His contribution appears in the feature section titled “Machine Learning Transforms Asian Fintech”, which explores how artificial intelligence is reshaping financial services across the region. Jonathan shares his perspective on how strategic partnerships and genuine internal product culture are critical for successful fintech innovation, not just flashy tech pilots or surface-level change.

Highlighting successful examples like Maybank’s MAE app and Ryt Bank, he emphasises the importance of user-centred design and long-term thinking. He also discusses how AI-powered fintech platforms are expanding access to financial services, especially in underserved markets across Asia:

“AI-powered fintech presents the opportunity for transformation that can accelerate financial inclusion in regions where traditional banking models have struggled,” he explains.

His insights point to a future where AI is not only a technological disruptor but also a key driver of economic inclusion, financial resilience, and practical innovation.

[Read the 4EJournazine Q3 2025 Issue (PDF)]

Japanese Prime Minister Kishida, whose family hails from the city, has previously directed stinging criticism of threats from Moscow to deploy nuclear weapons against Ukraine and has used the summit to accelerate discussion on his primary political goals of ‘realising a world without nuclear weapons’. 

Given almost half of the G7 are nuclear powers, with 44% of the world’s nuclear arsenal, such an improbable aim would typically be given short shrift in a time-pressed G7 summit. However, the urgency of the situation in Ukraine has called for a re-think. 

The G7 communique rightly focuses on the war, offering unequivocal support for Ukraine and further isolates Russia economically and politically. By attaching weight to the nuclear threat, the statement also counters the argument that Russia’s actions simply secure strategic interests in a region already within its sphere of influence. Disagreements over the seriousness of the invasion led to an ugly split at the most recent G20 Finance meeting in February. 

The immediacy of the situation in Ukraine should not take away from another important strand of the G7 dialogue. The port city of Hiroshima is almost equi-distant from Russia’s Pacific Fleet in Vladivostok and China’s North Sea naval fleet in Qingdao. China’s ratcheting up of rhetoric and military activities against Taiwan and in the South China Sea has raised questions about whether a pursuit of strategic interests in the region could spill over to military conflict. 

The G7 statement was surprisingly strong on China and papers over recent cracks between member states, most noticeable during President Macron’s April trip to China, when he downplayed Taiwan’s security issues and warned that the EU should not automatically follow the US lead.

It seems naïve to think that Taiwan does not have as much strategic importance to China as Ukraine to Russia. The more fundamental disagreements may hinge on China’s preparedness to launch a military offensive against Taiwan, especially given its lack of landing capability on an island target. The G7 statement should be seen as drawing an ideological line to counter any Chinese threat as well as a deterrent against further offensive military capacity building. 

Of course, it would be remiss not to mention the focus on the economic components of the statement. The city of Hiroshima is nestled in the heart of an Asian region with increasingly significant and complex economic linkages, accounting for more than 35% of global GDP.

The effectiveness of debilitating financial sanctions against Russia has stood in stark contrast to other economic sanctions, especially related to the more unwieldy and fragile web of global supply chain and trade linkages. The Ukraine war not only triggered a bout of energy and food-induced inflation it also raised questions about future supply chain security. 

The G7 commitment to address these vulnerabilities and to mitigate the cost-of-living squeeze is much welcomed. However, it should come as a complement rather than a derailment of efforts to mobilise economic resources to tackle climate and social problems that demand both our attention and our ingenuity. Perhaps we should look to the resilience and vitality of the modern city of Hiroshima to remind ourselves of human capacity for hope, while not forgetting the lessons of the past.

About The Author

Govinda Finn, an Economics Lecturer at Kobe University and sits on our International Advisory Council. He is a former Japan and Developed Asia Economist at Abrdn and is also involved in the Green Finance Initiative through his work on the board of the CityUK’s Japan Market Advisory Group.

It is not the first time that China and the then Soviet Union came together in a shared enmity toward the United States. In 1950 Mao Zedong established an alliance with the Soviet Union against what it regarded as the US-led revival of Japanese imperialism in Asia.  Mao’s resentment of Soviet condescension poisoned the relationship, leading to a split by 1963. In 1971 Richard Nixon created the opening resulting in an agreement aligning the US and China against the Soviet Union. This grew over two decades, ending with the collapse of the Soviet Union and the Chinese massacre of protesters at Tiananmen Square in 1989. With 9/11 both China and Russia supported the US especially in the common fight against fundamental Islamist terrorists, with each country confronted by similar threats. Since then that sense of common purpose has faded especially as Putin’s dreams of rebuilding Russia’s former imperial past has grown. Yet its lamentable performance in Ukraine has weakened perceptions of Russia and heightened Xi’s discomfort of drawing too close to Putin, whatever the external appearances of a bromance between the two might be. Shortly after the Moscow meeting, Xi reached out to the leaders of the five Central Asian republics to convene a summit in Moscow in May.

