China
US defense bill spends big against China’s maritime claims
U.S. President Joe Biden on Friday signed into law an $886 billion defense bill that includes US$16 billion to deter China’s expansive maritime claims and approves exemptions for Australia and the United Kingdom to buy American defense technology without licenses.
The 2024 National Defense Authorization Act was passed by the Senate on Dec. 18 in a 87-13 vote and by the House on Dec. 19 in a 310-118 vote, after a compromise removed supplemental funding for Ukraine along with contentious abortion and transgender provisions.
Senate Majority Leader Chuck Schumer, a Democrat from New York, last week called the compromise “precisely the kind of bipartisan cooperation the American people want from Congress.”
Biden said on Friday that parts of the compromise “raise concerns” but that he was “pleased to support the critical objectives” of the bill.
The legislation “provides the critical authorities we need to build the military required to deter future conflicts, while supporting service members and their spouses and families,” Biden said.
Maritime deterrence
The bill includes $14.7 billion for the Pacific Deterrence Initiative, well above the $9.1 billion requested by the Pentagon. The project, defense officials say, will help bolster U.S. defenses in Hawaii and the Pacific territory of Guam to increase “deterrence” efforts against China.
Bryan Clark, a senior fellow at the Hudson Institute and expert in naval operations, said the “big increase” in funds would help by “improving the resilience and capability of U.S. and allied forces in the Indo-Pacific.”
“I expect the increased PDI spending authorized in the NDAA will focus on defense of Guam, improved networking and data integration for U.S. forces in the Indo-Pacific, and accelerated efforts to posture U.S. ground troops in the region,” Clark told Radio Free Asia.
A further $1.3 billion is earmarked specifically for the Indo-Pacific Campaigning Initiative, which a Senate Armed Services Committee statement said would fund “increased frequency and scale of exercises, freedom of navigation operations, and partner engagements” as China ramps up its claims of sovereignty.
The 2024 bill also authorizes the biggest pay boost to military personnel in two decades, with a 5.2 percent overall bump, and increases the basic allowance for troops and housing subsidies.
AUKUS
It’s not only U.S. military bases and personnel in the Indo-Pacific that are receiving a large funding boost next year, though.
The 2024 bill also approves the sale of nuclear-powered submarines to Australia and exemptions for Australian and British firms from the need to seek licenses to buy U.S. defense technology.
The two provisions – known as “Pillar 1” and “Pillar 2” of the AUKUS security pact between Australia, the United Kingdom and the United States – have proved controversial, with some Republicans in Congress questioning Pillar 1 and some Democrats opposing Pillar 2.
Republicans expressed concerns about the ability of shipyards to supply Australia with submarines by the 2030s amid massive building backlogs that have left the U.S. Navy waiting on its own orders.
Democrats, meanwhile, said they were worried that exempting Australian businesses from the need to seek licenses could open up an avenue for Chinese espionage to procure sensitive U.S. technology.
But in the end the provisions passed with bipartisan support – even if the important licensing exemptions remain conditional on Australia and the United Kingdom putting in place “comparable” export restrictions.
Rep. Raja Krishnamoorthi, a Democrat from Illinois and the ranking member of his party on the House Select Committee on China, said that the approval of both pillars of AUKUS would be a boon to U.S. efforts to counter the Chinese Communist Party’s maritime claims.
“By authorizing the sale of up to three Virginia-class submarines to Australia, and simplifying the process for sharing advanced technologies between our countries, we are taking an important step in strengthening key U.S. alliances and working to maintain a free and open Indo-Pacific region in the face of CCP aggression,” he said.
Australian Defense Minister Richard Marles said that the passage of AUKUS meant that Australia, the United Kingdom and the United States are “on the precipice of historic reform that will transform our ability to effectively deter, innovate, and operate together.”
Australia’s ambassador to Washington, Kevin Rudd, said earlier this year he foresees a “seamless” defense industry across the AUKUS member states in coming decades if the security pact succeeds.
Other measures
The bill also establishes a new program to train and advise Taiwan’s military, and funds the Biden administration’s new “Indo-Pacific Maritime Domain Awareness Initiative,” which also is aimed at deterring China’s vast claims of maritime sovereignty.
