Global Shift

China's new foreign relations law, IMF - countries ditch dollar, Israel joins "wave of reconciliation", China-New Zealand boost relations, China-Cambodia Diamond Hexagon cooperation

Jun 30, 2023

UPDATE: China has unveiled a new foreign relations law “to take corresponding countermeasures and restrictive measures” against acts that violate international law and norms and that “endanger China’s sovereignty, security and development interests”.

The International Monetary Fund (IMF) has warned that many countries are settling trade with the Chinese Yuan and ditching the U.S. dollar for cross-border transactions. Countries such as Brazil and Iran are moving ahead by paying the Chinese Yuan and sidelining the U.S. dollar, in support of the BRICS mission. BRICS’ oil-rich Saudi Arabia is also following the path of de-dollarization by settling international trade with China with the Yuan.

The bilateral Diamond Hexagon cooperation framework will inject fresh impetus into the building of the Cambodia-China community with a shared future in the new era, a Cambodian scholar said on Wednesday.

China’s new foreign policy law

China has unveiled a new foreign relations law “to take corresponding countermeasures and restrictive measures” against acts that violate international law and norms and that “endanger China’s sovereignty, security and development interests”.

The law, approved on Wednesday and entering into force July 1, comes as China’s government pushes back against US efforts to suppress its development, such as US export controls on some high-tech goods and efforts to reduce reliance on Chinese suppliers in sectors where the US lags behind.

The two countries have entered a period of deep suspicion and tension that marks a low point in their relations, even as US Secretary of State Antony Blinken visited Beijing earlier this month in an effort to stabilize ties.

It is China’s first foreign policy legislation of this scope and was approved by a top decision-making body within China’s parliament on Wednesday. Its chairman Zhao Leji hailed the law as having “great significance” for safeguarding the country and supporting “national rejuvenation”.

The release comes “amid new challenges in foreign relations, especially when China has been facing frequent external interference in its internal affairs under the Western hegemony with unilateral sanctions and long-arm jurisdiction,” China’s Global Times reported.

Citing experts opinions, the Global Times wrote that the new law “provides a legal basis for the diplomatic struggle against sanctions, anti-intervention and long-arm jurisdiction” and enriches the “legal toolbox” to safeguard China’s national interest.

In recent months, the United States has blacklisted Chinese companies, over their alleged participation in surveillance programs and the war in Ukraine, to restrict semiconductor exports to China, coerced G7 economies to counter Beijing’s economic growth and “de-risk” supply chains – amid concerns about an alleged security challenge posed by Beijing.

Chinese officials have viewed this as a direct attack. When meeting with Blinken earlier this month, Xi told the US envoy that Washington “must not hurt China’s legitimate rights and interests” or deprive it of its “legitimate right to development.”

Beijing has also long decried Washington’s use of economic sanctions and arms sales to Taiwan as a tool of US foreign policy and in 2021 enacted an anti-foreign sanctions law aimed at combating overseas measures imposed on Chinese interests. In February, it sanctioned US defense firms Lockheed Martin and Raytheon over arms sales to Taiwan.

This is China’s first comprehensive foreign relations law, however, it doesn’t appear to add any additional anti-sanctions tools, but is designed to counter ‘Western containment,’ by turning to legal instruments. The new legislation also enshrines the promotion of China’s foreign policy initiatives on global security, development and civilisation into law, and affirms China’s stated opposition to “hegemony” and “power politics.”

The law also places control of international relations into the hands of an expert committee focused on foreign affairs and includes China’s pledge to promote “high-level opening-up” of its economy, development of foreign trade and and encouraging and legally protecting foreign investment.

In recent months, the scandals and failures of foreign consulting and due diligence firms in the US, EU and Australia has unnerved businesses in China.

Chinese Premier Li Qiang stressed a similar message at a World Economic Forum summit in the city of Tianjin this week and during a trip to Europe earlier this month, where he criticised G7 efforts to “de-risk” their supply chains by state-led campaigns to induce companies to withdraw from China in leading economic sectors.

