Today’s post shares excellent analyses of the on-going protests in China courtesy of Foreign Affairs:

Across China, people are protesting the country’s strict “zero COVID” policy, in a rare show of dissent against President Xi Jinping’s regime and the Chinese Communist Party (CCP). The wave of outrage started after a deadly fire in the city of Urumqi, the capital of the Xinjiang region, killed at least 10 people on November 24. The city has been under lockdown for more than 100 days. Protesters are calling for an end to the zero-COVID policy—but also for greater democracy and even the removal of Xi.

As Yanzhong Huang writes, it has been clear for some time that Xi’s commitment to zero COVID is a risky move. “Having staked enormous political capital on zero COVID,” Chinese officials have had to pursue “excessively harsh measures in an effort to avoid any outbreaks that might embarrass the government.” But “Beijing’s intransigence has come at an escalating cost.”

What could mounting public distrust and discontent mean for Xi’s regime? The country’s punishing lockdowns “could contain the seeds of future political transformation,” Huang writes. If the Chinese government refuses to alter course, it could face a serious crisis of legitimacy. And Xi’s power is already being questioned as never before, Chinese dissident Cai Xia notes. Despite Xi’s outward projection of confidence, his popularity is slipping—while “in the shadows, resentment among CCP elites is rising.”  As demonstrators clash with Chinese authorities across the country, we’ve compiled some of the best recent coverage in Foreign Affairs on how China’s zero-COVID policy is putting the country’s political stability at risk—and what it could mean for Xi and his grip on power. Start reading below.

I am frequently asked questions about Covid in China. The three most commonly posed questions are: (1) how and where did it originate; (2) how is Xi’s Zero-Covid policy faring and (3) what is the reaction in China among both businesspeople and ordinary citizens.

In this post, I’ll take on the first two questions but with the caveat that definitive answers to any of the three questions are almost impossible to arrive at given the complexity of the underlying facts and the fierce political skirmishing over establishing the “truth” of the matter.

I am going to stay above the fray and offer simple generalizations to put each of the first two questions into clear perspective and revealing context. On the second question, I will add substantial commentary from today’s edition of Sinocism by Bill Bishop, which has been well described as “the Presidential Daily Brief for China hands” by Evan Osnos of the New York Times. (Note: Bill Bishop gives his subscribers leave to share, on occasion, content from his newsletter which I am doing for the first time here). For anyone interested in the answer to the third question, I’d say for now that both the business response and popular response is dismal at best but would encourage you to keep an eye out for my fuller response coming soon.

Origins of Covid-19

I am not going to venture where even leading epidemiologists fear to tread but will confine myself to one unassailable truth. The Chinese Government has consistently and systematically denied the world community — both its cadre of scientists and its relevant governmental and non-governmental organizations — access to the sites, data and interviews which would facilitate pinpointing the origins of Covid-19. It may eventually be possible through painstaking DNA regression analysis to pinpoint the origin of Covid-19 with certainty despite this lack of Chinese cooperation. Meanwhile, the glaringly obvious question raised by China’s stance is what is the PRC government trying to hide?

Zero-Covid Thought Control

Ever since Xi Jinping held forth his Zero-Covid policy as the basis for claiming the superiority of “Chinese democracy” over traditional liberal democracy, his adherence to that policy has been “unflinching” and “unswerving.” This was especially apparent in the run-up to the 20th National Party Congress in Beijing last month, even in the face of plummeting economic performance. Emerging from that once-in-five-years leadership shakeup with a plalanx of Standing Committee loyalists in place, Xi acknowledged the economic fall-out and popular discontent by announcing on November 11th some tweaks to enforcement policies under the banner of “optimizing Zero-Covid.” The results of this ‘optimization?’ Today’s infection rate and number of partial lockdowns is, in toto, more widespread and deleterious (see below) than the earlier, traumatic nadir experienced during the Shanghai lockdown last spring. It is ironic, but not altogether surprising, that “the Emperor” insists, as a sop to his pride, that his citizens all change the way they talk and think about his Zero-Covid policy — now “optimized” — rather than that he change the policy meaningfully to ease their personal and economic lives.

Addendum: Extracts from today’s edition of Sinocism on ‘optimized Zero-Covid’

Lockdowns by another name continue in parts of several cities as daily cases are approaching the level of the Shanghai disaster earlier this year. Right now it feels like we are seeing a repeat of Shanghai in late March, when local officials tried targeted and precise measures, before realizing that Omicron overwhelms all those efforts, leaving officials with the choice between letting it start to rip or instituting suffocating lockdowns. Near term I think they will have to choose the latter as they are not where they need to be with vaccinations and hospital capacity. But even then they have a massive problem with virgin immunity, so until they are willing to tolerate larger numbers of serious illness and death, or have better therapeutics, I do not think there is a specific end date. I know it is popular now to say March, pegged to the “two meetings”, but I am not sure why that is really an end date. They really seem stuck.

China lockdowns reach record level as coronavirus cases spiral | Financial Times $$

“China is seeing a record level of lockdowns,” said Ting Lu, chief China economist at Nomura. “It’s even a bit worse than during the [spring] Shanghai lockdown because so many cities are partially locked down.”

The bank estimates Covid restrictions have hit areas responsible for one-fifth of China’s gross domestic product…

In Chongqing, another pandemic hotspot, the arrival on Monday of Sun Chunlan, a vice-premier known for her draconian approach to battling the pandemic, led to widespread panic shopping among residents, concerned about the potential for a tough Shanghai-style lockdown.

China’s Lockdowns Surge in Week Since Covid Policy Adjusted – Bloomberg

China’s top health officials vowed to stick with Covid Zero at a Tuesday briefing, saying outbreaks across the board remain “severe and complex.” Beijing is telling local governments to implement the updated guidelines, which were outlined in 20 measures earlier this month. Localities shouldn’t be excessive when it comes to Covid controls, but they also shouldn’t loosen too much either, said Mi Feng, spokesperson of the National Health Commission.

Beiijng Daily – 尹力:坚定坚决打赢疫情防控整体战阻击战歼灭战 实现防住疫情稳住经济安全发展-千龙网·中国首都网

Party Secretary Yin Li: Yin Li: Firmly and resolutely win the overall war of epidemic prevention and control, the war of resistance and annihilation, realize the prevention of epidemic situation and stabilize the development of economic security.

Comment: “歼灭战”, literally “war/battle of annihilation” seems hard to win with piecemeal shutdowns. Hearing that some beijing cadres issuing localized lockdown orders verbally only not going to inspire confidence in the “optimization” of dynamic zero-Covid on the road to reopening. why are they hiding it? from whom are they trying to hide it?

China vows to enhance medical resources, crack down on excessive approaches amid severest COVID outbreak in 3 years – Global Times

The ongoing epidemic is witnessing growing infections. The average daily new cases this week reached 22,200, nearly double last week’s level, Hu Xiang, an official of the national epidemic prevention and control bureau, said at a press conference on Tuesday.

Hu noted that the epidemic, which has hit many provinces and regions, showed complex transmission chains. Some provinces are facing the severest and most complicated epidemic in the past three years.

Densely populated cities like Guangzhou in South China’s Guangdong Province and Southwest China’s Chongqing Municipality are epicenters of the ongoing outbreaks, as the large population, high personnel mobility and frequent gatherings in key spots like schools increased the risk of epidemic transmission and the difficulty of putting the epidemic under control, according to Hu…

Citing experts who closely follow the situation of China’s epidemic, some media outlets predicted on Tuesday that this round of the epidemic would continue to expand until the middle of December.

新京报 – 北京疾控:2例重症病例未接种加强针 老人接种率偏低

Beijing official: two seriously ill Beijing patients, one 52 and the other 89, did not get the booster shot and the booster rate for those over 60 is low and for those over 80 is not even 30% 例新冠肺炎重症感染者分别为52岁和89岁,均未接种加强针, 30% 60岁及以上感染者全程和加强免疫接种率均偏低,80岁及以上感染者加强免疫接种率不足30%

新京报 – 24日起进入市属公园等须持48小时内核酸阴性证明

According to the requirements of epidemic prevention and control in Beijing, starting from November 24th, residents and visitors must hold a negative nucleic acid test certificate within 48 hours to visit the municipal parks and the National Botanical Garden.

根据北京市疫情防控工作要求,11月24日起,市民游客进入市属公园、国家植物园参观游览须持48小时内核酸检测阴性证明

尽责担当筑牢战“疫”防线

China should optimize and adjust its COVID control measures, depending on how the pandemic situation evolves domestically and beyond its borders, a page-one Economic Daily commentary said. Still, it said COVID control is a daunting and long-term endeavor, and that officials must not slack in implementing related measures to contain outbreaks. The pieces quote Xi from his comments to the Wuhan delegation at the delayed NPC meeting in May 2020 – “针尖大的窟窿能漏过斗大的风” – a hole the size of a needlepoint can let in a huge wind”. So how are officials supposed to respond, when they are being reminded that even the slightest slackening can lead to an outbreak? They have seemingly impossible and contradictory tasks

Outbreaks Test China’s Efforts to Limit the Cost of ‘Zero Covid’ – The New York Times

“It’s maybe 10 steps forward and nine steps back,” said Chen Long, a policy analyst at Plenum, a Beijing consulting firm…

Citizens will only be reassured, said Wang Xiangwei, a Beijing commentator and newsletter ( Wang Xiangwei’s Thought of the Day on China) writer, when trusted health experts appear on television to discuss the lack of severity of the Omicron variant for those who have been vaccinated, particularly young people who also have strong immune systems. A possible candidate, he said, was Zhong Nanshan, who helped uncover the SARS outbreak in 2003 and played a key role in drawing national attention to the initial Covid outbreak in Wuhan nearly three years ago.

近期多起疫情涉及高校!教育部本月两度开会部署:防止以“优化”为名放松防控|怀进鹏|教学|无症状感染者例_网易订阅

After several recent outbreaks at colleges and Universities, The the Ministry of Education held two meetings this month to make plans to prevent the relaxation of prevention and control in the name of “optimization”

国家卫健委明确:急诊、透析室、手术室、分娩室、重症监护室非必要不封控

The National Health and Health Commission has made it clear that emergency rooms, dialysis rooms, operating rooms, delivery rooms and intensive care units are not to be shut unless necessary.

国家卫健委重申:发热门诊全天候开放非常重要-中国科技网

The National Health and Health Commission reiterated that it is very important for fever clinics to stay open.

Comment: Officials have really upped the rhetoric on ensuring that people have access to medical care even if there are lockdowns

新华全媒+丨不折不扣落实疫情防控优化措施——国务院联防联控机制新闻发布会回应焦点问题-新华网

Xinhua on the key takeaways from the Joint Prevention and Control Mechanism of the State Council presser, concludes with:

In the affected areas, medical institutions at risk of the epidemic should not be “shut down” or “locked down” under the pretext of epidemic prevention and control, especially emergency rooms, dialysis rooms, operating rooms, delivery rooms, and intensive care units in medical institutions. These important departments should be “not sealed up and controlled unnecessarily” to ensure the treatment of patients. It is possible to minimize the impact of epidemic prevention and control on the daily medical services of medical institutions and meet the needs of the people for medical treatment.

