South Korea poised to crash and burn in 2025 – Asia Times

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It’s difficult to imagine any Eastern country more appreciative of South Korea’s accomplishments in 2024.

President Yoon Suk Yeol declared martial law just the last fortnight, reversed six hours later, was impeached in parliament amid large street protests, and is now facing a historic arrest permit.

As if that weren’t enough conflict and woe, Korea experienced its worst local aircraft disaster in more than 20 years, killing over 181 people and invoking grave fresh concerns about the safety of Asian skies. &nbsp,

Korea’s really nasty December deepened what was already anything of a midlife crisis time for Asia’s fourth-biggest business. This may be as good as it gets as a madly uncertain 2025: Seoul’s very destructive elections are about to meet with the Trumpian wind to occur.

Even if, best-case scenario, “increased US protectionist measures imply lower&nbsp, taxes on&nbsp, Korean&nbsp, imports than on various trading lovers”, says analyst Brian Coulton at Fitch Ratings, “declining demand from China and the US, which&nbsp, collectively accounted for around 40 % of&nbsp, Korean&nbsp, commodities exports in&nbsp, 2023, may adversely affect exports”.

Korea will be directly at the heart of the potential weaker Chinese demand-related collateral damage, despite the president-elect’s threats of 60 % tariffs against China. Japan, too, but then Tokyo isn’t embroiled in a political imbroglio the likes of which Seoul hasn’t seen in decades.

Something that Japan and Korea have in common, though, is being snubbed by Trump. Trump has rebuffed repeated requests from Yoon and Japanese Prime Minister Shigeru Ishiba for a Mar-a-Lago tee time since his re-election on November 5.

Both Yoon and Ishiba have watched as Trump met with a parade of world leaders, including Canada’s Justin Trudeau, France’s Emmanuel Macron, Ukraine’s Volodymyr Zelensky, Hungary’s Viktor Orban, Argentina’s Javier Milei and even the UK’s Prince William. But so far, he’s had no time for Washington’s top North Asian allies.

Anyone’s guesses whether Trump intends to impose tariffs on Seoul and Tokyo. Or that Trump’s hopes of a “grand bargain” trade deal with China take precedence.

Seoul’s distracted legislators won’t be doing much to improve Korea’s competitive game as Yoon awaits a possible arrest and his fate in the courts in the months to come.

Even before Yoon’s bizarre martial law decree on December 3, his People Power Party wasn’t getting much done to level economic playing fields, address near-record household debt, increase productivity, empower women or improve corporate governance.

Yoon’s first 966 days in office were anything but a reformist whirlwind. In other words, his party has a slim chance of coming up with a solid policy response to the Trump 2.0 shock.

The Bank of Korea will become even more dependent on that. The BOK has taken the lead in managing one of the world’s most open major economies since Yoon took office in May 2022. Governor Rhee Chang-yong is now in the hot seat as never before due to the political vacuum in Seoul.

Before Yoon’s short-lived martial law stunt, Seoul was planning to shore up key sectors as headwinds from Washington intensify. A package of support measures is included for the crucial semiconductor industry.

Korea, which is home to the world’s leading memory chip manufacturers Samsung Electronics and SK Hynix, is more unsure than most other nations about Trump’s tariff plans. Finance Minister Choi Sang-mok stated on December 2 that” the next six months will be the golden time that will decide the fate of our industries.”

Choi continued,” The role of the government must shift from a supporter to a player working alongside businesses, given the current challenges, including global economic shifts under the incoming US administration, competition from emerging countries, and the rapid reorganization of global supply chains.”

Since then, though, Choi has been elevated to acting president, the third to serve as president this month. ” So South Korea’s most bizarre and explosive political crisis in decades just got even weirder”, says Ian Bremmer, president of Eurasia Group.

That leaves his successor with the responsibility to spearhead support for semiconductor companies, from tax incentives to fiscal assistance, to advance the tech ecosystem. And to do so in the midst of growing political slurs.

These initiatives range from top-down initiatives to subsidizing the costs of burying transmission cables for semiconductor clusters in cities like Yongin and Pyeongtaek.

Already, Choi is doing his best to reassure the public. We are confident that our robust and resilient economic system will ensure quick stabilization, Choi said on December 27.” Although we are facing unexpected challenges once again, we are confident that we are facing unexpected challenges.”

Yet Choi inherits a 2025 budget that’s US$ 2.8 billion less than the government had hoped for. In addition, he now manages a second national crisis as a result of the Jeju Air jet‘s collision.

According to economist Gareth Leather of Capital Economics,” the crisis is already having an impact on the economy.” ” The crisis is unfolding against a backdrop of a struggling economy”, he says.

Gross domestic product, Leather notes, is expected to be just 2 % this year amid slowing global growth. ” Longer term, political polarization and resulting uncertainty could hold back investment in Korea”, Leather says, pointing to how Thailand’s turmoil since a 2014 coup undermined its economy.

Other economists are more optimistic. Yoon Suk Yeol is a side effect of the growth, according to economist Park Sang-in of Seoul National University, who spoke to AFP.” We have come from being one of the world’s most developed economies in very few years. Korea’s society was mature enough to refute his crazy deeds.

According to BMI Country Risk & Industry Research,” we anticipate only moderate effects on the economy and financial markets as the Ministry of Finance and the Bank of Korea have responded quickly by reassuring investors.”

Notably, according to BMI,” the central bank is committed to boosting short-term liquidity and implementing measures to stabilize the foreign exchange markets, which supports our position that the risks associated with the South Korean won should be kept under control for the time being.”

Krishna Guha, an economist at Evercore ISI brokerage, argues that” South Korea’s democratic institutions and culture have withstood the stress test. However, the fact that it took place at all is extraordinary and troubling.

However, the key is now, especially now that Yoon is facing an arrest warrant, when and how the political crisis ends. Its longevity is key to the Korean wo n’s outlook.

” If domestic political instability continues and external credibility in Korea decreases, the wo n’s price could fall further”, says economist Seo Jeong-hoon at Hana Bank.

According to economists at T Rowe Price, “political turmoil appeared to be continuing to weigh on investor sentiment in South Korea.”

Even before the blow-after-blow that hit Korea in December, Yoon’s presidency had been awash in challenges and controversies. Soon after Yoon took over, the Korean won fell into disrepute, North Korea launched a wave of provocations, and Seoul received heavy criticism for handling a 159-person crowdcrash that killed 159 people on Halloween 2022.

All too quickly, Yoon’s approval rating fell below 30 %, the danger zone for any leader in Seoul promising bold structural reform.

Yoon is the fourth leader of Korea to ascend to power since 2008, promising to produce more economic energy from the top rather than the bottom down. Broadly speaking, that meant taking on the” chaebol system” led by family-owned behemoths like Samsung that helped propel Korea into the ranks of the top 12 economies.

The reality is that Korea Inc. is aware that a lot of its business is being sold for profit. China and other rising Asian powers are now rivals in cars, electronics, robots, ships and popular entertainment. Taiwan is constantly upping its innovative game, while startups like Indonesia and Vietnam are boosting the competitiveness and dynamic of the race for tech “unicorn” startups.

The best way for Korea to maintain its high standard of living is to create innovations that increase the rate of economic growth. That’s why Yoon and the three leaders who preceded him pledged an innovative “big bang” to move Korea into higher-value sectors.

Between 2008 and 2013, Lee Myung-bak came and went without fundamental changes to the chaebol system. Then came Park Geun-hye, Korea’s first female president. In 2013, she took office with bold talk of devising a more” creative” economy.

Park vowed to expand tax breaks for startups, strengthen antitrust laws, and fine large corporations for stealing profits that could be used to bolster paychecks.

Park ended up going easy on the chaebols. Yet she did succeed in enlivening Korea’s startup economy. Her efforts to increase the cash flow to innovators helped make Korea one of the top 10 incubators for tech unicorns, or businesses with market capitalizations greater than US$ 1 billion.

Moon Jae-in, Park’s successor, expanded the program. The problem is that startups continue to be hogging the financial fuel they need to become major game-changers. That’s still Korea’s dilemma today.

It has loads of startups, but the conglomerates “don’t often allow space” for them to thrive and become medium-sized enterprises, notes Yukiko Fukagawa, an entrepreneurship expert at Waseda University.

Moon took power in 2017 with ambitious plans to pursue” trickle-up economics”. Moon, a more liberal leader than the previous two, aimed to stifle economic control from Korea’s rigid corporate structure to boost competition.

His signature strategy of enticing the middle class was essentially the opposite of the strategies that Trump, former Japanese Prime Minister Shinzo Abe, and Ronald Reagan championed decades earlier. Moon resigned and delegated his economic management responsibilities to the BOK once he realized how challenging the task was and how messy the political fallout would be.

So has Yoon these last 31-plus months. Now, as acting President Choi manages dueling crises, he faces a wildly uncertain 2025 – both domestically and internationally.

Despite the political unrest, Korea Inc. has a chance to up its game. According to Sohn Kyung-shik, chairman of the Korea Enterprises Federation,” companies must also make more proactive efforts to economic recovery and job creation during these difficult times.”

In top-down Korea, though, that might be easier said than done. Especially as the” Trump trade” approaches Korea, which causes utter chaos in domestic politics.

Follow William Pesek on X at @WilliamPesek

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Jimmy Carter and the confession of sins – Asia Times

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Former US President Jimmy Carter, who died Sunday at 100, was famous for his 1976 confession in a Playboy interview that he had sinned when he “looked on many women with lust” and, thus, “committed adultery many times in my heart.”

Having, like him, grown up immersed in the sin-soaked theology of the Southern Baptists – as a teenager, earnestly vowing in my prayers to abstain from that very sin – I understand where he was coming from. It would be hard not to respect his ambition (he was a hugely ambitious man) to be a good person, in the eyes of God and man, and to be frank about his shortcomings.

