China's growth to steer the world economy from a rocky course

By: Azhar Azam

A rising China is boosting the world economy. There's consensus that the country is a responsible stakeholder, a global actor, an important source of global demand and plays a major part of global supply chains.

Most recently, economists at the U.S. Federal Reserve in a discussion paper titled, "Whatever happens in China does not stay in China" provides evidence that Beijing is "an important driver of global financial cycle," and business activity boosted by "stronger Chinese demand" pushing international trade and economic growth.

The study concluded, "As such, higher economic growth in China raises global growth prospects." The authors estimated a 1 percent increase in the Chinese GDP (gross domestic product) could induce 0.3 percent and 1 percent increases in the global economy and trade respectively outside of China. The spillover effects could rise to 0.75 percent or $600 billion for the rest of the world.

Amid the challenges posed by COVID-19 and deteriorating international economy, China's economy reached a record high of around $18 trillion, which posted a growth rate of 3 percent in 2022. Although it may be difficult for China to move overnight from COVID-19 restrictions to free movement of people, some are hoping that China's reopening in 2023 would make a strong impact on global economic growth. For example, the International Monetary Fund (IMF) Managing Director Kristalina Georgieva has expected the country to continue its economic expassion this year as it will likely be the "single most important factor" for global growth.

Notwithstanding, the economies tend to slow down once they reach the middle-income stage due to a higher base average income, some referred the rate to claim that the country's goal, to become a mid-level developed country in 2035, was restrained by sluggish GDP growth. Beijing needed an economic growth rate of around 5 percent to achieve its economic ambitions, they argued.

China has already "closed most of the gap" with the U.S. economy and its potential expansion for the next few years will remain "significantly higher than the U.S.," according to the Goldman Sachs' Global Economics Paper, which also noted a decade of America's "exceptionalism" was over.

In its most recent global economic outlook, the IMF raised its global growth projection by 0.2 percentage points to 2.9 percent in 2023. The "faster-than-expected" recovery came on the heels of the reopening of China's economy. The IMF now projects a sharp rebound in China's growth rate for 2023, from 4.4 percent in the October forecast to 5.2 percent.

Every percentage-point growth in China is estimated to push the global GDP by 0.3 percentage points, which highlights the critical role that the world's second-largest economy will play to revive international growth. Reopening China is a "benefit" to the global economy since it will help to overcome the inflation-battered production bottlenecks and generate higher demand from Chinese households.

The saying – when China sneezes, the world catches a cold – is perhaps more accurately than ever. Beijing has become the paddle wheel of world economic growth. China's 5.2 percent growth is "good news" for the rest of the world, given that the country could contribute a quarter of the aggregate world growth this year.

Positive spin offs of Beijing's strong growth will benefit its closer trade partners such as members of the Association of Southeast Asian Nations. Beijing's economic development will precipitate a spending boom in China to the advantage of the Asia-Pacific region.

Reshoring and trade barriers including in chip-making equipment are one major "concern" for the economists at the IMF as these efforts will weaken international resilience and strain the global economy. The U.S.-coined reshoring could hurt developed and developing economies, contributing to a tremendous rise in poverty; factors such as high labor costs and lack of large-scale manufacturing infrastructure and skilled workforce in the U.S. would disrupt supply chains and cause a further spike in inflation.

China is a major source of world consumption. In 2021, about 40 percent of global vehicle sales; about double the size of the U.S., and 25 percent of the smartphone sales, making it the world's largest smartphone market, had originated from China. In 2019, Chinese tourists spent about $253 billion on leisure trips abroad, with Southeast Asia as their favorite destination, according to the World Trade and Tourism Council.

In December, China pledged to boost domestic consumption and imports to propel growth. Today, international investors feel more sanguine about the country's economic trajectory that is reflected in their purchases of Chinese yuan-dominated assets. The consumption-driven development will create pent-up demand in China and increase exports of the other economies. Right from the outset, China has stood at the core of the global economy and would drive the world economic growth.

*This is my opinion piece that first appeared at "China Global Television Network (CGTN)":

America's greatest challenge: China or national debt?

By: Azhar Azam

Under former U.S. President Donald Trump, the U.S. Department of Justice in November 2018 launched the racist China Initiative to persecute and crack down on Chinese scientists and researchers. The prejudiced program was shuttered last February after several failed prosecutions on alleged Chinese government-linked economic and intellectual property espionage; as envisaged, its backwash effects are being felt.

The establishment of the newly-formed "Select Committee on the Strategic Competition between the United States and the Chinese Communist Party" on January 10 in the U.S. House of Representatives is again arousing concerns within the country's lawmakers that it will fuel anti-Chinese xenophobia and "endanger" Chinese Americans and people of Asian descent living in the U.S.

Even House lawmakers, who voted for its creation, have a sour view of the select committee, admitting many Asian Americans see it as a new "witch hunt." The crew is the brainstorm of new Republican House Speaker Kevin McCarthy, gambles on the botched China Initiative and wants to beat the wind by trying to block China's economic and technological advancement.

