China’s ‘String of Pearls’ – Real or Fake?

I’ve got a new post up looking at the Chinese investment strategy in South Asia, and in particular, the theory that China is acquiring a ‘string of pearls,’ a network of strategic assets in Pakistan, Burma, Nepal et al that will encircle and contain India. My post is a response to a post by Dan Drezner at Foreign Policy, in which he contends that the ‘string of pearls’ is something western journalists cooked up in our imaginations because it feeds into fears about Big Scary China. I disagree.

My post argues that the ‘string of pearls’ is a real strategy, an extension of longstanding Cold War alliances China had in the region, and that its primary function is economic, not military. But I concede that the strategy may be failing or weakening, in part because China is growing wary of Pakistan, in part because China is growing less wary of India, and in part because the U.S. presence in Afghanistan has altered regional dynamics.

Read it all here.

Economic Peace: Some Thoughts from Barcelona

Returning from a brief (9 days) blogging hiatus with a post at Foreign Exchange. The subject: a panel I was asked to speak on at IESE’s sustainable business conference in Barcelona this weekend. My topic was ‘economic peace and the private sector’s role in fostering political stability.’ An excerpt:

Specifically, the reductive tendency leads us to place emphasis on macroeconomic growth as a cure-all, when as we’ve seen in Obasanjo’s Nigeria or Ben Ali’s Tunisia or Musharraf’s Pakistan, growth can correlate quite easily with increasing political instability and conflict. For one thing, there’s the question of distribution, of how much growth is trickling down the bottom of the economic ladder to those most likely to be embroiled in crime or violence.

But even if ‘economic growth’ is replaced by a genuine focus on job creation and the building of a stable middle class, a critical challenge remains. In a society which has chosen—and this is an ideological choice—to invest its resources in militarism or theocracy but not in education or health care, an angry young man with a steady income still can’t spend it providing for his family: the services he needs aren’t there to be purchased.

Instead, they’re available to him for free from the same crowd of ‘non-state actors’ responsible for his country’s turmoil. In other words, those actors—be they mobsters or terrorists or warlords—aren’t grafting an abstract ideology onto his poverty and rage; they are producing an alternative society, complete with the services the state does not provide. It’s an ideological battle, not an economic one, to transfer a whole society’s focus and collective, public, wealth into building the social structures that make an income valuable. Without those, a little money’s not worth the paper it’s printed on.

You can read the rest here.

One postscript: left to my own devices, I’d probably have parachuted into Barcelona for a day; attended the conference and jetted out. With encouragement and company from qwghlm, I took four whole days off work. I didn’t check Twitter and Google Reader every 5 minutes; I missed thousands of tweets and hundreds of news stories; and when we got back and I caught up, I found that nothing had fundamentally changed on the big stories I’d been following. Gaddafi? Still in power. Raymond Davis? Still in legal limbo. Me? Recharged and ready to report on both.

Don’t Dismiss New START

A Christmas Eve post at Foreign Exchange about the New START treaty and why it does actually matter:

New START is a disarmament treaty that is almost irrelevant as a step towards nonproliferation, because while the U.S. and Russia have 95% of the world’s nuclear weapons between them, their arsenals are reasonably secure. Reducing them is not going to end the Iranian nuclear program, stop the escalation on the Korean peninsula or prevent Pakistan from being overrun by the TTP.

What it is going to do, however, is create the basis for the next era in U.S.-Russia relations, burying the last hangovers of the Cold War (which is in many ways what the treaty is about) to acknowledge that as the competition for economic resources and influence in Central and South Asia heats up, Moscow and Washington will increasingly find themselves on the same side.

Go read it. And have a merry Christmas.

China’s New Pakistan Strategy

Post at Foreign Exchange today looks at the geostrategic significance of some new investment MOUs between China and Pakistan. The post is a follow-up to a story I wrote for Forbes in the spring about Chinese investment in Balochistan, where I highlighted a mining contract gone sour under Chinese pressure. That contract finally fell apart last week, and the lessons I learned reporting on it hang heavily over my analysis of the new deals:

Throughout my travels in South Asia, I’ve heard stories about what it means to do business with China. The running refrain has always been that Chinese investors are politically neutral, that they protect their own material interests while doing their best to appease local leaders with a cut of any deal, but with very little concern for the day-to-day running of local life. This is always subtly (or not so subtly) contrasted to an American approach of promoting foreign investment as a mechanism of societal makeover. In much of South Asia, Chinese investment has proven appealing to those who would rather not be re-made. That was very much the theme of my time in Balochistan. This weekend’s deals do not fit that mold…

Want to know why? Read it here.

