Ray Dalio’s stock tip: diversify portfolios to avoid getting caught in US-China rivalry; Ex-Trump adviser urges him to cut ties with China, restart nuclear tests
China's property measures give sales a boost, but only in big cities
Welcome to this issue of The China Brief. Today is June 18, 2024. Here at The China Brief, we bring you the latest news on China's politics, economy, and society from global media sources, along with exclusive expert analysis. If you find our content helpful, please subscribe to our newsletter.
Ray Dalio’s stock tip: diversify portfolios to avoid getting caught in US-China rivalry
South China Morning Post
Ray Dalio, founder of Bridgewater Associates, has warned that the US and China are on the brink of a major economic or military war, and investors should prepare for heightened volatility by diversifying their investments. He stated that the two countries will continue to press up against each other's red lines, and their domestic situations will have a greater impact on their relations than anything else. Dalio also sees opportunities in the Chinese market downturn, as assets now look cheap after "unsustainable" selling by investors. He believes that a combination of cheap prices and a tapering off of selling is consistent with price gains.
https://www.scmp.com/business/markets/article/3267041/bridgewater-founders-stock-tip-diversify-avoid-getting-caught-us-china-rivalry?utm_source=rss_feed
Ex-Trump adviser urges him to cut ties with China, restart nuclear tests
Japan Times
Donald Trump's former national security adviser, Robert O'Brien, has outlined potential foreign policy proposals for a second Trump term in an article for Foreign Affairs magazine. O'Brien suggests severing all economic ties with China, deploying the entire US Marine Corps to Asia, and resuming live nuclear-weapons testing. These proposals go beyond O'Brien's previous public positions and reflect a tougher stance toward China. O'Brien argues that as China seeks to undermine American economic and military strength, the US should seek to decouple its economy from China's.
https://www.japantimes.co.jp/news/2024/06/18/world/politics/trump-adviser-china-nuclear-tests/
China's property measures give sales a boost, but only in big cities
Yahoo US
China's new property support measures have helped revive transactions in its biggest cities but have failed to boost activity in smaller localities, raising concerns that the property downturn has further to run. The depressed property sector remains a major drag on the economy, which contributed nearly a quarter of China's GDP before the crisis and is now in need of more funds to reduce inventories and stabilise smaller markets. Beijing is expected to provide gradual support rather than any big-bang measures, as authorities are wary of bailing out profligate developers.
https://finance.yahoo.com/news/chinas-property-measures-sales-boost-050226302.html
Global aviation giants hope Beijing business is unscathed by China-EU trade rows
South China Morning Post
Leading European aviation and drone manufacturers, including Airbus and BAE Systems, are hopeful that trade tensions between China and the European Union will have limited impact on bilateral aviation trade. The companies are showcasing their latest unmanned aerial systems at Eurosatory, one of Europe's largest defence exhibitions in Paris, this week. Both Airbus and BAE Systems have strong business relationships with China and are optimistic that their cooperation will not be affected by the rising trade tensions.
https://www.scmp.com/news/china/diplomacy/article/3267035/global-aviation-giants-hope-beijing-business-unscathed-china-eu-trade-rows?utm_source=rss_feed
China marriages fall to ‘norm’ in first quarter after active 2023, threatening productivity as population ages
South China Morning Post
China's marriage rate fell by 8.2% in the first quarter of 2024, reflecting declining birth rates, a growing number of retirees, and an overall falling population. The decline in marriages is expected to further reduce childbirths and shrink the workforce, posing a major challenge to the country's economy. The government-backed Chinese Academy of Social Sciences warned in 2019 that the country's major state pension fund will run out of money by 2035 due to the growing number of retirees.
https://www.scmp.com/economy/economic-indicators/article/3267061/china-marriages-fall-norm-first-quarter-after-active-2023-threatening-productivity-population-ages?utm_source=rss_feed
Taipei keeping watch after Chinese submarine surfaces in Taiwan Strait
Japan Times
Pictures have emerged online of a Chinese nuclear submarine surfacing in the Taiwan Strait, just 200 kilometers from Taiwan's western coast. Taiwan's defense minister has said that they have a 'grasp' of the situation, but tensions continue to rise in the region. China has been asserting its sovereignty claims against Taiwan, with warplanes and warships frequently operating in the sensitive strait.