U.S. Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner said earlier this month would equip American allies across Asia and the Pacific “with high-grade commercial satellite imagery that allows them to have much more visibility into their littorals.”
Rep. Mike Gallagher, a Republican from Wisconsin and the chairman of the House Select Committee on China, said the bill was suitably focussed on the biggest threats currently facing the U.S. military.
“We are in the window of maximum danger when it comes to a conflict with China over Taiwan,” Gallagher said after the House passed the bill. “Ensuring our military has the resources to deter, and if necessary, win such a conflict must be our primary focus in Congress.”
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Business
McKinsey Reduces Workforce by 500 in Overhaul of China Operations – WSJ
McKinsey plans to cut about 500 jobs in China, reducing its workforce by a third as part of a strategic revamp focused on minimizing security risks and decreasing government-linked clients.
McKinsey Job Cuts in China
McKinsey & Company, the renowned US consulting firm, is reportedly laying off approximately 500 employees as part of a significant restructuring in its Chinese operations. This decision reflects the company’s shift away from government-linked clientele, a strategy aimed at mitigating political and security risks in the region.
Workforce Reduction
The job cuts will result in a reduction of McKinsey’s workforce in China by roughly one-third. Over the past two years, the firm has been downsizing its personnel across Greater China, which includes Hong Kong and Taiwan, affecting hundreds of positions. As of June 2023, McKinsey employed nearly 1,500 individuals in Greater China.
Strategic Separation
To address rising security concerns, McKinsey is separating its China unit from its global operations. This move aims to enhance operational security while navigating the complexities of the Chinese market. McKinsey has not yet commented on these developments following a request for information.
Source : McKinsey Cuts 500 Jobs Amid Revamp of China Business – WSJ
China
India’s Setback in Bangladesh May Not Equate to China’s Advantage
The fall of Bangladeshi Prime Minister Sheikh Hasina is detrimental to India, as her regime fostered strong ties. China may gain influence but faces significant challenges in capitalizing on this opportunity.
Strategic Loss for India
The recent fall of Bangladeshi Prime Minister Sheikh Hasina marks a significant strategic setback for India. Hasina was an unusually pro-Indian leader, and her departure has created fears that China may capitalize on this political upheaval. However, while China’s influence in Bangladesh might grow, such assumptions about its immediate gains are overstated.
Challenges to Chinese Expansion
Beijing’s opportunity to bolster its presence in Bangladesh is hindered by significant challenges. The ongoing crisis in Bangladesh could slow China’s attempts to extend its influence in the region. Despite the current turmoil favoring China, the practicalities of political dynamics in Bangladesh may make it difficult for Beijing to fully seize this chance.
Impact on India-Bangladesh Relations
Sheikh Hasina’s government served as a crucial ally for India, fostering a stable relationship that addressed longstanding concerns regarding cross-border issues and support for minority groups. The partnership facilitated vital infrastructure projects, including railway connections that enhance regional integration under Indian leadership. With Hasina’s government now collapsed, the hard-won gains in India-Bangladesh relations are at risk.
Source : India’s loss in Bangladesh not necessarily China’s gain
China
Why China is seeking greater presence in Africa – the strategy behind its financial deals
China plans to deepen its relationship with Africa, pledging $51 billion in loans and investments, aiming for increased diplomatic ties, economic growth, and expanded influence amidst Western concerns about debt-trap diplomacy.
China’s relationship with Africa is set to deepen. At a summit in Beijing in early September, China’s president, Xi Jinping, pledged to deliver US$51 billion (£39 billion) in loans, investment and aid to the continent over the next three years, as well as upgrading diplomatic ties.
Beijing’s close engagement with Africa is not new. Since 1950, the first overseas trip of the year for Chinese foreign ministers has almost always been to one or more African countries. But Xi’s commitments are still sure to raise concerns in the US and other western countries, which are competing with China for global influence.
They may well also bring back fears of China using “debt-trap diplomacy” to push African countries into default and thereby gain leverage over them. Such is the strength of this narrative that South Africa’s president, Cyril Ramaphosa, felt compelled to deny it at the summit.
The notion of Chinese debt traps, particularly the infamous case of Sri Lanka’s port of Hambantota that, in 2017, was leased by the Sri Lankan government to a Chinese company to raise liquidity, has been debunked several times.