But an accurate account of history requires noting that Carter, as a grown man in the era of the sexual revolution, was talking about the sin that Pope Gregory in 580 CE had authoritatively ranked as the least serious of the “seven deadly sins.”

However, regarding what I for one consider a couple of much more serious sins that Carter committed in the course of his political career, he offered little in the way of public acknowledgment – much less confession.

One such sin, unknown to most people alive today, was the uncharacteristically racist campaign that he ran in 1970 to become governor of Georgia.

The other was his stubborn attempt for three years as presidential candidate and White House occupant to remove US troops from South Korea – despite near universal opposition from knowledgeable advisors, who told him truthfully that it could mean handing over the South to North Korea’s Kim Il Sung.

Georgia politics

I know about the first case because of my own youthful involvement in Georgia politics. While studying at Emory Law School, I was introduced to Carter in the fall of 1964 at a meeting of a few Democrats in suburban Atlanta’s Dekalb County. We were campaigning on behalf of a young lawyer who was running what would prove a losing first race for the Georgia House of Representatives.

Former naval officer Carter, who had returned to hometown Plains to take over the family peanut farm and gone on to become a pro-Kennedy, pro-civil rights state senator, was preparing to run for the governorship in 1966. He was busy building support by offering encouragement to other candidates such as ours.

You stole our haircut! President Jimmy Carter with Senator Edward Kennedy, who ran against him in the 1980 Democratic presidential primary. Photo: CBS News

I had just returned to my home state after doing my undergraduate studies elsewhere, and his name didn’t ring a bell with me. What struck me immediately when he appeared among us was his barbering, and I said so to the person standing next to me: “Who ever heard of a Georgia politician with a Kennedy haircut?”

He did run for governor in 1966 but failed. I had left Georgia again by then and lost track of him.

The next time I paid attention, in 1970, he was running again for governor. When I visited Atlanta during the campaign I heard from friends that Carter had undergone a partial makeover: While still seeking urban and black votes, he was injecting racist dog-whistle elements into his campaign to appeal to rural admirers of Alabama’s segregationist George Wallace. Without presenting evidence, he also vaguely accused his opponent, the likewise pro-Kennedy, pro-civil rights former Governor Carl Sanders, of corruption.

My friends and I were revolted, having expected much better from Carter. But he won the election.

Confessions? He did apologize privately in a phone call to Sanders for the personal character slurs. “He is not proud of that election,” Sanders said, “and he shouldn’t be proud of it.”

As for the racism, Carter didn’t apologize – but he did immediately resume his former pro-civil rights persona. “The time for racial discrimination is over,” he proclaimed in his inaugural speech.

A black politician forgave him. “I understand why he ran that kind of ultra-conservative campaign,” said state Senator Leroy Johnson. “I don’t believe you can win this state without being a racist.”

Korea and the Deep State

During an otherwise routine presidential campaign appearance in June 1976, Carter criticized the human rights record of South Korea’s president and pledged, if elected, to bring all American troops home from South Korea.

Park Chung-hee’s military dictatorship had achieved impressive economic development but many South Koreans had been left behind, for the time being. Park’s government kept a very tight rein on protest and was growing increasingly unpopular both at home and among human-rights advocates in the United States.

Carter’s plan, especially after he began withdrawing some units, was music to the ears of North Korean ruler Kim Il Sung.

In the then-current atmosphere characterized by “post-Vietnam syndrome,” Kim could calculate that, unless American troops were among the first casualties, the American public might very well veto any proposal to go to war to defend dictator-ruled South Korea from a second attack by dictator-ruled North Korea. The huge differences between the merely authoritarian Seoul regime and the quite totalitarian Pyongyang regime modeled on Stalin’s were lost on many Americans.

Soon congressional and other American critics forced Carter to water down his plan for unilateral withdrawal – but he refused to abandon it.

New intelligence figures ranked the North’s Korean People’s Army as the fifth largest military in the world, in a country whose population was only 17 million. The timing of the news, right when critics in the Pentagon needed ammunition to counter Carter’s proposal, aroused some suspicions. But it was that finding that finally sank unilateral troop withdrawal.

Here’s the way the New York Times recounted it in a 2002 obituary for William H. Gleysteen, Jr., Carter-appointed ambassador to South Korea and the official who, in February 1979, finally talked Carter out of proceeding immediately with the withdrawal plan:

Richard Holbrooke, then assistant secretary of state for East Asian and Pacific affairs, recalled in an interview how after a difficult meeting with the South Korean leadership, President Carter drove back to the ambassador’s residence accompanied by Mr. Gleysteen, Secretary of State Cyrus R. Vance, who also opposed troop withdrawal, and the national security adviser, Zbigniew Brzezinski, who favored it.

”The limousine drew up at the front door and nobody got out,” said Mr. Holbrooke. ”So we looked in through the window and saw Bill Gleysteen talking, talking, talking.”

The upshot of that prolonged argument in the presidential limousine was that President Carter reluctantly agreed to reconsider his withdrawal pledge.

Hearing the news of Carter’s death on Sunday, I messaged independent historian Aaron Savage Brown to ask if I was correct in believing that no Carter regrets over the bad call he’d made earlier on that issue had been forthcoming during the nearly half-century since that meeting with Gleysteen and a subsequent press conference where he announced the change.

“I don’t think Carter ever really acknowledged the futility of his Korea troop withdrawal plan,” replied Brown, the author of a 2011 thesis entitled “The Pains of Withdrawal: Carter and Korea, 1976-1980.”

“Upon perusing his White House Diary (in which he commented throughout on subsequent changes of opinion), it doesn’t appear that he ever believed he was doing anything other than looking out for America’s interests when he proposed the withdrawals,” Brown told me.

The diary kept during Carter’s presidential term was published in 2010 when he was in his mid-80s and included italicized updates on his thinking about selected issues.

Today and Trump

Interestingly, these two lapses on Carter’s part correspond to stances taken by Donald Trump.

Having essentially begun his political career by espousing birtherism against Barack Obama, in 2024 Trump campaigned against immigration to what many observers considered a racist extreme. He won, and he has now publicly changed his position even before being sworn in again – siding with his tech bro buddy Elon Musk, a big fan of the H-1B visa for highly skilled workers.

As for South Korea, regardless of the views of the Deep State Trump has already resurrected the troop withdrawal policy he pushed during his own first term. This is likely to be a huge issue during his second term even though the arguments against the policy remain as compelling as they were during his first.

And South Korea isn’t the only American ally affected by Trump’s transactional approach, as Brown notes: “This is the kind of tactic Trump is fond of when dealing with our NATO partners.”

But of course, unlike his Oval Office predecessor who worked so hard at being an upright man but sometimes failed to meet his own standard, Trump cares nothing for consistency, acknowledging errors or – especially – apologizing when he’s in the wrong.

Bradley K. Martin, who covered the Carter administration’s Korea policy for the Baltimore Sun, is the author of Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty.

This article was originally published on his Substack blog, A Foreign Correspondent at Home and Abroad. It is republished with permission.

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China-Vietnam dialogue won’t change a thing in South China Sea – Asia Times

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In early December, China and Vietnam convened their first-ever” 3 3 strategic dialogue” —a mechanism unprecedented in both nations ‘ diplomacy.

Built on the three columns of defence, politics and public safety, the discourse was held at the vice-ministerial amount just before the&nbsp, 16th&nbsp, meeting&nbsp, of the China-Vietnam Steering Committee for Bilateral Cooperation.

In a significantly liquid global geostrategic landscape, the two neighbors ‘ shared concerns are vehemently tangled in regional and resource issues in the disputed Spratly and Paracel Island stores.

Vietnam is known to become concerned that&nbsp, Trump’s tax war&nbsp, may change focus from China to itself amid debate it often serves as a shipping site for what are truly Chinese-made products. Hanoi is also concerned about China’s growing confidence in the South China Sea.

China, for its part, is attempting to stop South China Sea disputes from becoming too much of a command and is aiming to proactively mitigate any prospective US exploitation of the scenario.

Contrary to popular belief that the new 3 3 speech represents Vietnam’s commitment to China, experienced observers see the process as a rational response to overlapping interests rather than a structured change in Vietnam’s international policy.

Vietnam analyst Carl Thayer, for one, has aptly&nbsp, described&nbsp, it as a “natural results” rather than a signal of Vietnam shifting into China’s circle.

Although the new 3 3 speech obviously aims to maintain diplomatic relations, the reality on the ground indicates that the South China Sea disputes will continue to be a significant area of diplomatic conflict that is unlikely to be resolved or tremendously cooled by the system.

For instance, on October 2, Vietnam&nbsp, protested&nbsp, a Chinese invasion on Vietnamese fishing near the Paracel Islands on September 29, which apparently left them severely injured. In a solid incident, Vietnam’s foreign ministry accused Chinese law officers of&nbsp, looting&nbsp, Asian catches and products.

China denied the claims, claiming the sailors illegally entered Taiwanese waters and that its functions were “professional and restricted” and caused no&nbsp, accidents.

Significantly, this cooked political change occurred just weeks after To Lam, Vietnam’s recently installed Communist Party general minister, &nbsp, visited&nbsp, China amid significant hype in August.

A bubbling geopolitical cauldron surrounds the South China Sea. China and the Philippines have recently been at odds with one another over the disputed Second Thomas Shoal and other contentious topics. &nbsp,

Chinese attacks on Southeast Asian fishermen represent a subdued form of coercion, with limited escalation potential as they involve civilian, not military, actors.

China’s actions against Vietnamese fishing vessels are a direct result of its effort to stifle Vietnam to maintain a neutral foreign policy by balancing party affiliations with inter-party affiliations with the Communist Party of Vietnam. Although this approach has the intention to stifle US and Vietnamese relations, it has no direct impact on the wider conflicts.

