CRG Weekly: Aukus, UN and Evergrande
News from the China Research Group
Tomorrow’s event - After Merkel: Germany’s Foreign Policy. How will the upcoming German election on 26 September shape Berlin’s foreign policy? And how could the Aukus announcement influence the EU’s approach to China and the Indo-Pacific? Join Tom Tugendhat MP, Constanze Stelzenmüller, Noah Barkin and Janka Oertel for an essential pre-election briefing on Monday 20 September from 3pm BST. Register for the virtual session here.
The week in review
The past week saw a string of major announcements, including Liz Truss replacing Dominic Raab as the UK’s new foreign secretary, a generational new defence pact between the UK, US and Australia - and China’s application to the CPTPP. But next week will also be far from quiet.
In China, the next few days could prove decisive for Evergrande’s fate. China’s second-largest property developer is due to repay interest on bank loans on Monday and payments to bondholders on Thursday. The most stable outcome would be a managed restructuring of Evergrande’s $300 billion of debt; more risky would be a more market-led default with a higher risk of contagion. The Guardian has a good long read on the situation which captures the structural problems facing China’s indebted real estate sector.
Boris Johnson and Liz Truss are set to fly to US this evening for the UN General Assembly. Writing in The Telegraph for the first time as foreign secretary, Liz Truss has set out a strong stance on the Aukus agreement, saying it “shows our readiness to be hard-headed in defending our interests and challenging unfair practices and malign acts”. Boris Johnson will also travel to the White House to meet President Biden in order to discuss climate, COVID and international security.
At the UN on Monday, the UK is set to convene a climate-focused meeting in an attempt to bring together leaders as part of preparations for COP26. But The Telegraph also reports that “UK officials now believe it is highly unlikely that Xi Jinping, the Chinese president, will attend, in a blow to Britain’s ambitions for the summit.” With COP26 now just a month and a half away, Beijing has showed little sign of softening its stance and agreeing to deeper emissions cuts, despite concerted diplomatic efforts from the UK and its allies.
Weekend reads
Red New Deal or Raw New Deal? Unraveling China’s astonishing barrage of regulatory action. Jude Blanchette and Lizzi Lee discuss whether Xi Jinping has a master plan, or if the regulatory pile-on is a coincidence of the political calendar. Sinica, 17 August
The Aukus pact is a sign of a new global order. Rana Mitter in The Guardian, 17 August
The UK’s tilt to the Indo-Pacific with Sophia Gaston, Claire Coutinho and Michael R. Auslin. China Research Group podcast, July 2021.
Crucial Collaboration: The Case for Closer Australia-UK Defence and Security Ties in Light of a Rising China. Tom Tugendhat for CIS, June 2021.