However, amid concerns about tensions with the US and its domestic economic woes, China has increased its engagement with Europe in an attempt to support the relationship fractured by US coercion to cut reliance on cheap reliable energy from Russia, which has led the EU into an economic recession.

To defend China’s national interest,” the new law demonstrates to the US and its G7 partners that acts that violate international law and norms and endanger China’s sovereignty, security and development interests will be met by strong legal challenges.

The Editor

Saudi’s, Iran & Brazil ditch the Dollar

By Vinod Dsouza

Just recently, Saudi Arabia purchased oil at record levels from Russia to help the nation evade the U.S. sanctions. Saudi laundered the oil into the European markets elbowing the Biden administration’s sanctions on Russia. Therefore, Saudi Arabia and other Middle East countries are eager to end reliance on the U.S. dollar and could promote the soon-to-be-released BRICS currency.

Aleksei Mozhin, the IMF Executive Director for Russia cautioned that the de-dollarization efforts from BRICS could be irreversible. He stressed that the U.S.’s sanctions on other countries compelled them to look for alternative currencies. The alternative currency is the Chinese Yuan and the Xi Jinping administration is making the most of the development.

“We can see that Iranians, Brazilians, and Saudis are already switching to trade in Yuan. Not only with China but also with (other) third (world) countries,” Mozhin said in an interview with RIA Novosti.
Mozhin believes that the decline of the U.S. dollar might not stop as more countries could join the de-dollarization bandwagon. “It’s clear that it will not happen at once, but the process has begun,” he said.

The developments add pressure on the U.S. dollar as a handful of countries, including allies, are challenging its reserve status. If the BRICS currency gains strength in the international markets, the U.S. dollar will find no means to fund its deficit. In conclusion, the fate of the greenback will be decided by how well the BRICS alliance handles its next moves. Decisions like this made by Brazil and Iran to pay in Chinese Yuan will only push BRICS ahead.

Read more here.

Israel joins wave of reconciliation

Israeli Prime Minister Benjamin Netanyahu revealed on Tuesday that he is set to visit China next month, and according to Chinese analysts on Wednesday, Israel will seek to enhance bilateral ties with China in the regional power rebalancing process at a time when countries in the Middle East have increasingly engaged in a "wave of reconciliation" since China brokered a rapprochement between Saudi Arabia and Iran in March. It will also serve as a reminder to the US that Israel has other diplomatic options than Washington, experts noted.

The Israeli premier announced his China trip when he met with US lawmakers in Jerusalem on Tuesday. Israeli local media said that Netanyahu's China visit comes at a time when ties between Israel and the US have suffered under the current government, with the Biden administration increasingly outspoken in its criticism of Israeli policies.

US President Joe Biden has publicly kept Netanyahu at arm's length. In March, he said Netanyahu would not be invited in the near term, in the context of the swirling protests in Israel against the government's plans to remake the judiciary. Netanyahu's China visit would send the US a clear message that Israel could have multiple partners in different fields - having the US as its security partner and China as its political, trade and science and technology partner, Sun Degang, director of the Center for Middle Eastern Studies at Fudan University, told the Global Times on Wednesday, adding that despite Biden government's displeasure and opposition, Israel will not make concessions over its policies.

Netanyahu's office said that Washington had been notified about the planned visit a month ago and insisted that ties with the US were at an "all-time high," according to media reports. The wording shows that Israel considers its alliance with the US as an existing asset that it hopes to maintain, and its relations with China as an increment that it hopes to enhance, and the two are not contradictory, Sun said, noting that by showing a pro-US yet not anti-China stance, Israel is voicing its reluctance to serve as a US pawn in Washington's scheming to contain China.

However, it would be an underestimation to think Netanyahu's upcoming trip is all about pressuring the US, experts point out. Ties between China and Israel have been warming over recent years, marked by cooperation especially in fields such as infrastructure and technology innovation. The US factor should not be considered as a deciding one in the development of China-Israel ties, Ding Long, a professor at the Middle East Research Institute of Shanghai International Studies University.