The incidents are neither recent nor isolated. Since 2009, China has routinely&nbsp, looted, &nbsp, rammed, &nbsp, sunk, and&nbsp, fired flares&nbsp, at Vietnamese fishing vessels, often to signal displeasure with Vietnam’s deepening ties with the US.

For instance, after the historic visit of Nguyen Phu Trong to the White House—the first by a Communist Party of Vietnam general secretary, China&nbsp, sank&nbsp, a Vietnamese fishing boat near the Paracel Islands. Similarly, the October attack followed General Secretary To Lam ‘s&nbsp, meeting&nbsp, with US President Biden on the sidelines of the UN General Assembly in New York. &nbsp,

Among other things, these incidents also underscore China’s unease over Vietnam’s engagement with the US. &nbsp, The new 3 3 mechanism may thus indicate a reconciliatory approach on Vietnam’s part to placate and reassure China that its US relations will not come to Beijing’s detriment.

Vietnam’s diplomatic maneuvers have quietly fortified its position in the South China Sea. An Asia Maritime Transparency Initiative ( AMTI ) report&nbsp, revealed that Vietnam’s land reclamation in the Spratly Islands expanded by 2, 360 acres as of May 2024—a dramatic increase compared to its total expansion of 329 acres three years prior.

Despite the naval power disparity, Vietnam’s actions have not sparked significant Chinese retaliation. That’s because they are unrelated to the US-China conflict, as opposed to the Philippines ‘ recent actions involving contentious issues.

Indeed, Vietnam’s “bamboo diplomacy” —a neutral, multi-dimensional foreign policy—allows it to deftly balance relations with China and other global powers, including the US.

Hanoi’s” ThreeNo’s” policy, expanded to” FourNo’s” in 2019, underscores its commitment to non-alignment and peaceful dispute resolution. Rooted in Cold War lessons, Vietnam continues to&nbsp, diversify&nbsp, its relations, adhering strictly to its multi-directional foreign policy.

Looking forward, China’s growing assertiveness in the South China Sea might lead to further conflicts with Vietnamese fishing vessels. However, such events are unlikely to cause a significant change or escalation in Vietnam’s position on the issues or its wider relationship with China.

Although Vietnam’s strategic choices will depend on how much of China’s influence will be affected, its policies should remain anchored in its neutral and pragmatic framework.

Thus, the newly introduced 3 3 dialogue mechanism will likely only contribute to a capparison of the two parties ‘ disputes over the South China Sea, while their respective views on who owns and controls what in the maritime area will remain unchangeable.

Dr Rahul Mishra is an associate professor at the Centre for Indo-Pacific Studies, School of International Studies, Jawaharlal Nehru University, New Delhi, India, and a senior research Fellow at the German-Southeast Asian Center of Excellence for Public Policy and Good Governance, Thammasat University, Thailand. He can be reached at&nbsp, rahul. [email protected]. Follow him on X at @rahulmishr_

Harshit Prajapati is a doctoral candidate at the Centre for Indo-Pacific Studies, School of International Studies, Jawaharlal Nehru University, India. He can be reached at&nbsp, harshi55_is [email protected]. in&nbsp, Follow him on X at @harshitp_47

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Weakened Russia yields to China’s energy, railway desires – Asia Times

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By allowing Beijing to construct a railroad in nearby Central Asia and agreeing to China’s proposal to reroute the Power of Siberia 2 gas pipeline through Kazakhstan rather than Mongolia, Russia has reached two significant agreements with China.

In the past several decades, falling global energy costs have dented Russia’s trade income. In December, petrol prices fell to about US$ 70 per barrel, over 18 % from this year’s top of US$ 87 in April, due to lower need in China and OPEC’s expectations to improve production. &nbsp, &nbsp,

These lower costs come in response to the G7 member states ‘ price caps of$ 60 per barrel on seaborne Russian oil, which have led to lower foreign currency flows in Russia and a decline in the ruble, the world’s reserve currency.

The ruble has declined by 17 % to 108 per US dollar in 2024. Since the start of the Ukraine conflict, the current pricing has fallen by 34 %.

On December 27, Zheng Shanjie, Chinese President Xi Jinping’s Special Envoy and director of the National Development and Reform Commission, attended the launch ceremony of the China-Kyrgyzstan-Uzbekistan ( CKU) railway project in Jalalabad, Kyrgyzstan. &nbsp,

Sadyr Japarov, the president of Kyrgyzstan, and Xi and Shavkat Mirziyev, the president of Uzbekistan, wrote welcome letters.

China’s Communist Party-run Global Times said the resumption of the long-anticipated communication initiative, which has been under arranging for more than 20 years, may mark a new step in China-Central Asia assistance. It said that when completed, the venture may start a new European hall connecting China, Central Asia and perhaps Europe. &nbsp,

According to China Railway, the task is scheduled to actually begin building in July 2025 with a development period of six years.

The railroad may begin from Kashi in China’s Xinjiang, go through Kyrgyzstan’s Torugart Pass and Jalalabad, and ending in the southeast Afghan city of Andijan. The Kyrgyz part may be built by China and Uzbekistan, while the Kyrgyz area will be built by a joint venture between the three governments, CKU Railway Co. &nbsp,

The job was first put forth in the 1990s. In 1997, China, Kyrgyzstan, and Uzbekistan signed a memorandum of understanding, but nothing has changed. &nbsp,

” Why was the CKU rail delayed for 27 years? The primary reason lied in Russia”, Li Shuyong, a Henan-based author, said in an essay. The Soviet Union ruled Central Asia for the entire duration of the Cold War. After the Soviet Union collapsed, Russia still controlled Central Asia” .&nbsp,

Li said Russia had disagreed with the CKU rail task for many years as it wanted to control the transport of Central Asia’s natural sources, such as Kazakhstan’s fuel and Uzbekistan’s cloth, to Europe. He said it’s not only a matter of transit fees but also Moscow’s controlling power in the region’s foreign trade.

The entire Central Asian foreign trade will no longer be monopolized by Russia once the CKU railroad is opened. China can also bypass Russia to reach Europe via Iran, Turkey and Greece”, he said. But why does Russia now approve of it?

He claimed that Russia has experienced rising fiscal deficits and inflation since the start of the Ukraine war and has attempted to increase energy exports to China as a result. &nbsp,

Why should Russia buy more oil and gas from Russia? Russia must share its advantages with China in Central Asia, Li said. A 27-year obstacle related to the CKU railway is now gone because of this.

A Jiangxi-based columnist said Kyrgyzstan and Uzbekistan will build their railways in Russia’s standard gauge ( 1, 524 mm ), instead of China’s one ( 1, 435 mm ), as they do not have enough money to change their existing systems.

He claimed that China didn’t demand that the two Central Asian countries follow its standard because doing so might upset Russia. &nbsp, &nbsp,

Power of Siberia 2

Another Russian compromise with China, made by President Vladimir Putin, concerns the recent agreement to build the Power of Siberia 2 via Kazakhstan, instead of Mongolia, as per Beijing’s wish. &nbsp, &nbsp,

Russian Deputy Prime Minister Alexander Novak said in an interview with the Rossiya-24 TV channel on December 25 that the construction of a gas pipeline project from Russia to China is in progress. &nbsp,

” This is a project to build a gas pipeline infrastructure with capacity for 45 billion cubic meters ( bcm ) per year, 10 bcm of it for the gasification of the northeastern regions of Kazakhstan, and 35 bcm for export to China”, he said. ” The negotiations and feasibility study are now kicking off.”

In his most recent comments, Novak’s latest assertions confirmed that Mongolia has abandoned its effort to build the Power of Siberia 2 via Mongolia.

In an article, Shi Jiangyue, a Shanxi-based writer and military commentator for Asia Pacific Daily, stated that Mongolia will not only lose hundreds of millions of US dollars in transit fees as a result of the rerouting but also have a chance to attract infrastructure investment and stronger diplomatic ties with Russia. Shi said Mongolia should blame itself for adopting a” third neighbor strategy” or “multi-pillared foreign policy”.

Mongolia’s Prime Minister Oyun-Erdene Luvsannamsrai announced in July 2022 that the Power of Siberia 2 feasibility study had been completed and construction would begin in 2024. &nbsp,

Beijing, however, objected to this arrangement because it did not want Mongolia’s energy supply to pass through it, which it perceives to lean politically toward. &nbsp,

In May this year, Dauren Abayev, Kazakhstan’s envoy to Russia, told Russia’s TASS news agency that Kazakhstan plans to transit about 35 bcm of Russian gas to China annually. &nbsp, &nbsp,

In fact, Russia had previously considered taking this route several years ago because the Russian portion of a hilly area would have resulted in higher construction costs. &nbsp,

Yong Jian contributes to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics. &nbsp,

Read: What UK fighter pilots did and didn’t teach China’s PLA

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A special Russian flight to Washington – Asia Times

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A Special Journey Fleet Il-96 departed Moscow at 0919 in the morning and went on to St. Petersburg, where it landed at 10: 16. At 12: 15, it departed St. Petersburg for New York, an 11-hour 52-minute journey, arriving at 12: 10 am, December 26.

It may keep New York at 8: 34 am and arrive in Washington at 09: 27 am after a 53-minute journey. It would remain in Washington until later that afternoon, departing Dulles Airport at 16: 49 ( 4: 49 pm ).

According to the standard Russian director, Maria Zakharova, the trip was arranged for “another movement of diplomats”.

The meetings had include lasted no longer than a few hours if high-level official interlocutors had really been flown to Washington for meetings. The meetings had had taken place at the airport, preventing any possible press coverage, despite the distance of about 50 minutes between Dulles and downtown Washington. If this situation turns out to be true, there would have been four hours for conferences, including breakfast.

