was greatly reduced, the general trend of British diplomacy was to strive for as much initiative as possible in passivity and never give up any opportunity to show initiative. The policy and strategy of "three-ring diplomacy" established in the early postwar period is a strategic choice based on reality, aiming to take as many initiatives as possible in diplomacy, so as to help maintain and restore Britain's great power status. From the perspective of the implementation effect, the strategy was also relatively successful on the whole, which protected the interests and dignity of Britain to the maximum extent in the post-war international politics. In a word, British diplomacy is based on reality, pragmatic and pursues interests.

After the war, Britain's diplomacy toward China was characteristic and pragmatic in addition to its maneuver among the "three rings" and the Soviet union. This can be seen through several large historical nodes. The early founding of the People's Republic of China, Britain's policy of new China has two sides: on the one hand, because of its own postwar recession, the United States relies on deepening, the UK in many international affairs support and follow the position of the United States, the new China policy in general agreement with the United States, which tries to prevent the expansion of China's influence in Africa and Asia, especially in southeast Asia, and actively cooperate with the American plots to thwart Taiwan's return to the motherland, to the far east, status quo and keep the purpose of Hong Kong. On the other hand, on the issue of China, Britain did not act in accordance with the will of the United States and recognized the new China in January 1950 despite the opposition of the United States. There are three main reasons: Britain invested more in old China than any other country, and it wants to keep its investment in China by recognizing the new China. Britain is worried that the excessive deterioration of Sino-British relations will lead to China's military recovery of Hong Kong, so it hopes to establish a dialogue mechanism with the new Chinese government as soon as possible. Britain wants to expand its presence in China at a time when the United States is helping Chiang kai-shek fight communism and Japan is being pushed out of the country by its defeat in the invasion of China. The recognition of the new China reflects the "realism" of British diplomacy. British leaders are keenly aware that the new China is a rising power, and it will be difficult for them to avoid dealing with the communist party of China if they want to safeguard their rights and interests in China. Ought to say, in the severe opposition between ideology and the situation of the cold war tensions between east and west, the first to admit that China is in the western powers will take political courage, is also because of this, the British a rational diplomatic move to the Chinese government and people a pragmatic and friendly impression, for the development of bilateral relations in the future laid a good foundation.

In the late 1970s, China implemented the reform and opening-up policy, which laid a solid foundation for China's economic growth and opened up broader space for the development of its foreign relations. Britain is salivating over the huge potential of the Chinese market and wants to reopen the one it was forced out of after the World War II. However, the problem of Hong Kong between the two countries has formed a constraint on the relationship between the two sides. Britain once set various obstacles for the solution of the problem of Hong Kong in an attempt to obstruct the return of Hong Kong. However, in the end, the situation is better than the people. Faced with the fact that the power structure of the two sides has changed and China has not wavered in its principled position, pragmatism has once again prevailed in the British diplomacy with China. Blair's government, which took office in 1997, adopted a strategy of taking the return of Hong Kong as an opportunity to improve china-uk relations and strengthen bilateral cooperation. The final settlement of the Hong Kong question has freed China and the UK from the burden of history and put bilateral relations on the fast track of all-round development. Within six months, the two countries have exchanged visits between senior leaders, which is unprecedented in the history of china-uk relations. More importantly, through high-level visits, the two sides have deepened mutual understanding, enhanced mutual trust and pushed bilateral relations towards a more stable and pragmatic direction.

In the 21st century, driven by the trend of economic globalization, China's economy has maintained rapid growth and its comprehensive national strength and international status have been greatly enhanced. Some foreign analysts have pointed out that China's increasingly powerful economic influence has gone beyond the regional level and is transforming into an international political advantage, which may even completely change the international strategic pattern after the cold war. Although this view is somewhat exaggerated, it is not necessary to deny the impact of China's development on the existing international situation. What is important is to make a reasonable and correct judgment of China's way and goal of achieving development. Should definitely pointed out that after the reform and opening up of China is the "builders" rather than "reformers" attitude to participate in international affairs, its development is peaceful, the purpose is to promote the international system towards more justice, democracy and the direction of balanced development, thus helping to build a harmonious world of lasting peace and common prosperity. China's path of peaceful development is fundamentally determined by the nature of its socialist country and conforms to the trend of The Times of world peace and development.