A few weeks ago, the Asia Scotland Institute hosted Dr Paul Clifford at the Business School of Edinburgh University where he spoke about his book “The China Paradox”. Updated to reflect recent developments, he concludes that his feelings over China are pulled in many directions. Advocating concentrated pressure to make China back off actions that the global community see as crimes against humanity, he stresses the need for widespread collaboration in areas that make sense such as climate change, environmentally sound technology, biotech and AI for medical applications. “I have a deep admiration for China’s remarkable and unanticipated achievements over the last four decades. I not only feel some pride at what has been achieved but also sadness at aspects of the China that is emerging from this long transition.”

On April 4th, our Institute mounts a webinar with Susan Shirk, Chair of the 21^st Century China Centre at the School of Global Policy and Strategy at the University of California, San Diego. Her book ‘Overreach, How China Derailed its Peaceful Rise’, has been viewed as “essential reading for everyone concerned with relations between China and the West.” Her conclusion is that “the festering resentment created by hostile US rhetoric and actions, which is then fuelled by CCP propaganda, could become a liability for stabilising the relationship”.

Writing in The Nation, Jake Werner reflects on a path away from great power conflict. He suggests that “Washington is girding for a long-term contest with China and often views the war in Ukraine as an early skirmish in that larger struggle. Beijing views the conflict differently, feeling itself pushed by US hostility to back Putin despite substantial misgivings about his action.”

Maybe any talk of a bromance is premature. Maybe the couple will never make it to the altar.

This article was written by Chairman and founder, Roddy Gow, and originally published on The Scotsman. The original article can be found published here:

https://www.scotsman.com/news/opinion/columnists/talk-of-bromance-between-russia-and-china-may-be-premature-roddy-gow-4098213

This is all quite wrong, argues Geoffrey Gresh, a professor at the US National Defense University in Washington DC. Eurasia, Gresh believes, is best thought of as a maritime construct. Whereas Mackinder spoke of ‘the world island’, with the hinge of global power somewhere in Ukraine (something to think about on the anniversary of the Russian invasion), Gresh would have us focus on the seas surrounding it: not only well known flashpoints like the Baltic, Mediterranean or South China Seas, but the increasingly-navigable Arctic Ocean too.

After all, the seas are arguably the most important theatre in contemporary geopolitics. Despite the hype over the new Chinese railways running from Hangzhou to London, 90% of all physical goods traded globally continue to move by sea. Quite simply, it’s a question of scale: even the smallest freighter far outstrips the capacity of a train. When Ukraine needed to export grain last year, it had to do so by sea – trains and lorries just couldn’t cope. If you’ve ever bought anything made overseas, from a pair of shoes to a new car, it almost certainly came by sea. The same is true for oil, liquid natural gas, food, animal feed, and the raw materials that make everything we take for granted, from the plastic beads extruded into household goods to the rare earths that power the device you’re reading this article on. Maritime trade underpins everything: in short, raw materials go into Far Eastern ports, and manufactured goods come out. Everything else in the global economy relies on this movement.

As this trade has grown more significant, ships have only gotten bigger. The sizes of the vessels that ply the routes to the east are staggering. Chinamax-class bulk carriers, built to carry iron ore to feed China’s steelmaking industry, are long enough that you could lay Big Ben lengthways on their decks – four times. The increasing size of ships has had huge knock-on effects. London was once the world’s busiest port, handling 40% of all global trade. Now, the Docklands are covered in skyscrapers: London couldn’t adapt and was left behind. The global shift of power to the East is reflected most visibly in the patterns of maritime trade. Today, nineteen of the twenty busiest ports are Asian. Fifteen of them are Chinese.

But the global maritime trading network that underpins modern life is remarkably fragile. When the MV Ever Given ran aground in the Suez Canal for six days in March 2021, the snarl in the supply chain cost at least $9.6 billion in lost trade. Gresh points to Suez as just one of the ‘chokepoints’ of maritime Eurasia, where accidents – or military action – could have devastating impacts on the global economy. Others include the pirate-infested Straits of Malacca, the quickest link between the Indian Ocean and the South China Sea, guarded at one end by Singapore; the Dardanelles, the only approach to the Black Sea; and the Strait of Hormuz, control of which means control of access to the oil-rich Persian Gulf. All of these are vital waterways, and all of them are increasingly at risk.

Even those who work in the digital economy cannot afford to ignore maritime geopolitics, as Gresh shows. As much as 99% of the Internet runs through a vast network of undersea cables crisscrossing the globe. For efficiency, these cables closely track major trade routes and run through the same chokepoints. They are especially vulnerable where they come ashore, from both accidental damage and sabotage. While these cables used to only come into the news for amusing reasons, like the time a grandmother digging for copper accidentally cut off Armenia’s internet, they are increasingly being recognised as a serious vulnerability that needs to be guarded. Russia frequently implies an ability, and potentially a willingness, to sever the transatlantic cables that link the US to Europe. Were they to be cut, and rerouting were not possible, it would have catastrophic impacts on global communications, and on the economy.

From the Mediterranean to the South China Sea, the Arctic to the Persian Gulf, the most crucial waterways for global trade, energy production and maritime security are all Eurasian. But who will control them? American naval hegemony is waning. There is no longer the money, physical capacity or public support for the US to continue to police every ocean. There are also, for the first time since the Second World War, now serious peer competitors for the US Navy. Instead of one country policing the seas, as the US and Britain have done between them since Trafalgar, in the 21st century seapower will be divided and distributed, with some countries dominating their regional seas, but with no one likely to be able to rule every ocean at once. This has the potential to seriously threaten the freedom of the seas that has been responsible for contemporary globalisation and economic growth. What happens when critical seas can suddenly be closed to trade, and no one else has the power to smash a blockade? Globalisation would be suddenly thrown into reverse.

Who will these future regional sea powers be? While the US, UK and Australia will still have a role to play – as demonstrated by the recent AUKUS pact – Gresh identifies China, Japan, Russia and India as the emerging powers to watch, and provides a comprehensive analysis of each. While naval enthusiasts will be the most likely to enjoy these chapters, those working in international trade, investment, and business can also benefit from Gresh’s sober, balanced look at the evolving security situation, and his commentary on how this might impact the global economy.

The great force in the future of maritime Eurasia is climate change, which makes for some of Gresh’s most interesting chapters. Melting ice caps mean that the Arctic Ocean is now navigable in the summer, which will have massive impacts on global trade and geopolitics. The route from Shanghai to Rotterdam via the Arctic is 30 to 50% shorter than the routes via Malacca, Suez, or Panama. For the longest time, ships couldn’t make the Arctic passage without an icebreaker escort – invariably Russian – but in 2018, the first freighter made it through unassisted. More will follow.

Arctic shipping may, paradoxically, even benefit the environment. Shorter routes will mean less fuel is required, and emissions are reduced. When Mackinder first wrote about Eurasia a hundred years ago, he dismissed the northern sea as permanently frozen, and irrelevant to trade and defence. This has changed. In the face of a new reality no one, from shipbrokers to naval officers, can afford to ignore what China, which now describes itself as a ‘near Arctic state’, quite romantically calls the Polar Silk Road.

The importance of Eurasian waters has been recognised for centuries. As a Portuguese adventurer arriving in the Straits of Malacca in the early 1500s observed, ‘whoever is lord of Malacca has his hand on the throat of Venice’, his country’s great rival for Eastern trade. Shortly afterwards, Portugal took Malacca, and with it the trade monopoly in the East. Venice was never powerful again. Contemporary strategists and thought leaders would be wise to take note – and read Gresh’s book.

Geoffrey Gresh, To Rule Eurasia’s Waves: The New Great Power Competition at Sea.  Yale University Press, 2020.  

Buy here: https://yalebooks.yale.edu/book/9780300234848/to-rule-eurasias waves/

Last year a meeting was held in Austin, Texas of the American Board of Medical Specialties (ABMS). It was noted how people move from one place to another for various reasons – war, persecution, seeking better opportunities, unemployment etc. This migration of people can result in consequences for both the place they left behind and their new place of residence. These consequences can be economic, social and demographic. Against the background of falling populations, these migrants, if productive, should be welcome.

What are the greatest challenges facing global growth in Asia? Are there factors in addition to climate change that we need to consider? With its focus on pan-Asian markets the Asia Scotland Institute feels that any growth depends on marshalling resources, the most important of which are people and confronting the demographic trends in key countries.

Russia’s invasion of Ukraine and its alliance with China dominate current affairs media coverage. The human and economic costs in Moscow and Kyiv will certainly continue to mount before the conflict ends and the impact on Europe wide energy and global food supplies have generated additional crises. However, there is another element that requires attention which is the concern we should all have about population projections. 

China’s population is shrinking and the impact post Covid with high fatality figures almost certainly makes it appear that projected economic growth may not be achieved and the expectation of achieving continued GDP figures to challenge the US will fail. The view of Dr Paul Clifford will be shared when he speaks in Edinburgh in mid-February about his book The China Paradox as the guest of the Asia Scotland Institute and the Business School of Edinburgh University. Quite simply there will also not be enough people of working age to support the growing numbers of retirees.

Russia, already suffering the consequences of its military action, is also not renewing its numbers. Since 2016, Russia’s death rate has exceeded its birth rate which has been called a demographic crisis by analysts. The nation has an ageing population, with the median age of the country being 40.3 years. In fact, Russia has one of the lowest fertility rates in the world. 

Japan has the second highest percentage of those over the age of 65 at 29%, after Monaco. In Japan the population is shrinking so dramatically that there is a growing realization of the need for action. Reuters reported that its Prime Minister, Fumio Kishida, speaking in their parliament, pledged to take urgent steps to tackle the country’s declining birth rate, saying it was “now or never” for one of the world’s oldest societies. Japan has in recent years been trying to encourage its people to have more children with promises of cash bonuses and better benefits, but it remains one of the most expensive places in the world to raise a child, according to surveys.

Births plunged to a new record low last year, according to official estimates, dropping below 800,000 for the first time – a watershed moment that came eight years earlier than the government had expected. “Our nation is on the cusp of whether it can maintain its societal functions,” Kishida said in a policy speech at the opening of this year’s parliamentary session.

These sorts of statistics represent enormously important factors on countries’ growth prospects and should be considered when assessing threats and opportunities. China and Russia are both unlikely to achieve any of the more aggressive goals envisaged by geo-political experts, which call for a reconsideration of policies by the West when planning to meet probable future threats, both military and economic. We can expect to hear more on these themes when Dr Gerard Lyons launches the Adam Smith series of economic briefings this month.

This could be the future time bomb.

This article was written by Chairman and founder, Roddy Gow, and originally published on The Scotsman. The original article can be found published here: https://www.scotsman.com/news/opinion/columnists/a-ticking-demgraphic-time-bomb-is-about-to-explode-in-china-and-russia-roddy-gow-4015486?itm_source=parsely-api

Many commentators believe that this is a Generation Z factor where young people who are driven by a sense of outrage at the policies and actions of their governments express their frustration through demonstrating. World Protests: A Study of Key Protest Issues in the 21st Century, issued by researchers from the German think tank Friedrich-Ebert-Stiftung (FES) and the Initiative for Policy Dialogue based at Columbia University, both add to a growing body of literature about an era of increasing protests. They concluded that, “we are living through a period of history like the years around 1848, 1917 or 1968 when large numbers of people rebelled against the way things were, demanding change”.

Now there is a much greater knowledge of global events than ever before. Separating facts from lies is critical. As Churchill said, acknowledging Mark Twain, “a lie gets halfway around the world before the truth has a chance to get its pants on”. There are key elements making up the factors at play. The percentage of those in China under 25 is very significant according to the Wilson Centre, compounding the problem that the country’s reproductive rate is too small to support its retirees. In China some Zero Covid restrictions have been lifted indicating a reaction to and concern about the level of protests. Iran has responded differently with the beginning of executions and the likelihood of many more. However, this shows that the protests are being felt.

Despite very repressive reactions to unrest, many of those protesting have united nearly every section of society in Iran and China. The frustrations of Covid imposed lockdowns have added to the universal feeling of liberty being deprived. Some reactions in recent days suggest a slight easing of restrictions in both China and Iran although whether these turn out to be long term remains to be seen. In a context of heavy censorship, China’s protestors have shown eye-catching creativity, for instance by holding blank sheets of paper to signify discontent that they cannot voice explicitly. Carne Ross is the author of The Leaderless Revolution. He has reflected on the protest movements in China and Iran although there have been others driven by growing dissatisfaction with other autocratic governments. He suggests that each of these uprisings is very different and contingent on local circumstances and causes. But the common factor is that they are facilitated by social media – otherwise they would simply not be possible.

Saif Islam of SRM, based in South Africa agrees: “There are multiple reasons for revolt, economic, political or governments relaxing laws. Protestors will want to see how matters develop and use social media to motivate and inform, as in the Arab Spring.” Victoria Schofield, author and expert on Pakistan and the Commonwealth, highlights the energy of Gen X, the younger, often unemployed, members of society who may feel invincible and are deeply frustrated by the slowness of change.

There is a sense that protest movements will evolve. Intervention in Belarus halted them for a time but even in Russia the regime will ultimately collapse if it proves incapable of change.

This article was written by Chairman and founder, Roddy Gow, and originally published on The Scotsman. The original article can be found published here: https://www.scotsman.com/news/opinion/columnists/demonstrations-around-the-globe-show-a-generation-demanding-change-roddy-gow-3973904?amp

His latest book, ‘Himalaya – Crisis on the Roof of the World?’, published in September 2022 by Bloomsbury, is a ground breaking new look at Himalaya and how climate change is re-casting one of the world’s most unique geophysical, historical, environmental, and social regions.

On 15th November, John Keay will be with the Asia Scotland Institute at the University of Edinburgh Business School to discuss the book and talk about the wider issues of the region. History has not been kind to Himalaya. Empires have collided here, cultures have clashed. Buddhist India claimed it from the south, Islam put down roots in its western approaches, Mongols and Manchus rode in from the north, and, from the east, China continues to absorb what it prefers not to call Tibet. Hunters have decimated its wildlife and mountaineers have bagged its peaks.

The Himalayas, Hindu Kush, and the Karakoram are part of what is known as ‘The Third Pole’, the region that encompasses these mountain ranges with the Tibetan Plateau to the north and the Indian great plains to the south. The ice fields in the region contain the largest reserve of fresh water outside the polar regions, leading to the Third Pole being described as Asia’s “water tower,” feeding major rivers such as the Ganges, Indus, and Yangtze. The region is the source of the 10 major river systems that provide irrigation, power and drinking water to over 1.9 billion people in Asia – over 24% of the world’s population.

Research indicates that the Himalayan glaciers have shrunk by 40 per cent in the past 400 years, with as much as another two thirds of glaciers predicted to vanish by the end of the century. A consequence of this will be a decline in meltwater from the Himalayas, which will result in less river water for people downstream in Afghanistan, Bangladesh, Bhutan, China, Nepal, India, Cambodia, Burma, Uzbekistan, Tajikistan, Kazakhstan, Turkmenistan, Thailand, Kyrgyzstan, Vietnam, Laos, Pakistan, and Malaysia.

The Himalayas is also one of the most complex regions on earth. The mountain range passes through India, Pakistan, Afghanistan, China, Bhutan and Nepal, a region riven by political divisions. In September 2022, China and India disengaged military forces from the disputed Himalaya border area following talks between senior military commanders. This followed deadly fighting between soldiers of the two countries in 2020 resulting from a build-up of Chinese forces and military infrastructure along parts of the disputed Line of Control. Despite the withdrawals, there is a constant risk of conflict in the region.

On another front, tensions remain between India and Pakistan in the disputed Himalayan region of Kashmir, where there are intermittent military clashes between the two sides. During the China-India dispute in 2020, the Pakistan army deployed 20,000 troops on the Line of Control border with India, illustrating how easily tension could develop into war.

The national borders around the Himalayas were not drawn by nature, but largely by the British colonial authorities. The ‘Durand Line’, established in 1893, cuts through Pashtun tribal areas from the Afghan border with Iran to the western Himalayas. The ‘McMahon Line’ is the contested boundary between China and India defined in the 1914 Simla Convention. The ‘Radcliffe Line’ defined the borders between India and Pakistan, and failed to resolve the issue of the princely state of Jammu and Kashmir that chose to remain independent after partition in 1947.

The Himalaya region is home to some of the most complex problems on earth. Join the Asia Scotland Institute on 15th November to understand more about this critical region.

This article was written by Institute Director, Martin Purbrick, and originally published on The Scotsman. The original article can be found published here: https://www.scotsman.com/news/opinion/columnists/ground-breaking-new-look-at-himalaya-and-the-crisis-on-the-roof-of-the-world-martin-purbrick-3917879

What should one expect from the Congress of the Chinese Communist Party (CCP)?

In terms of expectations, the entire week-long event starting on October 16^th has been carefully and meticulously choreographed for a very long time in order to prevent any adverse surprises and to ensure a smooth, uninterrupted transition to an unprecedented third term for Xi Jinping 

For Xi and the Chinese Communist Party (CCP) leadership, this Congress marks the most important political gathering in a decade. The coronation of his third-term formally consolidates Xi’s control over China and the CCP.

Xi’s overall focus on centralization of power over the past decade is accelerated by this Congress. Increasing economic challenges at home and abroad has provided Xi with a pretext to further strengthen this centralization process. It has allowed him to take definitive leadership – particularly during times of crisis such as the Covid-19 pandemic. However, increasing centralization threatens the economic dynamism and pragmatism that began over forty ago that made China into the world’s second largest economy.

What message will the Congress deliver? 

A key message of this Congress is to emphasize to ordinary Chinese and the world that China is fulfilling its historic mission of achieving greatness at home and abroad and that Xi’s continuing leadership is  indispensable in this mission. 

Any new appointments will clearly be filled by Xi’s loyalists such as upcoming changes in the diplomatic and military guard.

At the Party Congress, Xi’s cult of personality will be further consolidated. Xi’s goal is to secure his place in the historic pantheon of great Chinese leaders. 

Will the Congress generate dissent?

The Congress has been preceded by a strict crackdown on all forms of opposition to Xi and the CCP. In fact, arrests of what are considered to be suspects and agitators began months ago.  These range from criminals to ethnic minority advocates. Basically, anyone that Xi and his team considered a threat or risk to the system has been neutralized, at least for now, during the Congress. 

Will the Congress mark a shift in Xi’s strict Zero-Covid policy adversely impacting China’s economy? 

The pre-Congress communique has praised Xi’s Zero-Covid policy, also referred to Xi’s all-out war on Covid.  Xi has used Covid as a pretext to further consolidate power at home and further eliminate any form of opposition to the maximum amount possible. 

The Congress will not mark any major shift on Xi’s Zero-Covid policy despite the fact that strict security measures and the relentless enforcement of mass testing and abrupt lockdowns have frustrated many Chinese citizens

The official line will continue to be that Xi’s current Covid policy remains the most effective option for protecting the health of China’s 1.4 billion citizens despite the economic costs.  Another way to interpret this is that Xi is willing to sacrifice a degree of economic productivity (at least in the immediate term) for the sake of greater, long-term political control. 

While the rest of the world is moving beyond Covid, Xi continues to hamper China’s economy with a politically motivated Zero-Covid policy.  For Xi, politics trumps profits in his pursuit of absolute power. 

In addition, China’s failure to import any mRNA Covid jabs, particularly for its most vulnerable citizens, clearly has a political dimension that continues to frustrate many in China’s medical community. 

Are China’s economic problems impeding its global ambitions?

China’s current economic problems are actually strengthening Xi’s determination to reshape the international order toward a more multipolar world with China at its center. However, China’s ability to do so has been complicated, particular in the short to medium term. 

The global economic turmoil unleashed by the Covid-19 pandemic – which emanated from China – and Putin’s invasion of Ukraine – which had Xi’s tacit approval – will be felt for years. 

Like the rest of the world, China is struggling and its credibility has suffered as a result. 

However, China is much better prepared than most economies globally to confront these challenges.  China will continue to exploit this advantage to further its interests internationally on all fronts with the primary objective of reshaping the global order. 

How is the current economic turbulence impacting the rest of the world?

For quite some time, a perfect storm seems to be forming, largely resulting from the fallout of the Covid-19 pandemic and Russia’s invasion of Ukraine. 

There is an Increasing likelihood that we are heading toward a more turbulent and extended economic downturn. It is likely to last much longer than what mainstream economists anticipate – or willing to admit – with very serious social and political implications for the foreseeable future, particularly as evidenced by rising global inflation and ongoing crises with energy and food prices.

The recent IMF statistics on the global economy for 2023 clearly point in this direction. The IMF has cut growth predictions and forecast economic contraction in a third of the world. The three largest economies – US, China and EU – will continue to stall and it will feel like a recession for many parts of the world. 

Will China Invade Taiwan?

At this moment, China does not possess the capability for a successful invasion of Taiwan. It would pay an enormously high price on all levels and not achieve its objective. This reality can change in about five years. The world and the broader East Asia region may have a much different geopolitical structure by then. Basically, there is no upside at present for China to pursue military action against Taiwan.  Its policy of maximum pressure against Taiwan is fairly geared for domestic consumption with an external warning to outsiders, particularly the U.S.  However, China’s continuing game of brinksmanship over Taiwan risks an outcome it may not intend and complicate its longer term objective of reshaping the global order.

How is the Ukraine war impacting China’s global ambitions?

After Xi and Putin paraded their no-limits partnership at the Olympic Games in China in early 2022, Putin’s invasion of Ukraine began afterwards on February 24. Xi clearly gave his tacit approval to Putin’s invasion of Ukraine, believing Putin’s flawed expectations that it would be a fairly quick and successful operation and strengthen their objectives internationally, in particular reshaping the international order to their advantage. 

The disastrous course of Putin’s Ukraine war has proven a serious reversal for Xi on numerous fronts.  It has provided him with serious lessons and a rude awakening, particularly about his long-held view of a rapidly declining, and less effective, western world.

The western show of continuing unity and concerted action on Ukraine – particularly sanctions against Russia – has surprised Xi. This has also impacted Xi’s calculations vis-a-vis Taiwan – and other territorial claims and disputes along China’s borders. 

Xi is unlikely to abandon Putin anytime soon but his serious concerns over the course of Putin’s Ukraine war are growing, and have also been expressed in public. 

Xi’s ultimate long-term objective is ensuring China’s top role at the center of a new global order on all levels.  From Xi’s perspective, Putin’s war in Ukraine is increasingly complicating this mission as it adversely impacts business for China globally. 

For now, Xi sees Putin playing the nuclear card with the west as a negotiating tactic in a wider, but increasingly risky, game of brinksmanship. 

Although rational actors will do whatever necessary to avoid a nuclear outcome, the danger lies in a potentially unpredictable and unintended miscalculation that could result in such an outcome. Hence, the indispensable need for all lines of communication to be constantly active and open between all parties involved. 

Would current U.S. policy change should President Biden’s Democrats lose control of Congress in the U.S. mid-term elections?

In a highly polarized political environment, there are very few issues today that get bipartisan support in Washington, DC. China is the leading foreign policy issue that draws near unanimous bipartisan support. 

Even if Biden’s Democrats lose their majority in either one or both congressional chambers in the U.S. mid-term election, Biden will continue to receive the necessary bipartisan support as long he pursues a firm line with Xi Jinping and the Chinese Communist Party. 

China is not just a partisan issue but has become an existential issue on the foreign policy front.

Biden correctly made it clear recently that the U.S. faces a ‘decisive decade’ in its rivalry with China. This is further supported by his newly published national security strategy which highlights China’s ability and drive to reshape the international order.

In my opinion, the U.S. foreign policy establishment woke up very late to the threat of the Chinese Communist Party and has been  generally behind the curve in this rivalry. Although some think that war is inevitable, the U.S. needs to pursue a well thought long-term strategy that involves constructive engagement with China when possible and taking a firm line when necessary.  

How is China’s influence growing in Latin America?

Over the past two decades, China has become the leading economic partner for much of Latin America and a key provider of foreign direct investment, which has given it enormous leverage over the region, particularly in the political and diplomatic realms – and even in security in places such as Venezuela. 

This has provoked serious concern in the U.S., that China is using its leverage to extend its strategic goals and undermine U.S. interests in Latin America. 

It has also triggered concern among several nations in the region and beyond – that is, the fear of encroaching interference in their internal affairs and foreign policies. 

Much of this actually goes unreported and under-analyzed in the region. This considerable void facilitates China’s ability to operate effectively throughout Latin America to the detriment of regional and domestic interests. 

However, the U.S. has to tread carefully in dealing with nations in Latin America. Pressuring any state to make a choice between the U.S. and China can provoke adverse reactions and activate certain regional views about the U.S., which had traditionally considered the region a part of its hemispheric neighbourhood. 

With Latin America, the U.S. must pursue an effective strategic engagement that is astutely balanced in rhetoric and focuses on actions yielding tangible results. 

The original article can be found published here: https://globalsp.org/china-challenge-the-communist-party-congress-consolidates-xis-centrality-at-home-and-abroad/

With the “decoupling” of areas of economic activity by the USA and China, there are concerns that the world is entering a crisis of interdependence and even the end of globalisation. The term “decoupling” has been used to describe the lessening of political, investment, trade, innovation, and digital links between China and the West.

In 2018, President Trump imposed tariffs on some goods imported from China. Later that year China imposed duties of 178 per cent on Sorghum imports from the USA. The US-China trade war escalated, and relations between the two countries have continually worsened.

The Covid-19 pandemic, the Russian invasion of Ukraine and the heightened tensions around Taiwan have expanded what was previously largely a China-US economic issue to become a wider risk of “de-globalisation”.

In 1995 New York Times journalist Thomas Friedman wrote that “the world is flat”. Friedman described a new phase of globalisation that involved a massive expansion of global Internet connectivity, and the growth of outsourcing across huge distances. This convergence occurred around 2000 and facilitated the ability to deliver intellectual work from almost anywhere in the world. These changes levelled the playing field for developing countries such as China and India.

Globalisation has evolved for centuries as trading links between countries have developed and logistics improved. For several decades before 2000, globalisation was more about companies seeking lower labour costs as well as new markets, especially in China and other countries in Asia. After 2000, globalisation involved individuals being empowered through the expanded global Internet connecting diverse knowledge pools.

Two decades later and the world has changed. The pandemic caused huge economic losses as production and services stopped, major reductions in retail spending as people stayed at home, and disruption to travel that has still not recovered.

The impact continues as the policy of “Dynamic Zero Covid” in China has interrupted supply chains, a massive change given that China accounted for 28 per cent of global manufacturing output in 2019.

The IMF has warned of the risk of “de-globalisation”, pointing out that the Zero-Covid policies in Asia are a glimpse of what de-globalisation would look like if trade between advanced economies and China drops.

The war in Ukraine has further restricted supply chains, especially for commodities such as wheat (29 per cent from Russia and Ukraine), corn (15 per cent), and sunflower oil(69 per cent), causing significant shortages and price increases. The result is globally high inflation, reaching over 10 per cent in the UK, 9.1 per cent in the Euro area, 8.5 per cent in the USA, and over 70 per cent in Argentina and Turkey. The outcome is that globalisation has stalled and the world is now a little less flat than Thomas Friedman described in 1995.

To hear more, join us on October 27th for the Asia Scotland Institute webinar – Decoupling: A crisis of interdependence the end of globalisation?

After the occupation of his residence, President Gotabaya Rajapaksa fled the country on a military jet to safety in the Maldives. His brother, a former finance minister, also left Sri Lanka, seemingly ending the family’s power in the country. The president and his government are blamed by the protesters for the economic crisis in Sri Lanka, which has resulted in power cuts as well as inflation and shortages of essential goods.

The economic crisis is not unique to Sri Lanka, but the effects have been felt in this country for many months already. Fuel supplies are limited as a result of the international supply situation, largely driven by the war in Ukraine. Inflation is a problem across the world with levels of around 9 per cent in the UK, USA, and major European countries. However, in Sri Lanka annualised consumer price inflation is estimated to be over 50 per cent and hence is having a harsh and immediate impact on the cost of living for ordinary people.

Not only does Sri Lanka have difficulties with inflation and the supply of essential goods, but the country has huge debts. China is a major creditor having provided loans for major infrastructure projects such as $155 million for the Puttalam/Norochcholai Coal Power Project that generates around one third of electricity in the country. The reliance on coal powered energy is worsened as a major supplier to Sri Lanka is Russia.

In addition, Sri Lanka owes China $8 billion related to construction of the Hambantota port, strategically located on the southern coast of Sri Lanka. After struggling to repay the debts, the Sri Lanka government signed a 99-year lease for Chinese state-controlled China Merchants Port Holdings company to control the port and surrounding 15,000 acres.

The mismanagement of Hambantota port has caused local anger in Sri Lanka after aides to former president Rajapaksa have been accused of receiving cash from the project during the 2015 presidential election. Use of Hambantota by China has caused international anxiety due to concerns that as part of the debt repayments China could use the port as a military base. Illustrating this risk, Chinese scientific research vessel ‘Yuan Wang 5’ will visit Hambantota port in August for a week reportedly to conduct satellite control and research in the Indian Ocean Region.

China has responded to suggestions that it has caused a “debt trap” in Sri Lanka, with Chinese Foreign Ministry spokesman Zhao Lijian saying recently that, “The China-Sri Lanka practical cooperation has always been led by Sri Lanka with scientific planning and thorough verification with no strings attached”.

The elephant in the room is not China, but India which has historically close ties with Sri Lanka but a strained relationship due to Sinhalese nationalist concerns regarding excessive Indian influence. The current crisis in Sri Lanka may cause better relations between the two countries, helped by recent assistance from India that includes provision of a major credit line as well as shipments of food, fuel and fertiliser. This help from India will likely influence Sri Lankans to have a more favourable perception of their close neighbours in India, to the detriment of China.

The Asia Scotland Institute will hold a meeting to discuss the situation in Sri Lanka with experts who can project what the future is likely to hold. Stay tuned to our events schedule to hear more about Sri Lanka.