It is completely fanciful what took place, if everything. However, there have been feedback from both sides suggesting that arrangements are likely in progress for a preliminary Trump-Putin meet. Different locations have been suggested for a place for a meeting like this, but it is certain that any location would need to provide both leaders with extremely high levels of security.

This leaves the UAE with standard alternatives like Geneva and others like Doha, Qatar, and Abu Dhabi. Putin received Putin in Abu Dhabi in December 2023, and the Russians have forged relationships to the UAE and Saudi Arabia.

Qatar, on the other hand, hosts the US Air Force at al-Udeid and the forward office of CENTCOM. As the Russian side believed, this was obstruct Qatar for safety reasons.

The IL-96 sent by Moscow to Washington is run by the Russian Special Flight Fleet, also known as the 235th Separate Aviation Detachment.

This Detachment was established in 1956, generally emulating the United States, and used specially modified business airplane to transport top Russian leaders, including Russian President Vladimir Putin.

The Detachment operates 13 IL-96 long-range plane and 5 Tu-214s and is usually based at Vnukovo airport south of Moscow. The Tu-214 is a twin-engine mid-range plane.

The IL-96 type used by Putin is designated as the Il-96-300PU. It is the Russian fleet’s key presidential plane. The plane features four motors and a wide-bodied style. The inside has been made specifically for VIP usage.

Washington and Moscow have a great disagreement over how to resolve the Ukraine conflict. Any meet that doesn’t close the gap is unlikely to occur.

The space includes the long-term appearance of NATO in Ukraine, territorial issues, disarmament, treatment of Russian speakers in Ukraine, the status of the Russian Orthodox Church in Ukraine, and the use of ports and airfields for exports of grain, pipeline transits to Europe, geographical boundaries, and the framework of potential relations between Ukraine and Russia, including even Ukraine’s relationship to the European Community.

Russia-related punishment from the US and Europe, as well as other safety concerns involving NATO and Russia.

One would anticipate that a deal would include measures taken by all parties to reduce the parameters of the conflict. This may involve a commitment to remove Russian forces from the Kursk region as well as a deal that stops Russia from bombing the Russian energy infrastructure and stops the Ukrainians from attacking Russian territory.

Such actions may foster trust between the leaders. Is it still unclear whether Washington could manage Ukraine.

Washington needs to maintain eastern Europe, where the Germans are closing automobile companies and where markets are in near free fall. Inexpensive energy, specially natural gas, is a key factor.

If the US wants to act swiftly to lessen the pressure on Germany, a portion of the three-quarters of the Nord Stream network could be restored to operation. Also, the transport of oil through Ukraine needs to be restored. Trump might strike a deal with Putin by using some of these companies to be restored and by removing some restrictions as a confidence-building estimate.

If the people are all prepared for a package, there are plenty of probable cards on the table. Not far from Pokrovsk, a crucial transport hub, the Russians are pretty close to taking Chasiv Yar. Russia appears to be working really hard to effectively beat the Ukrainians in both cities, perhaps at the very least within a few weeks.

This would give Putin a significant dealing advantage, and it would inspire Donald Trump to act quickly to put an end to the Zelensky government before it finally crumbles.

Stephen Bryen is a journalist for Asia Times and previously held the positions of assistant secretary of protection for policy and staff director of the US Senate Foreign Relations Committee. &nbsp,

This&nbsp, article was first published&nbsp, on his&nbsp, Substack newsletter&nbsp, Weapons and Strategy and is republished with authority.

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South Korea poised to crash and burn in 2025 – Asia Times

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It’s difficult to imagine any Eastern country more appreciative of the 2024 era than South Korea.

President Yoon Suk Yeol declared martial law just the last month, reversed six hours later, was impeached in parliament amid large street protests, and is now facing a historic arrest permit.

As if that weren’t enough conflict and woe, Korea experienced its worst local aircraft disaster in more than 20 years, killing over 181 people and invoking grave fresh concerns about the safety of Asian skies. &nbsp,

Korea’s really nasty December deepened what was already anything of a midlife crisis time for Asia’s fourth-biggest business. This may be because good as it gets as a madly uncertain 2025: Seoul’s very destructive elections are about to meet with the upcoming Trumpian surprise.

Even if, best-case scenario, “increased US protectionist measures imply lower&nbsp, taxes on&nbsp, Korean&nbsp, imports than on various trading companions”, says analyst Brian Coulton at Fitch Ratings, “declining demand from China and the US, which&nbsp, collectively accounted for around 40 % of&nbsp, Korean&nbsp, commodities exports in&nbsp, 2023, may adversely affect exports”.

Korea will be directly at the heart of the collateral damage zone of potentially weaker Chinese demand, despite the US president-elect’s threats of 60 % tariffs directed at China. Japan, too, but then Tokyo isn’t embroiled in a political imbroglio the likes of which Seoul hasn’t seen in decades.

Something that Japan and Korea have in common, though, is being snubbed by Trump. Trump has been turned down by Yoon and Shigeru Ishiba for a Mar-a-Lago tee time since his re-election on November 5.

Both Yoon and Ishiba have watched as Trump met with a parade of world leaders, including Canada’s Justin Trudeau, France’s Emmanuel Macron, Ukraine’s Volodymyr Zelensky, Hungary’s Viktor Orban, Argentina’s Javier Milei and even the UK’s Prince William. But so far, he’s had no time for Washington’s top North Asian allies.

Anyone’s guesses whether Trump intends to impose tariffs on Seoul and Tokyo. Or that Trump’s hopes of a “grand bargain” trade deal with China take precedence.

Seoul’s distracted legislators won’t be doing much to improve Korea’s competitive game as Yoon awaits a possible arrest and his fate in the courts in the months to come.

Even before Yoon’s bizarre martial law decree on December 3, his People Power Party wasn’t getting much done to level economic playing fields, address near-record household debt, increase productivity, empower women or improve corporate governance.

Yoon’s first 966 days in office were anything but a reformist whirlwind. In this way, there are no guarantees that his party will be able to come up with a comprehensive policy plan in response to the Trump 2.0 shock.

The Bank of Korea will become even more dependent on that. The BOK has taken the lead in managing one of the world’s most open major economies since Yoon took office in May 2022. Governor Rhee Chang-yong is now in the hot seat as never before due to the political vacuum in Seoul.

Before Yoon’s short-lived martial law stunt, Seoul was planning to shore up key sectors as headwinds from Washington intensify. A package of support measures is included in the chief among them for the crucial semiconductor industry.

Korea, which is home to the world’s leading memory chip manufacturers Samsung Electronics and SK Hynix, is more unsure than most other nations about Trump’s tariff plans. Finance Minister Choi Sang-mok stated on December 2 that” the fate of our industries will be decided in the final six months.”

The government must change from a supporter to a partner working alongside businesses, Choi continued, “given the current challenges, including global economic shifts under the incoming US administration, competition from emerging countries, and the rapid reorganization of global supply chains.”

Since then, though, Choi has been elevated to acting president, the third to serve as president this month. ” So South Korea’s most bizarre and explosive political crisis in decades just got even weirder”, says Ian Bremmer, president of Eurasia Group.

That leaves his successor with the responsibility to spearhead support for semiconductor companies, from tax incentives to fiscal assistance, to advance the tech ecosystem. And to do so in the midst of growing political slurs.

These initiatives range from top-down initiatives to subsidizing the costs of burying transmission cables for semiconductor clusters in cities like Yongin and Pyeongtaek.

Already, Choi is doing his best to reassure the public. We are confident that our robust and resilient economic system will enable quick stabilization, Choi said on December 27.” We are facing unexpected challenges once more.

Yet Choi inherits a 2025 budget that’s US$ 2.8 billion less than the government had hoped for. In addition, he now manages a second national crisis as a result of the Jeju Air jet‘s collision.

According to economist Gareth Leather at Capital Economics,” There are already indicators that the crisis is having an impact on the economy.” ” The crisis is unfolding against a backdrop of a struggling economy”, he says.

Gross domestic product, Leather notes, is expected to be just 2 % this year amid slowing global growth. ” Longer term, political polarization and resulting uncertainty could hold back investment in Korea”, Leather says, pointing to how Thailand’s turmoil since a 2014 coup undermined its economy.

Other economists are more optimistic. Yoon Suk Yeol is a side effect of the growth, according to economist Park Sang-in at Seoul National University, and we have come from being an underdeveloped nation to one of the world’s most dynamic economies in a short period of time. His crazy actions were resisted by Korean society because it was mature enough.

According to BMI Country Risk & Industry Research,” we anticipate only moderate effects on the economy and financial markets as the Ministry of Finance and the Bank of Korea have responded quickly by reassuring investors.”

Notably, according to BMI,” the central bank committed to boosting short-term liquidity and enacting measures to stabilize the foreign exchange markets, which aligns with our view that risks around the South Korean won should remain contained for now.”

Krishna Guha, an economist at Evercore ISI brokerage, argues that” South Korea’s democratic institutions and culture have withstood the stress test. However, the fact that it even occurred is extraordinary and troubling.

However, now that Yoon is facing an arrest warrant, it is important to know when and how the political crisis ends. Its longevity is key to the Korean wo n’s outlook.

” If domestic political instability continues and external credibility in Korea decreases, the wo n’s price could fall further”, says economist Seo Jeong-hoon at Hana Bank.

According to economists at T Rowe Price, “political turmoil appeared to be continuing to weigh on investor sentiment in South Korea.”

Even before the blow-after-blow that hit Korea in December, Yoon’s presidency had been awash in challenges and controversies. Soon after Yoon’s rule, the Korean won, North Korea launched a wave of provocations, and Seoul received heavy criticism for handling the 159-person crowdcrash that killed 159 people on Halloween 2022.