Gordon Brown, After the Fall

A post at Foreign Exchange on a Gordon Brown lecture/book launch I attended yesterday at NYU:

The basic thrust of the book is that financial reform laws in individual countries are irrelevant as tools against a future crisis, because they simply provide incentives to firms to take their riskier business elsewhere. Instead, the book pushes for formal regulatory coordination and essentially, for expanded global governance. It is not an explicitly left-wing argument, as Brown’s vision of global coordination includes a completed Doha Round and a plea for international institutions to prod China into speeding up its push for more consumer spending. [During his talk, Brown clarified this point–essentially he thinks the recent five year plan can be a two year plan if Beijing wants it to be.] My take having read the first section and skimmed the rest: It’s a pretty good blueprint, but completely unfeasible. It’s also not badly written, as far as books by ex-politicians go. Certainly a relief after the purple prose we got from Blair.

After laying all this out in a short lecture, the former PM took a few questions.

Read the rest.

What is China Thinking?

Latest post at Foreign Exchange waffles about trying to understand what’s happening on the Korean peninsula:

So here are the questions: to what extent is the DPRK acting with Chinese support, and to what extent is it acting alone? and if it is acting alone, how comfortable is Beijing with the decisions Pyongyang is making? How seriously should observers take Chinese expressions of dissatisfaction, if, as the pessimists suggest, the proposed solutions are empty? South Korean news is reporting that North Korean envoy Choe Thae-Bak is in Beijing till Saturday–is that a friendly meeting or an opportunity for reprimanding? Truth be told, we just don’t know.

What we do know is that the primary foreign policy imperative for China is its sphere of influence in northeast Asia, not the regime per se.

Go read the rest.

India and Its Neighbors

I’ve got a piece in today’s Christian Science Monitor on India, China and the battle for South Asia.

China is certainly flexing its muscle. Last month, it sought to restrict exports of rare earth minerals to Japan, made overtures to a secession movement in southern Sudan, and wrestled with the G20 over its currency and trade imbalance.

Nowhere has China been more assertive than in South Asia. In a strategy it calls the “string of pearls,” China is building ports and infrastructure in Bangladesh and Pakistan; digging up minerals in Pakistan and Afghanistan; and refining hydropower in Nepal and Afghanistan.

According to the International Monetary Fund, China’s trade with India’s neighbors totaled $16 billion in 2008, growing at 14 percent annually. India’s regional trade was barely holding steady at $11 billion.

Yet China’s success in the Subcontinent reflects India’s own foreign policy blunders.

The takeaway: if India doesn’t improve its own regional relationships, it will not only lose South Asia to China, but it will be prevented from exercising power elsewhere. Don’t believe me? Read the whole piece.

China’s Growing Contradictions

My post at Foreign Exchange today is about the Chinese Communist Party’s latest five-year plan, which aims to reorient the economy to be more equitable and more consumption and service driven. I’m skeptical that this is going to work without the political reforms that the Party remains hesitant to make.

The economic part is easy. Of course an authoritarian regime has the ability to mandate changes in wages, to make dramatic shifts in managing currency and to reorient capital investment towards services. And it’s heartening that China is now interested in doing so after several years of other countries’ whining falling on deaf ears. But the political part seems impossible. How do you raise wages at the bottom to the point where you have a consumer economy without producing enormous pressure for democratization (something this five year plan has chosen to kick down to the road and which the Party elders still seem in denial about)? The mantra of consumer-centric, service-heavy capitalism is “What about me?” It won’t last long in a political culture of “Shut up and sit down.”

Go read it all.

The Great Game Grows

Post today at Foreign Exchange about the Great Game:

It’s been widely known for some time that China is engaged in a global race to acquire commodities: oil, gas, minerals, water, you name it. It’s well known that China is after these goods for a combination of reasons: too much cash on hand, a hungry growing economy that needs raw materials, and a keen awareness that controlling commodities—and their futures—is a powerful form of economic influence.  Policy wonks call this The (New) Great Game.

But experts have usually understood the Great Game in regional terms: the loot was concentrated in the Caucusus, Central Asia and the Middle East, and the major players were supposed to be China and Russia. That picture has always struck me as off base…

I go on to argue that the Great Game is increasingly global and  more diverse in the commodities it involves and to suggest how that changes U.S. policy imperatives. Go read.

China’s Pearl

My latest story is up, on Chinese investment in Balochistan, a Pakistani province that borders Afghanistan, Iran and the Persian Gulf. As others have reported, China is building up investments in Central and South Asia in a strategy it calls the “string of pearls,” in a way that contains/constrains India. My piece looks at how China goes about staking its claim and what the strategy, as applied in Pakistan, means for the United States.