In my previous column, I talked about 5 of the top 10 international news of 2016. Now, I will discuss the rest of them.
6. Major setbacks for free trade and the rise of protectionism:
The year 2016 would probably have been a fruitful year for international free trade agreements such as the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP) had it not been for the election of Donald Trump as US president and the rise of right-wing extremism in Europe.
With president-elect Trump vowing to pull out of the TPP and even repeal the existing North American Free Trade Agreement (NAFTA), and as the EU is putting the TTIP on indefinite hold, trade protectionism is making a major comeback, and less and less people in the developed world are buying into globalization and free trade, which they believe only benefit multi-national corporations.
7. The Hague Tribunal ruling and China’s diplomatic offensive
The Hague Tribunal had in June ruled in favor of the Philippines over the territorial disputes in the South China Sea, and relations between Beijing and Manila were at an all-time low.
However, after Rodrigo Duterte became the new president of Philippines, he has taken great pains to repair relations with China. As a result, ties between the two countries improved significantly within months.
In the meantime, in face of uncertainty over US foreign policy due to the incoming Trump administration, there has been a stampede among other Southeast Asian countries to strengthen diplomatic and economic ties with China as the nations sought to hedge their bets.
As such, in just a few months’ time, China managed to, rather dramatically, turn the tables on the US in the South China Sea disputes, and the balance of power in the region is once again tilted in Beijing’s favor.
8. Taiwan presidential election and the new cross-strait situation
The second half of 2016 saw a rapid deterioration in relations between Beijing and Taipei after Tsai Ing-wen of the Democratic Progressive Party assumed office as Taiwan’s president in May.
On one hand, hawks in Beijing are deeply dismayed at the fact that the independence-leaning Tsai has been reluctant to endorse the so-called “1992 consensus”, which has long been considered by Beijing as the foundation of trust across the strait. On the other, Beijing is also alarmed by the diplomatic footsie played between the incoming Trump administration and Tsai.
It appears there will be a lot of uncertainties and variables in cross-strait relations in 2017. Any over-reaction or miscalculation from either Beijing or Taipei could result in the escalation of diplomatic standoff between both sides.
9. Inclusion of RMB into the IMF’s Special Drawing Rights (SDR) basket
On October 1, 2016, the IMF announced that the Chinese unit would be included in the basket of currencies of the SDR with immediate effect, and that the respective weights of the US dollar, euro, renminbi, Japanese yen, and British pound would be 41.73 percent, 30.93 percent, 10.92 percent, 8.33 percent, and 8.09 percent, suggesting that the yuan is now the third most important currency in the global market.
The inclusion of the renminbi into the SDR is a milestone in the course of the internationalization of the yuan, and reflects the growing influence of China in the global financial market.
10. Corruption scandals in emerging economic entities
After years of rapid economic growth, the “BRICS” countries seemed to have run into trouble one after the other in 2016.
And their problems are compounded by the fact that many of their leaders have been engulfed by scandals or even faced impeachment, such as Brazilian president Dilma Rousseff and South African president Jacob Zuma, thereby undermining investors’ confidence in the emerging markets.
This article appeared in the Hong Kong Economic Journal on Dec. 30
Translation by Alan Lee
[Chinese version 中文版]
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