All too quickly, Yoon’s approval rating fell below 30 %, the danger zone for any leader in Seoul promising bold structural reform.

Yoon is the fourth leader of Korea to ascend to power since 2008, promising to produce more economic energy from the top rather than the bottom down. Broadly speaking, that meant taking on the” chaebol system” led by family-owned behemoths like Samsung that helped propel Korea into the ranks of the top 12 economies.

The reality is that Korea Inc. is aware that a lot of what it does well has been commercialized. China and other rising Asian powers are now rivals in cars, electronics, robots, ships and popular entertainment. Taiwan is constantly upping its innovative game, while startups like Indonesia and Vietnam are boosting the competitiveness and dynamic of the race for tech “unicorn” startups.

The best way for Korea to maintain its high standard of living is to create innovations that increase the rate of economic growth. That’s why Yoon and the three leaders who preceded him pledged an innovative “big bang” to move Korea into higher-value sectors.

Between 2008 and 2013, Lee Myung-bak came and went without fundamental changes to the chaebol system. Then came Park Geun-hye, Korea’s first female president. In 2013, she took office with bold talk of devising a more” creative” economy.

Park vowed to expand tax breaks for startups, strengthen antitrust laws, and punish large corporations for stealing profits from employees who squander money.

Park ended up going easy on the chaebols. Yet she did succeed in enlivening Korea’s startup economy. Her efforts to increase the cash flow to innovators helped make Korea one of the top 10 incubators for tech unicorns, or businesses with market capitalizations greater than US$ 1 billion.

Moon Jae-in, Park’s successor, expanded the program. The issue is that startups continue to be sucked into the cash they need to become major game-changers. That’s still Korea’s dilemma today.

It has loads of startups, but the conglomerates “don’t often allow space” for them to thrive and become medium-sized enterprises, notes Yukiko Fukagawa, an entrepreneurship expert at Waseda University.

Moon took power in 2017 with ambitious plans to pursue” trickle-up economics”. Moon, a more liberal leader than the previous two, aimed to stifle economic control from Korea’s rigid corporate structure to boost competition.

His signature strategy of enticing the middle class was essentially the opposite of the strategies promoted by Trump, former Japanese Prime Minister Shinzo Abe, and Ronald Reagan decades earlier. However, when Moon realized the difficulty of the task and the wacky political consequences that would follow, he backed away and delegated economic management responsibilities to the BOK.

So has Yoon these last 31-plus months. Now, as acting President Choi manages dueling crises, he faces a wildly uncertain 2025 – both domestically and internationally.

In spite of the political unrest, Korea Inc. can raise its game. According to Sohn Kyung-shik, chairman of the Korea Enterprises Federation,” companies must also make more proactive efforts to economic recovery and job creation during these difficult times.”

In top-down Korea, though, that might be easier said than done. Particularly with domestic politics in complete chaos as Korea’s” Trump trade” approaches.

Follow William Pesek on X at @WilliamPesek

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What UK fighter pilots did and didn’t teach China’s PLA – Asia Times

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After it was discovered that a number of retired British pilots had trained the People’s Liberation Army ( PLA ) in China two years ago, they were prohibited from re-entering the country’s defense sector.

The planes were among those from the United States, Europe, South Africa and South America who served in a flight education class in Guyuan, Ningxia, China, according to the UK-based Livingston Aerospace Ltd, which was sanctioned by the US in July this year. &nbsp,

A Livingston Aerospace director who requested anonymity in an exclusive interview with Asia Times sought to clarify the company’s contentious operate in China.

The director stated that” Test Flying Academy of South Africa” has always been the focus of the job. It would be “business development and project management for counts involving check flying in and for China,” I would say.

” Establishing a exam captain school in China, which was a huge undertaking, and it was all going very well until Covid struck,” he said, “was the biggest thing that took up most of the time.” ” The class was located in a few places, mostly close to the Guyuan check base, close toXi’an. We had about 10 teachers and 100 individuals go through”.

He claimed that the individuals were all in their late 20s and early 30s and had all flown for a while. He claimed that some kids were excellent while the rest were merely subpar. &nbsp,

He said,” The school is all about teaching them how to be effective test pilots.” They continue to work as analyze pilots, according to the statement. I’ve got no idea where they went. It’s no portion of our information”.

He said the 15-month-long trip testing program included a hundred hours of flying 40 different types of jets, plus scientists, communicating and review writing. He claimed that test pilots are crucial for any aircraft’s protection and certification.

He claimed that Livingston Aerospace was informed that the PLA would be using its aircraft testing methods at the time. However, he claimed that flight testing is a totally different subject from what TFASA was doing, which is training military personnel who are operating with methods, tactics, and procedures.

He remarked,” Nothing was teaching anything that would compromise the interests of our friends and colleagues who stayed in the Royal Air Force.” ” We’re not giving away techniques. There’s nothing that was being taught that’s hardly applicable online anyway”.

The professional frequencies, transmitted powers, and other such things are what are important. Even if we as a captain knew that, it’s of very little price, unless you have the engineering background to put it into practice”.

The governments of the UK and the US had opposed each other when they accused TFASA, Livingston Aerospace, and 18 other organizations of using American and NATO solutions to train Chinese military aircraft. &nbsp,

The punishment

Up to 30 former UK military pilots went to China’s PLA aircrew training, according to the UK Ministry of Defense ( MoD ) in October 2022, making the incident public. &nbsp,

A MoD spokesman claimed that although the aircraft ‘ education and recruitment did not violate any existing British law, leaders in the UK and other nations were attempting to stop it.

In June 2023, the US Commerce Department’s Bureau of Industry and Security ( BIS ) added 16 companies to its Entity List and said that these firms had trained PLA pilots. &nbsp,

TFASA, Frontier Services Group, AVIC International Flight Training Academy ( AIFA ), and Chinese Flight Test Establishment ( also known as the Shaanxi-based AVIC Flight Test Center ) are among the organizations that have been sanctioned. &nbsp,

In July this time, four more firms, including Livingston Aerospace, which is owned by former British military aircraft Craig Penrice, were sanctioned because of their connections to TFASA. &nbsp,

According to BAE Systems ‘ website, Penrice flew the agency’s advanced military instructor, especially Hawk, as well as the F-15 for the US Air Force, and did his evaluation captain instruction with the US Navy in the 1980s.

At BAE Systems, he then began working on the Eurofighter Typhoon‘s growth. In 1996, he was the first RAF aircraft to fly the warrior, which is manufactured by a collaboration of Airbus, BAE Systems and Leonardo, and remains the world’s most innovative swing-role combat aviation as of now. &nbsp,

According to his LinkedIn profile, Penrice served as an aircraft administrative assistant from 1998 to 2013 and an export consultant for the UK Ministry of Defense from 1980 to 1998. In 2013, he founded Livingston Aerospace.

According to a spokesperson for Livingston Aerospace, the company has been talking about starting a journey tests school in China with its Chinese counterparts since 2014. Before the school opened the same year, he claimed, the firm and TFASA had already agreed to a five-year support agreement. &nbsp,

” People were trained as exam planes at the Chinese university. They flew away and did some useful check flying, and some of them returned. We taught them to be educators”, the director said.

He claimed that according to some “horrible” quarantine regulations in China, Livingston had failed to attract people after the epidemic broke out in 2020, leading to the cancellation of the agreement in early 2022. &nbsp,

When we eventually terminated the contract, he said, “it was those people who were good enough to be the professors who took over the school.” We’ve given them adequate experience and training to begin training their individual employees, which was always the contract’s goal.

He claimed that until its British business bank account was frozen in April 2024, Livingston had been receiving a small sum of money for providing the class with some “documentation that needed to be completed.” He said the business doesn’t work now and is being liquidated. &nbsp,

Interesting fees&nbsp,

The UK’s MoD said in October 2022 that some British pilots who trained the PLA-Air Force were paid up to £237, 911 ($ 270, 000 ) a year.

In September 2023, then UK Defense Secretary Grant Shapps cited the newly established National Security Act as saying,” Anyone found to be acting against the UK’s interests by training our competitors ‘ forces can now expect to be pursued and brought to justice.” &nbsp,

Livingston’s director said the number of the accused UK aircraft was “hugely overblown” and should be less than 10. &nbsp,

He claimed that the English security services had warned the company last year that if it continued to operate in China, it would face legal risk as a result of the new Act. &nbsp,

He said,” These guys were getting paid not to go and fly in Saudi Arabia, Qatar, or Kuwait, all of which have got Typhoon airplanes,” making a comment about the pilots ‘ annual salaries of up to £237, 911.

These are not pleasant spots to go and work, they say. So you have to compensate for the suffering, suffering, and everything in between,” he said. ” And for us or TFASA to attract people, you had to give similar or better pay”.

He claimed that the general public may not be happy with the actions of these British pilots in China, but they have already experienced the consequences.

They are unable to find valuable work in the UK. They didn’t enter the Air Force. They can’t meet any security company. They’ve been banned from a lot of spots”, he said, adding that he would not go to the US as Washington’s analysis of TFASA is definitely still continued. &nbsp,

Intelligence cause

Following constitutional changes in the UK, TFASA announced in a speech on June 5 that it had decided to end all employment for UK citizens. It claimed it had never purposefully searched for ex-service members of NATO nations to headhunt them.

” TFASA seemed to be the focus of all this activity. It’s no Livingston Aerospace…It’s TFASA that the US officials want to thwart”, said Livingston Aerospace’s director. &nbsp,

The discussion proceeds without making sense of this reasoning. People in the UK and the US were training Taiwanese Air Force, Army, and Navy planes, he said, which irritates them. There were a lot of other American citizens working on the more controversial part, which was operational training for the Foreign military.