The Middle East region is experiencing a major change after Saudi Arabia and Iran resumed relations with the help of China, and countries in the region have become increasingly engaged in a "wave of reconciliation," Sun said. Israel would need to catch up with the trend and enhance its relations with China during the trip to achieve its own power rebalancing, he noted.

Ding expects that during Netanyahu's visit, China would also persuade Israel to remove non-economic factors hindering China-Israel cooperation, such as US pressure to reject Chinese companies from participating in major infrastructure projects.

Israel and China have seen warming relations and more interest in Israeli innovations, especially in medical tech, robotics, food tech and artificial intelligence, the Times of Israel said on Tuesday.

Netanyahu's China visit would come following Palestinian President Mahmoud Abbas' Beijing trip earlier in June. During Abbas' trip in Beijing, China put forward a three-point proposal for the settlement of the Palestinian question, according to the Xinhua News Agency.

It proves that after brokering reconciliation between Saudi Arabia and Iran, China continues to show its determination to broker peace in the Middle East region, and addressing the Palestine-Israel conflict is high on the agenda to implement China's Global Security Initiative, Sun said.

It is hard for the US that has a special alliance with Israel to win trust from Palestine. But China with a strategic partnership with Palestine and an innovative comprehensive partnership with Israel at the same time, would be more likely to play the role of a mediator upholding unbiased justice, Sun noted. "Therefore, Netanyahu's China visit itself showed that China's peace efforts have been further consolidated in the Middle East region."

Zhang Jun, China's permanent representative to the United Nations on Wednesday called for efforts to break the cycle of violence

between Israelis and Palestinians and strive for common security.

It is important to break the cycle of violence. It is important to uphold the international rule of law and stop unilateral actions to change the status quo, and it is important to honor political commitments and advance the two-state solution, he told the Security Council, Xinhua reported.

It is alarming that some US politicians hold China's peace efforts to blame for Washington's waning influence in the Middle East region, analysts said. China and the US have great room for cooperation and share a great deal of common interests on topics such as the Palestine-Israel question, and their interaction should not be defined as a zero-sum game.

Read more here.

China New Zealand boost relations

Chinese Commerce Minister Wang Wentao met with New Zealand Minister for Trade and Export Growth Damien O'Connor on Monday, as the two sides conducted frank and professional talks on strengthening trade and economic cooperation in sectors such as agriculture and grain security, the ministry said in an official statement.

The exchanges focused on advancing bilateral trade and economic relations and strengthening cooperation in regional and multilateral affairs, read the statement.

The China-New Zealand comprehensive strategic partnership has been progressing under the leadership of the top leaderships from both countries, said Wang, adding that China's continued development and promotion of high-quality opening-up will offer new opportunities for the rest of the world including New Zealand.

China is willing to work with New Zealand to promote balanced trade growth and continue to implement the upgrade protocol of the China-New Zealand Free Trade Agreement (FTA), aiming to inject new momentum into bilateral trade ties, Wang added.

Wang highlighted that China will further strengthen partnership with New Zealand under various international and regional frameworks including the WTO, APEC, and the Regional Comprehensive Economic Partnership (RCEP) agreement, along with other frameworks.

O'Connor said that the official visit of New Zealand Prime Minister Chris Hipkins to China bringing with him a large trade delegation aims to enhance bilateral exchanges. New Zealand is willing to continue to leverage its complementary advantages, further strengthen cooperation with China in sectors including agriculture and grain security, and ramp up communication and coordination in multilateral and regional mechanisms.

Following the thawing in China-Australia relations, Chinese experts noted the enhanced cooperation between China and New Zealand will boost regional economic exchanges despite the so-called "decoupling" hype from some Western countries.

