The end of the dollar is all the rage. In a piece yesterday for UnHerd, macroeconomic analyst Philip Pilkington argued for the acceleration of the de-dollarisation of international trade based on the recent news that Brazil and China will trade in their own currencies.
There’s one problem: the two countries have announced this arrangement multiple times — in 2009, in 2013 and now again in 2023. If history is any indicator, this is a routine talking point by the Brazilian and Chinese leadership that has so far lacked any substantial financial follow-through. Another example was an LNG trade in yuan between the China National Offshore Oil Corporation (CNOOC) and the French company TotalEnergies. But, as energy expert Anas Alhaji points out, the actual source of the LNG is the United Arab Emirates, which was paid neither in euros nor yuan but in USD, making the French-Chinese transaction symbolic at best.
In similar fashion, the claims that OPEC will de-dollarise have been around since 1975, and while the dollar has lost some ground, there is no alternative in sight. The USD share of the world’s official foreign exchange reserves is 60%; the Yuan’s is 2.76%. The dollar has been around the 60% mark since 1995, and — even more telling — a comparison of data from the Bank for International Settlements compiled by Brent Donnelly shows that since 1989 the USD share in international transactions has been steadily around 90%.
The spectre of a disappearing dollar even made it onto the cover page of the Economist in 2004, but if the last 19 years have shown anything, it is the resilience of the currency. While China certainly enjoys the media frenzy around the allegedly imminent decline of the US (think of it as a kind of diplomatic trolling), it is not clear if it or any other country would be willing to provide the world’s reserve currency even if they could.
Michael Pettis, a senior fellow at the Carnegie Endowment, has pointed out that China’s growth model benefits from the USD’s status as the global reserve currency. Replacing it would require the Chinese Government to give up control of its capital and trade account, while the People’s Bank of China would have to take over from the Federal Reserve.
This would also mean, however, that Chinese financial institutions need the same degree of transparency and global trust as their US counterparts. None of this seems likely, and it is not even clear if China trusts its own currency. A majority of its Belt and Road Initiative projects are funded and denominated in USD, demonstrating the unbroken dominance of Washington in the world of finance.
Another idea floated involves a BRICS+ currency backed by gold or commodities. Yet this assumes a level of political and institutional integration among BRICS member states that simply does not exist. Besides, the idea that India — both a regional & global competitor of China’s — will allow Beijing and Moscow to have a say in its fiscal and monetary policy is at this point political fiction.
For all the troubles of the West, the US and the EU are coherent actors with deeply embedded institutional structures that are difficult to replicate. The costs associated with the introduction of the euro were unequally distributed among member states, but the vision of a common currency as a unifying symbol was seen to be worth the sacrifice. There is no similar shared vision between India, Brazil, China, Iran, Russia, and those other states that would allow for the replication of a common currency. For now, and for some time to come, the dollar is here to stay.
MANILA (Reuters) - Hundreds of Chinese vessels believed to be manned by militias in the South China Sea have spread to a wider area, the Philippines said on Wednesday, defying its demand for the flotilla to be withdrawn immediately.
Wednesday, 31 Mar 2021
FILE PHOTO: Some of the about 220 Chinese vessels reported by the Philippine Coast Guard, and believed to be manned by Chinese maritime militia personnel, are pictured at Whitsun Reef, South China Sea, March 7, 2021. Philippine Coast Guard/National Task Force-West Philippine Sea/Handout via REUTERS.
The Philippines has described the presence of the boats inside its 200-mile exclusive economic zone at Whitsun Reef as "swarming and threatening", while Canada, Australia, the United States, Japan and others have voiced concern about China's intentions, prompting rebukes by Beijing.
Chinese diplomats have said the boats were sheltering from rough seas and no militia were aboard.
In a statement, the Philippines' task force on the South China Sea expressed "deep concern over the continuing unlawful presence (swarming) of the Chinese maritime militia, which did not pull out."
"Neither the Philippines nor the international community will ever accept China's assertion of its so-called 'indisputable integrated sovereignty' over almost all of the South China Sea," the task force said, urging an immediate withdrawal of the vessels.