在发生疫情的地区,不能够以疫情防控为由对发生疫情风险的医疗机构“一关了之”“一封了之”,特别是像医疗机构的急诊、透析室、手术室、分娩室、重症监护室等,这些重要的救治科室要做到“非必要不封控”,保障患者救治。最大可能减少因为疫情防控对医疗机构日常医疗服务的影响,满足人民群众就医需求。

11.22 People’s Daily “Zhong Yin” on epidemic control and prevention work – 深入细致做好服务保障工作

The relationship between epidemic prevention and control, normal production and life, and economic and social development is complementary and dialectically unified. To better respond to and resolve the reasonable demands of the masses and solve the practical difficulties of the people is not only an inherent requirement to adhere to the supremacy of the people and life, but also the right thing to do to firmly implement the general policy of “dynamic zero-Covid”. The struggle against the epidemic in the past three years has profoundly revealed to us that only when the epidemic can be prevented can people’s lives be safe and secure; The only way to effectively coordinate epidemic prevention and control with economic and social development is to take concrete measures to reduce the negative impact of the epidemic and ensure sustained, healthy and stable economic and social development with good results.

疫情防控和正常生产生活、经济社会发展,是相辅相成、辩证统一的关系。更好回应和解决群众合理诉求,解决好人民群众实际困难,这既是坚持人民至上、生命至上的内在要求,也是坚定不移贯彻“动态清零”总方针的题中应有之义。近3年的抗疫斗争深刻启示我们:只有疫情防得住,人民生活才能平平安安;只有抓实抓细疫情防控各项举措,同时减少疫情带来的不利影响,以良好的防控成效保障经济社会持续健康稳定发展,才是高效统筹疫情防控和经济社会发展。

Coronavirus in China: ‘critical moment’ for Beijing with cases at record high | South China Morning Post

The government also encouraged residents in Chaoyang district to “slow down their lives” at a press conference on Tuesday, asking them to not leave the district unless absolutely necessary, use online learning, online meetings and telephone communications to reduce visits to schools and offices.

CCTV – 上海:24日起,抵沪不满5天者不得进入公共场所_新闻频道_央视网(cctv.com)

Starting 11.24, people who have been in Shanghai for less than 5 days are not allowed to enter public spaces

Chinese regulators warn IPOs of zero-Covid winners subject to tight checks | Financial Times $$

Chinese regulators have warned that a wave of initial public offerings from companies claiming to be involved in China’s booming Covid-19 testing sector will be subject to added scrutiny over concerns that their high growth is unsustainable.

Zhengzhou Community Blasts Warning over Loudspeaker: Outside Visitors Will Be “Executed on the Spot” | What’s on Weibo

According to Chinese media outlets, a community staff member later suggested that this was a non-official, self-initiated move by the property management and that it has since been corrected.

China Economy Braces for Major Disruption into Next Year as Covid Cases Surge – Bloomberg

The path to reopening “may be slow, painful and bumpy,” the Nomura economists wrote in a note, suggesting a “back and forth” approach as rising cases stir reluctance among policymakers to ease curbs quickly. Nomura forecasts gross domestic product growth of 4.3% for 2023, lower than a median estimate of 4.9% in a Bloomberg survey.

Caixin – China Fleshes Out ‘Optimized’ Covid-19 Response

On Monday, China reported two Covid-related deaths, one in Henan province and one in Sichuan province, after Beijing recorded three virus-related deaths over the weekend.

Beijing shuts parks, museums as China’s Covid-19 cases rise | The Straits Times

The municipality of Tianjin near Beijing on Tuesday became the latest to order citywide testing, after a similar announcement on Sunday by the northern city of Shijiazhuang.

CQ Researcher asked me to argue the Pro side of the question “Should the U.S. cooperate with China in the global transition to clean energy.” That Pro/Con feature was published last week as part of the in-depth Geopolitics of Green Energy volume. Followers of Assessing China know that I have published a Wilson Center book advocating for U.S.-China cooperation in clean energy, have led a U.S. Government-awarded sub-national non-profit to advance this cooperation, and taught for three years at the Masters level at UPenn about the importance of sub-national cooperation in clean energy. Oddly, this is the first time I have argued the Pro side in a strict Pro/Con format. (The only other time I have engaged in this format was at Princeton a number of years ago when I was asked, in the spirit of rhetorical debate, to take the Con side which I tried gamely to do). Anyway, the appearance in (digital) print of this piece last Friday is very timely, appearing four days after Presidents Biden and Xi agreed face-to-face in Bali to resume binational U.S.-China climate change cooperation. The following day, the U.S. climate envoy John Kerry, sat down with his Chinese counterpart, Xie Zhenhua, as they rolled up their sleeves to resume that cooperative work (which Xi Jinping had unilaterally terminated in the wake of Speaker of the House Nancy Pelosi’s visit to Taiwan in August of this year).

Geopolitics of Green Energy

Pro/Con

Should the U.S. cooperate with China in the global transition to green energy?

The United States should continue to seek cooperation with China in the global transition to green energy for four principal reasons.

Scientifically, the knowledge basis on which the transition depends has no political boundaries. Just as an accurate understanding of human evolution requires archaeological digs in every country, as well as international scientific exchange to synthesize those findings, the scientific foundation for a global low-carbon future is strengthened by U.S.-Chinese scientific cooperation. Of course, that exchange must be conducted on the basis of stringent academic standards and strict safeguards for intellectual property. But scientists recognize that a molecule of any greenhouse gas produced anywhere is bad for our future everywhere.

Commercially, the logic for continued engagement in developing green energy products and services — through trade and investment — outweighs any arguments for decoupling. The U.S. comparative advantage is in basic research and development, technology innovation and the efficiency of our capital markets to bring breakthrough products to scale. China’s comparative advantage is in the size of its market and the market certainty fostered by its top-down political model. It is far more advantageous for the United States to be smart and vigilant in protecting its core assets from unfair trade practices than to forgo access to the world’s largest and still dynamically growing green energy market.

Politically, it is a harder call to make, but there is no reason to turn our backs on political cooperation entirely. From 2009 through 2019, there was a formal program of U.S.-Chinese cooperation on energy and the environment (read “green energy”) signed at the presidential level (and, in its early days, supported on a bipartisan basis in Washington). That framework expired several years ago and, following House Speaker Nancy Pelosi’s visit to Taiwan in August, China formally terminated all national programs of U.S.-Chinese cooperation. However, cooperation at the level of states, cities and businesses can and should proceed when it is in the interest of those entities to do so. The absence of a binational framework makes that subnational cooperation more difficult but is not a reason to forgo it.

Morally, the issue could not be clearer. Transition to a green energy future is not an option, it is a necessity. The current moment presents us — as a species — with an existential threat of our own making and forces us again to prove our species’ resilience and ability to adapt. Cooperation, not conflict, improves our odds for pulling that off.

The idea that cooperation is needed between the United States and China, the world’s largest energy consumers, to tackle global energy challenges sounds almost tautological.

The high point of such cooperation was 2014, when Presidents Xi Jinping and Barack Obama jointly announced their new climate commitments, winning support for their proposals in both countries while adding crucial momentum to the process leading up to the 2015 Paris agreement. Since then, the political dynamics in both countries have changed in a way that would make such a joint announcement politically unattractive. This was clear when China announced in 2020 that it would reach carbon neutrality in 2060 and when it pledged last year to stop building coal power plants overseas. Both announcements were unilateral.

The two countries do not need technology or financing from one another. Rather, both are keen to ensure that they have decoupled their supply chains for key strategic technologies and resources.

Xi has set low-carbon development as a strategic priority for China, for obvious reasons: China’s food security, water resources and the regional security environment — all key strategic issues — would be jeopardized by runaway climate change. Clean energy technology is thus now firmly positioned as a strategic sector for national security.

Xi’s announcement of the carbon neutrality goal triggered a dramatic expansion in domestic deployment of clean energy and manufacturing of clean energy technology, particularly solar power equipment, batteries and electric vehicles. China is positioning itself to supply the vast majority of the equipment and technology for the global green energy transition.

The best thing the United States can do is to scale up clean energy deployment and manufacturing at home and increase financing and support for clean energy in developing countries.

China’s leaders have been skeptical of the ability of the often-unruly processes in democratic countries to deliver and implement, scorning their climate pledges as “vague promises.” If Chinese leaders were to see the United States and the European Union pulling ahead with 100 percent clean electricity, smart grids, electrified transport, zero-carbon manufacturing and major financing and technology partnerships with the developing world, China would accelerate its own transition.

The United States and China do still have a shared interest in the success of international climate talks. There are opportunities for coordination and dialogue, but they need to be based on a clear-eyed appreciation of shared and conflicting interests.

Hope you enjoyed the debate. I have allowed comments on this post so please feel free to weigh in with your perspective. Would love to hear from you.

Guest Article by Edward DeMarco, CQ Researcher

The following is the Introduction and Overview to an in-depth article by Edward DeMarco published today in CQ Researcher. CQ Researcher, a division of CQ Press, provides “in-depth reports on today’s issues.” The full article contains, in addition to the Introduction and Overview replicated here, the following setions: Background, Current Situation, Outlook, Pro/Con, Discussion Questions, Chronology and Short Features. I was invited to write the Pro perspective for the Pro/Con section and I will follow this post up with a separate post replicating that section. Please note that the full article (hyperlinked above) is freely accessible for one week from today but will go behind a paywall starting Friday, November 24th.

Introduction

The postwar, U.S.-dominated geopolitical order shaped by oil is yielding to a new system built on carbon-free renewable energy and electric vehicles. In the emerging international scramble for so-called green energy, China is leading, with its control over many supplies of minerals essential for batteries, wind turbines and other technologies. China is also key to addressing climate change because its coal-powered economy creates more planet-warming greenhouse gas emissions than any other country. To counter China, the United States is rallying allies and friendly mineral-rich countries to forge alternative supply chains that can enable green energy industries to scale up. And, faced with Russian aggression in Ukraine, Europe is shedding energy ties to Moscow and expanding its domestic wind and solar power sources. Clean hydrogen may also create new energy powers — from Australia to Chile and Africa — as industrial demand for fossil-free energy surges. Competition extends into the Arctic, where retreating ice is spurring the hunt for green energy minerals. While the transition will take decades, the rules of the game are being set now — in Beijing and Washington.

The oil-dominated geopolitical order is changing as countries embrace carbon-free energy sources to reduce climate-warming greenhouse gas emissions. That transition has produced tensions, in part due to the need for rare earth minerals used in clean energy technologies, such as these wind turbines and solar panels near Klettwitz, Germany. (Getty Images/Sean Gallup)

Overview

In late September, as Russia was calling up 300,000 military recruits to overcome battlefield losses in Ukraine, and Europe coped with shrinking Russian natural gas supplies due to the war there, U.S. Secretary of State Antony Blinken convened a little-noticed meeting in New York on the sidelines of the U.N. General Assembly.

Attending were ministers from mineral-rich U.S. allies Canada and Australia, along with Britain, France, Japan and South Korea — all among the world’s 10 largest economies.

U.S. Secretary of State Antony Blinken, center, speaks at the Minerals Security Partnership meeting on the sidelines of the U.N. General Assembly in New York in September. Participants included ministers from Australia, Britain, Canada, France, Japan, South Korea and African mining nations. (AFP/Getty Images/Craig Ruttle)

Alongside them sat envoys from other mining nations, including Brazil, Argentina and five African countries — Democratic Republic of Congo, Mozambique, Namibia, Tanzania and Zambia — whose mineral exports are needed for the coming transition from globe-warming fossil fuels to green energy. Those minerals range from lithium and copper used in electric vehicles, to platinum needed for batteries and neodymium required for wind turbine magnets.1 (See Short Feature.)