Mike Gallagher, former counterintelligence officer of the U.S. Marine Corps – the greatest "propaganda organization in human history" – is tasked with uniting the "divided government" against China. The Republican duo labels China as the "greatest threat" to the U.S. and seeks to begin a "new Cold War" with China, exposing their true ominous intentions.

The committee is sheerly dominated by Republicans; it doesn't have any legislative power. Two years ago, Democrats declined to join the China Task Force and they are yet to announce their members for the select committee on China. As McCarthy has denied two Democrats of seats on the House Intelligence Committee and lacks "political vengeance" for some of them, it seems unlikely the party of "chaos and catastrophe," akin to the prior initiatives, will deliver much to obstruct Beijing's "economic, technological and security progress."

Another turmoil is in the making after McCarthy on January 25 appointed a dozen of the House lawmakers to the select committee on the weaponization of the federal government. The "tinfoil hat" panel – solely authorized with Republican support to investigate the nexus among the Justice Department, the Federal Bureau of Intelligence and other law enforcement agencies – Democrats worry, will pursue conspiracy theories in addition widening political gulf as it empowers the Republicans to investigate the January 6 attacks on the Capitol Hill and last year's raid at Trump's Mar-a-Lago residence.

A growing "extremist politics" threatens to invade the U.S. justice and intelligence system, dislosing the country's governance system is being challenged from within and that the Communist Party of China (CPC) poses no threat to American democracy and leadership. China's "exponential" farmland purchase in the U.S. is touted as one of the factor's behind this "great power struggle." However, the U.S's own congressmen defy this false narrative, saying Beijing own just 192,000 acres of the total 35 million acres of farmland owned by foreign countries.

By building on the Cold War-inspired initiatives, showing animosity toward China's peaceful rise and laying focus on bringing back jobs to the U.S., the Republicans just want to tame the CPC? Obviously, their only objective is China's containment. The other goal is to put deep-seated rifts within the GOP – as evidenced by McCarthy's rise to speakership that took an unprecedented 15 rounds of voting although Republicans had the majority in the lower chamber – in abeyance and trot out the same old mantra of the China threat to bunch the party together.

Not just the Republicans are divided; the country's entire political leadership is in a whirl. The Democrat President Joe Biden "absolutely" believes there will not be a new Cold War. Still, the U.S. Department of State has unveiled its own China House to "responsibly manage" competition with China and "successfully" implement U.S. policy and strategy toward "the most complex and consequential geopolitical challenge."

Both Democrats and Republicans are itching to declare a new Cold War against China, knowing the domestic polarization and national debt represent real long-term challenges for the U.S. On January 19, the country's statutory debt ceiling hit the $31.4 trillion borrowing cap, sparking risks of fiscal crisis in the next few months, as leaders of two parties continue to be at loggerheads on spending cuts.

Since 2001 when the U.S. launched the global war on terror to September 2022, America's federal dept had surged from 55 percent to 128 percent of the GDP, according to the U.S. Treasury Department. Twenty years later, the U.S. needs to reassess how severely and adversely this aggressive and meddlesome approach has stolen taxpayers' money and damaged the economy and is leading to suspension of pension and welfare funds for ordinary Americans.

The U.S. national debt now stands at $31.45 trillion. For more than a decade, treasury secretaries almost every year were forced to write a debt limit letter to the Congress to avoid "catastrophic" economic consequences. The row around suspending or increasing debt is spookily identical to that of Republicans' Tea Party campaign, which was founded and funded by elites and 10 years ago brought the U.S. appallingly close to the default with the nation suffering its first ever credit downgrade.

So far in January alone, the U.S. Treasury Secretary Janet Yellen has given an unprecedented three warnings to McCarthy, notifying him of taking "extraordinary measures" to prevent the U.S. from "defaulting" on its obligations and protect America's "full faith and credit." These preventive actions will allow the government to operate by June 5 when the cap should need an increase to circumvent a devastating economic and international credibility damage to the U.S. and American working families.

At this critical moment, the China hawks on both sides of the aisle, in the newly-installed Republican-controlled U.S. House and Democrat-majority Senate, are more keen to start and win a new Cold War for fear of falling behind Beijing in economy, technology and other areas or by coercing the world into swallowing their vision.

This misguided belief steers clear of the very fact the greatest U.S. challenge to America and the Americans is national debt, which can't be overwhelmed by severing relations with China – but only through enhanced communication and cooperation between Beijing and Washington on economy, trade, investment and climate change for the benefit for the benefit of the people in both countries and sustainable development of the rest of the world.

*This is my opinion piece that first appeared at "China Global Television Network (CGTN)":

US is making a mountain out of a molehill

By: Azhar Azam

At the direction of the US President Joe Biden, the so-called world superpower nowadays is engrossed in dispatching the most expensive fighter aircraft such as F-22 to detect and explode weather balloons and other airborne objects, posing “threats” to national “sovereignty.” The downing is followed by verbose press briefings, notifying deployment of recovery teams to map out the areas and search and identify the debris on the ocean floor.