The Philippine position over Chinese boats is one of the strongest since President Rodrigo Duterte took power in 2016 and sought to befriend Beijing, which has frustrated nationalists who say he has been soft on China, hurt ties with the United States and gambled with national sovereignty.
Citing intelligence gathered by its own patrols, the task force said 44 vessels were still at Whitsun Reef and about 200 others were spread out around other parts of the Spratly islands, including near China's militarised manmade islands, where four of its navy boats were seen.
Zaobao associate editor Peter Ong observes that members of the Chinese community in Singapore hold diverse views on reunification and other issues, and have varying levels of emotional ties to the mainland and Taiwan. If war breaks out, it will not be distant like the war in Ukraine, but stir up different feelings in the Chinese community. Remaining objective would be hard but necessary.
Children play with sand near a Taiwan Navy supply ship at a beach on Nangan island of the Matsu Islands in Taiwan, 16 August 2022. (Ann Wang/Reuters)
Following US House Speaker Nancy Pelosi’s high-profile visit to Taiwan on 2 August, mainland China conducted unprecedented military exercises around Taiwan, sent aircraft across the median line in the Taiwan Strait, and flew four missiles over Taipei for the first time. Commentators said this was the dawning of a new mode of attack or a new normal, and there was no turning back.
In this context, a news report in Singapore drew much attention: United Microelectronics Corp founder Robert Tsao, who had emigrated to Singapore a long time ago, announced that he would be donating NT$3 billion (US$100.17 million) to help Taiwan bolster its defences. Some Singaporeans thought this a bad idea as it interfered with the internal affairs of others and ran counter to Singapore’s “one China” policy. Others even asked if this violated the law.
Objectively speaking, first-generation immigrants typically feel some connection to their place of origins. Didn’t our ancestors from southern China also donate money and resources during China’s eight-year war of resistance? Of course, as Singapore was a colony at that time, it was natural for them to pledge allegiance to their motherland. From a different perspective, if Singapore was under threat and received help and support from Singaporeans who had emigrated to other countries, wouldn’t we be touched by the move too? So taking the politics out of it and different opinions aside, Tsao’s gesture is still admirable, or at least understandable.
How Singaporeans would react
While Tsao’s move may be an isolated case, if war really breaks out across the Taiwan Strait, what kind of psychological impact that would have on the average Singaporean? While we will not rush to make donations, will we be able to stay out of the situation and go on with our life?
... what happens if we report on a war in the Taiwan Strait? How do we stay balanced and put aside all of our political affiliations and connections?
People looking at their mobile phones while taking the escalators at Raffles Place MRT station in Singapore on 3 January 2022. (SPH Media)
I immediately thought about whether I would be able to write, publish and vet articles as usual, and whether I could maintain objectivity in my reports. While we can constantly remind ourselves to put our own stands aside and be professional, this is still quite a challenge. For example, when you are flooded by news from all sides, which source would you trust and how would you sieve out the truth from the lies to avoid fake news and emerge from the fog of cognitive warfare? And this even comes down to the specific words we use. For example, I used “place of origin” when talking about Tsao earlier on. If I had used “homeland”, astute readers would definitely pick up the difference. Such subtleties and nuances are commonplace in news reports.
Distance, neutrality and objectivity are standards we hold ourselves to as journalists but sometimes this is hard to put in practice. Take the Russia-Ukraine war for example. Over the past six months and more, we have been translating Western newswires every day. If we are not careful or lack experience, we could be misled by the subtleties in expression. In fact, the decisions people make when they choose what to report and what not to report already have an effect behind the scenes. Fortunately, most people sympathise with the weak and agree that the sovereignty and territorial integrity of small countries are inviolable. Thus, going along with the mainstream international media and showing a slight slant towards Ukraine is still acceptable. But the point is that this war is far away from us, whether geographically or emotionally. But what happens if we report on a war in the Taiwan Strait? How do we stay balanced and put aside all of our political affiliations and connections?
Chinese reunification is no longer a matter of course
I remember what a senior in the media industry drummed into me over 20 years ago: reunification is a major matter of principle; separatists will be regarded as sinners in the eyes of history and these black sheep in reality are not worth mentioning. In short, Chinese reunification was internalised as the most prized and natural course of action. But in the new internet era of today, I am not sure if the younger generations concur with this view — relatively speaking, people do not have a strong sense of history and some simply reject the mainland’s system, whether innately or not. In Taiwan, they are known as the “natural independence” (天然独) camp. On the streets of Hong Kong, these individuals’ firm beliefs and tenacity in the protest years attracted many eyeballs.