The African and South American mining nations, along with Mongolia, joined members of the newly formed Minerals Security Partnership, which will offer financing, loan guarantees and technical assistance to accelerate the production of key minerals needed for electric vehicles and to boost solar and wind power. The initiative, said Blinken, is needed because “critical mineral supply chains are simply vital to our shared future.”2

In his opening remarks, Blinken did not mention the biggest economy absent from the table — China — whose sizeable control over the global supply of minerals needed for green energy technologies has many of the ministers worried about the international security implications.

As countries deal with increasingly intense storms, droughts, rising seas, human migration and conflict caused by a warming planet, the transition to green energy to reduce emissions of carbon dioxide and other so-called greenhouse gases is reshaping the U.S.-dominated, post-World War II geopolitical system. That system is rooted in the use of fossil fuels — oil, natural gas and coal — the major sources of those emissions. The transition to a carbon-free economy has strengthened the power of China, which controls a large percentage of the world’s green energy minerals and has massive investments in carbon-free technologies and electric cars.3 Many governments worry that China could use its dominance in the green energy market for geopolitical leverage.

“We’ll stand together with others against economic coercion and intimidation,” Blinken said in May, explaining the new U.S. partnership during a China policy speech. “We’ll boost supply chain security and resilience by reshoring production or sourcing materials from other countries in sensitive sectors like pharmaceuticals and critical minerals, so that we’re not dependent on any one supplier.”4

As Washington and Beijing race to establish a framework for that emerging green energy system, other countries — such as Australia, Chile and several African nations — could become consequential energy players.

The joining of economic and mining powers under U.S. leadership highlights the geopolitical shift under way as the world aims to reduce human-caused carbon emissions to “net zero” in the second half of this century, a goal established by the 2015 Paris climate agreement. To achieve that goal, 195 countries pledged to limit the increase in the global average temperature to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) above preindustrial levels. But even that 2-degree rise, the U.N.’s Intergovernmental Panel on Climate Change (IPCC) warned, would intensify heat, drought and rainfall, harm ocean life and double the share of plants, insects and vertebrates at risk of losing most of their habitat.5

In its 2022 update, the IPCC said achieving the net zero goal would require “a rapid acceleration of mitigation efforts after 2030,” but some models say the world may not reach the goal until the early 2070s. For example, China, the world’s largest carbon dioxide emitter, does not intend to reach its peak carbon emissions before 2030 and will not achieve net zero carbon emissions before 2060.6

Given this timeline, the uncoupling of international fossil fuel alliances will take longer than many green advocates and activist governments would like, experts say. As a result, the two geopolitical systems — one seven decades old and built on oil and an emerging one shaped by the sun, wind and key minerals — are likely to co-exist for some time.

The realization that oil and natural gas are likely to continue to play a major role in the energy economy is an unwelcome reality in many places, including Europe, says former U.S. Energy Secretary Ernest Moniz, chief executive of the Energy Futures Initiative, a clean energy advocacy group in Washington. It “has elevated the importance of more seriously defining the multi-decadal clean energy transition, rather than a simple-minded focus by many on the net-zero end state.”

For example, U.S. crude oil production is forecast to reach a record 12.3 million barrels a day in 2023, while the U.S. share of electrical power generated by renewable energy — solar, wind and hydropower — will increase from 20 percent in 2021 to 24 percent in 2023, according to the U.S. Energy Information Administration.7

And while renewable sources will generate more U.S. electricity than coal this year, China still depends on the fuel for more than 60 percent of its electricity and plans to increase that usage through 2030. Coal-generated electricity powers the growing number of electric vehicles on Chinese streets. This year, a quarter of all new cars bought in China will be electric or plug-in hybrids, served by about 4 million charging units, double the total a year ago. The United States is far behind, with about 140,000 charging units.8

Reaching net zero by 2050 “requires nothing short of a total transformation of the energy systems that underpin our economies,” said the International Energy Agency, a research and coordination organization whose 31 member countries include the United States, Britain, France, Italy, Japan and Germany.9

A man charges an electric bus in Wuhan, China. Although a quarter of China’s new cars are electric or plug-in hybrids, most of the electricity for the country’s 4 million charging stations comes from coal-fired power plants. (Getty Images/Visual China Group)

Japan, the world’s third largest economy, exemplifies the emerging choices at the intersection of energy and national security. Since the Fukushima nuclear power plant disaster in 2011 caused Japan to reduce its reliance on nuclear power, the country has depended on gas and coal to generate electricity, according to IEA data. Yet Japan is pivoting toward green energy, notably hydrogen, and collaborating with developing nations in Asia to accelerate its transition toward carbon neutrality.10

Concern about energy security is also forcing countries to recalculate the geopolitical equation in favor of renewables. Russia’s war in Ukraine exposed Europe’s dependence on Russian gas supplies and prompted a rapid shift of strategy toward renewables. Germany is expanding its wind energy to further displace fossil fuels.11

The war itself may have broken out in part due to international competition for green energy minerals. Some analysts cite the European Union’s 2021 deal to access Ukrainian minerals used in electric vehicles — such as lithium, cobalt and so-called rare earth elements — as a possible factor in Russia’s decision to invade. Rare earths are 15 lesser-known metals such as neodymium and terbium valued for their magnetic and optical properties.12 (See Short Feature.)

As the effects of climate change intensify in developing countries, the United States by 2030 is likely to face a high risk of climate-related demands for financing and technology assistance, an influx of climate refugees and a greater need to supply aid and humanitarian relief, according to a U.S. national intelligence estimate.13

“Geopolitical tensions are likely to grow as countries increasingly argue about how to accelerate the reductions in net greenhouse gas emissions needed to meet Paris Agreement goals,” the National Intelligence Council said last year. “Debate will center on who bears more responsibility to act and to pay — and how quickly — and countries will compete to control resources and dominate new technologies needed for the clean energy transition.”14

At November’s 27th conference of parties to the U.N. climate convention (COP27) in Egypt, debate centered on how industrialized countries that generate the bulk of greenhouse gas emissions should compensate developing nations — which spew far less carbon dioxide and methane into the atmosphere — for climate-related damages. Seventeen of the world’s 20 most climate-vulnerable countries are in Africa.

“The most valuable contribution that developed countries can make is to reduce their emissions faster while investing in Africa to build sustainable, green power,” Rwanda President Paul Kagame said at the gathering. “Questioning whether Africa is ready to make use of climate finance should not be used as an excuse to justify inaction.”15

Meanwhile, among the new arenas for global competition are mineral- and sun-rich Africa, as well as the Arctic, where shrinking seasonal ice is opening new shipping channels and aiding the hunt for green energy minerals and untapped oil and gas. (See Short Feature.)

With the world’s largest solar energy potential, Africa could strengthen its geopolitical position as other countries jockey to access the continent’s green energy minerals and seek to convince Africans to protect their carbon-absorbing rainforests.16

One encouraging sign: Hydrogen — the most abundant element in the universe — can be extracted from water to produce a clean fuel. The investment bank Goldman Sachs said $5 trillion may be needed to develop “clean” hydrogen as a fuel source, which could help cut greenhouse gas emissions about 15 percent “while becoming a key pillar of the energy mix.”17 And hydrogen production is arriving at commercial scale in countries as far-flung as Australia and Namibia.

Dozens of countries, including Germany and Japan, have rolled out strategies to harness hydrogen for industrial use and transportation, while stepping up diplomatic outreach to future exporters. The idea is to use renewables such as solar energy to extract “green” hydrogen gas from fresh or salt water through electrolysis, then transport the gas through pipelines or, in liquified form, by ship to industrial markets. The Hydrogen Council, a Brussels-based industry group promoting hydrogen-based energy, said 680 large-scale projects are planned worldwide in this decade, up 50 percent from a year ago. Based on planned hydrogen projects, global capacity could reach 134 gigawatts in 2030, from around 1 gigawatt this year, according to the International Energy Agency.18

As energy strategists, investors and policymakers strive to understand the scale, sources and sequencing of this transition and the countries poised to benefit, these are some of the questions on their agendas:

Will China dictate the pace of the world’s transition to green energy?

In August, China suspended climate talks with U.S. presidential climate envoy John Kerry after House Speaker Nancy Pelosi arrived in self-governing Taiwan, a visit the Chinese government called an affront to its “one China” policy that claims Taiwan as part of China.19

An announcement that the talks would resume came on Nov. 14 after the first face-to-face meeting between U.S. President Biden and China’s President Xi Jinping in Indonesia, a hopeful signal for advocates of more aggressive action on climate change who were meeting at the same time in Egypt at COP27.20

China and the United States had issued a joint declaration in late 2021 on the “seriousness and urgency of the climate crisis” and committed to accelerated actions and cooperation in the 2020s on reducing greenhouse gases, especially methane, and speeding up the shift to renewable energy.21

“Methane is 80 times more potent than carbon, and it accounts for nearly half of the net warming we’re experiencing now,” Biden told the COP27 meeting on Nov. 11. “So, cutting methane by at least 30 percent by 2030 can be our best chance to keep within reach of 1.5 degrees Celsius target.”22

The world’s energy transition would be eased if the United States and China “cooperate substantially, including in technology transfers, both ways,” but rising tensions between the two countries made that unlikely, says Henry Lee, director of the environment and natural resources program at Harvard University’s Belfer Center for Science and International Affairs.

Lithium mines, such as this one in Chile’s Atacama Desert, provide a key element needed for green technology such as electric vehicles. China currently has a lock on the lithium-ion battery supply chain, prompting the United States and others to seek alternate supplies. (Getty Images/John Moore)

Chinese control over key minerals used in electric vehicles and other green technologies sharpen the divide, as reflected in the aim of the U.S.-led Minerals Security Partnership to create alternative supplies. Currently, China refines 68 percent of the world’s nickel, 40 percent of copper, 59 percent of lithium and 73 percent of cobalt, according to the Brookings Institution in Washington. China also controlled 79 percent of lithium-ion battery manufacturing in 2021.23

The United States relies totally on imports for 14 “critical” minerals, including graphite, manganese, niobium and rare earths, and depends on imports for more than 75 percent of 10 others, according to congressional researchers.24

“This is China’s hegemonic weapon,” says James Kennedy, a consultant on rare earth elements, such as dysprosium, used to strengthen magnets for vehicles and wind turbines.25 “The U.S. uses oil and the dollar as hegemonic tools. China is using critical materials as a hegemonic tool.”

In September 2020, President Donald Trump issued Executive Order 13953, which declared that U.S. dependence on “foreign adversaries” for critical minerals was a national emergency. Trump said China had used “aggressive economic practices to strategically flood the global market for rare earth elements and displace its competitors,” while coercing industries that rely on these elements to locate in China.26

Countries key to the minerals-security initiative buttressed the U.S. stance. In June, Canada called for advanced economies to prioritize creation of critical mineral supply chain resilience for lithium, graphite, nickel, cobalt, copper and rare earths. Britain published a similar strategy document in July.27

In August, the European Union said China’s control of critical minerals posed a risk of supplies being “used as a geopolitical leverage, for instance through export restrictions.”28

“We are much more dependent on those critical minerals in comparison to oil and gas,” raising concerns if relations with China deteriorate, says Sergey Paltsev, deputy director of the Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology (MIT).

