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Chinese investment and a state of emergency: Ethiopia’s latest

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Ethiopian Prime Minister Hailemariam Desalegn resigned on February 15 following mass protests. A six-month long state of emergency was imposed by the government the next day, with the intention of quelling civil unrest.

The state of emergency prohibits, among other things, the distribution of potentially sensitive material and unauthorized demonstrations or meetings.

Hailemariam remains in office until a new prime minister is appointed.

Ethiopia is, in essence, a one party state led by the Ethiopian People’s Revolutionary Democratic Front, a coalition comprising of parties representing different regions of the country.

Tension has been bristling between the powerful Tigray People’s Liberation front, which represents just 6 percent of Ethiopians, and its counterparts representing the Amhara and Oromo ethnic groups. Meanwhile, Hailemariam’s party, the Southern Ethiopian People’s Democratic Movement, is the weakest in the coalition.

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China received more foreign investment last year than U.S., U.N. says

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Employees work on the production line of WEY Tank 300 SUV at a factory of Great Wall Motors on January 19, 2021 in Chongqing, China.

VCG | Visual China Group | Getty Images

The Chinese economy brought in more foreign direct investment than any other country last year, knocking the United States from its perch atop the list.

China brought in $163 billion in inflows last year, compared to $134 billion attracted by the U.S., the United Nations Conference on Trade and Development wrote in a report released on Sunday. In 2019, the U.S. received $251 billion in inflows and China received $140 billion.

Overall, the report found that foreign direct investment tanked globally, as the Covid-19 pandemic brought countries large and small to virtual stand-stills.

FDI plunged 42% in 2020, to $859 billion, a 30% drop from even the depths of the 2009 financial crisis. The economic measure accounts for investments in a country made by people and businesses in other countries, such as the construction of a factory or the opening of a satellite office.

Developed countries were hit harder last year than so-called “developing” countries. Investment in the U.S. fell 49%, slightly less than the developed country average of 69%.

FDI in developing countries fell a comparatively moderate 12%. China, included on that list, actually saw a small increase of 4% in its inflows.

The European Union saw FDI decline by two-thirds, according to the report, with the United Kingdom seeing no new inflows. The U.K. has been particularly hard hit by the coronavirus.

China managed to largely get coronavirus under control within its borders last year, despite being the first nation to be hit with the deadly disease.

Strict lock down measures, early mass testing and an abundance of personal protective equipment have been credited for the country’s relatively low death toll.

Since the start of the pandemic, China has had fewer than 100,000 confirmed Covid-19 cases and suffered about 4,800 deaths from the disease, according to Johns Hopkins University data.

The U.S., which has a much smaller population, has had nearly 25 million cases and more than 400,000 deaths.

Despite China surpassing the U.S. in the flow of foreign direct investment in 2020, the total stock of foreign investment remains much larger in the U.S. than in China, according to data compiled by the Organization for Economic Cooperation and Development.

Other economic data have also suggested that China has borne the brunt of the pandemic more nimbly than its peers. Beijing reported 2020 GDP growth of 2.3% earlier this month, and is expected to be the only major economy to report a positive annual growth rate.

The United Nations report comes one day before China’s President Xi Jinping will deliver an address at a virtual gathering of the World Economic Forum. President Joe Biden is not expected to attend the event.

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SpaceX Transporter-1 rideshare launch carries 143 spacecraft

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The Falcon 9 rocket stands on the launchpad in Florida ahead of liftoff for the Transporter-1 mission.

SpaceX

SpaceX launched another rocket into the record books on Sunday with the first mission of its “rideshare” program carrying dozens of small satellites into space.

The Falcon 9 rocket, which took off from Florida’s Cape Canaveral, carried 143 spacecraft into orbit — a new global record for the most spacecraft launched at once, and surpassing the mark of 104 set by an Indian PSLV rocket in February 2017.

Called Transporter-1, the SpaceX mission was the first for the company’s SmallSat Rideshare program.

While SpaceX advertises a launch on a Falcon 9 dedicated to a single satellite for $62 million, the company’s SmallSat Rideshare launches give smaller satellites — as small as the size of a mailbox — an option to orbit for as little as $1 million for 200 kilograms.

Such rideshare missions have become increasingly common in the space industry, with international competitors like Arianespace’s Vega looking to claim a share of the growing marketplace of small satellites.

Rideshare missions offer a different option for low-cost satellites looking for a ride to orbit, with smaller rockets like Rocket Lab’s Electron offering a more tailored approach.

“SpaceX is providing a competitive rideshare option, in large part leveraging its Starlink launches,” Bryce Space and Technology senior analyst Phil Smith told CNBC.

The SpaceX service is not quite on demand, Smith said, but companies can pay a premium to launch according to their schedule, rather than the schedule of the primary customer.

“A fairly reliable ‘bus route’ is available,” Smith said of SpaceX, “whereas I suppose one might compare companies like Rocket Lab and Virgin Orbit as on-call taxies that get your satellite where you want it ASAP.”

Elon Musk’s company launched 133 satellites for a broad variety of government and private customers, as well as 10 of its own Starlink satellites.

SpaceX’s customers on board Transporter-1 include: Planet Labs, Exolaunch, D-Orbit, Kepler Communications, Spaceflight Inc, Nanoracks, NASA and Capella Space, as well as iQPS, Loft Orbital, Spire Global, ICEYE, HawkEye 360, Astrocast, and the University of South Florida Institute of Applied Engineering.

Notably, the 10 Starlink satellites aboard this mission will be the first in the constellation to deploy to a polar orbit, as the company continues to expand public access to its satellite internet network. Those 10 satellites were added after Momentus took its first Vigoride mission off the Transporter-1 launch earlier this month. Momentus cited additional time needed for regulatory approval as the cause of the change.