... the gradual schism of views in the newsroom is but a microcosm of what’s happening in society at large.
Pedestrians wait at an intersection near a screen showing footage of Chinese People's Liberation Army (PLA) aircraft during an evening news programme, in Beijing, China, 2 August 2022. (Tingshu Wang/Reuters)
In fact, the gradual schism of views in the newsroom is but a microcosm of what’s happening in society at large.
I am friends with mainland Chinese, Taiwanese and new immigrants. The interesting thing is that not all of my mainland Chinese friends support reunification and some of my Taiwanese friends oppose “Taiwan independence” as well. Undeniably, those who sit on the fence or advocate separation but not independence and simply hope for the best are still in the majority. In terms of their attitudes, while most of them respect the opinions of others, some are more extreme. As long as someone shows their approval of the mainland’s achievements in recent years, they would criticise them for “sucking up to the Chinese Communist Party (CCP)”. Conversely, if someone speaks up for Taiwan, they would mock them for supporting “Taiwan independence” (胎毒 taidu, lit. embryotoxicity, derogatory term for 台独 taidu, Taiwan independence). Such endless criticism is truly unpleasant. When that happens, I usually try to stick to casual conversations and avoid talking about national issues. When I see messages that involve political correctness or incorrectness, I do not reply as well.
But tensions are just rising at this point — if war really breaks out in the Taiwan Strait, how would everyone feel about it?
A F-16V lands at the air base in Hualien, Taiwan,17 August 2022. (Ann Wang/Reuters)
Let’s look at Taiwan first. The divide between supporters of reunification and independence runs deeper here than in any other Chinese community in the world. Even in peacetime, people on the island are already split down the middle. Family members may even have terrible fights over differing political views and support for the Blue, Green or White camp. A Malaysian friend told me that a difference of views among the Chinese are also becoming more common in Malaysia because many students furthered their studies in Taiwan in recent decades. They have thus formed strong opinions and are vocal about issues of reunification and independence. In contrast, even if Chinese Singaporeans have an opinion about the topic, they are more reserved and not so adamant about their views.
If we also include the new Chinese immigrants — whether they are from the mainland, Hong Kong, Taiwan, or Malaysia — in this group, then they can be broadly seen as a larger and new “Chinese community”.
The new ‘Chinese community’ in Singapore
To have a sense of how the Chinese born and bred in Singapore will react to a Taiwan Strait crisis, we must first distinguish between two groups. One, the younger students and English-speaking “monolinguals” across all age groups. They are generally not interested in the happenings in the Chinese region and have no concept of Kuomintang and CCP history. For example, they do not understand the 1992 Consensus and are not interested to find out more. Put simply, they couldn’t care less about these topics.
People ride bicycles near the Singapore Flyer in Singapore on 22 July 2022. (Roslan Rahman/AFP)
Two, the people who listen to Chinese radio, read Chinese newspapers and consume massive amounts of first-hand information from the Chinese world on the internet. They interact with mainland Chinese and Taiwanese and could have relatives or colleagues living on both sides of the Taiwan Strait. The spouses of some of them could even be from these regions. Many people listen to popular songs from Taiwan (or Hong Kong) growing up and could still be humming the tunes of Jonathan Lee and Jay Chou. They have experienced the beauty of Taiwan and could have also travelled frequently to the mainland for work or business over the past two, three decades. Some have settled down there and have their own business partners, and also found many life-changing opportunities. The younger generation also have their favourite internet celebrities and drama series that they binge-watch. They may shop on mainland Chinese e-commerce platforms every day, using the “Made in China” products they have bought…
Because of these complex and intricately connected interpersonal, commercial and cultural relations, this group of people are more concerned with the cross-strait situation and would stay updated with the various happenings. If something happens, they will not be unmoved. If we also include the new Chinese immigrants — whether they are from the mainland, Hong Kong, Taiwan, or Malaysia — in this group, then they can be broadly seen as a larger and new “Chinese community”.
... regardless of which side they gravitate towards, nobody wants a war.
Based on my limited contact with them, this “Chinese community” does not have a “one-size-fits-all” attitude or a clear-cut love-hate relationship with the mainland and Taiwan; they do not see one side as “friend” and the other side as “foe”. Rather, there are things they like and admire but also aspects that they cannot agree with. Thus, most of them feel that choosing sides puts them in a dilemma and is also very unnecessary.
Soldiers demonstrate a GDF-006 anti-aircraft gun to the media in Hualien, Taiwan, 18 August 2022. (Ann Wang/Reuters)
But one thing is clear: regardless of which side they gravitate towards, nobody wants a war. This is because as long as war breaks out, there will be bloodshed and families will be torn apart. And there will always be someone they know among the victims. Also, Taiwan will suffer a severe blow and the mainland’s economy will go into recession. And this is assuming that the war is contained within the Western Pacific region without the participation of a third party — not a full-scale confrontation between China and the US or nuclear war.
I spoke with a recent businessman migrant from mainland China the other day. While he is undoubtedly a nationalist, he is also aware that there will be no winners between both sides of the Taiwan Strait under this situation — they would only hurt themselves and benefit their enemies. Thus, he was also stuck in the middle.
Shouldn’t the “Chinese” elevate their perspective and allow one side to continue building wealth and power while the other side continues experimenting and developing a democracy suitable for the Chinese?
War will mean big trouble for Singapore
I told him that I studied history and that the Anglo-Saxons founded at least five developed countries in the world today — the UK, the US, Canada, Australia and New Zealand. Among them, after the UK and the US fought the War of 1812, they never fought another war over the past 200 years and only joined hands to fight others. This is a nation’s greatest wisdom. Shouldn’t the “Chinese” elevate their perspective and allow one side to continue building wealth and power while the other side continues experimenting and developing a democracy suitable for the Chinese? Why can’t the top leaders consider the longer-term historical merits for the sake of humanity right now?
We do not know if there will be war in the Taiwan Strait. But if it really happens, how will it affect Singapore? The answer is clear — it’d mean big trouble!
We have taken rides on Taipei’s metro, eaten black tuna from Donggang and walked along Tamsui Old Street. If these places are destroyed, how can we take the blow?
People throng a street in Tamsui district of New Taipei City, Taiwan, 7 August 2022. (Jameson Wu/Reuters)
Putting aside the losses in the economic, investment and trade sectors, such an event would send the Chinese community made up of people with different backgrounds and positions on an emotional rollercoaster ride. Taiwan is not Ukraine — we do not understand a single word that Ukrainian President Volodymyr Zelenskyy is saying and neither can we pronounce that many place names in Ukraine. The day when Europe’s largest nuclear plant was shelled in Ukraine, it did not become the cover story of local newspapers. But we understand Hokkien and the Mandarin spoken in Taiwan. We have taken rides on Taipei’s metro, eaten black tuna from Donggang and walked along Tamsui Old Street. If these places are destroyed, how can we take the blow?
A war in the Taiwan Strait is ultimately a stress test for the unity of the Chinese community. Will we fight among ourselves and label one another with derogatory terms or be torn into pieces like Taiwan society? Or will we stay calm and rational, be more understanding, and keep communicating with one another?
Yes, it’s hard, but it is necessary.
Afternote:
Donning a bullet vest, United Microelectronics Corp founder Robert Tsao announced in an international press conference on 1 September that he has renounced his Singapore citizenship and returned to Taiwan. He vowed to stand with his Taiwanese compatriots against the CCP and hoped that it would one day become like the US, a "land of the free and home of the brave". He also pledged support to develop Taiwan's civil defence.
Authorities did not name countries, pointed to New Zealand’s censure of China for its involvement in a hacking spree in 2021 and Russia for its malicious cyber ...
WELLINGTON, March 27 (Reuters) - New Zealand intelligence agencies are growing more concerned about both foreign interference and malicious cyber activity ahead of elections in October, the country’s intelligence chiefs said on Monday.
“It's fair to say that concern about foreign interference as well as malicious cyber activity is growing,” Andrew Hampton, director general of the New Zealand Government Communications Security Bureau (GCSB), told media after testifying at parliament.
“That's not just the domestic trend it's the international trend as well,” he said.
Security services are working with the election authority to improve cybersecurity and procedures and will also brief political parties on security and foreign interference threats.
Both the GCSB and Security Intelligence Service chiefs were speaking before the intelligence committee that includes the country’s Prime Minister as part of their annual review. Much of the testimony was classified and closed to the public.
Hampton said in a pre-written speech that over the past year, the GCSB had witnessed geostrategic competition intensifying around the world, including in the Pacific region, while serious cyber security incidents continue to threaten New Zealand organisations.
State-sponsored cybersecurity actors feature significantly with 34% of recorded incidents that can be linked to state actors, up from 28% the previous year, said Hampton.
Phil McKee, Acting Director-General of Security, said the threat of foreign interference and espionage is a growing cause for concern, adding information was being collected on those who speak out against foreign governments and their families being threatened in their home countries.
“Foreign interference should not be tolerated,” McKee said.
Reporting by Lucy Craymer; Editing by David Gregorio
TEGUCIGALPA/TAIPEI (Reuters) -- China established diplomatic ties with Honduras on Sunday after the Central American country ended its decades-long relationship with Taiwan, while Taiwan's foreign minister accused Honduras of demanding exorbitant sums before being lured away by Beijing.
The ending of ties with Taiwan had been expected after the Honduran foreign minister travelled to China last week to open relations and President Xiomara Castro said her government would start ties with Beijing.
China said its foreign minister, Qin Gang, and Honduran Foreign Minister Eduardo Enrique Reina signed the deal on diplomatic recognition in Beijing, ending relations with Taiwan dating back to the 1940s.
In a brief statement late on Saturday, the Honduran foreign ministry said it recognized the People's Republic of China as the only legitimate government that represents all of China and that Taiwan is an "inseparable part of Chinese territory".
China claims democratically ruled Taiwan as its own territory with no right to state-to-state ties, a position Taipei strongly rejects. China demands that countries with which it has ties to recognize its position.
Speaking in Taipei, Taiwan Foreign Minister Joseph Wu said Castro, who took office early last year, and her government had "always had illusions" about China and China's "luring" had never stopped.
"The foreign ministry and embassy grasped the relevant information and handled it carefully. However, the Castro government also asked us for billions of dollars in huge economic assistance and compared prices for assistance programs provided by Taiwan and China," Wu said.
Taiwan President Tsai Ing-wen, in a video statement, said Taiwan will not compete with China in "meaningless" dollar diplomacy.
"Taiwan's people have proved to the world that we never cower from threats. Taiwan's cooperation and links with allies and like-minded countries to jointly promote international well-being and security will only increase, not decrease," she said.
Neither the Chinese nor the Honduran statements made mention of aid.
Wu said Reina wrote to Taiwan on March 13, the day before Castro's original announcement, demanding a total of $2.45 billion in aid, including the construction of a hospital and a dam and to write off debt.
"It felt like what they wanted was money, not a hospital," Wu said.
Reina told Reuters last week the $2.5 billion figure was "not a donation" but rather "a negotiated refinancing mechanism".
Tsai is due to depart on a sensitive visit to the United States, Guatemala and Belize on Wednesday. She is expected to meet U.S. House Speaker Kevin McCarthy in Los Angeles at the end of the trip.
Wu said he was "highly suspicious" of the timing of the Honduran decision so close to Tsai's overseas tour.
"China seems to be doing this intentionally," he said.
The United States has been watching with concern as China expands its footprint in its backyard by taking away Taiwan's Central American allies, and has repeatedly warned countries not to believe China's promises of aid.
The U.S. State Department said while the Honduran action was a sovereign decision, it was important to note China "often makes promises in exchange for diplomatic recognition that ultimately remain unfulfilled".
"Regardless of Honduras' decision, the United States will continue to deepen and expand our engagement with Taiwan," it said in a statement.
Relations between Honduras and Taiwan date back to 1941 when the government of the Republic of China, which remains Taiwan's official name, was still in China before it fled to the island in 1949 after losing a civil war with Mao Zedong's communists.
Taiwan now only has formal diplomatic relations with 13 countries, mostly poor and developing countries in Central America, the Caribbean and the Pacific.