As the green energy transition accelerates, Chinese companies are securing their international positions. CATL, the world’s biggest electric-vehicle battery maker, last year bought a minority stake in a copper and cobalt mine in Congo. It is setting up factories in Germany and Hungary and reducing carbon emissions in its batteries to meet U.S. and European standards.29

However, says the Belfer Center’s Lee, while China will have a major influence on the green transition, “I don’t think any one country will dictate the pace” of it. “You’re looking at a machine with many moving parts.”

As China flexes its muscles in renewable energy and electric vehicles, it also depends on coal to provide electricity for those cars as it ramps up the use of wind and solar. During his Oct. 16 speech to the Chinese Communist Party congress, Xi pledged to “push forward the clean and low-carbon transition” in industry, transportation and construction, but admitted China would also need to step up its use of fossil fuels. “Coal will be used in a cleaner and more efficient way, and greater efforts will be made to explore and develop petroleum and natural gas, discover more untapped reserves, and increase production,” Xi said.30

That tighter embrace of fossil fuels, however, could diminish China’s influence over the transition from carbon-based fuels.

Stabilizing carbon emissions in 2030, says Neil Hirst, a senior policy fellow for energy and mitigation at Imperial College London, is “a tough call for the Chinese,” because of economic growth and social progress considerations.

The boost in coal use will raise China’s carbon emissions by 1.5 to 2.5 percent by 2025 — above prior estimates — although long-term, carbon-reduction targets should still be viable, says Yang Fuqiang, a senior adviser on climate change and energy transition at Beijing University’s Institute of Energy. “Coal will not go away very soon,” he says. “It will last several decades.” In his projections, coal will still account for 7 to 10 percent of total Chinese energy production in 2050.

China’s renewed commitment to coal contrasts with Xi’s 2021 announcement at the United Nations that China would no longer build coal projects abroad.31

The Climate Action Tracker, produced by German researchers, rates China’s target for reduced greenhouse gas emissions as “highly insufficient” and said that “if all countries followed the level of ambition implicit in this development, it would lead to a warming of 3°C degrees globally,” or 5.4 degrees Fahrenheit.32 That is double the optimal Paris Agreement limit and would threaten a range of natural systems.

A study by the Australian Academy of Science found that just 3 degrees of warming would exacerbate heat waves and drought, diminish water supplies and have ecosystem-changing effects on forests, fisheries and ocean reefs.33

As climate worries escalate and energy goes green, China’s neighbor and rival, India, may be the geopolitical wild card. Access to fossil fuels is crucial for India, the world’s third-largest carbon dioxide emitter. As international pressure mounts to squeeze carbon out of the energy system, India will face challenges in energy-intensive industries such as iron and steel production, cement and chemicals, according to an MIT study.34

Still, India is accelerating its conversion to renewable energy, pushed by Prime Minister Narendra Modi’s ambitions and tens of billions of dollars of planned investment from Indian billionaires. Solar and wind energy will become India’s dominant power sources by 2050, while hydrogen use for transport will increase in this decade, according to The Energy and Resources Institute in New Delhi.35

The United States should “privately work behind the scenes to assist India with the larger policy dilemma about how to begin a transition into a cleaner, green economy and achieve it with American technology and private sector trade,” said Tim Roemer, the former U.S. ambassador to India. “America needs to play this strategically for the long term — and not push India into the powerful gravitation of the China-Russia orbit.”36

Can hydrogen diminish energy competition among nations?

At the World Hydrogen Summit, held in Rotterdam, Netherlands, in May, a futuristic city named Neom claimed a top prize for its plans to generate environmentally friendly hydrogen fuel.37

The accolade was less surprising than the place where Neom is being built: Saudi Arabia, one of the world’s biggest producers of crude oil and natural gas. For decades, the Saudi kingdom has played a central role in the supply and pricing of the world’s oil, making it a crucial geopolitical player.

During a July visit to Jeddah to confer with Crown Prince Mohammed bin Salman, President Biden and the Saudis signed a partnership to develop and finance clean energy sources, such as green hydrogen, nuclear and solar.38

Creating green hydrogen from water by using solar and wind energy to power electrolysis produces carbon-free energy that can be traded internationally. “By opening up the long-distance transport of sunlight and wind, hydrogen will become the new oil,” energy executive Marco Alverá wrote in his 2021 book, The Hydrogen Revolution. 39

Siemens Mobility unveils the first hydrogen-powered train in collaboration with German rail operator Deutsche Bahn in Krefeld, Germany, on May 5. Experts hope the use of hydrogen fuel, made from water, can reduce carbon emissions and ease global tensions spawned during the oil era. (AFP/Getty Images/Ina Fassbender)

“Green hydrogen is a huge growth area for us, and we believe it’s going to be a contributor in the future economy and the future energy as we transition to a decarbonized world,” Saudi Investment Minister Khalid al-Falih told Bloomberg in July.40

Saudi Arabia will be competing with a range of green energy newcomers. The United Arab Emirates, the world’s seventh-largest oil producer, is forging a hydrogen partnership with the United Kingdom. Hydrogen could enable the U.A.E. “to maintain or grow its geostrategic energy position despite global decarbonisation policies,” said a study by the Dubai-based World Green Economy Organization.41

As an energy source that is created rather than extracted, hydrogen has raised hopes that it can dissipate global tensions spawned during the oil era. Italian energy researcher Marco Giuli said hydrogen is likely to “reduce the geopolitical sensitivity of energy trade” by focusing more on domestic needs than on “grabbing resources.”42

Others are more cautious, however.

“Hydrogen will certainly play a significant role in decarbonizing multiple sectors of the energy economy,” says Moniz, the former U.S. energy secretary. “However, arguing that it would eliminate geopolitical considerations is a step too far. Hydrogen should abate, but not eliminate, geopolitical competition.”

Countries increasingly are focusing on building a global market for hydrogen and negotiating future trade deals. Germany has opened hydrogen offices in Nigeria and Saudi Arabia, with the goal, in part, of helping oil exporters adapt to the transition and reducing economic disruptions and security risks.43

Chile, which seeks to become a green hydrogen power in South America, is discussing with the Netherlands how to create “export-import corridors” between Chile and Europe. The European Union’s energy strategy is to support three renewable hydrogen import corridors via the Mediterranean Sea, the North Sea and, “as soon as conditions allow, with Ukraine.”44

Some say that hydrogen could “completely democratize global energy markets and let most countries self-produce,” says Jeffrey Beyer, managing director of Zest Associates in Dubai, a clean-energy consultancy, and author of the U.A.E. study. “The reality is that some countries have lots of indigenous energy sources and others don’t.”

Japan, whose reliance on Middle East oil makes it susceptible to geopolitical jolts, is pursuing a regional hydrogen strategy that would support Asian markets. In September, Japan hosted a green energy meeting of 20 nations, including Southeast Asia’s rising economies of Indonesia and Vietnam.45

“Currently, the international finance industry is rapidly withdrawing investments from fossil fuel projects,” Japan’s Minister of Economy, Trade and Industry Nishimura Yasutoshi told the Asia Green Growth Partnership on Sept. 26. “However, Asia is highly dependent on fossil fuels amid growing energy demand and its potential for renewable energy is not necessarily as high as it is in Europe.”46

In February, the specially built ship Suiso Frontier arrived in Kobe, Japan, from Australia with the first cargo of liquified hydrogen in a pilot project, viewed as a milestone in the transition to green energy.47

Australia is also developing hydrogen ties with Germany. “If our current pipeline of clean hydrogen projects is completed on time, Australia could be one of the world’s largest hydrogen suppliers by 2030,” a 2021 Australian government report said.48

An analysis by the International Renewable Energy Agency, an Abu Dhabi-based intergovernmental organization, suggests that about one-third of hydrogen would be traded across borders by 2050, about half of that probably in pipelines, including those now used to transport natural gas. Exporting countries will gain in strategic importance and new shipping routes will shape security and defense plans, the agency said.49

Coastal countries might hold an advantage over dry, inland areas, because desalination of seawater adds only one U.S. cent per kilogram to the cost of hydrogen, energy executive Alverá wrote.50

Hydrogen “will change the dynamics of geopolitics in energy,” says Jamie Speirs, a fellow in energy analysis and policy at the Sustainable Gas Institute at the Imperial College London. “Some countries will do this better than others, and those are the places where green hydrogen will be done at scale.”

China is already the world’s largest producer and consumer of hydrogen, but it is made using coal. China’s new strategy calls for creating 50,000 hydrogen-fueled vehicles by 2025, using more hydrogen in industry and increasing the manufacture of electrolyzers for hydrogen production.51

While hydrogen is riding a wave of optimism, Speirs says it’s “easy to get carried away by the hype” surrounding it. “We might find out that hydrogen isn’t as low-carbon as we hope, or need it to be, to meet our targets,” undercutting the confidence of governments and investors, he says.

Can Africa parlay its green assets into geopolitical influence?

On Africa’s arid southwestern coast, Namibia boasts a population of only 2.7 million people in an area almost twice the size of California, which has nearly 40 million people. Namibia currently depends on electricity from South Africa. Yet, it has two assets of increasing international interest: high solar energy potential and metals coveted for electric vehicles.52

Germany, which is seeking hydrogen to decarbonize its industries, formed a partnership with Namibia last year, linked to a Namibian government initiative that has awarded 1,544 square miles of land to investors for a $9.4 billion green hydrogen project. The enterprise will convert Atlantic Ocean water into hydrogen, fueled by the country’s abundant solar and wind power.53

“The global race for the best hydrogen technologies and the best sites for hydrogen production is already on,” Germany’s federal research minister at the time, Anja Karliczek, said during the signing of the partnership. Namibia could produce hydrogen “at the most competitive price in the world.”54

A recent U.S. assessment described Namibia, which also has new lithium and cobalt mines, as “an up-and-coming source country for critical minerals” used in electric vehicles and battery storage. In October, Namibia Critical Metals said its Lofdal mine could produce significant amounts of dysprosium and terbium — rare earth metals used in the permanent magnets of electric vehicles — to supply Japan long term. China currently controls the world’s supply of dysprosium and terbium.55

Besides Namibia, other African regions are well-positioned to capitalize on the green energy transition — from the continent’s vast, sun-washed deserts and savannas to its carbon-capturing Congo Basin rainforest and the vast supply of cobalt in the Democratic Republic of Congo (DRC). Clean energy investments on the continent are projected to rise sixfold from 2026 to 2030, with total annual energy investment averaging about $190 billion, according to the International Energy Agency.56

Whether Africa can translate those assets into geopolitical clout hinges on tackling entrenched economic barriers.

“Much more needs to happen from African governments to be able to change the game completely” regarding critical minerals, says Alfonso Medinilla, head of climate and green transition geopolitics at ECDPM, a think tank on Africa-Europe relations. African countries need to get away from the current model of merely extracting raw materials and exporting them to be processed elsewhere, he says. Instead, he says, they should process the minerals domestically and export the higher value finished products.

James Mwangi, founder of the Kenya-based Climate Action Network Africa, agrees. Antiquated supply chains that export raw African materials without adding value incur a large carbon cost and concentrate poverty and instability in Africa, he says.