https://www.japantimes.co.jp/news/2024/06/18/asia-pacific/politics/chinese-submarine-taiwan-strait/
Malaysia to join BRICS, China’s Xi an ‘outstanding leader’, Anwar says
Al Jazeera
Malaysia plans to join the BRICS grouping of emerging economies, according to Prime Minister Anwar Ibrahim. Malaysia will begin the process of joining the bloc once it has received feedback from South Africa, he said. The BRICS bloc, founded in 2006, originally comprised Brazil, Russia, India, China, and South Africa. In January, Egypt, Ethiopia, Iran, and the United Arab Emirates joined the group. Ibrahim also backed comments by Brazilian President Luiz Inacio Lula da Silva criticising the dominance of the US dollar in international trade.
https://www.aljazeera.com/economy/2024/6/18/malaysias-anwar-flags-brics-membership-praises-xi-as-outstanding-leader
The Power of Principles
Foreign Affairs
International norms, or guidelines for appropriate state behavior, have long been a central concern in foreign policy debates. While it may seem that power often trumps principle in the world today, norms still play a significant role in shaping state behavior. Norms can be a powerful motivator and constraint, even for powerful states, as they can face penalties and isolation for violating widely accepted norms. The strength of norms lies in their alignment with state interests, as states exercise self-restraint to protect their greater interests. However, norms are open to interpretation and abuse, and their power is not guaranteed.
The current normative architecture is under threat, with challenges from Russia's invasion of Ukraine and China's territorial expansion in the South China Sea. The responses of developing countries to these transgressions suggest that the challenges to current norms may succeed. Western hypocrisy and perceived double standards have eroded trust in the existing normative order. The potential demise of key international norms should alarm policymakers, as it would have human rights implications and could lead to a loss of influence for the United States.
To save the system, proactive measures are needed. Norms require maintenance, enforcement, and adjustments. The United States could push for reforms, such as expanding the UN Security Council to include representatives from Africa and Latin America, to prevent the council from becoming irrelevant. The United States could also provide more financing to compensate poorer states for the damages caused by climate change. However, reviving international norms will not be easy, and the United States cannot do it alone. Political polarization and internal divisions make it challenging for the United States to convey strong support for global norms.
In a world in flux, it is worth questioning the purpose and effectiveness of certain international principles. However, the erosion of foundational norms would not be the result of a careful cost-benefit analysis but a failure of American politicians to uphold these ideals. The result would be a world in which everyone is worse off.
https://www.foreignaffairs.com/ukraine/power-principles-norms-tanisha-fazal
The Most Dangerous Game
Foreign Affairs
The rise of China as a global power has raised concerns about the potential for conflict between China and the United States, known as the "Thucydides trap." This trap refers to the pattern in history where a rising power challenges the dominant power and leads to conflict. However, recent research on power transition theory suggests that conflict is not inevitable and that the way the established power manages the international order can play a crucial role in preventing war. Rising powers often seek to gain sufficient power to change aspects of the international order that they find dissatisfying. Therefore, the established power must be willing to rethink and adjust the order to accommodate the rising power's concerns and avoid war.
To avoid the Thucydides trap, the United States should focus on changing the international order to reinforce its own power rather than directly confronting China. This can be achieved by addressing issues that are not yet governed by international norms, such as cybersecurity, social media, cross-border data flows, and artificial intelligence. The United States should also seek buy-in from its allies to build a coalition that supports its efforts to restructure the order. By doing so, the United States can reduce the chances of conflict and maintain its position as the dominant power.
In addition, the United States needs to show that its interests are not in opposition to those of non-Western countries. It should support changes to international institutions that are inclusive, pragmatic, and efficient, and promote initiatives that build more trade links with developing countries. By including rising powers like India in the rebuilding of the international order and addressing their concerns, the United States can gain their buy-in and set the norms for future cooperation or restraint. Ultimately, the United States must be proactive in reshaping the international order to prevent conflict and maintain its position as the dominant power.
https://www.foreignaffairs.com/united-states/most-dangerous-game
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