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Xi is positioning China as the world’s indispensable economy

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A news report on Chinese President Xi Jinping’s New Year’s Eve speech is shown on a public screen in Hong Kong, China, on Thursday, Dec. 31, 2020.

Bloomberg | Bloomberg | Getty Images

It’s now Biden’s America, but whose world will it be?

Expect China’s President Xi Jinping to answer that question unequivocally on Monday with his keynote at the World Economic Forum’s first global virtual meeting. It will leave little doubt that managing relations with China will be both President Joe Biden’s most immediate and most defining foreign policy challenge.

It’s hard to imagine more dramatic timing for Xi’s “special address,” coming in the wake of Biden’s inaugural, Trump’s second impeachment and the Capitol insurrection that prompted it.

Whatever words Xi chooses, his message will be clear: this is China’s historic moment. With modifications for global listeners, it will echo the theme he delivered a few days ago to a gathering of provincial and ministerial level officials at the Communist party school.

 “The world is undergoing profound changes unseen in a century,” Xi said, kicking off a celebration-strewn hundredth anniversary  year of the Chinese Communist Party’s creation.  He declared that the “time and situation” had turned in China’s favor.  “This is where our determination and confidence are coming from.”

In a relieved Washington this week, all eyes were on President Biden. He sounded his determination to heal and unify the United States, and he announced his audacious  move to unleash the U.S. economy with a $1.9 trillion Covid relief package, and infrastructure spending bills to follow.  Internationally, Biden’s focus will be on  rallying democratic partners and allies to counter China’s authoritarian gambits.

 Yet 2021 may instead be more the year of Xi Jinping than of Joe Biden. The Chinese leader is leveraging  the centennial of his Communist Party and China’s emergence as the first major economy to return to growth after Covid-19 to strengthen his individual authority, to tighten the party’s unrivalled control, and to accelerate China’s rise and increased global influence through new investment and trade deals.

U.S. President Joe Biden and first lady Jill Biden wave as they arrive at the North Portico of the White House in Washington, DC, January 20, 2021.

Alex Brandon | Pool | Reuters

At the same time, Xi is laying the ground work for the  20th Party Congress in the second half of 2022, which could formally seal his long-term tenure as China’s paramount leader. Along the way, he has been crushing dissent and rivals, reigning in the country’s biggest private businesses starting with Jack Ma, and deploying digital and surveillance methods to assert control in a manner that he hopes will be more enduring, efficient, productive and less violent than that of Mao Tse-tung.

The world won’t like all of what it sees, but Chinese officials are drawing the comparison of their economic resilience and political stability in  2020 with the dramatic dysfunctions of American democracy and the reality that the pathogen China unleashed has been far less effectively managed, and thus far more damaging, in the United States.

China drove home that narrative through this week’s announcement that the country achieved 2.3% GDP growth in 2020, far outperforming an expected U.S. decline of 3.6 %, a European Union downturn of 7.4% and a global economic pullback of 4.3%. For the first time ever, China passed the United States as Europe’s leading trading partner through the first eleven months of last year. 

Most challenging for President Biden is that China has taken a series of pre-emptive steps through trade and investment deals that will complicate his efforts to reinvigorate Asian and European alliances and partnerships. These will be difficult to counter due to his Democratic Party’s reluctance to negotiate new trade arrangements  and the detritus of President Trump’s punitive tariffs and sanctions.

Shortly after Biden’s election in November, China signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Asia countries. Then in December, Beijing offered surprise concessions to break a negotiating deadlock and close an investment agreement with the European Union shortly before Biden’s inauguration.

To ensure the significance of the deal wasn’t missed, Chinese Foreign Minister Wang Yi at a lunch for EU ambassadors praised this demonstration of Europe’s “strategic autonomy.”

President Xi even has expressed interest in joining the higher value Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade liberalization pact among Canada and ten Asian-Pacific Countries that the United Kingdom is applying to join. The U.S. continues to suffer from Trump’s withdrawal from negotiations that created that agreement during the first days of his presidency.

Xi’s underlying message: the U.S. may once have been what former Secretary of State Madeleine Albright called “the indispensable nation,” but China now has become “the indispensable economy.”

President Biden’s opportunity is that Xi may overplay his hand internationally through bullying and at home through an over-concentration of power. His crackdown on private business will render his economy less productive. And history is littered with examples that excessive authoritarianism is ultimately unsustainable. 

The Biden administration approach to the China challenge seems to be one of urgent patience, leading with the reinvigoration of the U.S. economy and the prioritization of alliances and partnerships.

For deeper insights, it’s worth reading the impressive recent body of work by Kurt Campbell, who President Biden has brought into the White House as his right hand on China and Asia matters. Campbell sees the need to rise to the China challenge as “a rare area susceptible to bipartisan consensus” that can be leveraged to steer a path away from U.S. decline.

With co-author Rush Doshi in Foreign Affairs, Campbell wrote in December: “Meeting this challenge requires the kinds of reinvestments in American competitiveness and innovation that are also critical to domestic renewal and working class prosperity. Policy makers should link these two agendas, not to amplify American anxieties but to make clear that accomplishing the country’s most important domestic tasks will also have salutary effects abroad.”

As Biden’s presidency enters its first 100 days, he can’t take his eyes off President Xi’s efforts to leverage the anniversary of the first 100 years of the Communist Party’s power. Biden faces a wide array of international challenges, but this contest will be the one that will define his place in history—and whether democracy or authoritarianism will be the ascendant system for the future.

Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.



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