African Development Bank President Akinwumi Adesina told Norwegian investors in September that Africa’s lithium deposits could “make Africa competitive with China and Chile in the race for supplying global value chains for electric cars.” He also touted Africa’s green hydrogen potential, along with a $20 billion “Desert to Power” plan to turn 11 countries in the Sahel — a transition belt between the Sahara Desert and tropical regions to the south — into the world’s largest solar zone.57

Some hydrogen projects already emerging in Egypt, Mauritania, Morocco and South Africa are using renewable energy to make ammonia for fertilizer, which would strengthen Africa’s food security, the International Energy Agency said. African farmers face a shortage of imported fertilizer due to the war in Ukraine.58

Experts say African countries must balance domestic needs and international interests as they strive to amass green geopolitical influence. The DRC illustrates the challenge, as Secretary of State Blinken highlighted during an August visit to its capital, Kinshasa. “On climate, the Democratic Republic of Congo is vital to the future of the planet,” Blinken said. “It’s as simple as that. The Congo Basin rainforest absorbs more carbon than is emitted by the entire continent of Africa.”59

A large swath of flooded rainforest — a region the size of England — runs through the DRC and neighboring Republic of Congo. The peat under the water contains about 30 billion metric tons of carbon — as much as the world emits in about three years.

A moratorium on logging concessions in the DRC rainforest took effect in 2002. Germany, Norway and the United Kingdom have been funding a forest preservation and management initiative that could lead to the lifting of that moratorium in 2023. Western countries would like for the DRC and other Congo Basin nations to leave their rainforests undisturbed or for them to be sustainably developed.

But the African governments also are eyeing the sizeable oil deposits underneath the peat.

“The challenge is to find an equilibrium, a balance between the well-being of the Congolese people” and an ecological framework, said Congolese Foreign Minister Christophe Lutundula.60

A national audit of rainforest logging published this year found that six DRC government ministers in a row had violated forest-protection laws and illegally allocated at least 18 concessions to themselves. The environmental advocacy group Greenpeace Africa, which said the logging moratorium is routinely violated, found that a DRC environment minister had awarded a logging permit to Chinese and other companies covering an area equal to four times the size of Kinshasa.61

Another Central African country, Gabon, has been trying to balance its domestic needs while helping in the global effort to slow climate change. The tiny nation aims to sustainably manage its abundant, carbon-absorbing rainforest by banning exports of logs, controlling and tracking tree harvesting and developing domestic manufacturing of wood products.62

Expanding renewable energy and helping to create an industrial base in Africa could position the United States more strongly against China, says Mwangi. Africa’s projected population surge — estimated to represent 52 percent of world growth by 2050 — makes it an enticing alternative market to China’s for U.S. companies, given current trade tensions between China and the United States, he says.63

“Don’t think about Africa purely as a climate victim,” Mwangi says. Instead, focus on the potential of the African economy to help lower the cost of meeting global net zero emissions targets, he says.

At COP27, Biden announced investments in climate adaptation and green energy in Africa, including early warning systems and disaster-risk protection. He said the United States is joining the EU and Germany in a $500-million effort to help Egypt add 10 gigawatts of renewable energy by 2030 while reducing 5 gigawatts of “inefficient” gas-powered facilities and capturing natural gas that flares or leaks from oil and gas operations.64

During the conference, countries such as Kenya and Nigeria announced the Africa Carbon Markets Initiative, designed to generate $6 billion by 2030 for African communities to invest in renewable energy and other efforts to curb climate change. It would set up a system for trading carbon credits, each representing one ton of carbon dioxide emissions that a polluter can purchase, with the funds being invested in carbon-reduction systems, such as a forest.65

Achieving a so-called African Green Deal would require bold, government-directed efforts to boost energy availability and reduce carbon emissions while expanding economic growth and ensuring social equity, according to the International Renewable Energy Agency. “African leaders must clearly articulate, map and assert their own climate transition and development agendas” with regional coordination, the agency said.66

Ethiopia also aims to become a major player in Africa’s efforts to become a world leader in renewable energy. It seeks to boost its power output ninefold by 2037 by expanding its hydropower, wind, solar and geothermal resources.67

Africa’s largest hydropower dam, the Grand Ethiopian Renaissance Dam on the Nile River, has begun to generate electricity amid tensions with downstream Egypt.68

Construction of the Grand Ethiopian Renaissance Dam, a massive hydropower plant on the Nile River that has begun to generate electricity, caused tension with downstream Egypt, which relies heavily on the Nile for its water. Ethiopia aims to become a major player in Africa’s efforts to be a global renewable energy leader but that plan could be limited by the need for financing. (Getty Images/Anadolu Agency/Minasse Wondimu Hailu)

But Ethiopia’s potential is limited by investment risks and the need for “prohibitively costly” energy-delivery infrastructure, says Mikael Alemu, an Ethiopian-Israeli entrepreneur and co-founder of 10 Green Gigawatt for Ethiopia, a solar energy development company.

“My partners and myself believe in [the] enormous potential of solar energy in Ethiopia, and we know hundreds of investors who share this belief,” he says. “But very few investors today can accept the country and currency risks of Ethiopia, and therefore there is just a handful of private energy developers.”

Some activists say that as the green energy transition gathers momentum, some African countries, such as Mozambique, continue to bet too much on new oil and gas production, where European and Japanese investors are tapping major gas discoveries for export.69

The three-hour face-to-face meeting in Bali between President Biden and President Xi — their first non-virtual meeting in over three years — concluded just over an hour ago.

Much can be said (and is already in digital print) looking at this meeting from various angles:

  • History of Biden’s personal relationship with Xi
  • Composition of the small delegations accompanying the heads of state and what those choices say
  • The wide range of issues discussed including Taiwan, Russia, nuclear arms (and their possible use in Ukraine), North Korea, human rights, resumption of national level cooperation on issues of climate change, health security, global food security, and defense-related communications (to forestall accidents and misunderstandings), etc.
  • Differences in the official post-meeting read-outs from the two sides and what those differences signify
  • Atmospherics of the meeting — effect of recent boosts to each leader’s domestic standing; implications of the third-party location on periphery of G20, etc
US President Joe Biden and China’s President Xi Jinping, Nusa Dua Bali, Nov 14, 2022 (Photo by SAUL LOEB/AFP via Getty Images)

But I will go to what I believe to be the heart of the matter. The bottom line, both immediately and over the medium term:

CONTEXT: Gauged charitably, U.S.-China relations are at their lowest point since at least 1991 (post-Tiananmen and pre-Deng’s Tour of the South). Gauged more hard-headedly, they are in their worst shape since before Nixon’s visit to China in 1972 to begin dialogue and explore a relationship amid the Cold War freeze. The vertiginous decline we’ve been experiencing in recent years started very gradually as far back as 2008 when the (Western) Financial Crisis put shortcomings of the Washington Consensus on display in Beijing at the very moment when China was basking in its success in hosting the 2008 Summer Olympics. The hardening of attitudes became personified on the Chinese side with the emergence of Xi Jinping as paramount leader in 2012. Over the following years, the on-going decline in political relations — as contrasted with ever-strengthening commercial ties — became exacerbated for the Obama Administration as China militarized islands in the South and Southeast China Seas, brazenly breaking a commitment Xi had personally given Obama. It was then personified on the U.S. side starting in 2015 with Donald Trump’s racially-tinged campaign and, following his election, by his go-it-alone crusade to punish China with sanctions and Oval Office invective. The rhetoric was answered in 2017 by Xi Jinping upon his re-election as Chinese Communist Party (CCP) head in the form of an uber-triumphalist speech he delivered from the 19th Party Congress stage. The flash-points multiplied during the pandemic with China working hard to obscure the origins of the Covid-19 outbreak and subsequently using its heavy-handed Zero-Covid policy as the linchpin for Xi’s claim that China offered the world a superior system to liberal Western democracy (a claim which non-Western Taiwan makes a mockery of every day and which Hong Kong once also challenged prior to its being brought to heel brutally by Beijing in 2020). The deterioration continued in 2021 as the Biden Administration disappointed Beijing by not reverting to the softer, Obama-era approach to China that the Chinese leadership in Zhongnanhai had expected. Instead, the Biden Administration worked assiduously and with considerable success, to build a broad, values-based partnership with traditional allies and other aligned countries to answer China with a solid front. The Peoples Liberation Army’s practice-run blockade of Taiwan following House Speaker Pelosi’s visit to Taiwan in August further accelerated the downward spiral. And, while not yet fully appreciated by the American public, passage of the Biden Administration’s CHIPS Act into law in August is perceived in China, rightly, as a policy dagger pointed at the heart of its aspirations for seizing dominance in 21st c. technologies for defense, aerospace and space, surveillance and security, and industrial automation and productivity. (It is with the set of issues in these last two sentences — the interlinked issue of Taiwan and the CHIPS Act — that the Assessing China blog is now focused).

THE BOTTOM LINE: The bottom line of today’s meeting is Taiwan. While both sides settled in their separate post-meeting read-outs on emphasizing the lowest common denominator assertion that they’re now working together to stabilize an unstable relationship, their agendas going into the meeting were clearly different. For the Biden Administration, stabilization was the goal. It was enough just to establish a floor to stop further relationship decline and to limit the negative impact further decline would have on the range of issues under discussion (see above). For Xi, the goal was something more — to leverage agreement to stabilize the relationship toward the end of prying out some glimmer of affirmation from the U.S. side to validate his stance on Taiwan. With his eye on 2027 (21st Party Congress) and 2035 (a key CCP goal for China’s development) and with a domestic lock-hold for the next five years in the form of his new Standing Committee of loyalists, Xi is turning his attention — and ambition — to the international sphere. That means Taiwan as the culmination of his China Dream (and, I would wager, the fulfillment of the backroom deal he likely crafted with the CCP in 2012 to let him off the two-term-limit leash). In Xi’s thinking, if the U.S. could commit to the Shanghai Communique in earlier years, he should push as a next step for formal U.S. acceptance of his claim on Taiwan. As Xi put it, Taiwan is “the very core of our core interests.”

The bottom line of their meeting in Bali today may then be that Xi, just like Putin with Ukraine, misreads U.S. politics and society and the resolve of most of the international community concerning Taiwan. The evidence for this view would be the public read-outs: Biden achieved his chief objective while Xi did not.

But another view is possible. As Xi has demonstrated over the last twelve years, he is willing to take large risks to achieve the China Dream but he is methodical about how he goes about taking those risks. Militarization of the South China Sea and the ruthless imposition of the Basic Security Law in Hong Kong are just two examples. Militarily, China has been modernizing and arming up with laser-focus on deterring the U.S. in the Strait of Taiwan for far longer than the Pentagon has been taking steps to respond. As a result, the window of opportunity for Xi to move militarily is expected to be at its widest around 2027 or 2028. Following that, the belated U.S. military revamp in the region will be coming on stream and narrowing that window with each passing year. (It’s worth noting that 2027 coincides with the next Party Congress and therefore coincides well with the ‘chapter structure’ of the narrative Xi has been building about his stature as not only a peer of Mao Zedong in the Communist era but as a Chinese leader of destiny for the ages.)

