🌍 China gives up its trade perks
Plus: Macron stuck in traffic.
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Today’s briefing: |
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Good morning Intriguer. My favourite subject at law school was International Trade Law, taught by the legendary Professor Morgan Wayne. Wayne earned his place as MVP prof because he managed to make learning about tariff lines and rules of origin exciting.
I took a lot away from that semester, mainly from cases about shrimps and turtles, deadlocked appellate bodies, and how China joining the World Trade Organization in 2001 was meant to pave the way to its eventual economic and political liberalisation.
Though the latter proved to be more aspirational, China has reaped rewards aplenty from its WTO membership. So much so, that it now feels ready to waive its access to special and differential treatment in future WTO agreements. That’s our top story today, let’s dive in.
Number of the day
7-10%
That’s by how much China, the world’s biggest carbon emitter, is pledging to cut its greenhouse gas emissions by 2035, according to a new announcement by President Xi Jinping.
Quid pro quo no mo’
It’s the year 2000. The world has survived Y2K. None of Conan O’Brien’s predictions have come true. And the US House of Representatives has just passed a bill normalising trade relations with China and paving the way for its accession to the World Trade Organisation (WTO).
Bill Clinton reasons that the US has a "far greater chance of having a positive influence on China's actions if we welcome China into the world community instead of shutting it out," as he signs the bill into law.
In Beijing, the shots of Maotai are flowing. China is about to benefit from immediate tariff reductions and large cuts on trade quotas on its products in return for giving foreign companies more access to its enormous market.
Fast forward 25 years to this past Tuesday. At a side event during UNGA week in New York, Beijing's No.2, Premier Li Qiang, made the surprising announcement that China will voluntarily give up its access to Special and Differential Treatment under ‘developing nation status’ (though it intends to keep its status as a developing nation).
In those intervening 25 years, China’s GDP has grown from $1.3 trillion to ~$19 trillion, a staggering ~13x increase (for reference, the US economy has increased about 2.7x in the same period). Today, China accounts for 20% of global GDP.
So that’s the news, but the question is, why is China voluntarily walking away from the benefits that helped fuel its rise, and why now?
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🎁 Setting a positive tone with Trump
Countries like China and India's insistence on keeping their self-declared "developing" status — even as China subsidised state industries and forced technology transfers from the foreign companies it had promised to welcome — has long stuck in the craw of many WTO members, including the US.
Trump and Xi recently announced they’ll meet next month to discuss a wide range of issues, including access to chips, a TikTok deal, and a possible US-China trade deal. China’s decision to give Trump an ‘early win’ on something he’s long griped about will help create positive momentum ahead of that meeting.
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😇 Demonstrating ‘leadership’ to the rest of the world
Consider the contrast: as President Trump mocked the UN’s toothlessness (perhaps not inaccurately) and told member states their countries were “going to hell”, China was drawing praise from WTO Director General Ngozi Okonjo-Iweala, who said “[China’s announcement] is the culmination of many years of hard work” as she applauded China’s leadership.
The Nigerian-born leader of one of the world’s best-known multilateral organisations praising them in front of more than 140 world leaders, while the US president gripes about broken escalators? China’s leaders couldn’t have scripted it better.
Intrigue’s Take
We’re doing something we’ve never done before, and handing today’s Intrigue’s Take™️ to honorary Intriguer, leading trade expert, and “Rory Stewart’s hero”, Dmitry Grozoubinski:
“The category of 'developing country' is overly broad, simultaneously including industrial giants like China, uber-wealthy Gulf states like Saudi Arabia and the UAE, and small Pacific Islands recently graduated from Least Developed Country status, like Samoa.
The Chinese move to forego the benefits of special and differential treatment in future agreements is smart because it demonstrates significant symbolic willingness to sacrifice for the sake of the multilateral system, but comes at a very low price. There are no ongoing negotiations with any prospects of success where the Chinese would have wanted special and differential treatment, and little prospect of any emerging in the short to medium term.