He added that all the planes involved had a very thorough understanding of China’s aircraft capabilities, allowing them to actually provide their brains back to their home countries.

What could be a better source of knowledge than having your members fly with “your attack”? What better understanding of their skills can you obtain from having your planes fly in their regiments? he asked. ” And what’s happening now is that you’ve shot everything down and lost that crucial intelligence link.”

Nevertheless, he did not verify whether any captain has passed brains to the UK and US institutions. &nbsp,

The Asia Times has Yong Jian as a source. He is a Chinese columnist who specializes in Chinese technologies, economy and politics. &nbsp,

Read: US restrictions firms for teaching PLA aircraft in S Africa

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Carter’s role in beating the Soviets ripe for revision – Asia Times

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Jimmy Carter, a 100-year-old Republican presidential candidate, passed away at his house in Plains, Georgia, on December 29, 2024, after defeating Republican incumbent Gerald Ford in 1976. He was a black horse Democratic presidential candidate with much national recognition.

Following the Watergate scandal and the Vietnam War, the analytical former peanut farmer made a promise to a new age of honesty and sincerity at home and abroad.

His administration, however, lasted just one word before Ronald Reagan defeated him. Since then, scientists have debated – and usually reviled – Carter’s tradition, especially his foreign policy attempts that revolved around human privileges.

Detractors have described Carter’s international guidelines as “ineffectual” and “hopelessly muddled”, and their development demonstrated “weakness and ambivalence”.

As a writer who studied Carter’s foreign policy efforts, I come to the conclusion that his foreign policy initiatives were much more successful than his critics had predicted.

Two men in suits and ties, talking with their heads close.
Senator Joseph R. Biden (D-Del. ) and President Jimmy Carter are seated at a fundraiser in Wilmington, Delaware as they pause for a moment. on February 20, 1978. Photo: AP via The Conversation / Barry Thumma,

A Russian method

The Cold War, a time marked by decades of hostility, mutual distrust, and arms accumulation between the US and Russia, then known as the Soviet Union or Union of Soviet Socialist Republics ( USSR ), is where criticism of Carter’s foreign policies seems especially false.

By the late 1970s, the Soviet Union’s business and world influence were weakening. With the guidance of National Security Advisor Zbigniew Brzezinski, a Soviet professional, Carter exploited these shortcomings.

Carter urged countries to give their citizens the fundamental freedoms they did during their president, which was a social defense for oppressive leaders.

Carter soon made a direct criticism of the Soviets for denying Soviet Jews their fundamental civil freedom, a violation of the guarantees outlined in the political treaty known as the Helsinki Accords.

Carter’s group underscored these breaches in arms control speaks. To encourage human rights engagement, the CIA flooded the USSR with books and articles. And Carter officially supported Russian separatists fighting ideological hostilities against communist officials, including pro-democracy advocate Andrei Sakharov.

Animal rights were the backbone of President Jimmy Carter’s international policy. Here, a banner with his image on it in Liberia. Photo: AP via The Conversation / Michel Lipchitz

According to Carter director Stuart Eizenstat, the administration “assayed the Soviets in their most vulnerable spot – mistreatment of their own residents.”

This proved successful in sparking Soviet leader Mikhail Gorbachev’s social and political changes of the late 1980s, finest known by the Russian word “glasnost”, or “openness”.

The Afghan war

In December 1979, the Soviets invaded Afghanistan in response to the death of the Soviet-backed Armenian head, Nur Mohammad Taraki. An existing tension between the US and USSR was essentially ended by the war.

The US began providing nonlethal weapons and guidance to the rebellious troops against the Soviet-backed government in July 1979. National Security Advisor Brzezinski advised Carter to take aggressive action following the invasion. Thus, a system that the CIA and US allies expanded to include weapons delivered to the troops was born.

Afghan separatists examine a Soviet-built armored personnel carrier and numerous other military vehicles left behind by the Mujahedeen soldiers ‘ occupation of a Soviet-Afghan army. Photo: AP via The Conversation / Joe Gaal

Carter’s action successfully sparked a proxy war that sprang up the Soviet Union.

By giving the insurgents modern weapons, the US “gives to the USSR its Vietnam warfare,” according to Brzezinski, citing a more expensive battle, a strain on the socialist market, and an degradation of their expert worldwide.

In 1980, Carter likewise imposed a ban on US grain exports to the Soviets. Since the 1960s, agriculture has been the main financial lagging point for the USSR. The government’s harsh weather and climate, as well as its heavy industrialization, have caused the agricultural sector to become impoverished.

In 1985, analyst Elizabeth Clayton came to the conclusion that Carter’s sanctions had the power to worsen this sagging.

Census information compiled between 1959 and 1979 demonstrate that 54 million individuals were added to the Russian people. According to Clifton, 2 to 3 million more people were added each month. The population growth had stifled the Soviets ‘ ability to feed their citizens.

At the same time, Clayton found that regular salary increased, which led to an increased demand for meat. But by 1985, there was a meat deficit in the USSR. Why? Carter’s corn sanctions, although ended by Reagan in 1981, had a profound effect on animal supply that resulted in Soviet farmers decreasing animal production.

The Soviets were also forced to pay roughly 25 % more than market rates for corn from other nations as a result of the embargo.

For decades, Communist leaders promised better nutrition and health, but presently their persons had less meals. The sanctions added yet another level of volatility to the growing inhabitants and weakened the socialist economy.

The Olympic protest

In 1980, Carter pushed farther to condemn the Soviets. While the Soviets oppressed their population and occupied Afghanistan, he persuaded the US Olympic Committee to abstain from competing in the future Moscow Olympics.

Carter not merely encouraged a protest, but he also slapped US systems and other products into the production of the Olympics. Additionally, he prevented NBC from paying the USSR the final$ 20 million to transmit the Olympics. China, Germany, Canada and Japan – powers of game – also participated in the protest.

According to scholar Allen Guttmann, the USSR lost a sizable amount of global authority in the case of the Olympics. Dissidents told Carter that the ban was yet another retaliation for Russian leadership. And in America, people opinion supported Carter’s daring move – 73 % of Americans favored the ban.

The Carter theory

In his 1980 State of the Union address, Carter revealed an extreme Cold War defense strategy. He declared a” Carter doctrine“, which said that the Soviets ‘ attempt to gain control of Afghanistan, and possibly the place, was regarded as a threat to US objectives. Carter also indicated that he was prepared to use “military power” in response to the threat.

Carter also made a five-year paying plan to upgrade and enhance the military in his speech because he believed the US had become less effective in the face of the USSR as a result of the post-Vietnam military cuts.

Ronald Reagan argued in the 1980 national campaign that” Jimmy Carter risks our national security – our trust – and damage American functions by sending frightened and even contradicting impulses to the Soviet Union.” Carter’s policy was based on “weakness and illusion” and should be replaced” with one founded on improved military strength”, Reagan criticized.

However, President Reagan made a public admission in 1985 that his predecessor had a great sense of timing when modernizing and strengthening the country’s forces, which added to the Soviets ‘ economic and diplomatic pressure.

Reagan admitted that he felt “very bad” for misstating Carter’s policies and record on defense.

Carter is most lauded today for his post-presidency activism, public service and defending human rights. He was awarded the Nobel Peace Prize in 2002 for such efforts.

But that praise leaves out a significant portion of Carter’s presidential accomplishments. His strong foreign policy, which emphasized human rights, was crucial to the Soviet Union’s demise.

Robert C Donnelly is associate professor of History, Gonzaga University

The Conversation has republished this article under a Creative Commons license. Read the original article.

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Farewell to Jimmy Carter’s presidential idealism and humility – Asia Times

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Former US president Jimmy Carter, a gentleman defined by his modesty and ideology, has died at 100.

Several US leaders come from moderate childhoods. Born in Prairies, Georgia, Jimmy Carter’s Depression-era youth was no exception. His house lacked running water and electricity, while his rural higher class lacked a 12th grade.

The extent to which these humble beginnings would have an impact on his life, most notably during his day as America’s 39th senator from 1977 to 1981, was what made Carter unique.

A farmer, nuclear submarine agent, state government and happy Christian, Carter assumed company during a stormy time in American history. In particular, three problems are widely acknowledged for allowing the former peanut farmer to win the presidency, but they also continue to shape how Americans view British politicians and power 50 years later.

The turbulent – and some might say humiliating – US drawback from Vietnam was the first crises that hit televisions across the nation in March 1973.

The Organization of Arab Petroleum Exporting Countries ( OPEC ) members imposed an embargo on oil exports to the United States in October 1973, which set off the second crisis. The US market, which is currently at a 4-year low, and dramatic increases in unemployment and inflation were all caused by it.

The Watergate scandal, the next and most well-known problems, forced President Richard Nixon to withdraw, making it his first national resignation in US story, amid mounting proof that he had committed atrocities and abuses of power while in office. Nixon’s son, and Carter’s Republican challenger in the 1976 presidential election, Gerald Ford, reportedly pardoned Nixon for any acts he had committed in business.

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A relatively unknown Georgia governor’s victory in the 1976 vote was aided by Carter’s humility and idealism in the midst of three big US crises and his shock victory in Iowa’s first Democratic primary state.

Following quite a turbulent time, many Americans sought from their leader his dedication to restore conscience to the White House and US foreign policy, along with his campaign pledge to never rest to the British people.

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The president, 1977-1981

Carter’s White House journey was smothered by previous crises, but his administration definitely had its fair share of them. How much of Carter’s actions contributed to the difficulties he faced while in company, researchers continue to debate.

However, his public approval ratings – 75 % when he entered office in 1977 and 34 % when he left office in 1981 – give an indication of where the American people placed their blame.