The trade cooperation remains as the ballast stone for China-Australia and China-New Zealand relations thanks to China's huge market potential, Chen Hong, director of the New Zealand Studies Center at East China Normal University, told the Global Times on Monday, adding the consolidated interactions will continue to promote regional cooperation as China, Australia and New Zealand are all RCEP members.

Amid the US call for "decoupling" or "de-risking" from China, New Zealand has made "prudent calculation" and not changed its national strategy under the pressure from the US, Chen said.

Prime Minister Hipkins' visit to China is a pragmatic move from the New Zealand side, underlying the importance attached to economic and trade cooperation with China - its largest trading partner - amid global economic uncertainties and growing geopolitical tensions, Zhou Fangyin, professor at the Guangdong Research Institute for International Strategies, told the Global Times on Monday.

China is actively promoting opening-up in the wake of COVID-19 pandemic, and strengthening win-win cooperation will facilitate both sides' economic recovery, according to Zhou.

Zhou said that New Zealand should continue to maintain the stability and continuity in its China policy in order to expand their partnership in trade, tourism and education.

A total of 29 delegates encompassing a wide range of export sectors including tourism and education are accompanying Hipkins, according to an article published by the New Zealand Trade & Enterprise on June 19, which is the country's international business development agency. The article stressed that the business delegation travelling with Hipkins to China will have a dual focus that will benefit New Zealand's economy and relationship with China.

O'Connor said at the meeting with Wang that China and New Zealand have maintained long-term economic and trade cooperation with a highly complementary trade structure, while the FTA accelerated the development of bilateral trade. He expressed his excitement on his Twitter, saying that he and Wang discussed the strong bilateral and economic relationship, with the two-way trade reaching more than NZ$40 billion ($26.7 billion).

The development of China-New Zealand bilateral relations has gained momentum over the past decades, with New Zealand making many "firsts" with China, for example, becoming the first Western country to support China's accession to the WTO and the first country to sign a free trade agreement with China, Zhou said.

Chinese Foreign Ministry spokesperson Mao Ning announced on June 20 that prime ministers of four countries including New Zealand will attend the 14th Annual Meeting of the New Champions in Tianjin and pay an official visit to China.

During Hipkins' first visit to China, Mao said that leaders of the two countries will hold in-depth exchange of views on bilateral relations and international and regional issues of mutual interest.

Read more here.

China decoupling is EU suicide

Hungary’s foreign minister said Tuesday that any move to decouple, or even de-risk, from China would be an act of “suicide” for Europe. Péter Szijjártó said that curtailing ties with Beijing — one of Europe’s biggest trade partners and a major source of foreign direct investment — would essentially kill the region’s economy.

“Both decoupling and de-risking would be a suicide committed by the European economy,” Szijjártó told CNBC’s Sam Vadas at the World Economic Forum’s annual conference in Tianjin, China. “How could you decouple without killing the European economy?”

European leaders have until now struggled to formulate a unified Sino-European strategy, with some states echoing U.S. calls for a complete disassociation — or decoupling — with Beijing, while others have preferred a softer approach of mitigating risks.

We look at China as a country with which, if you cooperate, you can take a lot of benefit out of it. (Péter Szijjártó Foreign Minister of Hungary)

The issue is a particularly sensitive balancing act for Europe, which remains deeply reliant on U.S. support in Ukraine but also has critical economic ties with Beijing. China was the largest source of EU imports and the third-largest buyer of EU goods in 2022, according to Eurostat.

Szijjártó, for his part, said that Hungary — which holds notably more cordial relations with China than some of its European counterparts — does not view China as a threat or a risk, and therefore sees no reason for “de-risking.”

“We look at China as a country with which, if you cooperate, you can take a lot of benefit out of it,” he said.

Beijing is Budapest’s largest trading partner outside of the European Union and its number one investor so far this year. Szijjártó said he expected Chinese foreign direct investment in the country to double this year, from 6.5 billion euros ($7.1 billion) to 13 billion euros.