So does the “failure” of Xi’s bottom-line agenda regarding Taiwan at today’s meeting indicate that he misreads Biden and the U.S. political system? Or might he instead be playing a longer game to a wider audience? If Xi’s sights are indeed firmly fixed on the 2027/8 moment (not only militarily but also politically and in the eyes of history) and if he is focused on exploiting that window of maximum military opportunity, his failure today to make any headway toward some type of formal understanding with the U.S. regarding Taiwan may be exactly the point.

The choreography may be designed to show Xi making a concerted effort to get the U.S. to more fully acknowledge his claim on Taiwan. Xi probably recognizes this won’t happen. The U.S. will not cut a deal with an autocrat to throw 23 million people in a thriving democracy under the bus. But Xi can use that show of effort over the next few years to advantage. He will have made a show for the world to see of having tried hard to exhaust “peaceful measures” prior to being “forced” to make a military move on Taiwan. He will have checked that box. And it won’t be a coincidence if the moment of being “forced” happens at the same moment of the PLA’s maximum military advantage.

As Bob Marley said, “If you know your history, then you would know where you’re coming from.”

Wednesday’s post — My Proprietary Chipset — included hyperlinks to specific publications and websites from the 2000s. Some of these are more easily accessed than others. For instance, the link to my testimony before the U.S. China Economic and Security Review Commission in the 109th Session of Congress (2005) takes you directly to that testimony. However, the links to my testimony at the 108th (2003) and 107th (2001) sessions takes you to the full text of the Commission’s work covering the full session and it takes some perseverance to find one’s way to my testimony. In the spirit of presenting my work on these issues from the 2000s in one, easily accessed location, I will add here to the blog a few archive posts to fill in behind Wednesday’s My Proprietary Chipset post providing readier access to those harder-to-navigate publications.

2003 Testimony, 108th Session of Congress

SUMMARY:

In the information technology sector, Taiwan semiconductor and electronics manufacturing firms are major global actors, and their
expansion into China continues, but without noticeable erosion of Taiwan equity control. In testimony before the Commission, Merritt Cooke, former senior commercial officer at the American Institute in Taiwan, attributed this to the relative stability of ‘‘highly differentiated, high-value supply chains’’ as opposed to the ‘‘instability of far simpler manufacturer-retailer networks characteristic of commodity products.’’ Cooke believes this distinction helps explain the historical pattern of Taiwan investment into the mainland. While many light industry sectors that Taiwan moved to the mainland in the 1980s and 1990s ‘‘have been swallowed up by mainland competitors,’’ highly differentiated, relatively high-value consumer products such as brand-name athletic shoes and high-performance bicycles have remained largely in Taiwan equity hands. ‘‘If these product sectors, with their relatively lower levels of technology and slower product cycles, could stay in Taiwan control for decades, there is every reason to believe that the various IT [information technology] hardware sectors will stay even more firmly in Taiwan’s grip in years ahead,’’ Cooke said. Despite the large and growing Taiwan business presence in the mainland and burgeoning indirect cross-Strait trade and investment, there is a sense in the Taipei business community that Taiwan itself—as a venue for investment, manufacturing, logistics, or finance—is in danger of becoming marginalized within Asia. Kaohsiung’s container port—once the fourth busiest in the world— now ranks sixth, with the Chinese ports of Shenzhen and Shanghai jumping ahead. The American Chamber of Commerce in Taiwan reports that a number of U.S. corporations’ regional headquarters in Taiwan have been eliminated or downgraded to local offices.

2001 Testimony, 107th Session of Congress

TESTIMONY:

STATEMENT OF MERRITT TODD COOKE, JR., CHIEF, COMMERCIAL SECTION, AMERICAN INSTITUTE IN TAIWAN

Mr. COOKE. Mr. Chairman, thank you. I hope the Commission will feel free to overlook the confusion that my parents introduced
with my legal name and call me by the name that I most often respond to, Terry. [Laughter.]
I will also request that, with the consent of the Commission, some paragraphs that I delete in the interest of brevity do be entered into the record. I will spare the Commission a recap of Taiwan’s ten-year structural transformation in the 1990s.
It is an honor to be asked to testify in front of this distinguished panel of Commissioners. In the following brief statement, I will bring to bear my perspective as current Chief of the Commercial Section at the American Institute in Taiwan to address the issues
identified by the Commission in its July 24 invitation letter, specifically the growing interdependence of the U.S., Taiwan, and Chinese high-tech economies.
The strategic interdependence of the U.S. and Taiwan economies has grown steadily throughout the 1990s as Taiwan’s economy has shifted from its traditional structure as a labor-intensive export-oriented economy towards a more service-oriented investment and technology-intensive economy. While Taiwan’s industrial sector has shrunk in relative terms over this period, capital and technology-intensive industries have expanded dramatically. These industries accounted for approximately 75 percent of total manufacturing in 2000, compared to 48 percent in 1986.
Taiwan now supplies 60 percent of the world’s motherboards and is the world’s leading supplier of notebook computers, monitors,
mice, keyboards, video cards, sound cards, on/off switches, LAN cards, graphic cards, scanners, and laser disk drives. Through the
strength of its foundry model, Taiwan has emerged as a preeminent semiconductor supplier to the world.
This transition from the production of labor-intensive goods to high-tech goods has to date proceeded relatively smoothly, even
against the background turbulence of the Asian financial crisis in 1997–98 and a major earthquake occurring on September 21, 1999.
Against the broad backdrop of its structural transformation, two major dynamics have emerged: First, the growing regional partnership and global interdependence of the U.S. and Taiwan high-tech industries, and secondly, the accelerating shift of the lower end of Taiwan’s high-tech production offshore, particularly to mainland China.
One clear indicator of the degree of evolving interdependence with the U.S. was the fact that following the 9/21 earthquake in
Taiwan, the tech markets in New York dropped more in percentage terms than in Taipei.
The scale of this interdependence is likewise highlighted in other ways. For example, four of the top U.S. suppliers of PCs alone procured $20 billion of components from Taiwan to support their 1999 global sales. Additionally, Taiwan will soon have more state-of-the-art 300-millimeter chip wafer fabs in operation than the U.S., Germany, Japan, or any other world market.
The accelerating shift of high-tech production from Taiwan to mainland China has been equally pronounced over this period. The
Taiwan government’s Office of Budget, Accounting, and Statistics reported in February that government approved Taiwan investments in China for 2000 more than doubled from the 1999 levels.
The Taipei Computer Association reported in the same month that 30 percent of Taiwan’s 411 high-technology companies had established major investments in mainland China and that fully 90 percent of those 411 companies planned to be invested in China by the end of 2001.
Lastly, China edged out Taiwan in 2000 for the first time for the number three slot in world IT production value. China came in behind the U.S. and Japan, with $25.5 billion of production value, against Taiwan in fourth place with $23 billion. The key point to
note, however, is that Taiwanese companies generated fully 70 percent of that $25.5 production value in mainland China.
The impending accessions of China and Taiwan to the WTO will likely further accelerate this process of growing cross-straits commercial interdependence in high-tech, with consequent implications for the already highly interdependent U.S. and Taiwan high-tech economies. Although Taiwan’s relatively late liberalization and privatization of its fixed-line monopoly regime will limit somewhat the impact of this development in the telecom sector, the likely effect will be continued fast accelerating cross-straits interdependence in sectors such as PC and notebook assembly, motherboard and other PC component manufacture, production of chip sets for mobile telephony and other applications, scanner and computer peripheral production, and lower end IC production.
A number of important trends will reinforce WTO financial linkages and commercial disciplines and tend to produce this outcome.
First, the network of business relationships which Taiwan firms have established in China represents largely an extension into
China of preexisting product and service supply chain relationships originally established in Taiwan. This greater Taiwan phenomenon in China, localized in growth centers such as Donguan in Guangdong, Xianen in Fujian, and increasingly in the greater Shanghai area, has now reached a critical mass sufficient for greater efficiency in the global supply chain.
Second, the commoditization of IT production worldwide is increasingly pressuring production costs, forcing manufacturers to
distribute a growing number of lower end steps in their production processes to the world’s lowest-cost production centers. Under more than a decade of the KMT or Guangdong’s ‘‘Go South’’ policy, Taiwan manufacturers have quite fully exploited the advantages of relatively low-cost production centers in the Philippines, Thailand, and elsewhere in Southeast Asia, the one exception to that probably being an expected spurt of Taiwan investment in Vietnam following the ratification and implementation of the U.S.-Vietnam bilateral trade agreement.
At the same time, the KMTs, and now the new administration, the DPP’s ‘‘go slow’’ policy vis-a-vis investment in the mainland has tended to limit the degree to which Taiwan firms could take advantage of the even lower costs of production in China. However, since cost pressure started mounting sharply in March 2000, Taiwan high-tech firms have found themselves no longer able to maintain global competitiveness without relocating a greater share of their production to China, the lowest cost major production center in the Asian production platform.
A third trend really represents a number of technology trends that underlie an emerging division of labor in high-tech production
between Taiwan and the PRC. Without trying to go into any of these, I would just note the increasing specialization of national
economies in the globalized IT industry segments. For instance, fully half of Finland’s GDP is dedicated to wireless telephony.
Secondly, the migration of value away from hardware assembly and towards embedded software technologies in scanners, in peripherals, in Internet appliances, and so on.
And a third technology trend being the steep rise in investment costs and shorter product cycles in the IC semiconductor sector.
A fourth and final trend, the Taiwan and China markets are
largely complementary, creating unique opportunities for commercial cooperation between these political rivals. For instance, Taiwan firms have generally failed to establish global brand and to capture the higher valuations that accrue to brand-name products. However, the large size of the China market, the skill and cultural familiarity of Taiwan business managers, and the high regard which China’s consumers have for Taiwan’s products are now giving Taiwan firms a chance to establish brand names on a large-scale regional basis as opposed to global basis.
Each one of these trends holds important implications for U.S. interests. The establishment of Taiwan regional brands might, for
instance, tend to weaken the existing cooperative bonds between U.S. and Taiwan alliance partners and foster more direct competition in the region. Conversely, the combination of U.S. innovation, Taiwan regional management skill, and the largely untapped potential of the developing China market is already creating a set of
opportunities for enhanced commercial cooperation among traditional U.S. and Taiwan partners.
The rapid proliferation of commercial ties between Taiwan and China is of major importance to U.S. interests. There are the narrower set of commercial implications for the U.S. competitive posture in regional and global markets, to which I have just alluded. Also, as Rupert Hammond Chambers, President of the U.S. ROC Business Council suggested in his June 14 testimony to this Commission, there are equally important implications which fast-growing commercial interdependence between Taiwan and China have for traditional U.S. military and security interests in the Straits of Taiwan.
I commend the Commission for focusing attention on the extent to which commercial dynamics in the computer electronics and telecommunications sectors are affecting these interests. It is my personal observation that these market and technology-driven dynamics are not always fully captured in the dialogue regarding our key
interests in this potential flash point region of the world. Thank you very much.