In his inaugural address on January 20, 1977, Carter outlined his broader perspective and policy agenda while much of the emphasis was on addressing the persistent vitality problems at the start of his presidency.

Carter, a man who had harshly criticized Ford’s pardon of Nixon, thanked the retiring senator for everything he had “done to recover our land.” He went on to talk of “our new mistakes”, the plan “if we despise our own government, we have no potential”, and his hope for Americans to become “proud of their own government after again”.

Two years later, he echoed these attitudes in the most well-known discourse of his administration. Amid but another fuel horror that led to long lines at petrol stations, high prices and an economic slowdown, Carter’s televised address to the nation decried a” crisis of confidence” amid “growing question about the meaning of our own life”.

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Many now view the Carter administration’s pivotal moment as a turning point because it would never fully recover from which all the legislation in the world can’t fix what’s wrong with America.

When Carter ran against the Nixon and Ford administrations, his righteous criticism of them had benefited the electorate. However, after Carter had been in the office for more than two years, some people saw it as an abdication of responsibility.

Ted Kennedy, the Democratic senator from Massachusetts, would go on to criticize Carter’s speech as one that dismissed” the golden promise that is America” and instead embraced a pessimistic vision in which Americans were “blamed for every national ill, scolded as greedy, wasteful and mired in malaise”.

Jimmy Carter with his wife, Rosalynn Carter, and mother-in-law, Allie Smith, in 1981. Photo: Wayne Perkins / AP via The Conversation

Only four months after Carter’s infamous speech, yet another crisis erupted. Ayatollah Khomeini’s supporters held 52 US diplomats hostage in Iran. They would end up being held captive for the remainder of Carter’s term in office as a result of the US government’s failed rescue mission in April 1980 only serving to worsen the situation.

Carter undoubtedly achieved a lot of success in terms of foreign policy with his normalization of ties with China and his facilitation of the Camp David Accords, an unprecedented peace agreement between the Israeli and Egyptian governments.

Ted Kennedy chose to challenge Carter for the 1980 Democratic presidential nomination because of the perception that he would have a failed presidency.

Carter would ultimately defeat Kennedy for the Democratic nomination, but the harm done to Carter’s presidency made it possible for a much more optimistic Ronald Reagan to triumph in a landslide victory over the sitting president in November 1980.

Lasting significance

In many ways, Carter exemplifies what a post-presidential life might entail after the 56-year-old president failed to win a second term. His successors in the Oval Office would occasionally find it difficult to follow, despite his diplomatic and humanitarian efforts that would earn him the 2002 Nobel Peace Prize.

Carter’s steadfast Christian faith and idealism persisted throughout his life, from the work of his own organization to his commitment to building homes with Habitat for Humanity.

Although Carter was the first US president to declare that human rights were a central part of US foreign policy, most Americans today may perceive it as unremarkable for a US president to support them. Human rights have undoubtedly had an impact on his presidential successors ‘ policies, despite not having always been at the forefront of their plans.

This includes Ronald Reagan, who criticized Carter’s emphasis on human rights during the 1980 presidential campaign but later took a strong stand against Soviet human rights abuses.

Most living Americans were not yet born on Carter’s last day in office. In consequence, the former president is perhaps best known for living lavishly after retiring from office and living in a small Georgian town where his secret service detail’s armored vehicles were more expensive than the home the former president lived in.

Whether or not they realize it or not, Jimmy Carter’s humility, morality, and idealism still have an impact on American culture and thinking today.

Jared Mondschein is director of research, US Studies Centre, University of Sydney

The Conversation has republished this article under a Creative Commons license. Read the original article.

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Why China’s productivity keeps slowing down – Asia Times

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China’s market is having major issues. Despite the country’s dominance of international manufacturing, its existing criteria are starting to dwindle at a level much below that of developed countries.

China’s growth has slowed down dramatically, from around 6.5 % before the pandemic to 4.6 % now, and there are credible signs that even that number is&nbsp, seriously overstated. Notice this, this, this and this on the topic. I believe that all cited here is generally in agreement.

But in the history, China has another issue that’s weighing on its people’s wealth and even making it harder to answer to the economic crisis. This is the issue of&nbsp, severely lower productivity growth.

I don’t quite believe the official numbers that say China’s total factor productivity ( TFP ) has &nbsp, fallen&nbsp, over the past decade and a half, but it’s undeniable that it has grown much more slowly than in previous periods.

Why? After the global financial crisis of 2008, Paul Krugman factors to a regional shift toward real house, an economy with slower productivity growth. I think that’s surely a part of the story, but perhaps not all of it.

In a post from 2022, I looked at the different possible causes of China’s productivity growth declining long before it reached rich-world living requirements.

But in light of China’s recent challenges, which have only gotten worse in the adjacent 2.5 years, I thought it might be useful to publish it today. I believe what I wrote is fairly solid.

Reading books about China’s market from before 2018 or until is always a fascinating experience. But some world-shaking events have changed the history since then — Trump’s trade conflict, Covid, Xi’s business reprisals, the real estate bust, shutdowns, Russia’s invasion of Ukraine. Reading predictions of China’s evolution from before these events occur is similar to reading sci-fi from 1962.

When I started&nbsp, China’s Economy: What Everyone Needs to Know®, by the veteran economic consultant Arthur Kroeber, I was prepared for this surreal effect. After all, it was published in April 2016— not the most opportune timing. So I was surprised by how significant the book still felt.

Most of the book’s explanations of aspects of the Chinese economy — fiscal federalism, urbanization and real estate construction, corruption, Chinese firms ‘ position within the supply chain, etc. — are either still highly relevant, or provide important explanations of what Xi’s policies were reacting against. Dan Wang was not wrong&nbsp, to recommend&nbsp, that I read it.

But&nbsp, China’s Economy&nbsp, is still a book from 2016, and through it all runs a strain of stubborn optimism that seems a lot less justifiable six years later.

Most crucially, while Kroeber acknowledged many of China’s economic challenges — an unsustainable pace of real estate construction, low efficiency of capital, an imbalance between investment and consumption, and so on — he argued that China would eventually overcome these challenges by shifting from an&nbsp, extensive growth model&nbsp, based on resource mobilization to one based on greater efficiency and productivity improvements.

This was made known despite his acknowledgment of the fact that Xi’s policies so far didn’t seem to be up to the challenge of reviving it because productivity growth had already slowed well before 2016 and that he had acknowledged this.

Productivity growth is the underlying thread that has connected the Chinese economy’s entire history since 2008 in many ways. According to Basic Economic Theory, eventually the growth benefits of capital accumulation hit a halt and need to be improved to maintain growth.

Some countries, like Japan, South Korea, Singapore, and Taiwan, have done this successfully and are now rich, others, like Thailand, failed to do it and are now languishing at the middle-income level. For several decades, Chinese productivity growth looked like Japan’s or Korea’s did. However, it changed slightly before Xi took office, making it appear a little more Thailand-like. Here’s a graph from&nbsp, a Lowy Institute report:

Source: &nbsp, Lowy Institute

In fact, the Lowy Institute’s numbers are more optimistic than some other sources. According to the Penn World Tables, China’s overall factor productivity has increased by about 0 or less since 2011.

And&nbsp, the Conference Board agrees.

Personally, I suspect these sources probably&nbsp, underestimate TFP growth&nbsp, ( for all countries, not just for China ). However, even Lowy’s more accurate figures reveal a significant deceleration in the 2010s. If this productivity slump persists, it will be very difficult for China to grow itself out of its problems — such as its&nbsp, giant mountain of debt&nbsp, — in the next two decades.

Then, why has China’s productivity increased so slowly? There are several compelling reasons for Xi to make a change, and each of them has significant implications.

The first reason, of course, is that China had several tailwinds that were helping them become more productive, and these are mostly gone now.

Reason 1: Hitting natural limits

Simply put, China’s productivity increased as a result of their geographic isolation from the technological frontier. When you don’t even know how to do fairly simply industrial processes, it’s pretty easy to learn these quickly.

China imported basic foreign technology by insisting that foreign companies set up local joint ventures when they invest in China, by sending students overseas to learn in rich countries, by reverse-engineering developed-country products, by acquiring foreign companies, etc. Also by industrial espionage, of course, but there are lots of above-board ways to absorb foreign technology too.

The problem is, this has limits. The technologies you need to learn to keep growing productivity quickly increase as you get near the finish line; this is not something you can easily learn from taking classes or looking at blueprints. Companies guard these higher-level secret-sauce technologies much more carefully.

For instance, China has had trouble developing its own fighter jets because only a few companies in a few countries are aware of the metallurgy to create the specialized jet engines that enable modern top-of-the-line fighters. So it becomes necessary to start creating your own products as foreign technology becomes more and more difficult to absorb.

A second tailwind was demographics. Everyone talks about China’s unusually high demographic dividend in terms of labor input ( when there are many young people with few elders or children to care for ), but it’s also likely to be a factor in productivity. &nbsp,

Maestas, Mullen &amp, Powell ( 2016 ) &nbsp, shows a negative relationship between population age and productivity at the US state level, while&nbsp, Ozimek, DeAntonio &amp, Zandi ( 2018 ) &nbsp, find that the same is true at the firm level. The mechanism is unknown, but the pattern is pretty robust. In any case, China’s population reached its highest point in terms of working-age as a percentage of the total ( and quickly reached its absolute peak ) in 2010:

A third tailwind for productivity was rapid urbanization. Simply moving people from low-productivity agricultural work to high-productivity urban manufacturing work, as Arthur Lewis&nbsp, is a well-known fact, increases productivity a lot. Another factor that increases productivity is agglomeration economies.

And economists believe that China reached its” Lewis turning point” right around 2010 when there was no longer any surplus agricultural laborers moving to the cities. China, of course, also unnecessarily reduced urbanization by using its hukou ( household registration ) system to prevent migrant laborers from settling permanently in cities. However, in any case, this tailwind also appears to be over.