The majority of last year’s inflow was due to a $7.6 billion investment — Hungary’s largest ever — by Chinese battery maker Contemporary Amperex Technology Co. Limited in a new factory in the country. The plant is expected to service automakers with factories in Hungary, including Mercedez Benz, BMW, and VW.

Szijjártó said such investments highlighted Hungary’s critical role in Europe’s car manufacturing industry and its strategic importance in the region — particularly as automakers transition toward electric vehicles.

“These big Chinese investments come to Hungary because of the German carmakers being present in Hungary,” Szijjártó said.

“So when the German foreign minister speaks about decoupling, the CEOs of the German carmakers usually call me to convince their Chinese suppliers to come to Hungary,” he continued.

“There’s a big gap between the political perception and the reality on the ground. A decoupling would kill the European economy and be very harmful to the German economy as well.”

Dubbing the political atmosphere in Europe as “very ideological, very emotional,” Szijjártó said that treating China as a rival was futile and called on other European leaders to face up to be more rational about that “reality.”

“It’s obvious that if you want to compete with China, if you want to look at China as a rival to us, then we Europeans will lose on it,” he said.

“Why don’t we come back to the basis of rationality, common sense, reality and pragmatism, and why don’t we start to make an even closer relationship with China than before.”

His words come as allies in the bloc have questioned China’s growing assertiveness, particularly amid rising tensions around Taiwan and Beijing’s support for Russia’s war in Ukraine.

Read more here.

Cambodia-China Diamond Hexagon

Established by the two countries in February, the Diamond Hexagon cooperation framework has focused on six priority areas, including political cooperation, production capacity and quality, agriculture, energy, security, and people-to-people exchanges.

Thong Mengdavid, a research fellow at Phnom Penh-based independent think tank Asian Vision Institute, said as 2023 marks the 65th anniversary of diplomatic relations between Cambodia and China, the Diamond Hexagon cooperation framework will give new momentum to the development of ties and cooperation between the two countries.

“With the newly established Diamond Hexagon cooperation framework, the two countries will be able to achieve more political, economic, and security cooperation towards a community with a shared future in the new era,” he told Xinhua.

Mengdavid said the friendship between China and Cambodia has thrived in the past 65 years and has evolved into a “role model” for world relations.

“Leaders-to-leaders, government-to-government, party-to-party, and people-to-people relations are the crucial elements that help enhance the unbreakable ironclad friendship between the two countries,” he said.

China’s support for Cambodia’s successful fight against the COVID-19 pandemic in the past few years has built an even stronger fraternal bond of friendship between the two countries Mengdavid said.

China is one of the key economic drivers and humanitarian assistance providers to the Southeast Asian nation, he added.

“Under the Regional Comprehensive Economic Partnership (RCEP) agreement and the Cambodia-China Free Trade Agreement, which both took effect in 2022, Cambodia-China trade and investment volumes have increased drastically,” he said.

The two free trade agreements have facilitated trade liberalisation and investment between the two countries, he added.

As 2023 also marks the 10th anniversary of the Belt and Road Initiative (BRI), the scholar said Cambodia is one of the first supporters of the BRI, which was proposed in 2013.

“Under the BRI, Cambodia and China have actively promoted pragmatic cooperation in the areas of people’s livelihood improvement, agriculture, trade, investment, tourism, infrastructure, and people-to-people exchanges, among others,” Mengdavid said.

Many Chinese mega-projects under the BRI such as hydropower plants, the Sihanoukville Special Economic Zone, the Phnom Penh-Sihanouk Expressway, the Morodok Techo National Stadium, and the Siem Reap-Angkor International Airport have greatly contributed to promoting win-win cooperation as well as inclusive and sustainable socioeconomic development, he added.

“The fruit of China’s peaceful development has been shared with Cambodia and other countries around the world through the concept of a community with a shared future for mankind, the BRI, the Global Development Initiative, and the Global Security Initiative, among others,” he said.

Read more here.

Long Mekong

Discussion about this post