[The statement follows:]
PREPARED STATEMENT OF MERRITT TODD COOKE, JR.
It is an honor to be asked to testify in front of this distinguished panel of Commissioners. It is also, personally, a distinct pleasure to see again a number of former Departmental and Embassy colleagues as well as others with whom I have had the
past pleasure of working on various overseas and stateside activities. In the following brief statement, I will bring to bear my perspective as current Chief of the Commercial Section at the American Institute in Taiwan to address the issues identified by the Commission in its July 24th invitation letter.
The strategic interdependence of the U.S. and Taiwan economies has grown steadily throughout the 1990s as Taiwan’s economy has shifted from its traditional structure as a labor-intensive, export-oriented economy towards a more services-oriented,
investment- and technology-intensive economy. While Taiwan’s industrial sector has
shrunk in relative terms over this period, capital- and technology-intensive industries have expanded dramatically. These industries accounted for approximately 75 percent of total manufacturing in 2000, compared to 48 percent in 1986. During this
structural transition, labor-intensive industries, such as toys, footwear, umbrellas,
and garments, relocated offshore. Their place was taken by petrochemicals, metal products, machinery, and ‘‘most dramatically during the 1990s’’ by technology-oriented industries, such as electronic, electric, and information products.
By 2000, more than half of the top ten manufacturing firms in Taiwan were electronic and computer manufacturing firms, compared with only two in 1993. More than half of the top ten manufactured products were in the areas of integrated circuits (ICs), personal computers, and computer peripherals, whereas in 1993, only ICs had been among the top ten. Taiwan now supplies 60% of the world’s motherboards and is the world’s leading supplier of notebook computers, monitors, mice, keyboards, video cards, sound cards, on-off switches, LAN cards, graphics cards, scanners, and laser disk drives. Through the strength of its foundry model, Taiwan has emerged as a preeminent semiconductor supplier to the world. This transition from the production of labor-intensive goods to high-tech goods has, to date, proceeded relatively smoothly, even against the background turbulence of the Asian Financial Crisis in 1997–98 and a major earthquake occurring on September 21, 1999.
Against the broad backdrop of this structural transformation, two major dynamics have emerged: (1) the growing regional partnership and global interdependence of the U.S. and Taiwan high-tech industries and (2) the accelerating shift of the lowerend of Taiwan’s high-tech production offshore, particularly to mainland China. One clear indicator of the degree of evolving interdependence with the U.S. was the fact that, following the 9–21(–99) earthquake in Taiwan, the tech markets in New York
dropped more in percentage terms than in Taipei. The scale of this interdependence is likewise highlighted in other ways. For example, four of the top U.S. suppliers of PCs alone procured $20 billion (USD) of components from Taiwan to support their
1999 global sales. Additionally, Taiwan will soon have more state-of-the-art 300mm chip-wafer fabs in operation than the U.S., Germany, Japan or any other world market.
The accelerating shift of high-tech production from Taiwan to mainland China has been equally pronounced over this period. The Taiwan Government’s Office of Budget, Accounting, and Statistics reported in February that government-approved Taiwan investments in China for 2000 more than doubled from the 1999 levels. The Taipei Computer Association reported in the same month that 30 percent of Taiwan’s 411 high technology companies had established major investments in mainland China and that fully 90 percent of those 411 companies planned to be invested in China by the end of 2001. Lastly, China edged out Taiwan in 2000 for the first time for the number three slot in world IT production value. China came in behindthe U.S. and Japan with $25.5 billion of production value against Taiwan in fourth place with $23 billion. The key point to note, however, is that Taiwanese companies generated fully 70% of that $25.5 production value in Mainland China.
The impending accessions of China and Taiwan to the WTO will likely further accelerate this process of growing cross-straits commercial interdependence in hightech, with consequent implications for the already highly interdependent U.S. and Taiwan high-tech economies. Although Taiwan’s relatively late liberalization and privatization of its fixed-line monopoly regime will limit somewhat the impact of this development in the telecoms sector, the likely effect will be continued fast-accelerating cross-straits interdependence in sectors such as PC and notebook assembly, motherboard and other PC component manufacture, production of chipsets for mobile telephony and other applications, scanner and computer peripheral production, and lower-end IC production. A number of important trends will reinforce WTO financial linkages and commercial disciplines and tend to produce this outcome:
—First, the network of business relationships which Taiwan firms have established in China represents largely an extension into China of pre-existing product and service supply-chain relationships originally established in Taiwan. This ‘‘Greater Taiwan’’ phenomenon in China, localized in growth centers such as Dongguan (Guangdong), Xiamen (Fujian) and, increasingly, the Greater
Shanghai area, has now reached a critical mass sufficient for greater efficiency in the global supply chain;
—Second, the commoditization of IT production worldwide is increasingly pressuring production costs, forcing manufacturers to distribute a growing number of lower-end steps in their production processes to the world’s lowest-cost production centers. Under more than a decade of the KMT’s ‘‘Go South’’ policy, Taiwan manufacturers have quite fully exploited the advantages of relatively low-cost production centers in the Philippines, Thailand and elsewhere in Southeast Asia. (The exception to this being an expected spurt of Taiwan investment in Vietnam following the ratification and implementation of the U.S.-Vietnam Bilateral Trade Agreement). At the same time, the KMT’s (and now the DPP’s) ‘‘Go Slow’’ policy vis-a`-vis investment in the mainland tended to limit the degree to which Taiwan firms could take advantage of the even lower costs-of-production in China. However, since cost pressures started mounting sharply in March 2000, Taiwan high-tech firms have found themselves no longer able to maintain
global competitiveness without relocating a greater share of their production to China, the lowest-cost major production center in the Asian production platform;
—Third, a number of technology trends underlie an emerging division of labor in high-tech production between Taiwan and the PRC. Among these, are (a) the increasing specialization of national economies in globalized IT industry-segments (e.g., fully half of Finland’s GDP is now generated from wireless related technologies); (b) the migration of value away from hardware assembly and towards imbedded software (e.g., scanners and other peripherals, Internet Appliances, etc.); and (c) the steep rise in investment cost and shorter product cycles in the IC/semiconductor sector; and
—Fourth, the Taiwan and China markets are largely complementary, creating
unique opportunities for commercial cooperation between these political rivals. For instance, Taiwan firms have generally failed to establish global brands and to capture the higher market valuations that accrue to brand-name products. However, the large size of the China market, the skill and cultural familiarity of Taiwan business managers with that market, and the high regard which Chinese consumers have for Taiwan products, are now giving Taiwan firms the chance to establish brand-names on a large-scale regional basis. Further, Taiwan’s proven skills in development and service-oriented management of global IT technologies, coupled with the breadth and potential of China’s basic research capabilities, create distinct opportunities for partnership in regional innovation.
Each one of these trends holds important implications for U.S. interests. The establishment of Taiwan regional brands might, for instance, tend to weaken the existing cooperative bonds between U.S. and Taiwan alliance partners and foster more direct competition in the region. Conversely, the combination of U.S. innovation, Taiwan regional management skill, and the largely-untapped potential of the developing China market is already creating a set of opportunities for enhanced commercial cooperation among traditional U.S. and Taiwan partners.
The rapid proliferation of commercial ties between Taiwan and China is of major importance to U.S. interests. There are the narrower set of commercial implications for the U.S. competitive posture in regional and global markets, to which I have just
alluded. Also, as Rupert Hammond-Chambers, President of the U.S.-R.O.C. (Taiwan) Business Council, suggested in his June 14 testimony to this Commission, there are equally important implications which fast-growing commercial interdependence between Taiwan and China have for traditional U.S. military and security interests in the Straits of Taiwan. I commend the Commission for focusing attention on the extent to which commercial dynamics in the computer electronics and telecommunications sectors are affecting these interests. It is my personal observation that these market- and technology-driven dynamics are not always fully captured in the dialogue regarding our key interests in this potential flashpoint region of the world.

Since leaving the Foreign Service in 2002, my work with Greater China is most often associated with U.S.-China clean energy cooperation. That makes sense — that was the focus of the non-profit I founded in 2011, the book I published through the Wilson Center in 2012 and the BE Better program for low-carbon industrial park built environments which the China Partnership of Greater Philadelphia (CPGP) team and I developed through 2021.

However, the prior decade of work which I had done previously through the GC3 Strategy consultancy had a very different focus –on Taiwan as the world’s leader in advanced chip manufacturing and on the vulnerability of global supply chains due to Taiwan’s proximity to China. That earlier work became less active and visible as CPGP’s U.S.-China clean energy cooperation work earned support from Mayor Nutter (2012) and was subsequently competitively selected by the U.S. Departments of State and Energy for one of a very limited number of official U.S.-China EcoPartner awards (2014-21) in partnership with the TEDA EcoCenter in Philadelphia’s Sister City, Tianjin. But my Wikipedia profile gives equal prominence to both sets of work and noted “Cooke is known for his work on U.S.-China-Taiwan commercial interactions. As early as 2002, he was drawing attention to the issue of advanced semiconductor manufacturing in Taiwan and the vulnerability of global information and communication technology (ICT) supply chains.”

Cooke Testimony, 108th Congress (see below)

In 2022, my old chip chops have acquired some new relevance in light of China’s no-holds-barred bid for technology supremacy and the passage of the Biden Administration’s CHIPS Act. Here is a dusting off of some of the accomplishments from that earlier set of work:

  • Three-time Invited Congressional Commission Expert Witness at the U.S.-China Economic and Security Review Commission’s Public Hearings on Global Supply Chains and Cross-Straits Security Issues (109th108th, and 107th Sessions of the U.S. Congress)
  • Director and Head of Partnership Development, Asia at the World Economic Forum  (with strategic focus on ICT, Energy, Transportation, Finance industries)
  • Author of The Politics of Greater China’s Integration into the Global Info Tech Supply Chain in The Journal of Contemporary China, Vol. 13, No. 40; and of Taiwan’s FTA Prospects from the Global IT Supply Chain Perspective in Economic Integration, Democratization and National Security in East Asia, edited by Peter C.Y. Chow
  • Green Team Leader on Cross-Straits Economics, U.S. Dept. of Defense/Defense Intelligence Agency Strategic Coercion Wargame convened by Science Applications International Corporation (SAIC)
  • Invited Non-Governmental Expert Participant, Asian Scenario Seminar Game at the Army War College, Carlisle, PA
  • Co-organizer of The Role of Taiwan in the Post-WTO Global Supply Chain Workshop at the 19th Modern Engineering & Technology Seminar
  • Official Host (“Ambassador”) for the Taiwan Delegation at World Congress on Information Technology XV in Austin TX
  • Featured Speaker & Seminar Consultant – RAND Corporation, MITRE Corporation
  • Keynote/Plenary Speaker at large scale media (Forbes, BusinessWeek, Reuters, The Economist Conference Group) and investor (Berkshire-Hathaway-themed 3rd Annual Global Investment Conference, China’s Financial Markets Conference, New York Cleantech Investors Forum, National Association of Business Economists/NABE) conferences
  • Moderator at Fabless Semiconductor Association and Wharton China Business Forum annual conference events
  • Advisor on Global Business Outreach, The Lauder Institute, University of Pennsylvania
  • Invited Think-tank Speaker: CSIS, AEI, Heritage, Brookings, etc

Since the termination of the U.S-China EcoPartnership program in 2021 and, in particular, since China’s unilateral breaking off of all bi-national coooperation for climate change mitigation following Nancy Pelosi’s visit to Taiwan, I have returned exclusively to the issues of Taiwan, microchips and vulnerable ICT supply chains in my commercial work with Greater China. Currently, I am pursuing that primarily through consultancy engagements with private companies and through introductions provided by GLG, CapVision and other expert networks.