Three significant tailwinds that were causing China’s productivity growth over the past ten years have probably dried up. And Xi Jinping or any other leader has no real authority over that. However, there are probably other factors that could be more helpful for policy adjustments that are dragging China’s productivity growth down as well.

Reason 2: Low research productivity

One thing you can do is to invent your own if you are unable to import foreign technology any longer. In fact, this is a good thing to do even if you&nbsp, do &nbsp, import foreign technology, since companies should create new products and new markets instead of just aping foreign stuff. In fact, China has been investing a lot more in research and development in recent years. Here’s a chart&nbsp, from the blog Bruegel:

Source: Bruegel

Unfortunately, research&nbsp, input&nbsp, doesn’t always lead to research&nbsp, output. A&nbsp, 2018 study by Zhang, Zhang &amp, Zhao&nbsp, finds that Chinese state-owned companies have much lower R&amp, D productivity than Chinese private companies, which in turn have much lower productivity than foreign-owned companies. And&nbsp, a 2021 paper by König et al. &nbsp, finds that while R&amp, D spending by Chinese companies does appear to raise TFP growth, the effect is quite modest:

Source: &nbsp, König et al. ( 2021 )

In other words, a lot of this spending is being done by state-owned companies that are just throwing money at “research” because the government tells them to, but not really discovering much. The authors point to the misallocation of resources as a major contributor to low R&amp, D productivity. They also point out that some businesses simply reclassify regular investment as” R&amp, D” to profit from tax breaks ( note that this is done everywhere ).

What about university research? This is a crucial component of how the US maintains its technological edge. And China has indeed been throwing huge amounts of money at university research, such that its expenditure&nbsp, now nearly rivals that of the US&nbsp, China recently passed the US in terms of&nbsp, published scientific papers, including&nbsp, highly cited papers.

However, the quality of this study has been questioned. Despite all this publication activity and all this money, Chinese universities are frequently found to be not the leaders in most areas of research.

Basically, the story is that Chinese scientists are under tremendous pressure to publish a ton of crappy papers, which all cite each other, raising citation counts. In the words of Scientific American, this has led to” the proliferation of research malpractice, including plagiarism, nepotism, misrepresentation and falsification of records, bribery, conspiracy and collusion”.

Therefore, the low productivity of Chinese R&amp, D may contribute to the reason why domestic innovation hasn’t surpassed foreign technology absorption.

Reason 3: Limited export markets

I’m a big fan of the development theories of Joe Studwell and Ha-Joon Chang, as everyone who reads this blog will be aware of. A pillar of the Chang-Studwell model is the idea of “export discipline“.

Basically, when companies venture out into global markets, they encounter tougher competition and also ideas for new products, new customers, and new technologies. This raises their incentive ( and their ability ) to import more foreign technology, and in general makes them more productive and innovative.

After the global financial crisis of 2008 and the recession that followed, the US wasn’t able to absorb an ever-expanding amount of imports from China. So Chinese exports to the US market&nbsp, slowed in the 2010s, and then Trump’s trade war slowed them even more. China’s exports to the EU&nbsp, rose a bit, but not that much.

Developed-country markets simply became saturated with Chinese goods, and there wasn’t much more room for expansion. Although developing nations are reportedly purchasing more Chinese goods, they lack the purchasing power of the wealthy nations. Since the mid-2000s, China’s exports as a percentage of GDP have actually decreased significantly:

Many people ( including Kroeber ) talk about this as a shift from export-led growth to growth led by domestic investment. And so it is. But if productivity benefits from exporting, then this is also a challenge for long-term growth, because there’s less opportunity for export discipline to work its magic.

This may be one factor in the decline in growth for large nations compared to smaller ones. When you have 1.4 billion people, than when you only have 50 million, as South Korea does, because the world is suffocated with your exports, which is much harder to be an export-led economy.

Which raises the question of why the US is so productive, even more productive than the majority of the rich and productive East Asian nations. Consumption might have a role in that.

Reason 4: Not enough consumption

The US has a very large economy that is geographically dispersed from the majority of the world’s major economies. This explains why the US has a very low&nbsp, amount of trade relative to GDP&nbsp, — just 23 %, compared to 81 % for Germany and 69 % for South Korea.

However, the US has a highly productive economy, surpassing that of all but a few small wealthy nations. Exports undoubtedly contributed to the US’s expansion, but in large part it was just selling itself.

As the chart above shows, China increasingly does the same. But unlike the US, China’s domestic economy is heavily weighted towards&nbsp, investment in capital goods &nbsp, — apartment buildings, highways, trains, and so on. China’s final consumption is&nbsp, only 54 % of GDP, compared to over 80 % in the US.

And private household consumption accounts for&nbsp, only 39 % of China’s GDP, compared with 67 % in the US. China is undoubtedly in a later stage of development, but Kroeber points out in his book that even nations like Japan and South Korea had significantly higher consumption shares at comparable stages of their own growth stories.

Usually this gets discussed in the context of “imbalances”. But what if it also affects productivity? Consumers have a preference for differentiated goods that spurs companies to develop new products, increase quality, offer new features, and so on.

The strategy professor&nbsp, Michael Porter argues&nbsp, that when companies compete by differentiating their products instead of simply competing on costs, it results in higher value-added — in other words, it makes them more productive.

Over the past decade, China has been building a lot of buildings and a lot of infrastructure. But it hasn’t been developing a lot of innovative and high-quality cutting-edge consumer products. Unintentionally, various government initiatives that divert resources from domestic investment to domestic consumption may be reducing Chinese productivity.

And the biggest such policy might be macroeconomic stabilization.

Reason 5: Macroeconomic stabilization

It’s important to stabilize the economy. Recessions cause many people to lose their jobs and cause a lot of suffering, and they most likely also cause underinvestment in businesses. They can damage the cohesion of entire societies. In 2008-11, the US learned this lesson the hard way when our insufficient fiscal stimulus caused a recession that was longer and more painful than it had to be.

But there may be such a thing as too much stabilization. As&nbsp, I explained in a post last September, China avoided going into recession both in 2008-11 and again in 2015-16 ( after a big stock market crash ) by pumping money into real estate, via&nbsp, lending by state-controlled banks, &nbsp, often to SOEs&nbsp, and to&nbsp, local governments.

This likely prevented the Chinese economy from experiencing recessions in 2008, 2008, and 2015-16. But it had a big negative effect on productivity growth, for three reasons.

First, SOEs simply aren’t very productive compared to other Chinese companies. Second, the funds were quickly thrown out the window, leaving little time or motivation to determine which projects were worthwhile.

Third, construction and real estate are two key sectors of the economy that have a reputation for having low rates of productivity growth. This last is probably the scariest, as it led China’s economy to be&nbsp, more dependent on real estate&nbsp, than any other in recent memory:

Source: &nbsp, Rogoff ( 2021 )

Anyone who has followed&nbsp, the saga of China’s Covid lockdowns&nbsp, will sense a familiar pattern here. The Chinese government, eager to preserve the appearance of invincibility, often goes overboard in unleashing the tools of control.

Although recessions are not good things, the measures taken by Chinese policymakers to make sure they never had even the slightest recession may have left their economy with a significant hangover from the low-productivity sector.

Will Xi bring back the increase in productivity?

There are many reasons why China’s productivity growth fell to a low level in the 2010s and 2020s.

But speeding it back up again — which every analyst, including Kroeber, seems to recommend — will be no easy task. The negative effects of productivity have vanished. These systems have a way of becoming established, and China’s misallocation of resources toward low-quality research and low-quality real estate industries won’t be easy to reverse.

Xi Jinping, of course, is going to try. Part of his effort consists of&nbsp, industrial policy&nbsp, — the&nbsp, Made in China 2025&nbsp, initiative and the&nbsp, big push for a domestic semiconductor industry. Whether those will bear fruit is still to be seen.

But in the last three years, Xi has undertaken a second, more destructive effort to reshape China’s industrial landscape. He has attacked the industries he doesn’t want, rather than simply boosting the industries he wants. &nbsp,

He has cracked down&nbsp, on consumer internet companies, finance companies, video games and entertainment. And he has attempted to&nbsp, curtail the size of the real estate industry, resulting in a slow-motion crash that ‘s&nbsp, still ongoing.

Essentially, Xi is trying to crush industries he doesn’t like, in the hopes that resources — talent and capital — flow to the industries he does like. This is a new kind of industrial policy — instead of “picking winners”, Xi is stomping losers.

One of the saddest things about optimistic 2016-era analyses like Kroeber’s is how much hope they place in internet companies like Alibaba, Tencent, and Baidu as heralds of a new, more innovative China. Xi has declared that these companies are not, in fact, the future.

However, it’s not at all clear that an economy operates similarly to a tube of toothpaste when resources are squirted out from one end. Do you really believe that starting a semiconductor company rather than an internet company will help you become Emperor Xi’s favor as a budding entrepreneur?

What if he decides next week that he doesn’t need more chip companies and that your business isn’t one of his preferred champions? What if after you get rich and successful, Xi decides you’re a potential rival and appropriates your fortune?

An economy with a leader who consistently destroys businesses and industries he dislikes is inherently risky. Chinese engineers and managers will, indeed, follow Xi’s orders and work in the sectors he wants them to. However, the absence of entrepreneurial spirit and initiative may result in this being a pyrrhic triumph.

In other words, escaping China’s low-productivity-growth trap is going to be tough, and Xi’s strategy doesn’t fill me with a ton of confidence so far.

This&nbsp, article&nbsp, was first published on Noah Smith’s Noahpinion&nbsp, Substack and is republished with kind permission. Become a Noahopinion&nbsp, subscriber&nbsp, here.

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