This move will be greeted with significant applause from much of the membership and seen as a magnanimous and constructive gesture. They are trading a PR coup for entirely hypothetical flexibilities in entirely hypothetical agreements in the still distant future — and doing so through a political commitment they could reverse if they really needed to.”
Sound even smarter:
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Buy Dmitry’s superb book “Why Politicians Lie About Trade,” read it, and never be hoodwinked by anyone about trade again.
Today’s newsletter is sponsored by Minderoo Foundation
Lethal Humidity: The Silent Climate Threat
Extreme heat and humidity are a deadly combination. Lethal humidity is already disrupting lives, health systems, food security, and economies — yet few are paying attention.
At this year’s UNGA, the Lethal Humidity Global Council — a network of more than 160 members across nine countries — is calling for urgent global action. Backed by the Minderoo Foundation, we’re advancing the science, policy, and tools needed to confront this growing crisis.
Our message is clear: it’s time to treat lethal humidity as the climate and security risk it is, and Only Real Zero emissions can stop it.
Meanwhile, elsewhere…
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🇦🇷 ARGENTINA — That’s what friends are for. |
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🇨🇳 CHINA — Peak storm season. |
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🇰🇷 SOUTH KOREA — Church leader arrested. |
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🇪🇺 EUROPEAN UNION — The EU is too boring even for Europeans. Comment: Chiocchetti is correct. |
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🇳🇿 NEW ZEALAND — Trusting a Swede to fix things. Comment: There’s no doubting Breman’s technical chops, but internal morale at the bank is at an all-time low and, as a foreigner, she’ll have to quickly build local legitimacy. New Zealand’s GDP fell ~0.9 % in Q2. |
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🇲🇼 MALAWI — Meet the new boss, same as the old boss. Comment: Chakwera’s pledge is great news for the country. Since emerging from the highly repressive regime of its first post-colonial leader, Hastings Banda, in 1994, Malawi has become one of the more democratic and stable countries in Africa. |
Extra Intrigue
Meanwhile, in other worlds…
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Tech: YouTube will reinstate accounts previously banned for violating its policies on COVID-19.
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Health: A team of UK-based scientists announced they had successfully treated Huntington’s disease, a degenerative illness, for the first time.
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Space: A Russian biological research probe carrying 75 mice, 1,500 flies, microorganisms, and more, has returned to Earth after 30 days in orbit as part of research into the effect of cosmic radiation on organisms.
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Snafu of the day
Credits: Document BFMTV.
What do you do when you get stuck in traffic en route back from a super important meeting? Call the President of the United States, obviously!
While that might not work for common mortals like us, French President Emmanuel Macron called Trump on Tuesday after his car was stopped by law enforcement to make way for Trump’s motorcade.
The two leaders appeared to exchange niceties: “How are you? Guess what? I’m waiting in the street because everything is frozen for you”, Macron joked, before deciding to make the 30-minute journey back to the French consulate on foot. Macron was in good spirits as he stopped to pose for photographs with passersby – he even got a lil smooch on the head for his troubles.
Today’s poll
Why is China foregoing its special WTO status? |
Yesterday’s poll: What do you think we should do to get the UN at its full potential?
💸 More funding (7%)
🏢 Streamline and consolidate (28%)
➕ Expand the Security Council (8%)
🚫 Abolish the veto (52%)
✍️ Other (write in!) (5%)
Your two cents:
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🚫 M.B: “Veto power by just one member effectively silences any power the UN might have. By abolishing it, the UN will be allowed to follow through on majority-voted issues, thus restoring the initial purpose upon which the organization was founded.”
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➕ R.B: “Incentivize clearly prominent players such as all the BRICs plus Japan and Germany to play their global security roles, and the UN will feel more modern and relevant.”
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✍️ S.M: “Abolish the UN. Its political biases have been clear for decades, its current purpose is obscure, and it doesn't serve anything other than its own bureaucracy.”