I hope that this retrospective review will help readers keep pace with the sharp break I am taking from the past decade-plus of China-centric work supporting U.S.-China clean energy programs at the bi-national level and stepping back to Taiwan-centric advanced technology markets. This change in my personal focus entails a change in posture towards China — from cooperation to reduce green house gas emissions through a bi-national program to stark competition to help the U.S. and its allies maintain leadership in 21st c. technologies vital to national security. (More prosaically, this change also entails a change in business platforms — from the CPGP non-profit to the GC3 Strategy consultancy S-corp.). This change in focus will become increasingly apparent here in the Assessing China/TEA Collaboration blog over the months and years ahead.

A shift in gears but I hope you’ll continue to enjoy the ride.

It has been a long journey to reach this moment …

  • In 1972, Nixon traveled to China
  • In 1973, the Philadelphia Orchestra became the first international orchestra to perform in China
  • In 1974, I began to study Mandarin at college
  • In 1976, Mao died (and the Cultural Revolution with him)
  • In 1978, Deng and the CCP began experimenting with economic reforms
  • In 1979, Carter normalized relations
  • In 1980, I traveled to the mainland for the first time
  • 1n 1982, at its 12th National Party Congress, China adopted economic reforms as its priority policy

Just this past week — forty years later at its 20th Party Congress — China under Xi has formally abandoned economic growth as its top priority for national development (along with the international partnerships on which that growth depended for trade, investment, access to capital markets and innovation) and prioritized instead “security” (with all the ideological baggage which that entails in Xi’s worldview).

Put simply, Xi has just crossed the Rubicon …

I wrote on Monday in Ideologues Meet Markets that I would share my considered view on the implications of the just concluded 20th National Party Congress after a few days of rumination and reflection. I am doing so now. Xi has just crossed the Rubicon. His move not only upends a forty-year trajectory of the most dynamic economic growth ever witnessed in the world, it threatens — more ominously — the foundations of the post-WWII international order and the unprecedented seventy-year run of (relative) peace the world has enjoyed at the global level.

An extremely well observed account of what this moment means is contained in the political economist Yuen Yuen Ang’s opinion piece in today’s New York Times. I reproduce below that piece in its entirety:

China’s Era of Reform Has Officially Ended

By Yuen Yuen Ang

Forty-four years ago, Deng Xiaoping kicked off the period of “reform and opening up” that transformed China from a poor, autarkic nation into an emerging global power.

President Xi Jinping officially ended that era last week. He emerged from the Chinese Communist Party’s congress in Beijing with unchallenged authority and plans for China that revolve around his obsession with control and security — even if that means harming the economy.

It’s a momentous change in outlook.

Deng Xiaoping’s strategy for China’s spectacular economic achievements had two main components. The first was a collective leadership arrangement within the Communist Party. Deng rejected Western-style democracy, but China’s tumultuous decades under Mao Zedong had taught him that one-man rule is dangerous. He and the party introduced partial checks and balances into politics at the highest level, including term limits. The second component was a single-minded pursuit of economic growth that, Deng famously declared, would be China’s “hard principle.” Officials throughout China dove headlong into promoting growth at all costs — bringing prosperity but also corruption, inequality and heavy industrial pollution.

Last week in Beijing, Mr. Xi dismantled those foundations. He ensured that he would remain paramount leader of China for a third term — if not for life — and packed the party’s leadership with loyalists while heavily prioritizing national security over the pursuit of economic growth.

In his speech to the party congress at the Great Hall of the People on Oct. 16, he mentioned “security” significantly more often than “economy,” a major break with precedent. He went further, declaring unambiguously, “National security is the bedrock of national rejuvenation, and social stability is a prerequisite for building a strong and prosperous China.”

In Chinese politics, small changes in wording can herald big shifts in ideology and policy. If there were any remaining doubts about Mr. Xi’s intentions, he dispelled them by vowing that China would stick to its zero-Covid policy, “without wavering.” His government’s approach to the pandemic, a public health policy in name, is in reality the most powerful security tool devised by the Communist Party, restricting access to the country and controlling who can go where, underpinned by tracking apps that citizens and visitors must have on their smartphones.

For observers long accustomed to Deng’s growth-first ethos, Mr. Xi’s policy choice is mind-boggling. The Covid controls are angering citizens, crippling China’s economy, decimating domestic consumption, disrupting manufacturing and logistics, and repelling foreign and local investors alike.

Why is the most powerful Chinese leader in decades so obsessed with security and domestic control that he would sacrifice the economy? The answer lies in an array of domestic and foreign challenges, some worsened by Mr. Xi’s own policy choices.

Politically, he probably fears the proverbial knife in the back after making enemies through a decade-long anti-corruption campaign in which thousands of officials — possibly including potential political rivals — were punished and is doubling down on repression out of his instinct for self-preservation.

On the economic front, he faces smoldering crises, including an economy that is slowing sharply, a property sector meltdown and record-breaking youth unemployment. These problems have been exacerbated by the Covid controls and by Mr. Xi’s “common prosperity” campaign — a strategy for narrowing inequality and addressing monopolistic behavior by big tech firms and other private companies, which was punctuated by an abrupt and sweeping regulatory crackdown last year that has alarmed investors. The market backlash was intense: Within months, more than a trillion dollars in value at many of China’s most innovative companies evaporated.

On foreign policy, Mr. Xi has projected an ambition to challenge American primacy. The Trump administration’s chaotic handling of the pandemic prompted Mr. Xi to boast that “the East is rising and the West is declining.” But his triumphalism was premature. China is far from an even match with the United States in economic, military or technological power. And while American democracy is in crisis, the United States remains strong, a true superpower and a free country able to criticize and renew itself. Mr. Xi criticizes the West for seeking to contain China, but his hubris and aggressive approach helped bring about this threat.

To be sure, Mr. Xi does not intend to completely abandon the capitalist success that rejuvenated China and brought global respect and influence. And to his credit, he has confronted serious problems that his predecessors swept under the rug, particularly corruption and economic inequality. His vision of a powerful China, respected on the global stage, is warranted given his country’s size and economic clout.

But addressing China’s myriad problems will require measured steps that Mr. Xi seems disinclined to take. Putting out fires in China’s economy must begin with relaxing Covid restrictions and importing more effective vaccines, something that his government has prevented. These won’t be miracle cures, but they are necessary first steps that will go a long way toward alleviating stress on China’s people and reassuring investors that his leadership team has not lost all sense.

Mr. Xi has plunged China into a vicious cycle: A hubristic and authoritarian leader, unaccountable to society and unchallenged even by his own advisers, makes poor policy choices, which add to his problems, exacerbating his fears of a revolt and leading to more repression.

The consequences of his decision to emphasize security over economic vibrancy will be global. China is the world’s second-largest economy and the biggest trading partner of dozens of countries. A prolonged economic slowdown in China will increase the risk of a global recession, with many countries sharing the pain. In the long run, there may be winners as China’s waning competitiveness hastens a shift in global supply chains to other emerging economies. But if China turns inward, it will lose. Chinese tech companies are already expanding overseas to compensate for a restrictive home environment.

China’s great capitalist revolution under Deng and his successors is now history. So is Mr. Xi’s first 10 years in office, when there was at least a minimal layer of checks on his power from moderate, non-loyalist officials. China under Mao and the former Soviet Union proved that absolute dictatorships fail miserably at making nations prosperous and strong. They bring only impoverishment and false security. Mr. Xi is likely to relearn those lessons in the coming years.

Yuen Yuen Ang (@yuenyuenang) is a political economist and the author of “Chinaʼs Gilded Age” and “How China Escaped the Poverty Trap.”

Two items from today’s Wall Street Journal highlight the increasingly belligerent turn in Xi’s foreign policy toward the United States.

China’s Wolf Warrior Diplomacy

The first is an excellent analysis of promotions (and putting out to pasture) during the 20th Party Congress through the lens of China’s Wolf Warrior diplomacy. Some key takeaways:

  • China’s acerbic foreign minister, Wang Yi, has replaced the relatively urbane Yang Jiechi as China Communist Party’s (CCP) top foreign affairs official. (It was Yang Jiechi together with John Kerry who awarded China Partnership of Greater Philadelphia our U.S.-China EcoPartnership award in 2014). Yang is retiring.
  • China’s envoy to the U.S., Qin Gang, who has earned a reputation for brusqueness since his appointment in 2021, is considered a leading contender for the position of foreign minister (to be decided this spring). His elevation to the CCP’s 205-member Central Committee makes him the first incumbent ambassador to be promoted directly to full membership.
  • As Chun Han Wong and Keith Zhai report, “Messrs. Qin and Wang are leading exponents of the muscular diplomacy that Mr. Xi demands, driven by the leader’s vision of an ascendant and uncompromising China that challenges the U.S. for global preeminence. The personnel shuffle suggests … that Beijing remains committed to an adversarial stance toward Washington, undeterred by rising tensions.

China’s Covid Coercion

The second, today’s main editorial, summarizes the confinements and coercive measures that U.S. diplomats were forced to endure in China despite the State Department’s stated policy that it would not allow authoritarian governments to use Covid as an excuse to mistreat or monitor diplomats. I rarely find myself in agreement with WSJ editorials but, in this instance, investigation is warranted because the Chinese government demonstrably leveraged its Covid measures to increase its control and technological surveillance over its population as a whole. It’s important to better understand how this intrusive and abusive treatment may also have been targeted to U.S. and other diplomats who are supposed, by internationally recognized law, to have special protections.

After a run of nine years and ten months, the Assessing China blog was blacklisted last weekend in China.

How did it last that long given that my view of the Chinese Communist Party (not the Chinese people) is highly critical? By exercising some diplomatic judiciousness in my posts and by hitching my star to a Presidential-level, bi-national program of U.S.-China clean energy cooperation aimed at mitigating the global effects of climate change at scale and speed. It was in the U.S. interest to cooperate with China on climate change mitigation as long as China was willing to cooperate.

What led to Sunday’s change? Three things …

1. China officially ended all high-level bilateral programs of cooperation with the U.S. — not only on climate change but also, among others, on defense coordination to forestall risks of military miscalculation — in the wake of Nancy Pelosi’s mid-August visit to Taiwan.

2. Last month’s CHIPS Act and last week’s National Security Strategy released by the Biden Administration have raised the salience of work, publications and Congressional Commission testimony I previously did in the 2000s, advocating strengthened trade ties with Taiwan and pointing out vulnerabilities in global semiconductor supply chains

3. In light of 1 and 2, I intentionally courted blacklisting over the weekend by including a link to BBC’s coverage of The Bridge Man protest against Xi Jinping’s and the CCP’s rule in Saturday’s post (which contains the link to the BBC report). The censors didn’t miss a beat in catching this. But, given my shift in focus to Taiwan and microchips, it’s better for me that the blog is now blocked in China and can’t become the focus of netizen ire. I’m just sorry for the subscribers in the mainland who find themselves suddenly cut off.

My wife and I were stationed with the U.S. Consulate in Shanghai at the time of The Tank Man’s protest. That act of defiance as well as this month’s ‘cri du coeur’ by The Bridge Man are extraordinarily courageous acts by individuals against a system dedicated to silencing any voices other than those who choose to be fully obedient or, more frequently, are cowed into full obedience.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 4,945 other followers


For more information about
Assessing China /The TEA Collaborative blog, please visit us at www.teacollab.org

Terry Cooke on Twitter

%d bloggers like this: