Andrew Cottey (UCC) - China, Governance, and the Changing Global Order

Good afternoon everyone. So I'm Andrew Cotti. I'm in the department of government politics at University uh College Cork. So I'll say a bit about my engagement with China, some thoughts on China's economic development and recent developments which will um reference some of the things that the ambassador said and that were on the earlier panel. um couple of comments on the green transition and then finally getting on to the thing about global governance. So I'll go quickly I mean I work in international relations and security studies. I've worked particularly on European security but for about 15 20 years I've been working on um Europe China EU China and wider Europe China relations and I've published a number of things in that area. I traveled to China a number of times in the 2000s and 2010s, not so much um recently and kind of engaged with people in in in universities and think tanks and even in that period I felt between say the 2000s and the 2010s you could see let's say the domestic tightening up in terms of you know willingness of people to discuss things with you with with with you with you or or or not. Um so secondly then just a few thoughts on um China's economic um development and how we can think about China's development model as was referenced um earlier. I mean I think this phrase which you know other others have used of state capitalism um quite nicely captures what China uh has done if you put it like that since the 1970s in that it's employed if you want to use that word elements of capitalism um domestically but within the context of a model where the state intervenes uh significantly. ly uh in the economy and at the same time obviously China has engaged with and benefited significantly from uh the overall global capitalist economy both in terms of um inward investment into China and then particularly over the last uh 15 plus years um exports um out into the um global uh econ economy. Um, so as I say, for me that notion of of state capitalism, you know, captures a way of kind of thinking about China's economic model, but obviously that can be discussed. Um, second thing I want to say, and this is where I'm going to speak um, pretty bluntly um, and be interesting to see um, you know, where we get to in any kind of discussion on this. Um in blunt terms I think that China has gained the system of the global economy that China has benefited from the system while not playing by uh the rules. Um and in broad terms I would list sort of five areas in which that's the case. One is the use effectively of subsidies uh for Chinese uh industry. Uh and these probably have been more indirect than direct in terms of particularly um cheap loans uh from uh Chinese banks but also R&D support uh for uh the development of technology. Um secondly the um what's argued to be the artificially low uh exchange rate of the renmb the Chinese currency which again it's argued helps to promote Chinese exports. Uh thirdly um non-tariff barriers. So China hasn't particularly employed tariffs at least since the point of um WTO accession in 2001. But there are, it's argued, a range of non-tariff barriers which make it difficult for uh other companies and countries to export to China. Um fourthly, um what's described as coerced uh technology uh or intellectual property um transfer uh and then fifthly also uh industrial uh espionage. Um so as I say my view would be that China has significantly basically gained the system. it's benefited from being able to plug into uh a globalized uh economy while not really uh playing by uh the rules. Um obviously we heard from the ambassador some of the Chinese counterarguments to that and I'll maybe come back to that in terms of one point uh in a moment. Um I think perhaps the more important point is not that some relatively obscure uh academic from university college Cork might hold these views but that these views I think are broadly held by the European Commission, European governments, US government uh European and US companies uh and European and US uh chambers of commerce for uh companies operating uh in um China. Um, second thing on the economy is what's now described as uh China shock 2.0. So again, those of you familiar with this debate will know that when um China joined the WTO in 2001, there was this debate around the China uh shock and you know what impact did this have in terms of uh flows of relatively cheaper imports into uh particularly uh US uh and um Europe and therefore uh industry and job losses in US and Europe and there's been quite a a lot of um debate amongst economists. There are a number of kind of quite famous economics papers looking at was there a China shock? What was the scale of the of the China shock? Uh and so on. And now we're in the midst in the last really I suppose only perhaps one two years maybe a little bit longer of a debate over what's now described as China shock um 2.0 0 which as was discussed um in the um earlier panel uh relates in particular to uh electric vehicles, batteries, solar panels but also some other uh relatively higher tech technological areas. And this is also sometimes described as the the over capacity problem. So that China is simply producing uh much more than it can consume domestically. it's exporting this out cheaply uh to uh the rest of the world which is then uh threatening uh industries in Europe, the US in particular but also elsewhere. Um two or two or three brief things to mention here. Um in terms of some of the evidence for this, there was a couple of months back a prominent um OECD report on this issue and that report argued that uh Chinese in particular I think EV and solar industries were effectively in the re receiving very large subsidies which were kind of pratt much bigger than equivalent subsidies that uh European or US uh companies might see um the sort of political impact to all of this. I think you can measure from the fact that I say one month ago, but we're now in September. Two months ago in July, um the Chinese Ministry of Commerce uh published a report which I just noted the title of here. China's position on the so-called excess capacity issue which is the the the ambassador didn't reference the report but you know the Chinese counterargument uh is that actually this issue is exaggerated andor uh misunderstood. So this debate is playing playing out. Okay, great. Thank you. Um I'll drop my climate point and maybe we can come back to climate. So just two things then briefly on the um economy issue. I'll just reference um recent article um by Michael Froman who was um the Obama administration's trade representative and deputy national security adviser for international economic affairs and is now president of the Council of Foreign Relations. But he has uh an issue uh an article in the latest issue of the journal foreign affairs entitled the next global economic crisis could be made in China how overcapacity ends. So I mean there is a real debate about not only this over capacity issue but does the issue have the potential to trigger a really you know large global economic crisis you know on the scale of you perhaps 2008 or something like that. Um final point then and this gets to the global governance point. Um this issue of China shock 2.0 and over capacity one way or another is a major challenge even if one can debate the exact n nature or the scope of that challenge. There have been bilateral economic dialogues between the US and China, between the EU and China which have gone on for a number of years. Final point I promise. Um, and those dialogues have made rather limited progress. Very final point I just read in the New York Times this morning that there's was a meeting of G20 I guess it's finance ministers or their their their equivalent Scott Bessant was there in North Carolina and the New York Times article was highlighting that basically what came out of this was a big split between China on the one hand and most of the other G20 countries on the other which I think points to just how difficult this issue is to address. Thank you. >> Okay. Thank you very much. And uh uh I'm just I can't resist myself. I'm going to abuse my progress with one fun fact which is uh more of uh a greater percentage of uh the economy was controlled by state enterprise under the Atley administration in England uh than currently in China. So, I think that's just, you know, what the meaning of that is is is uh another question, [laughter] but I think it's just a fun index of where we are in China