Earlier, a purely civilian Chinese research and meteorological balloon blew off its planned course and entered the US airspace. After the US Secretary of State Anthony Blinken termed the unintended entry of the anodyne unmanned airship as “clear violation” of America’s sovereignty and took it as an excuse to postpone his unannounced China visit, a US jet shot it down.

“Open lines of communication” still is the rhyme, the Biden administration continues to sing. But they would have made sense if they were activated before firing a missile at the balloon. Once the innocuous object was destroyed, the US commitment to maintain communication was immediately exposed, Blinken has been reciting for a month or so to follow up on and move forward an “open, candid” and “vitally important” conversation between the presidents of the two countries at the G20 summit Bali.

Mutual respect for sovereignty and territorial integrity, the topmost tenet of China’s Five Principles of Peaceful Coexistence to build a better world, is the mainstay of the country’s foreign policy. Beijing has advocated the Bandung Spirit and acceded to the Treaty of Amity and Cooperation in Southeast Asia, each of which promotes the vision of respecting sovereignty and territorial integrity.

It is also one of the key pillars of Beijing's Global Security Initiative that conforms to the purposes and principles of the United Nations and guarantees security for all. On the other hand, the US continues to deliberately trespass into China’s sovereign waters, breaching the one China principle by frequently practicing political provocations and conducting surveillance operations and military drills around the Taiwan Strait and the South China Sea, where it has no sovereignty claims.

Just a handful of countries recognize Taiwan – aka the international community overwhelmingly sees the island as an inalienable part of China. The amendment in the US' Taiwan Relations Act of 1979 through the Taiwan Policy Act of 2022 – swapping the phrase in the interventionist law from provision of arms of “defensive” character to “arms conducive to deterring acts of aggression" by China – and encouragement of Taiwan’s independence challenge Beijing’s national security interests and give it the right to resolute countermeasures.

The “freedom and democracy” in Taipei bears no relation to American prosperity and security. China and Taiwan may have different political systems; they are one country. The US exploitation of the balloon episode to spark tensions in the Taiwan Strait dashes even Biden’s own pledge to manage competition and stabilize the relationship, which has been festered by his furtherance of trade and technology sanctions on China, and amounts to unsolicited intervention in Chinese affairs.

America is taking pride in detecting a Chinese “spy,” which was clearly visible from ground. But why would China give the US a sitting duck to attack when it has sophisticated satellites at its disposal? Washington's reaction tells all that it is in search of blowing the bugle of a new cold war. On one side, Washington seeks to manage competition and on the other, it is establishing military bases in Southeast Asia to undermine regional peace and stability and sanctioning Chinese firms to contain Beijing’s rise.

In late January, the sanctions regime took punitive measures against a Chinese space and technology firm for allegedly providing satellite imagery to Wagner operations in Ukraine. Soon after Biden declared the US was “in strongest position in decades to compete” with China, Washington on Friday linked six Chinese entities with the Chinese military’s alleged balloon surveillance program to outlaw them all.

Biden’s insistence to work with a China that “can advance American interests,” delusion of “winning the competition,” sanctions overuse and the proposed US lawmakers’ visit to Taiwan attempt to hold back the legitimate rights and interests of Chinese companies and challenge China’s territorial integrity, calling the US longstanding commitment to one-China principle into question.

These actions will adversely impact the delicate China-US relationship given Blinken and other American officials have consistently denied seeing any evidence of Beijing’s direct or indirect assistance to Moscow. This also supports some of the European leaders' belief the US is prolonging the conflict to profit from the Ukraine crisis by supplying lethal weapons to Kyiv. Biden's latest comments and repeated contravention of agreed fundamental consensus of diplomatic ties deliver the escalation ladder to Beijing, allowing it to take appropriate antidote measures.

Mending ties with China is equally a compelling necessity for the US. Beijing is a major economic power and the two economies are deeply entwined. The “draconian decoupling” and trade and technology war, some hawkish elements in Washington are pursuing or Biden sticks to, are hitting Americans hard. For instance, the China 301 investigation, intended at restricting Beijing’s economic and technology growth, augurs ill for the US economy since it from July 2018 through February 9 has saddled American businesses and consumers with additional tariffs of about $169 billion, according to the US Custom and Border Protection.

The US and NATO Secretary General Jens Stoltenberg’s mischaracterization of Beijing as a challenge to the self-styled western values, security and interests and concocted connections between the balloon and security of Asia-Pacific exposes a strong urge for cold war and brings downside risks to peace and stability in Asia-Pacific.

Stoltenberg’s thorny avant-garde idea, “weapons are the way to peace” and description of the Ukraine war as "fight for democracy," reveals the US stooge organization isn't serious about engaging China on arms control, underscoring the defensive alliance is devoid of purpose and seeks to reshape itself into an aggressive organization.

The US is making a mountain out of a molehill. The balloon didn't pose any threat to America’s sovereignty; it was nowhere close to an act of aggression either. Washington’s overdramatization of the force majeure aims to smear China internationally and renew the cold war-era bloc politics. Yet today's world is capable of cracking every covert plan that may destabilize countries across regions. That's why global nations want the US to back away from zero-sum competition and manage differences with China.