There are other pressures on economic growth that are hindering a post-Covid recovery. The OECD reported in June that Russia’s war in Ukraine is slowing economic recovery, is causing rising inflation, and has triggered a cost-of-living crisis that is affecting millions of people globally (not only in the UK).

In addition, although the world economy was on track for a strong recovery from Covid-19, the war in Ukraine as well as supply chain disruptions in China caused by the “Dynamic Zero Covid” approach are hindering recovery. Global shipping and logistics giant Maersk reported in May that despite the lockdown in Shanghai for over seven weeks the city ports continued to operate, but that truck drivers (who transport three quarters of freight in China) spent 70 per cent less time on the roads in March 2022 compared to April 2021. Ships may be able to get to China’s ports, but manufactured goods have not been able to get to the ships.

The official story from inside China is very different. The Ministry of Commerce reported in June that there should be stable growth in foreign trade this year and that “there are multiple enabling factors to stabilize foreign trade and improve trade quality”. The good economic news story, repeated across state-controlled media in China, is that exports have increased by over 15 per cent year-on-year in May, which is attributed to the control of Covid-19 cases. Zhao Ping, vice-president of the Academy of China Council for the Promotion of International Trade, said: Thanks to the huge size, firm footing and strong resilience, China’s foreign trade will keep healthy growth momentum despite challenges from the slowdown in world economic recovery and rising commodity prices.”

Variable economic growth in different countries after recovery from Covid has shown that some countries have come out of the pandemic more quickly than others. The IMF projected economic growth for the UK of 7.4 per cent in 2021, 3.7 per cent in 2022, but only 1.2 per cent for 2023. The corresponding projections for the Euro area are 5.3 per cent, 2.8 per cent, and 2.3 per cent, indicating an initially faster recovery by the UK. But economic growth projections for China are 8.1 per cent in 2021, 4.4 per cent in 2022, and 5.1 per cent in 2023. Despite “Dynamic Zero Covid”, China seems to have such a huge scale of production and range of industries that its economy is more resilient and can recover from the prolonged lockdowns.

As Jörg Wuttke pointed out recently, China depends on the European market more than Europe does on China. Europe exports goods to China valued at 600 million euros every day, but China exports 1.3 billion euros worth of goods daily to Europe.

Some analysts have suggested that the Cold War never ended and the Ukraine war is part of this ongoing confrontation. Great power competition has continued as the Korean peninsula remains divided, China is communist and insists on reclaiming Taiwan, there is continued resistance to American power as well as the west’s professed ideals, and the potential for nuclear war remains. Hence the Ukraine war is simply a continuation of the Cold War, which increasingly has Asia at its centre.

The most obvious impact of the Ukraine war in Asia is on how threats from China are now perceived, and also how the Chinese government perceives its ability to exercise power and influence in Asia. The Chinese Ministry of Foreign Affairs has clearly stated that “Taiwan for sure is not Ukraine.” Foreign Ministry Spokesperson Hua Chunying has said that “Taiwan has always been an inalienable part of China’s territory. This is an indisputable historical and legal fact. The one-China principle is a universally recognized norm governing international relations. The Taiwan region’s peace hinges on the peaceful development of cross-Strait relations, rather than fawning on foreign forces for arms sales and military support. “Taiwan independence” only leads to a dead end. No one shall have any illusion or make any miscalculation on this issue.” As Vladimir Putin conflates Ukraine with greater Russia, so too does the CCP believe that Taiwan is part of greater China, based on the boundaries of the Qing Dynasty.

The Chinese government is resolute in making statements about ‘One China’, but the Ukraine war has cast further doubt on the ability of the Chinese military to stage a successful invasion of Taiwan. The government of the Republic of China Taiwan may see their chances differently after the Ukraine war. Taiwan analysts are considering how the island could best prepare for invasion by deploying defensive systems that are short-range, able to survive an initial bombardment from a larger adversary, and suitable for deployment close to home in defence of the island should it come under blockade or attack. Taiwan is likely to focus more on sea mines and anti-ship cruise missiles to counter amphibious forces, improved air defences, and stockpile large amounts of small and cheap asymmetric weapons such as coastal defence missiles, and drones. An invasion of Taiwan would still be devastating, as is the war in Ukraine.

The Chinese government may be learning military lessons from the Ukraine war but it is more likely that their strategy has not changed. Bonnie Glaser, Director of the Asia Program at the German Marshall Fund of the United States, recently commented that if Taiwan was to declare independence this would cross a red line for China and they would not hesitate to launch an attack even if they felt that they could not achieve success. China has a sophisticated toolbox of grey zone tactics that are below the threshold of an invasion which are intended to instil a psychological sense of despair in Taiwan that the USA cannot defend them and they should surrender. Glaser suggested there is a clear lesson from Ukraine for the Chinese military that if they invade Taiwan they should use overwhelming force, decapitate the leadership, and control the air.

The world is a changed place after the Russian invasion of Ukraine, but the cold war may never have ended and Asia is just as affected as is Europe by the geopolitical and economic impact.