But with African populations and economies growing, and China’s engagement with them continuing to deepen, it is important to understand what China hopes to achieve with its diplomacy.
China’s engagement with Africa is strategic as well as economic. Whether it’s gaining votes at the UN, better access to resources, or increasing the international use of its currency, China’s diplomatic relations with Africa play into its ambitions of being a major player in a multipolar world.
Chinese children hold national flags as they prepare for the arrival of Togo’s president, Faure Gnassingbe, at Beijing International Airport ahead of the summit.
Ken Ishii / Pool / EPA
The long game
From a purely economic perspective, Africa is a potentially lucrative market for China. With its under-served market and booming population, the scope for expansion into Africa offers huge potential for Chinese firms.
This is particularly true now that the African Continental Free Trade Area (which was established in 2018) opens up the possibility of cross-border value chains developing in Africa.
Most of the goods that China imports from Africa are natural resources. Many of these resources have strategic relevance, for example, in manufacturing batteries. In return, Chinese companies export a wide range of goods to Africa, including manufactured products, industrial and agricultural machinery, and vehicles.
In terms of foreign direct investment, Chinese companies are still only the fifth-largest investors in Africa after their Dutch, French, US and UK counterparts. But their ascent has been relatively quick, and while western companies are focused on resources and the financial sector, Chinese ones also invest heavily in construction and manufacturing.
Chinese companies are major players in Africa’s construction sector, often working on projects funded by loans from Chinese banks to African governments. In 2019, for example, Chinese contractors accounted for about 60% of the total value of construction work in Africa.
Some of the infrastructure financed by China has done little to improve trade or economic development in Africa. And it has, admittedly, also contributed to the increased debt burden of several African countries.
The costly expressways that connect Nairobi in Kenya and Kampala in Uganda to the respective international airports, for instance, have made life easier for city elites and international travellers. But they have not led to economic growth.
So, China has moved to recalibrate its infrastructure finance in recent years. In 2021, Xi introduced the concept of “small and beautiful” projects better targeted at the partner country’s needs – a concept he repeated at the recent summit.
It is this alignment with the requests of African leaders that differentiates China’s engagement with Africa from that of the west. A key request of many African leaders is for investment in manufacturing value chains and imports of African processed goods rather than just raw resources.
Xi’s keynote speech addressed these two concerns. He promised more investment in key sectors and to allow more African goods to enter China without duties.
The construction of the Nairobi Expressway was supposed to decongest Kenya’s capital city, Nairobi.
Daniel Irungu / EPA
China’s support to African nations is political as well as economic. Its policy of non-interference in Africa’s internal affairs have been well received by African leaders – a sharp contrast to western nations who have often tied their support to the respect of certain social or economic conditions.
This has, in turn, bolstered China’s diplomatic influence on the continent. A good indicator of this influence is how many countries maintain diplomatic relations with Taiwan, which the Chinese government sees as part of China’s territory. In Africa, only Eswatini has full relations with Taiwan and just a handful of other countries have representative offices.
Another Chinese goal is to expand the global reach of its currency, the renminbi. Its motive here is to challenge the dominance of the US dollar, which gives America control over transactions anywhere in the world.
Since the late 2000s, the People’s Bank of China has signed bilateral swap agreements with Morocco, Egypt, Nigeria and South Africa to conduct transactions in renminbi. And China is aiming to increase the use of renminbi in official lending, both through domestic banks such as the China Development Bank and regional institutions such as the New Development Bank.
Much like Africa’s western partners, China pursues both political and economic interests in its dealings with the continent. But, with western leaders paying little attention to Africa, China doesn’t need to pursue debt-trap diplomacy to increase its influence there. It just needs to put forward a better partnership offer to gain ground.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
- McKinsey Reduces Workforce by 500 in Overhaul of China Operations – WSJ
- India’s Setback in Bangladesh May Not Equate to China’s Advantage
- Why China is seeking greater presence in Africa – the strategy behind its financial deals
- Trends in China’s Outbound Investment: Key Sources, Destinations, and Sectors
- This Chinese EV Manufacturer is Ready to Compete with Elon Musk in China
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