China's desire and policy for peaceful development are clear and sincere, and have been recognized and appreciated by more and more countries in the world. Due to political and ideological prejudice, some western countries have doubts about China's development, advocate and spread the "China threat theory", and even interfere and restrict China's economic, political and cultural development. Nevertheless, in a world full of more wisdom and rationality, even the western society is not monolithic, and practical British people realize that China's development is an irresistible trend, which is both a challenge and an opportunity for Britain.

While in office, Blair stressed time and again that some people in the west see China's development as a threat, but he believes that China's development is both a challenge and an opportunity. For the development of China's "challenge", Britain's cognitive perspective is different from the United States and other countries, the latter tend to exaggerate China's possible geopolitical consequences caused by the development, while the British pay more attention to the environment, energy and resources to the world, and hope to cooperate with China to address climate change, energy security and other global challenges. In May 2007, British foreign secretary Margaret beckett pointed out in a speech delivered at the party school of the CPC central committee entitled "building a harmonious world: uk-china relations and its contribution to addressing international challenges": "we see China as a strategic partner in the UK... Britain and Europe also have a stake in China's continued economic boom. I would like to quote a concept used by the Chinese leadership, which is that the UK and China are not only strategic partners, but also partners in scientific development. She added, "in a globalized world of interdependence, China's success is good for the world, and China's failure hurts everyone." Beckett's remarks illustrate the Blair administration's pragmatic foreign policy of turning challenges into opportunities in response to China's development.

Since brown took office in 2007, he has continued to pursue a pragmatic approach to China. Brown, who was chancellor of the exchequer in Blair's government, has visited China many times and supported the development of friendly and cooperative relations with China. He has said in public speeches that China's peaceful rise is not a threat and noted that "Britain's foreign policy objectives cannot be achieved without working closely with China".

It is worth mentioning that under the background of the current international financial and economic crisis, the brown government attaches great importance to and makes positive comments on China's role and supports China and other large developing countries to play a bigger role in international institutions. In addressing other global challenges and reform of the international system, the brown government also attaches great importance to China's role and appeal, and advocates that the international community should increase assistance to developing countries and support technology transfer and financial cooperation in the fields of climate and environment. It can be said that the China policy of the brown government has continued the pragmatic friendship of the Blair era and made new progress at the same time.

It is a new credo of contemporary international diplomacy that diplomacy serves economy. The realization of this diplomatic goal requires transcending the differences of social systems between countries and getting rid of the shackles of ideological differences. China and the UK have different social systems and different ideologies and values, but this has not prevented the UK from developing relations with China. The reason lies in the fact that the UK emphasizes that diplomacy serves the economy and adopts the strategy of prioritizing economic interests under ideological differences. Above all, Britain's pragmatic diplomacy with China is mainly driven by economic interests.

From the outset, there have been strong economic motivations for Britain's China policy. As mentioned earlier, one of the important considerations for the UK to recognize the new China is to maintain its investment and expand its market in China. According to relevant statistics, the import and export volume of china-uk trade was 23 million us dollars in 1949. After the UK recognized the People's Republic of China, the direct trade between China and the UK and the trade between mainland China and Hong Kong both recovered and developed significantly in 1950, with the volume of trade about three times that of 1949. The comparison of these figures shows that pragmatic diplomacy with China has brought significant economic benefits to the UK. Economic considerations also played an important role in helping Britain finally make rational decisions about Hong Kong.

The Blair government sees great opportunities in China's rapid economic development and hopes to pursue practical cooperation with China for economic benefits. During his first visit to China in 1998, Blair issued a joint statement with Chinese leaders, which established the development framework of china-uk comprehensive partnership and laid a political foundation for china-uk economic cooperation. After his next visit to China in 2003, Blair agreed with the Chinese side to set up an interactive group on bilateral relations, which brought together wisdom from all sectors of society and put forward new proposals on trade and investment, finance, energy, education, culture, science and technology, environment, including climate change and sustainable development. Mr Blair also reminded the eu of its pragmatic approach to trade disputes with China. In 2005, for example, when the sino-eu textile trade negotiations were floundering, Blair stressed that the eu should view China's development rationally. There is, of course, a domestic interest behind this, as the UK stands to gain a lot from developing the Chinese market from a trade and economic perspective. Mr Blair has successfully exploited the historic opportunity of China's peaceful development to secure tangible benefits for the UK, as evidenced by the annual rise in trade between the two countries during his tenure.

Mr Blair's successor, Gordon brown, is an economic and fiscal man with a deeper understanding of the opportunities that China's development presents to Britain. In a speech to the Chinese academy of social sciences in February 2005, brown, then chancellor of the exchequer, said, "some may see China and global integration as a threat. I see China's rise and deepening global integration not as a threat but as an opportunity. It's an opportunity because China is a huge market with huge opportunities for British companies; A dynamic market that prepares Britain to meet and respond to the challenges of the new world. It is an opportunity because China's development helps us understand the need for change and enables the British people to seek change. Since brown's government came into office, it has attached great importance to economic diplomacy with China, and British trade and investment with China have been growing steadily. In 2007, the bilateral trade volume between China and the UK reached 39.44 billion us dollars, an increase of 28.6%, among which China's exports reached 31.66 billion us dollars, an increase of 31%, and imports 7.78 billion us dollars, an increase of 19.5%. By the end of 2007, the UK had invested in 5,834 projects in China, with an agreed amount of us $28.58 billion and an actual amount of us $14.78 billion. In recent years, the economic and trade disputes between China and the eu have increased, but the brown government insists that China's development will do more good than harm to china-uk economic and trade relations, and the British business community is increasingly aware of the interests of cooperation with China. The UK is now the eu's largest investor in China and the eu's third largest trading partner with China.

While further exploring the Chinese market, the brown government also tried to expand the common interests with China through diversified means, so as to promote the institutionalization and institutionalization of bilateral cooperation to a new level. In 2008, the two countries held the first china-uk economic and financial dialogue at the deputy prime minister level. In the shadow of the current international financial and economic crisis, the mechanism has highlighted its significance and value. On the one hand, the British economy dragged down by the financial crisis and recession, the international monetary fund forecasts released data show that the British economy will contract by 2.8% this year, under the worst recession in the developed country, in this case the UK more realized the importance of cooperation with China, hoping to use the Sino-British trade in order to boost their stagnant economy. On the other hand, due to the impact of the international financial and economic crisis, trade protectionism is on the rise in the world. However, China and the UK have reached consensus on reforming the international financial system and opposing trade protection, and share common interests. Therefore, the above mechanism provides a good platform for deepening bilateral exchanges and cooperation. In March 2008, wood, director general of the asia-pacific department of the British foreign office, said at a meeting of the uk-china trade association that Britain needs China to maintain stability and development, and China is Britain's partner in advancing the reform of the international financial system and opposing trade protectionism. China also needs Britain's cooperation to resist trade protectionism, defuse some diplomatic challenges and promote overseas investment and trade. The second china-uk economic and financial dialogue was held in London in May 2009. The two sides reached many important consensus on cooperation in finance, trade, investment, energy and environment. Darling, the chancellor of the exchequer positive comments on China to promote the implementation of the group of 20 financial summit in London consensus the constructive role played by, say China in tackling the international financial crisis, the reform of the international financial system to reflect the current state of the world plays an important role, he also emphasized in the current situation of the importance of both countries work together, according to the British side looking forward to further close cooperation with China.

Ideology and values differences is the biggest sticking point leading to twists and turns in china-eu relations in recent years, but with some sort of reverse method, the sino-german relations in contrast, the overall china-uk relations remain stable and obtain further development, its reason lies in the better processing the political differences and the relationship between the economic interests, and take the ideological differences of pragmatic strategy of economic benefits is preferred. It can be predicted that with the continuous development of China's economy, china-uk relations will be closer and the role of economic factors in Britain's diplomacy with China will be further strengthened. Of course, it should be emphasized that the economic relations between China and the UK in the new era are based on equality, cooperation and mutual benefit.

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omcik-blog · 7 years

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New Post has been published on OmCik

New Post has been published on http://omcik.com/why-investors-trust-companies-more-than-governments/

Why investors trust companies more than governments

The proposed White House infrastructure program would spend $200 billion in federal money over 10 years — that’s $20 billion a year, if Congress approves — to lure private capital toward roads, bridges and airports. Meantime, Apple alone has more than $200 billion in cash on its books right now, which it could bring back to the U.S. tomorrow and spend however it wishes.

Big companies today can borrow more cheaply than at any time in history, and there are at least 30 companies for which credit-default insurance is cheaper than for the United States government.

The value of global equities is now about 95 percent of world GDP, the highest ratio of corporate capitalization to economic output on record, despite stubbornly sluggish growth and widespread dissatisfaction in the developed world with the effectiveness of government leadership.

These are just a few illustrations of how investors trust and value companies more than they do countries right now — because they’re seen as more stable, powerful and flexible, in many cases. The ballooning value of a handful of globe-enveloping technology companies is part of this trend, with the markets assessing them as if these networks will prove stable and reliable economic entities for decades.

Companies have even taken to forging their own foreign policies, with dozens of CEOs opposing President Donald Trump’s withdrawal from the Paris climate-change pact, and then vowing to continue meeting the Paris environmental goals anyway.

The idea that giant companies are, in a sense, stable transnational institutions largely insulated from public policy perhaps helps explain financial markets’ consistent strength despite stalled fiscal-policy efforts. This is not just about the Trump economic agenda, now slowed relative to expectations of a few months ago.

Since 2012 or so, investors have been awaiting a “handoff” from easy monetary policy to fiscal reforms and stimulus in Europe and the U.S., yet gridlock and austerity have persisted. The populist wave sweeping the developed world is rooted to some degree in all of this: hamstrung governments, powerful companies, buoyant markets and widening wealth gaps.

Ben Hunt, chief investment strategist at Salient Partners and author of the Epsilon Theory blog, writes, “If political parties in Western democracies were stocks, we’d be talking today about the structural bear market that has gripped that sector. Show me any country that’s had an election in the past 24 months, and I’ll show you at least one formerly big-time status quo political party that has been crushed.”

Ray Dalio, chairman and chief investment officer at Bridgewater Associates, last week wrote a LinkedIn post on his continuing theme of rising populism and prospect for instability. “In the early stages of a new populist administration, the main thing to look for is whether conflict moves to the point that it is detrimental to the effectiveness of government and the economy.”

The way that democracies can stoke self-reinforcing popular conflict, he says, “has to be watched out for because, if it were to occur, it would have profound implications for economies, capital flows, and markets. Right now there is a whiff of it in the air.”

In a sort of contorted result of the Great Recession and its aftermath, governments (outside of China, perhaps) have quit trying to foster broad economic growth and instead have capped spending as leaders quarrel over who’s to blame for the fix they’re in. Companies and owners of capital have been net beneficiaries of this pattern.

A key reason (though not the only one) that instability and impotence on the governing front have not disturbed financial markets is, of course, the exertions of central banks, with their combined $14 trillion in bond purchases and open-ended commitments to support the capital markets.

Yet the way that highly liquid markets have lately rewarded a set of very large companies driving a sort of deflationary global technology boom has been remarkable. While the reflex “Trump trade” after the election benefited Old Economy industrials that would benefit from fiscal stimulus and revived inflation, we’ve now unwound most of that move.

Five members of President Trump’s manufacturing CEO council have since exited their jobs, while Amazon boss Jeff Bezos – owner of The Washington Post initially seen as a possible victim of this administration – has seen his personal net worth rise by $14 billion since Election Day.

The question now — especially after we’ve seen a little wobble in the stocks of the half-dozen or so anointed Big Tech companies in recent days — is whether investors have gone too far in taking shelter in this quadrant of the market. As these stocks plumbed new highs, we began to hear more and more justifications of their towering market values and the unstoppable enlargement of their domains over time.

That’s what Wall Street does — extrapolates the momentum and spins a story around it. And, in large part, it makes sense, given the speed at which a company such as Facebook or Alphabet can become so huge and dominant with comparatively little capital employed — the two companies are lines of code, their R&D and capex consisting of engineers on laptops. And, together the two companies are worth $1.1 trillion.

But it’s also telling that the zeal for mega-cap tech stocks took on the character of a “defensive” trade — assets to own when the broader growth picture blurs and Washington goes “tilt.” Any defensive trade will only work so long as the thing that’s feared remains scary. So, maybe, one risk in these stocks is that policy progress begins to look more likely, and growth might quicken and interest rates come unstuck from such low levels.

Another hazard? That these companies keep getting bigger and more highly valued and themselves become targets of an uneasy populace.

Eric Peters, chief investment officer of One River Asset Management, who circulates a weekly note summarizing conversations with big investors, quotes one unnamed chief investment officer: “People talk of rising populism. Every populist movement turns its ire on someone. … Apple earns 90 percent of the global smartphone market profits but sells 20 percent of the phones. Populists will go after these firms, because that’s where the money is.”

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