China, Southeast Asia: Tributary acts.
Also: Also, Australia, Antarctica, Ukraine, Russia and democratic backsliding.
CHINA. SOUTHEAST ASIA. Tributary acts.
Beijing has a freer hand to reclaim its backyard.
Diplomats from China and ASEAN renewed vows this week to agree a South China Sea 'code of conduct' by 2026. Japan's prime minister visited Manila on Friday following weeks of further tensions between China and the Philippines.
INTELLIGENCE. Beijing aims to tie members of the Association of Southeast Asian Nations – five of whom claim overlapping waters in the South China Sea – in endless talks as it builds its presence on a series of remote atolls. With support from Washington and Tokyo, Manila under President Ferdinand Marcos Jr has pushed back, but larger economies – notably Indonesia, Thailand, and Malaysia – see Chinese trade and investment as too lucrative to risk.
FOR BUSINESS. As China and the US goad each other in Taiwan, real near misses are occurring in Southeast Asia. As China’s economy recovers and its factories expand to the region (partly to avoid US barriers), Beijing won’t risk a new geopolitical front, but likewise it is freer to assert dominance while Washington is disengaged. Last week, a group of senators wrote to the White House to oppose a critical mineral free trade agreement proposed by Jakarta.
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CHINA. AUSTRALIA. Xi’ll be right.
Canberra shows the path and perils of rapprochement.
Prime Minister Anthony Albanese prepared on Friday to visit Beijing after a seven-year freeze in relations. The White House on Tuesday said Joe Biden would meet Xi Jinping in San Francisco later this month. Beijing declined to confirm.
INTELLIGENCE. As Canada, Lithuania and Britain had been punished previously, Australia had been put in China’s doghouse as a warning to the US and others, though matters weren’t helped by the tone of Canberra’s previous government. With a new administration, Australia can reset ties without losing face, but it will be limited in how far it goes lest it upset the advances concurrently secured with the US, particularly a deal on nuclear-powered submarines.
FOR BUSINESS. Australians are famously laid-back, and no middle power wants to be forced to choose sides, but after being admitted to Washington’s sanctum sanctorum, any reset with Beijing could be viewed as betrayal; particularly among pro-Trump Republicans in Congress after Albanese was just hosted to a US State Dinner. To balance its trade and security interests, Canberra will need a deftness not always seen during its ructions with Beijing.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
CHINA. ANTARCTICA. Polar front.
Beijing makes new investments in the south.
A 460-member scientific expedition left Shanghai on Wednesday to establish China's fifth Antarctic station and undertake research. Scientists last month said the melting of West Antarctica’s ice shelves was now unavoidable.
INTELLIGENCE. Mirroring a rising interest in the Arctic as sea ice melts, China and others are eyeing the Antarctic. And with the Antarctic Treaty potentially set to expire in 25 years, their interest could be more than scientific. China is deepening its Antarctic cooperation with Russia. At last week's meeting of the Commission for the Conservation of Antarctic Marine Living Resources, they reportedly opposed the creation of an EU-sized new protected area.
FOR BUSINESS. China is showing its hand in other ways. The governor of Argentina's Tierra del Fuego province signed a port deal with a Chinese firm this year, allowing access to Antarctica, the Magellan Strait and the Falklands. Its fishing fleet routinely visits the Southern Ocean, prompting activity in turn from the US Coast Guard and others. Earlier this year, it announced plans to build satellite ground stations in Antarctica, with potential military applications.
UKRAINE. RUSSIA. Arms wrestle.
The White House seeks new ways to rebalance supplies.
The US on Thursday announced new sanctions against Russia, targeting gas, drones, and third-country trade. The Pentagon plans to send $425 million worth of aid to Ukraine via existing stockpiles, Associated Press said on Thursday.
INTELLIGENCE. Russia is diminishing Ukraine’s defences and unless Congress approves new aid, the White House needs alternatives. Yet donations from US stocks risk preparedness for other theatres. Sanctions routinely lead to workarounds. On gas, LNG restrictions have boosted piped gas. Gazprom on Wednesday signed a pipeline deal with China. On military goods, a Russian firm on Thursday announced an Uzbek production line for “agricultural” drones.
FOR BUSINESS. Besides much-publicised deals with Iran and North Korea, Russia has demonstrated self-reliance in military hardware. Tank production has increased seven-fold over the past year. Munitions for multiple rocket launcher systems are reportedly up 20-fold. Western production is also up, but at a much lower scale. A donation by Germany this week of 25 Leopard tanks attracted little notice but could represent about half of annual production.
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DEMOCRACY. Government issues.
Autocracy is on the march, everywhere.
One in two countries are in democratic decline, a human rights think tank said on Thursday. Guatemala's electoral body on Thursday suspended the party of its president-elect. Pakistan delayed its election for a second time to February.
INTELLIGENCE. Measures of democracy can be imprecise, but the Institute for Democracy and Electoral Assistance's annual report gives a point of comparison, and the trend is clear. Anecdotally, the media tends to report the bad, not the good, but the West’s focus on Ukraine and now Israel has objectively given authoritarian actors more space to avoid scrutiny and evade legal norms. And amid charges of hypocrisy, it is getting harder to call them out.
FOR BUSINESS. Without democracy, rules are easier to usurp. And without rules, trade is harder, within and between states. A decline in democracy mirrors a decline in world order, as well as declining US hegemony, despite the resilience of its domestic economy. A multi-polar world will be both harder to govern and harder to operate in, but could conversely see deeper integration within blocs (e.g. the EU) where similar standards and laws still exist.