ESADEgeo Daily Digest, 04/06/2019

South China Morning Post – Editorial / There is every reason why Beijing must revisit its June 4 verdict

  • Thirty years ago today a military crackdown to clear a student-led pro-democracy protest from Beijing’s Tiananmen Square left hundreds, perhaps more than 1,000 dead. In these thirty years, rapid economic development has helped Beijing in its efforts to sweep the events of June 4, 1989, under the rug.
  • Defence Minister General Wei Fenghe’s recent remarks defending the crackdown appeared to dash hopes of vindication of the protest movement any time soon. It is time for Beijing to reflect and make amends by recognizing the patriotism of the movement so that China can move on.
  • In 1997, former party leader Zhao Ziyang wrote that “people won’t forget about it no matter how long we sit on this. It is better we solve this issue [of reversing the verdict] by our own initiative … when the country is stable and the people rational”.
  • Beijing’s authoritarian line comes at the price of a lack of checks and balances that would strengthen its ability to face challenges. There is also a price to pay in criticism and questioning at home and abroad and in winning the hearts and minds of its own people, and in particular Hongkongers.
  • Washington Post – Yuhua Wang / How has Tiananmen changed China?
  • The New York Times / The Tiananmen Square anniversary: A guide to our coverage

Financial Times – Lucy Hornby & Henry Sanderson / Rare earths: Beijing threatens a new front in the trade war

  • Rare earths — a group of 17 obscure minerals — have been thrust into the center of the US-China trade war following warnings by Beijing that it could cut off supply. These minerals are used in smartphones, lasers, instrument panels, wind turbines, MRI machines and electric cars.
  • China accounts for almost 80 per cent of the global mined supply of rare earths, thanks to especially rich deposits and a high tolerance for the toxic and sometimes even radioactive process of mining and extracting. “The Middle East has oil, China has rare earths,” noted Deng Xiaoping in 1987.
  • The tussle over rare earths is more complicated in 2019 than it was in 2010. Back then, it revolved around minerals and oxides supply to Japan. This time, tensions with the US play out over longer and much more complex supply chains. Actually, the US imports very little rare earths directly from China.
  • Disruptions in Chinese rare earth supply would stoke concerns in Europe and Japan that the country is not a reliable supplier. The 2010 scare already prompted a global flood of new mining projects. China’s threats may even push the US to revive its own rare earth industry.
  • Chinese President Xi Jinping must balance the need to present the US with credible consequences for the trade war against the need to maintain the trust of the magnets and motors market.

Project Syndicate – Joschka Fischer / The end of the world as we know it

  • Google’s move to terminate cooperation with Huawei poses an existential threat to the Chinese company. But, more than that, it marks both a new pinnacle in the Sino-American conflict and the end of US-led globalization. The message is clear: from now on, the US will put might over market.
  • The Trump administration’s latest move is meant to signal that the US will not hand over its dominant global position without a fight. Yet by precipitating a break in the existing trade relationship with China, the US will incur immense costs of its own.
  • In the medium term, US and Chinese efforts to increase self-reliance would effectively divide the world into two spheres of economic competition. Smaller powers would have to choose a side, and even economic giants like the EU would face an intractable dilemma.
  • Such a scenario would produce a lose-lose outcome. True, in a full-scale technology war, the EU’s value as an ally to the US would increase, and the risks of punitive US tariffs on European exports would decline. But European exporters that have become more dependent on China would be squeezed.

Bloomberg – Birgit Jennen, Arne Delfs & Patrick Donahue / Merkel gets a break as partner stays in coalition, for now

  • German Chancellor Angela Merkel won her rattled government some time as her junior coalition partner – the SPD – agreed to remain on board after the resignation of its leader, Andrea Nahles.
  • “We remain true to the coalition agreement,” said Malu Dreyer, prime minister of the state of Rhineland-Palatinate and one of three regional party leaders who will steer the Social Democrats until a new leader is elected at a convention expected for mid-October.
  • “Both the Christian Democrats and the SPD know very well that they would lose seats in new elections right now, so it’s quite possible this grand coalition will die a very slow and painful death,” said Ulrich Sarcinelli of the University of Koblenz-Landau.
  • Yet while both sides sought to downplay the risk of rupture, the issue will remain on the table in coming weeks. By June 24, the SPD wants to lay out a road map as to how and when a new leadership will be elected and whether the party decides to remain in the coalition.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces.

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